A potential answer to this question is the slow pace of adoption of IT in the healthcare industry. In the last few decades, the benefits of IT in the manufacturing and service industries have been well demonstrated. These benefits can just as easily be implemented in the healthcare area. For example, much of current record keeping is paper based, disorganized, and often illegible. Thus, records can be easily lost or scattered, and are poorly linked together. This disorganization can cause up to 80% of errors in healthcare administration. Clearly, the information needs to be organized architecturally according to a designed framework while keeping in mind the privacy of health records. Automation and streamlining of information storage would enable the seamless flow of information and would contribute to overall cost reduction. Cost containment is one of the key drivers of this kind of change, particularly in light of the growing elderly population combined with a shortage of physicians and nurses.
The rising proportion of healthcare costs with respect to the gross domestic product (GDP) is an important indicator of the significance of this issue. In 1960, healthcare costs amounted to 7.2% of the GDP. By 2005 they have escalated to 16% of GDP and are predicted to continue to grow to 20% by 2015. The increase in the average human lifespan has been made possible by the advancement in medical science and technologies. Despite the high cost, the availability of healthcare in America is dismal compared to other developed nations where the average healthcare cost is typically around 8% of the GDP .
Today, forty-four million Americans cannot afford health insurance because health-care costs have risen four times faster than wages . Many hospitals and vital health care services are out of reach for needy Americans. The United States will spend 10 trillion dollars in health-care in next 10 years, which will have a significant negative impact on the economy. Worse, government programs such as Medicare do not cover the hospital costs. These unpaid expenses add to the cost private insurance for individuals and employers. To be sure, the cost of health-care must be addressed on a top priority. The inherent efficiency of the system is perhaps the leading culprit in producing these consequences.
Condition of Current Practices is Critical
Utilization of information technology in the healthcare industry has been minimal, and its adoption slow. Although health insurance is among the leading industries, 90% of the transactions within this $30 billion industry are performed by phone, fax or mail. Fewer than 5% of prescriptions from U.S. physicians are managed electronically. Most healthcare organizations spend only 1% to 4 % of their revenues on IT. This is half the amount that organizations in other leading industries spend on their IT infrastructures . Clearly, more effort must be directed toward facilitating the implementation of IT in the healthcare field by addressing the barriers to its adoption.
Some hospitals have already started to capitalize on this opportunity by using electronic medical record keeping technologies, and hospital information systems (HISs). For example, Kaiser Permanante allows its users to book and cancel appointments on-line. Such initiatives must be expanded in order to fully realize the benefits of IT for reducing the cost of healthcare. Indeed, they hold great promise for making