Health IT: Big Costs, Big Savings

Consulting firm McKinsey has identified three characteristics of successful health information technology rollouts that will allow capable users of electronic health records to capture $40 billion in annual savings.

To realize the greatest return on investment, hospitals must rethink approaches to governance and change management; radically simplify IT architecture; and take a methodical approach to the planning and execution of large-scale IT rollouts. The cost to implement new health IT at U.S. hospitals will average $80,000 to $100,000 per bed or $120 billion nationwide, estimates McKinsey. Federal incentives will offset 15 to 20 percent of those costs, making the timely recovery of IT investments imperative. When implementation is done well, the productivity and resource savings often pay back the initial IT investment within two to four years while also producing better health outcomes for patients.