PCEHR to save $11.5 billion over 15 years: Deloitte

The Department of Health and Ageing has released a summary of economic modelling undertaken by Deloitte in 2010-2011 into the cost benefits of the PCEHR, showing the net direct benefits are expected to be worth approximately $11.5 billion over 15 years.

The figure was used by the Minister for Health, Tanya Plibersek, in a speech to the Committee for Economic Development of Australia (CEDA) on May 16. The report was prepared by Adam Powick, managing partner of consulting at Deloitte, who was also the lead author of the landmark 2008 National eHealth Strategy.

Mr Powick told Pulse+IT that the report was prepared in confidence and was not available to the public. While the report was written in 2010, the benefits are still valid from the launch date of July 1, 2012, he said. "What we have is a profile of benefits which is valid from whenever you decide is the starting point. The beginning of the implementation of the PCEHR is the beginning of that process."

Ms Plibersek said the government estimates that eHealth will save around $11 billion over 15 years. “That’s a long-term return of $11 billion for a government investment which includes around $465 million over the last two years, and another $233 million in the next two.

“However you look at it, that’s pretty good bang for your buck.”

In its summary, Deloitte said the $11.5 billion comprises approximately $9.5 billion in net direct benefits to Australian governments and $2 billion in net direct benefits to the private sector.

“The economic modelling considered both the benefits that accrue from the direct investment in the national PCEHR system as well as the benefits that accrue from investment by the broader health sector that is catalysed by the Commonwealth Government’s investment in the national PCEHR system,” the report states.

It found that the benefits would accrue from two key areas: reduced avoidable hospital admissions and GP visits due to the more effective medication management, and improved continuity of care.

Deloitte said it had developed two scenarios to come to its overall figure, one a base case investment scenario in which no national PCEHR system was built but taking into account other eHealth capabilities. The second was a cost-benefit model in which the PCEHR was built, taking into account the extra eHealth capabilities that Deloitte expects to be driven earlier by the PCEHR.

“By comparing the benefits that would be realised for different technologies in the PCEHR scenario with the Base Case scenario the analysis is able to identify the benefits associated with the national PCEHR system,” Deloitte said.

It said the economic impact assessment focused on identifying the incremental health and economic benefits that could be realised from the implementation of a national PCEHR system as distinct from the benefits of other eHealth investments occurring in the Australian landscape.

“These other eHealth investments include the core standards and eHealth foundational infrastructure being developed by NEHTA; investments that have already been proposed or implemented by Australian governments, such as the implementation of electronic medical records, ePrescribing, eDiagnostics and care plan capabilities; and investments that have already been proposed or implemented by commercial providers, such as commercially available ePrescribing solutions.”

While developing the modelling, Deloitte said it had made some assumptions of numbers taking up the new system, both in terms of healthcare providers and consumers. It said that with the scope of changes happening in eHealth, a nationally uniform rate of technology take-up is not expected.

“It is expected that there will be a faster rate of adoption and take-up within eHealth Site regions, and a slower rate of take-up in the rest of the country. It has also been assumed that there will be comparatively higher rates of take up by GPs, hospitals, pharmacies and aged care providers, with lower rates amongst specialists and allied health providers.”

In terms of consumers, Deloitte assumed that a percentage of consumers will never choose to register for a PCEHR, and that the rate of participation by consumers will lag the aggregate participation rate for healthcare providers.

Overall, Deloitte estimates that the benefit of reduced avoidable hospital admissions and GP visits due to more effective medication management will save $10.237 billion over 15 years, with improved continuity of care saving $1.308 billion, for a net community benefit of $11.545 billion.

Posted in Australian eHealth

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