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Four years ago, management and I.T. consultant Joan Duke's difficult lesson in health care inefficiency came to a sad end when her mother passed away. During the previous three years, Duke's mother, suffering from congestive heart failure and other complications, was in and out of emergency departments throughout Florida, while the beleaguered daughter-the founder of Baltimore-based Health Care Information Consultants-struggled from afar.

Her mother was treated at multiple hospitals, where caregivers-disconnected from one another-started treatment regimens from scratch. "Her record didn't follow her around and it was impossible to coordinate care," recalls Duke, who is now semi-retired. "There was a tremendous amount of excessive, wasteful and uncomfortable care." Her mother received over a dozen CT scans during her final years, an excess that Duke believes could have easily been avoided with electronic data sharing. "If the overall health system worked better, and had better data, it would be more efficient, deliver better care, and reduce the unnecessary treatments caused by a lack of information," she sighs.

No doubt, health care is an industry beset with staggering costs. According to numerous federal and private industry studies, national spending topped $2.5 trillion in 2009, with health-related expenses accounting for more than one-sixth of the nation's economy-and on an inflationary spiral many have described as unsustainable. Worse, by many measures, the United States lags behind in quality measures attained by countries that spend far less. Against the backdrop of fragmented care and the corresponding rise in outlays, electronic health records may indeed hold the keys to the kingdom of fiscal constraint. Washington, D.C., is betting so, with its $40 billion-plus EHR meaningful use incentive program.

A financial panacea?

In the spring of 2009, during the run-up to the launch of his meaningful use program, President Obama spoke at a health summit in the nation's capital in which he touted the electronic record as a financial panacea. National adoption of a computerized system containing every patient's history, lab results and treatments would safeguard against medical errors, improve preventive care and, as a result, save $80 billion annually, he said, citing a widely quoted RAND Corp. analysis from 2005.

For many in the industry, however, the claims of widespread savings as the result of electronic record system deployments are overblown. It's an exaggeration rooted in the paucity of meaningful studies, the bias of I.T. proponents, and the vested interest of software companies. Ironically, many experts say that the introduction of EHRs will, in the short-term at least, actually raise the national outlay for care.

Few policy makers have addressed the fact that EHRs could uncover a goldmine of services in both the outpatient and inpatient settings previously undocumented-and therefore unbilled. Uncovering that goldmine is good for hospitals and physicians with boosts in revenue after EHR implementations, but it's not necessarily welcome news for those hoping to see the national cost curve bend downward.

Even skeptics who debunk the EHR's potential as a fiscal brake on health care inflation still uphold the urgent need for widespread adoption of the technology. For many, EHRs set the stage for high-risk patient monitoring in the short-term and evidence-based medicine in the long, both of which are key factors in cost avoidance. For others, the vision of widespread savings enabled by the EHR won't happen without payment reform, one that rewards quality, not productivity, and one that gives patients a bigger financial stake in outcomes. They see the EHR as the precursor-not the cause-of savings.

Obama's endorsement of EHR savings drew fire from physicians and researchers affiliated with Harvard Medical School. Jerome Groopman, M.D., and Pamela Hartzbrand, M.D., faculty members at Beth Israel Deaconess Medical Center, Harvard's teaching hospital, published a rebuttal in The Wall Street Journal that dismissed Obama's assertion-and the RAND study supporting it-as "an elegant exercise in wishful thinking." They challenged the scientific merits of the study, which was based on nationwide extrapolation of data, saying it made invalid comparisons with the banking industry.

And Stephen Soumerai, director of Harvard's Drug Policy Research Group, has published multiple articles decrying the lack of objective studies upholding the proposition that health I.T. will save money. According to an editorial Soumerai published in The Washington Post, "personal financial ties have been found between some researchers and the companies that produce [EHRs]." (Groopman, Hartzbrand, and Soumerai were unavailable for comment; RAND did not reply to an interview request.)

Indeed, much of the debate around the fiscal impact of EHRs has taken place in policy discussions and academic think tanks. For physicians like Ken Adler, M.D., who are ensconced in the trenches of medicine, the debate is a bit too abstract. Adler serves as medical director of information technology at Arizona Community Physicians, a 115-physician group practice scattered across some 40 sites in metropolitan Tucson that began its EHR journey seven years ago. "Can EHRs save money?" he asks. "Theoretically, yes. But has anyone proven they can? In limited ways, there is evidence to support they can. But on the grand scale, many claims are not yet substantiated. The nation is investing a huge amount of money on a hope and prayer."

In his role as physician I.T. champion, Adler understands the merits of the technology. "By reducing medical errors, we can have fewer hospitalizations," he says. "And evidence-based medicine alerts, having the latest research in front of doctors, will yield better quality and better outcomes." But then his clinical side comes through. Adler says more research is needed before financial claims hold water. "There is no really good data that shows that EHRs reduce hospitalizations," he asserts. "You need a study of areas with high concentration of EHRs compared with areas of low concentration to see if there's a difference, or better yet, a study that would look at region before and after EHR penetration. I haven't seen research like that."

For many physicians, EHR validation studies lack the objective science of a clinical trial. The studies too easily reflect the biases of the researchers, says Jaan Sidorov, M.D., who runs his own health care management consulting shop in Harrisburg, Pa. "For every doctor who says the EHR has been a disaster, you can find another doctor who says life with the EHR is grand," he says. "It's easy for advocates on either side of the aisle to pull up anecdotes to support their point of view. That is the problem with EHR advocacy groups-they already believe in the technology from an ideological point of view."