Does healthcare IT really improve medical care?
This series of articles was inspired by a recent hospitalization of this author in Spain, after which the bill showed that medical care costs there are less than 10 percent of those in the United States. All of the services rendered in Spain were performed about the same way as here, except one – in Spain there is considerably less reliance on information technology.
This led to my hypothesis that information technology (IT) may be a driver of high costs of medical care. Today we present the third edition in a series of articles that is exploring how IT is one of the most key enablers of the high cost of medical care in the United States. We will see that in spite of runaway costs, IT actually degrades productivity.
The U.S. Spends Twice as Much
Since 1970, the total health expenditures as a percentage of GDP for the United States went from around 6 percent to around 18 percent today. For the rest of the world, it rose from 5 percent to around 10 percent. So while it doubled across the world, it tripled in the U.S.
On a per-capita basis, the U.S. spends twice as much as other developed countries: $10,348 per person here, $5,169 elsewhere.
There is a rough correlation between GDP per capita and health expenditures per capita, except in the U.S., which is an outlier – it has a little less than $60,000 GDP per capita, but spends more than $10,000 per capita on healthcare.
The average annual growth rate in total health spending per capita in the U.S. was almost 10 percent per year in the 1980s, but has settled down to around 6 percent since then, still a rapid rate of growth – faster than GDP growth.
U.S. healthcare is almost evenly divided between public and private spending, but for comparable countries, public spending is around 80 percent, leaving only around one-fifth of the spending to be done by the private sector. Both private and public U.S. healthcare spending have grown at a faster rate than in comparable countries.
Americans spend an average of $1,443 on drugs annually, compared to $749 per person in comparable countries.
Twice as much.
Costs for common procedures such as knee replacement, Cesarean birth, or unclogging blood flow is also higher in the U.S.
But This Achieves Worse Results
U.S. citizens go to the doctor or stay in a hospital about the same amount as in comparable countries, but also suffer from the lowest life expectancy and highest infant mortality. Life expectancy in the U.S. is 78.8 years, but in comparable countries it is 80.7 to 83.9 years.
Something isn’t working.
It’s the Bureaucracy, Stupid!
Administrative costs in the U.S. account for 8 percent of GDP, but only 3 percent in comparable countries. Single-payer systems have a lower cost than multi-payer plans, and public systems have a lower cost than private plans.
Billing and insurance-related costs (BIR) are also very high for private health insurers. There is no standard billing system. This leaves healthcare providers the task of adjusting their information systems to interface with multiple and differing billing and claims systems. This staggering complexity is impossible to overcome. And there is no way to catch up.
IT spending in hospitals is continuing to accelerate.
Applications such as electronic forms management and pharmacy workflow systems will require sustained investment.
In addition, new applications such as nurse communication systems and voice recognition add an impression that IT is transforming healthcare. There is a continued rush to investment.
Every month, a new IT technology is introduced. There is an illusion that a technology solution can be found for each problem. Each promises to increase efficiency and outcomes, but none truly do. IT appears to add complexity without providing any clear benefit. Cyber is simply another layer of complexity foisted onto an already over-complex system.
There are a number of studies that show how IT decreases productivity.
The bottom line is this: Although we can expect that IT spending in healthcare will continue to grow, nevertheless, for patients there is a negative correlation between more IT and healthcare outcomes.
Coming Articles
In the next installment of this series, we will examine efforts to simplify the bureaucracy of healthcare and the corrosive role of IT.
Program Note:
Listen to Edward Roche on Monitor Monday this coming Monday, Nov. 12, 10-10:30 a.m. ET.
It’s no secret to any of us that there has been quite a bit of recent disagreement between the opposing sides of the political aisle
I’m going to skip over the topic of the hour with the government shutdown and address two actions the federal government has taken in the
Please log in to your account to comment on this article.
Sepsis sequencing continues to challenge even experienced coding and CDI professionals, with evolving guidelines, documentation gaps, and payer scrutiny driving denials and data inconsistencies. In this webcast, Payal Sinha, MBA, RHIA, CCDS, CDIP, CCS, CCS-P, CCDS-O, CRC, CRCR, provides clear guideline-based strategies to accurately code sepsis, severe sepsis, and septic shock, assign POA indicators, clarify the relationship between infection and organ dysfunction, and align documentation across teams. Attendees will gain practical tools to strengthen audit defensibility, improve first-pass accuracy, support appeal success, reduce denials, and ensure accurate quality reporting, empowering organizations to achieve consistent, compliant sepsis coding outcomes.
Expert presenters Kathy Pride, RHIT, CPC, CCS-P, CPMA, and Brandi Russell, RHIA, CCS, COC, CPMA, break down complex fracture care coding rules, walk through correct modifier application (-25, -57, 54, 55), and clarify sequencing for initial and subsequent encounters. Attendees will gain the practical knowledge needed to submit clean claims, ensure compliance, and stay one step ahead of payer audits in 2026.
Accurately determining the principal diagnosis is critical for compliant billing, appropriate reimbursement, and valid quality reporting — yet it remains one of the most subjective and error-prone areas in inpatient coding. In this expert-led session, Cheryl Ericson, RN, MS, CCDS, CDIP, demystifies the complexities of principal diagnosis assignment, bridging the gap between coding rules and clinical reality. Learn how to strengthen your organization’s coding accuracy, reduce denials, and ensure your documentation supports true medical necessity.
Denials continue to delay reimbursement, increase administrative burden, and threaten financial stability across healthcare organizations. This essential webcast tackles the root causes—rising payer scrutiny, fragmented workflows, inconsistent documentation, and underused analytics—and offers proven, data-driven strategies to prevent and overturn denials. Attendees will gain practical tools to strengthen documentation and coding accuracy, engage clinicians effectively, and leverage predictive analytics and AI to identify risks before they impact revenue. Through real-world case examples and actionable guidance, this session empowers coding, CDI, and revenue cycle professionals to shift from reactive appeals to proactive denial prevention and revenue protection.
In this timely session, Stacey Shillito, CDIP, CPMA, CCS, CCS-P, CPEDC, COPC, breaks down the complexities of Medical Decision Making (MDM) documentation so providers can confidently capture the true complexity of their care. Attendees will learn practical, efficient strategies to ensure documentation aligns with current E/M guidelines, supports accurate coding, and reduces audit risk, all without adding to charting time.
Join Ronald Hirsch, MD, FACP, CHCQM for The PEPPER Returns – Risk and Opportunity at Your Fingertips, a practical webcast that demystifies the PEPPER and shows you how to turn complex claims data into actionable insights. Dr. Hirsch will explain how to interpret key measures, identify compliance risks, uncover missed revenue opportunities, and understand new updates in the PEPPER, all to help your organization stay ahead of audits and use this powerful data proactively.
Stay ahead of the 2026-2027 audit surge with “Top 10 Audit Targets for 2026-2027 for Hospitals & Physicians: Protect Your Revenue,” a high-impact webcast led by Michael Calahan, PA, MBA. This concise session gives hospitals and physicians clear insight into the most likely federal audit targets, such as E/M services, split/shared and critical care, observation and admissions, device credits, and Two-Midnight Rule changes, and shows how to tighten documentation, coding, and internal processes to reduce denials, recoupments, and penalties. Attendees walk away with practical best practices to protect revenue, strengthen compliance, and better prepare their teams for inevitable audits.
As AI reshapes healthcare compliance, the risk of biased outputs and opaque decision-making grows. This webcast, led by Frank Cohen, delivers a practical Four-Pillar Governance Framework—Transparency, Accountability, Fairness, and Explainability—to help you govern AI-driven claim auditing with confidence. Learn how to identify and mitigate bias, implement robust human oversight, and document defensible AI review processes that regulators and auditors will accept. Discover concrete remedies, from rotation protocols to uncertainty scoring, and actionable steps to evaluate vendors before contracts are signed. In a regulatory landscape that moves faster than ever, gain the tools to stay compliant, defend your processes, and reduce liability while maintaining operational effectiveness.
Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 1 with code CYBER25
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24
