Booz & Company report identifies possible $7.6 billion in annual savings from Government investment in e-health

Sydney, 6 May 2010 — A report released today by leading global management consultancy, Booz & Company, has revealed Government investment in a comprehensive e-health system may generate more than $7.6 billion in annual healthcare savings by 2020.

The Booz & Company report, Optimising E-Health Value, outlines a comprehensive case for national investment in e-health to better connect GPs, hospitals and other points of care, so as to improve sharing of patient information.

The report points to reduced errors in medication as offering the greatest potential for savings ($2.6 billion), followed by improved care programs and prevention measures ($2.3 billion). Adverse drug events from errors in medication are estimated to affect 10.4% of patients currently treated by GPs in Australia each year, of which half are classified as moderate to severe, 138,000 require hospitalisation, and as many as 18,000 may result in death according
to some sources.

Booz & Company says a comprehensive commitment to e-health could help Australia avoid an estimated 5,000 deaths, two million primary care and outpatient visits, 500,000 emergency department visits and 310,000 hospital admissions each year.

Report co-author and Sydney-based Booz & Company Principal, Klaus Boehncke, said the analysis demonstrated clearly the benefits from significant investment in e-health, and the need to build such investment in the health reform agenda.

“E-health is the crucial missing piece of the health reform jigsaw presently, and it must not be allowed to slip from view,” Mr Boehncke said.

“Indeed, the success of some of the Government’s reforms, particularly the local hospital networks and primary care networks, and reduced Emergency Department waiting times, depends largely on the connectivity that a robust e-health system provides,” he said.

The report was based on Booz & Company’s global experience advising Governments and health authorities in countries overseas including the United States, Canada, Germany, Italy, Singapore, Hong Kong and the UAE. The e-health model outlined in the report draws on Australian health data and has been adjusted to reflect the characteristics of Australia’s health system.

The report says existing e-health investment in Australia has been patchwork, limited and often focused on acute care. It calls for a shift in e-health focus from hospitals to networking primary care settings – GP clinics - where the volume of patient interaction is high and the potential for flow-on benefits are greatest.

“GPs are increasingly at the sharp end of providing integrated and chronic care, and their role becomes more important under the Government’s reforms, with their initial focus on diabetes. There is a real opportunity to reap powerful gains by putting them at the centre of the e-health push,” Mr Boehncke said.

“Australia’s GPs – 95% of whom use computers - are among the most highly computerised in the world. However, they are not well connected with each other, or with other points of care such as hospitals, so the valuable patient information they hold is not shared with other care providers or indeed among their own community,” he said.

“With a national e-health infrastructure in place, we estimate an investment in information networking of $3,000 per annum per GP clinic could deliver up to $668,000 in annual savings per clinic, mainly through prevention and avoidable hospitalisation. Up to $5 billion of the total savings from e-health investment in our model would come from improving connectivity and dissemination of information to and from GPs.”

Booz & Company’s analysis argues the case for Federal and State Governments to fund the information networking of GPs, as they would be the beneficiaries of the resulting savings. The firm estimates Governments would share in 68% ($5.2 billion) of annual savings accruing from a national e-health investment.

Other e-health benefits identified within the Booz & Company report include:

  • Better use of healthcare infrastructure
  • Less duplication of diagnostics such as lab tests and X-rays
  • Savings from optimised use of pharmaceuticals
  • Enhanced productivity among healthcare workers
  • Early warning from disease outbreaks

Based on current trends, the estimated total annual savings of $7.6 billion from e-health may represent 3% of total health expenditure. This figure does not include flow-on economic benefits to Australia, such as improved workforce productivity, which are estimated to be considerable.

Mr Boehncke said the health community was watching closely for signs from the Federal Government that it would commit to a significant investment in e-health.

“It did seem obvious that e-health would figure prominently in the reform agenda but there are now concerns it may have slipped off the table. That would be disappointing – there are good reasons why comparable countries overseas are investing heavily in this area, and the arguments for doing so here are irresistible,” he said.

About Booz & Company

Booz & Company is a leading global management consulting firm, helping the world’s top businesses, government ministries and organisations. With more than 3,300 people in 60 offices around the world, Booz & Company brings foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. Booz & Company works closely with clients to create and deliver essential advantage. For Booz & Company’s management magazine strategy+business, visit Visit to learn more about Booz & Company.