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Health Information Network Costs More

Before a national health information network (NHIN) is built, a realistic estimate of costs is needed. That's what an expert panel was convened to do, according to a report published in the August 2 issue of the Annals of Internal Medicine. The report is based on expert estimates because primary data are not yet availble.

Assuming fixed prices for hardware and software, but no major new technological developments, the panel estimated that a model NHIN would require $156 billion in capital investment over five years and would incur $48 billion in annual operating costs. This capital investment is equivalent to two percent of annual health care spending for five years.

When reviewing the current spending data, the panel estimated that the health care system will spend $24 billion on system functionality, or only one-quarter of the cost for functionality proposed in the report.

The report said the hospital industry would bear $53 billion of the capital costs to implement such functions as electronic medical records, while physician practices would invest almost $50 million, mostly to achieve operability.

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