34 billion euros: that is the savings potential from digitizing healthcare calculated by McKinsey & Company in their study entitled "Digitization in German Hospitals". The largest item, standing at more than €16 billion, is allotted to hospitals – a standardized Electronic Patient Record alone could save €6.4 billion. Yet these figures are as thought-provoking as the most important reason for the digitization deficit given by those surveyed: the lack of compatibility and interoperability of IT systems.
Digitization in Hospitals
The dilemma of managers in hospitals is reflected by the fact that this point was named ahead of inadequate funding opportunities and the lack of standardization of processes. The will to digitize is there, but questions about the correct technology and strategy remain unanswered. There are a few reasons for this, with the most important one being the boom in a more proprietary, monolithic system that has been shaping the IT landscape in hospitals for a long time and was pushed ahead by parts of the sector. Other causes may lie in the delayed, hesitant, and highly selective implementation of the telematics infrastructure. If neither hospitals nor system providers know what, when or how it is to be implemented, it makes it rather difficult to plan and implement a long-term digitization strategy.
How Far German Hospitals Have Come with Going Digital
Whatever reasons individual hospitals like to give, the fact is that the Healthcare sector is lagging far behind other sectors in terms of technological options and actual needs. "This fact was the one which confused us the most and was the reason for the study. Despite a real financial pressure and technologies being available, the healthcare sector is using digitization as leverage for greater efficiency and quality far less than other sectors. From an economic point of view, that really makes no sense," says Dr. Manuel Möller, partner at McKinsey & Company and coauthor of the study, describing the consultants’ motivation. In the search for reasons for this discrepancy, on the one hand executives, physicians and commercial directors at German clinics of various sponsorships were surveyed about the status of digitization in their hospitals. On the other hand, more than 500 scientific studies were evaluated to find out how large the savings potential might be and where it is hiding.
"To arrive at a savings potential of €34 billion, McKinsey evaluated at least 500 scientific studies".
Dr. Manuel Möller
Partner at McKinsey & Company and coauthor of the study "Digitization in German Hospitals"
"The first insight was that the degree of digitization is a question of the size of the institution. Larger units such as hospital chains are already exploiting the digitization lever more strongly and are profiting from partial effects", states Manuel Möller. Overall, the following picture emerges regarding the digitization in German hospitals: the highest degree of digitization occurs when drawing up service and shift schedules and ordering food. Areas such as digital patient records, asking for a second opinion, or medication prescription and planning are ranked middle and bottom.
The Greatest Savings Potential Lies in Switching from Paper-Based to Digital Data
"From a financial point of view, these aspects are the most interesting. That's because the switch from paper-based to digital data – which includes digital records, e-prescriptions, and hospital internal communications – is accompanied by a savings potential of about €9 billion. After all, that is 26 percent of the total sum of €34 billion for the entire healthcare market". Add to that about another €6 billion resulting from increased transparency and better benchmarking opportunities. In practice, this means that if data is available then performance becomes transparent – which automatically has an impact on quality. In addition, data allows you to draw conclusions, recognize patterns and thus deliver solutions for better medical care. The McKinsey consultant cites a neat example of this: “In the USA, HIS manufacturers possess thousands of long-term data taken from patient records. They can use these to determine the angle at which the hospital bed should be positioned in order to optimally position a patient with a lung infection. Insights such as these make their way back into the HIS as treatment recommendations, resulting in a reduced number of days for lung patients to lie in bed”.
Time and Technology Are Ready for the Big Move
Such granular results are unable to flow freely into German IT systems due to restrictive data protection regulations. Despite this, we can do an enormous amount to make it easier to benefit from the financial and qualitative advantages of digital data. On the one hand, health insurance companies must provide Electronic Patient Records from 2021 onwards (section 291a book V German Social Insurance Code). The components of these records are specified by the gematik – which promises a certain reliability. On the other hand, there are already suitable IT systems that permit the consolidation of medical data based on standards, thereby creating the foundation for digital patient records – independently of the technical specifications and enabling the necessary interoperability to be produced in practice. The prerequisites are therefore good for shining a light into the data jungle and establishing digitization as an economic factor in healthcare.
This Is How €34 Billion Come Together
To arrive at a savings potential of €34 billion, McKinsey evaluated at least 500 scientific studies dealing with the financial advantages of certain digital technologies. These included, for example, studies looking at time savings gained by care staff able to use comprehensive electronic patient records. Or studies, which assessed the impact of electronic prescriptions on hospitalization rates. The results of the evaluations were adjusted to fit the German healthcare situation, to take account, for example, of German Radiological Society (DRG) fees and to adjust the data to remove the effects of double-counting. You can find the complete study in the publications area of McKinsey's website (German Language).
Here you can find additional articles of the story "Escape the Data Jungle".