U.S. Hospitals Waste $12 Billion Annually Because of Poor Communication
Biggest Losses Seen in Patient Delays and Unnecessary Stays
College Park, Md. – March 9, 2009 — Researchers from the University of Maryland’s
Robert H. Smith School of Business put a price tag on the cost of poor communication
in U.S. hospitals at $12 billion per year. The research, newly released from the
Center for Health Information and Decision Systems (CHIDS), is the first to quantify
the economic impact of a health care system rife with communication delays and failures.
Among key findings was unnecessarily long hospital stays – such as the time and
resources patients squandered waiting to be discharged – account for 54 percent
of total losses.
To put the $12 billion amount into perspective, the loss equals approximately
two percent of hospital revenue nationwide, a figure that is more than half of the
average hospital margin of 3.6 percent.
“Simply stated, the average hospital wastes a figure that is in substantial proportion
to the amount it makes,” said Ritu Agarwal, director of CHIDS at the Robert H. Smith
School of Business and the study’s lead researcher. “The industry ramifications
for recouping these losses – particularly in light of the need for health care reform
in improving patient access to care and services – are tremendous.”
In an article, Agarwal and CHIDS researchers say the solution to these inefficiencies
rests largely in investment in information technology that would help streamline
communication among hospital caregivers. Theirs is a timely observation following
the $787 billion economic stimulus bill recently signed into law by President Obama.
Of that, more than $140 billion is earmarked for health care, with $19 billion to
modernize health information technology systems. As part of his proposed $634 billion
budget to expand U.S. health care, Obama has also charged Congress to come up with
the means of making it available to 46 million Americans now without medical insurance.
“An infusion of IT investment in the U.S. health care system is sorely needed
as a step toward ensuring long-term sustainability,” said Agarwal. “This research
quantifies and supports what we’ve intuitively known for some time – information
technology is a critical component in creating the cost efficiencies that will enable
us to revamp and repair our beleaguered health care system – efficiencies that will
be passed along to the consumer to significantly improve patient quality of care
and access.”
Agarwal points to solutions that include location-based technology that would
help staff identify caregivers’ locations at all times and shared communication
systems that would allow nurses to identify an attending physician. These investments
would significantly reduce the amount of time and resources wasted identifying and
locating attending caregivers, as well as the likelihood of hospital error. She
also suggests telecommunications systems to facilitate remote consultations with
specialists, thereby reducing patient travel and waiting time. Future CHIDS papers
and studies will look at how process changes and applications of technology at the
hospital level can alleviate these inefficiencies.
In conducting the research, Agarwal, Kenyon Crowley, CHIDS assistant director,
and Jorge Diaz Schneider, CHIDS graduate research fellow, developed models for quantifying
the economic burden of poor communication between doctors and nurses in U.S. hospitals.
They conducted a comprehensive review of the literature and interviewed senior hospital
administrators and clinical staff from seven U.S. hospitals of different types and
sizes. Using this information, they were able to develop a scenario of possible
outcomes and create conceptual and quantitative models to estimate inefficiency.
While the situation at individual hospitals varies depending upon size and staffing,
they found that the typical 500-bed facility stands to recoup an astounding $4 million
with improved caregiver communication.
CHIDS’ research and mission is connected to issues currently under discussion
as critical to the nation’s economy and future. As an academic research center
with collaboration from industry and government affiliates, it is designed to
research, analyze and recommend solutions to challenges surrounding the
introduction and integration of information and decision technologies into the
health care system. CHIDS’ corporate members include: Cisco Systems, Inc.,
Johnson & Johnson and CNSI, Inc. More information, including the research
briefing “Quantifying the Economic Impact of Communication Inefficiencies in
U.S. Hospitals,” can be found at the center’s Web site.
About the University of
Maryland’s Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader
in management education and research. One of 13 colleges and schools at the
University of Maryland, College Park, the Smith School offers undergraduate,
full-time and part-time MBA, executive MBA, MS in business, PhD and executive
education programs, as well as outreach services to the corporate community. The
school offers its degree, custom and certification programs in learning
locations on three continents — North America, Europe and Asia.
