U.S. hospitals waste $12B annually due to poor communication

Researchers from the University of Maryland's Robert H. Smith School of Business say poor communication in U.S. hospitals has cost the nation $12 billion a year.

The loss equals approximately 2 percent of hospital revenues nationwide, a figure that is more than half of the average hospital margin of 3.6 percent.

The research, by the Center for Health Information and Decision Systems, indicates that unnecessarily long hospital stays – such as the time and resources patients squander waiting to be discharged – account for 54 percent of total losses.

"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 healthcare reform in improving patient access to care and services – are tremendous."

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.

More than $140 billion of the $787 billion economic stimulus bill recently signed into law by President Barack Obama is earmarked for healthcare, with $19 billion set aside to modernize health information technology systems.

"An infusion of IT investment in the U.S. healthcare 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 healthcare 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. 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.

While the situation at individual hospitals varies depending upon size and staffing, researchers found that the typical 500-bed facility stands to recoup $4 million with improved caregiver communication.