It seems that everyday, health care costs go up, while actual care becomes less effective. One way to ensure appropriate care, however, is to offer each health care provider with the same information regarding a patient's history of diseases, treatments, and even allergies. The solution? Electronic health records (EHRs). With these newly computerized medical histories, all health care providers can gain access to information on any and every patient. But can the use of EHRs truly reduce costs?

A new study regarding the effect of EHRs on health care costs says, definitively, yes. Researchers compared the health care costs of 179,000 patients in three Massachusetts communities that widely adopted electronic health records to the costs in six control communities that did not. The findings support the fundamental, but sometimes criticized, notion that computerizing medical histories can lead to lower health care expenses.

When total cost of health care before EHRs was compared to costs after its implementation, major savings were spotted. On average, the researchers estimated $5.14 in savings per month for each patient in the communities with electronic health records. Specifically, patients with an EHR paid close to $173 for health care each month, while patients without EHRs were paying almost $179.

As a result of having an EHR, fewer diagnostic procedures were done and more treatments were granted, as doctors had medical histories to consult from the wide array of other doctors the patient may have seen. Furthermore, instead of having to order tests and examinations, which can easily become costly, doctors could use a person's medical history to treat him or her, as likely diseases and disorders can be gleaned from such records. In the end, most of the savings were in radiology, as doctors may have ordered fewer imaging studies because they had better access to patients' medical histories, according to Julia Adler-Milstein, Ph.D., the study's author and assistant professor at the University of Michigan School of Information and School of Public Health.

Similarly, costs for ambulatory care, or outpatient types of circumstances, comprised a major part of the $5.14 savings. Researchers estimate that $4.69 was saved each month when a patient had an EHR and sought to see a doctor for something inconsequential, like a cold or a sprain. Also, researchers found a 14-percent reduction in the use of radiology to diagnose diseases and disorders, as one's medical history would point doctors in the right direction or treatment, instead of ordering costly tests.

"To me, this is good news," said Adler-Milstein. "We found 3 percent savings and while that might not sound huge, if it could be sustained or even increased, it would be a substantial amount."

"That said, when we talk about cost savings, it does not mean that the costs went down, but that the costs did not go up as quickly in the intervention communities. This suggests that adopting electronic records helped slow the rise in healthcare costs."

However, costs were not substantially cut for those suffering from chronic diseases, such as diabetes or cardiovascular issues. This is likely explained by the fact that it is more prudent for doctors to assess a chronic disease's progression so as to identify potential changes to symptoms and their management. Similarly, treatments must be rigorously attempted, as chronic diseases hinder one's quality of life, if left untreated. What's more, inpatient costs were not reduced much either, as their histories with diseases are known, but many precautions, diagnostic exams, and treatments must be used, regardless of cost, to ensure recovery of health.

While this EHR system is not necessarily free — it actually cost $27 billion in incentives to get physicians and hospitals to adopt the practice in 2009, not to mention the cost of setup and training for its use — its implementation is quite helpful. The long-terms savings that it affords patients, as well as taxpayers, are not to be overlooked.

"I think our findings are significant because we provide evidence to support the use of taxpayer dollars to invest in electronic health records," Adler-Milstein said. "We really have not had compelling evidence that proved that they would save money. It was assumed, but there are a lot of skeptics. This study helps clarify whether there are cost savings and what the magnitude of those are in the near-term."

Source: Adler-Milstein J, Salzberg C, Franz C, Orav J, Newhouse JP, Bates DW. Effect of Electronic Health Records on Health Care Costs: Longitudinal Comparative Evidence from Community Practices. Annals of Internal Medicine. 2013.