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Understanding the Costs and Benefits of Health Information Technology in Nursing Homes and Home Health Agencies: Case Study Findings

Publication Date
May 31, 2009

U.S. Department of Health and Human Services

Understanding the Costs and Benefits of Health Information Technology in Nursing Homes and Home Health Agencies: Case Study Findings

Executive Summary

Andrew Kramer, MD, Angela A. Richard, MS, RN, Anne Epstein, PhD, Dennis Winn, MA, BSN, RN, and Karis May

University of Colorado, Denver
Division of Health Care Policy and Research

June 2009

This report was prepared under contract#HHS-100-03-0028 between U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the University of Colorado. For additional information about this subject, you can visit the DALTCP home page at or contact the ASPE Project Officer, Jennie Harvell, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. Her e-mail address is:

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.

One of the major cited barriers to adopting health information technology (HIT) in long-term care is a lack of information on the benefits and costs of HIT in nursing homes and home health agencies (HHAs). While rigorous cost and benefit studies of information technology are limited in health care as a whole, establishing a business case for HIT in long-term care has become a priority in order to stimulate adoption of information technology applications that go beyond supporting administrative functions and federal data requirements. Several completed and ongoing multi-site studies in nursing homes and HHAs have demonstrated selective benefits of HIT in long-term care.


The eight sites for this study were selected from a larger group of purposefully selected providers that had a reputation for advanced HIT systems. Site selection was based on their self-reported level of HIT implementation, using a screening survey that utilized a previously-developed taxonomy of HIT functions. The minimum criteria for inclusion were the use of HIT functionality that included administrative functions and some form of electronic health record (EHR), with one or more of the following types of functions: quality reporting and decision-support tools, medication administration and e-prescribing, and/or health information exchange (HIE) and secure messaging capability. The five nursing homes and four HHAs (at one site two nursing homes were visited) included providers that were and were not affiliated with other long-term care settings, hospitals, physician offices, and retirement settings. They varied in terms of system design (e.g., web-based vs. software that was resident on local hardware), development (private vs. vendor designed), and functionality. Site visits involved structured interviews with administrative, financial, and a full range of clinical staff that assessed the specific benefits and costs associated with each functionality included in the taxonomy.


The single most frequently-cited benefit for both the nursing home and home health staff was anytime and anywhere access to health information afforded by an EHR. This access to electronic records was sharply contrasted to locating and retrieving the single copy of the resident’s paper chart, which may be in use by another individual, requiring not only the time to find and retrieve the record but also delays in waiting for the record to become available. Numerous examples were given of the advantages of being able to immediately access the chart in a nursing home when receiving a call from the family or the physician. In HHAs, the time savings and care coordination benefits were clearly substantial with various clinicians at multiple locations needing to review or make an entry into the record. A major benefit cited was access to health records from remote locations, which enabled remote providers such as physicians to review charts, make clinical decisions, authorize orders, and perform other tasks in a timely manner without traveling to the facility/agency.

A second benefit that was articulated at most all the sites was greater efficiency in meeting administrative and federal requirements in long-term care. With complexities related to determining eligibility for coverage, case mix reimbursement, and the numerous federal, state, and insurance carrier requirements in long-term care, administrative systems that were integrated with clinical information in EHRs yielded substantial benefits to providers. Bills were automatically generated from clinical information entered into the EHR leading to shorter billing cycles. Information used for payment was reported to be more accurate with automated edit checks, and ensured that services that were provided were billed and that billed services were provided. Minimum Data Set and Outcome and Assessment Information Set data were reported to be more accurate. Administrative staff could be more efficient and accurate, as they did not need to enter information that could be automatically pulled from the EHR. Claims denials and resubmissions were reduced. Most providers reported reductions in administrative staffing because of accrued time savings.

A third benefit that was universal, while not fully realized in most sites, was improved quality management through reports, alerts, and decision-support tools. Electronic reports to routinely track status, alerts that identified specific residents/clients with a more immediate concern, dashboards that required an action before logging out, and automated risk tracking were the basis for numerous examples of early intervention to prevent problems like falls, weight decline, skin breakdown, and hospitalization. The availability of quality information required an informed user to review reports on a systematic and regular basis, which often was difficult for nursing homes and HHAs to achieve. Many sites were discovering how to manage all the information that they were able to generate through now-available quality management systems. For the potential of HIT to be realized with regard to improved quality management, personnel must be allocated and trained in generating and using reports and the HIT systems to support these efforts require continued refinement.

Finally, HIE between providers was a large benefit in the few cases where sites had the capability. Data exchange with physicians for order review and approval minimized duplicate data entry, and data exchange with hospitals facilitated patient admission and transfer processes. To fully benefit from HIT in long-term care, interoperable systems that allow for HIE are an essential step to achieving care coordination and effective transitions across settings.

While these benefits exist in almost any health care setting, in long-term care they may be particularly pronounced. Long-term care is provided by interdisciplinary teams of clinicians that all have to share the same record in order to coordinate services. In home health care, both the patients and the care team are geographically dispersed, which is also the case for some members of the nursing home care team that work on a contractual basis. Physicians, an integral member of the team, are almost always remote from a nursing home or HHA and often need to review information to make clinical decisions and write orders. In addition, the patients are often frail and less able to advocate for themselves.

The following are enumerated benefits of HIT implementation reported by the nursing homes and HHAs included in this case study.


On the cost side, sites described large financial outlays for servers and back-up systems, although the costs varied widely depending on the storage size and processing speed. An advantage of using a web-based system was that data were stored and backed up on the vendor’s server, thus it was not necessary for providers to directly purchase and maintain a large server. Hardware and software costs varied considerably depending on the systems purchased, bundling of applications vs. individually purchased applications, organization size, and individual vendor negotiations. Labor costs included needs for information systems staff that varied greatly, and clinician time for system and workflow re-design, as well as time to learn the system and how to manage and use the health information that was made available through the use of HIT. Maintaining duplicate paper systems in whole or in part was a cost at some sites, while other sites were paperless.


This study adds to the growing body of literature through case studies reporting benefits and costs/burdens in eight sites with advanced HIT systems. While all eight of the case study sites noted that they would “never go back” to paper-based systems for administration and clinical service delivery, no site had conducted a rigorous cost-benefit analysis of their HIT systems. Thus, the case studies necessarily focused on the costs and benefits reported by system users and managers. Respondents cited numerous examples of system benefits and rated their magnitude, as well as identified the types of increased costs and burdens resulting from HIT implementation.

The qualitative findings from the site visits may have implications for recent policy initiatives. The newly enacted American Recovery and Reinvestment Act (ARRA) included many provisions to accelerate adoption of HIT across health care providers, including nursing homes, HHAs, and other long-term care facilities. One provision of ARRA requires the Department of Health and Human Services to study the extent to which payment incentives should be made available to health care providers, such as nursing homes and HHAs, which are receiving minimal or no payment incentives for purposes of implementing certified EHR technology. The study has direct bearing on this provision in that it demonstrates some of the potential benefits of HIT in these settings that would be realized through incentives for EHR adoption.

Empirical studies that quantify benefits and costs have an important place in expanding our knowledge base so that we can emphasize functions that offer the greatest value. However, compelling qualitative evidence from this study and others on benefits of HIT provides ample rationale for why nursing homes and HHAs should move forward with HIT adoption. Failing to support and accelerate widespread HIT adoption in nursing homes and HHAs while awaiting large-scale empirical studies would be a disservice to the many beneficiaries and staff in long-term care settings who would benefit from improvements in quality of care and more efficient service delivery that were reported by the respondents in this case study.

The Full Report is also available from the DALTCP website ( or directly at