Ten blocks from the 705-bed Maimonides Medical Center, Senior Vice President and CIO Ann C. Sullivan has finished a $44 million technology transformation that in seven years has taken the hospital from punched cards to a sophisticated system of electronic medical records (EMR) and computerized physician order-entry (CPOE).

Today, every one of Maimonides’ doctors—not only its 277 employed physicians but also 978 community physicians with hospital privileges—log on to order medications and tests, check lab results, and track treatment. One in every five prescriptions is flagged by the system for a possible problem—an allergy or an adverse drug interaction. The average turnaround time for administering medicine to inpatients now has been cut from five hours to 90 minutes. Physicians receive all reports online from the radiology department within 24 hours (formerly, it was five days), and they no longer have to reorder tests for the estimated 15 percent of film records that used to get lost. Last year, revenue increased $50 million, and hospital officials attribute a fourth of that jump in revenue to the new IT systems. In addition, the annual cost of the hospital’s malpractice insurance just dropped $1 million, a savings largely credited to the new systems.

Advanced systems like these could reduce U.S. hospitalization costs by $2 billion a year. And if similar systems were used in doctors’ offices and clinics as well as hospitals, they could prevent thousands of deaths from medical errors and save the U.S. health-care system a whopping $44 billion each year—taking a significant bite out of the $1.4 trillion America annually spends on health care. Health-care costs, which in 2001 constituted 14 percent of the gross domestic product, continue to soar, slicing into business profits and exacerbating state and federal deficits. An increasing number of employers are cutting back on health coverage or offering none at all. The enormous efficiencies of electronic medicine could ameliorate this deepening crisis.

The good news is that this push toward paperless medicine seems inevitable. Insurance companies have begun rewarding physicians and hospitals for using IT to reduce errors. And a 2002 survey found that 46 percent of physician executives work for organizations that have invested in EMRs or plan to do so in the next year—more than double the number reported in 2001.