The Value of Personal Health Record (PHR) Systems

David Kaelber, MD, PhD1,2 and Eric C Pan, MD, MSc1,2

1
Center for Information Technology Leadership (CITL), Partners HealthCare System and
2
Harvard Medical School, Boston, MA

Abstract
Personal health records (PHRs) are a rapidly
growing area of health information technology
despite a lack of significant value-based assessment.
Here we present an assessment of the potential value
of PHR systems, looking at both costs and benefits.
We examine provider-tethered, payer-tethered, and
third-party PHRs, as well as idealized interoperable
PHRs. An analytical model was developed that
considered eight PHR application and infrastructure
functions. Our analysis projects the initial and
annual costs and annual benefits of PHRs to the
entire US over the next 10 years.
This PHR analysis shows that all forms of PHRs have
initial net negative value. However, at the end of 10
years, steady state annual net value ranging from
$13 billion to -$29 billion. Interoperable PHRs
provide the most value, followed by third-party PHRs
and payer-tethered PHRs also showing positive net
value. Provider-tethered PHRs constantly
demonstrating negative net value.
Introduction
Personal health records (PHRs) are gaining attention
in the US healthcare system. A large variety of
provider, payer, and third-party organizations,
including organizations not traditionally involved in
healthcare such as Google, are discussing,
developing, and in some cases bringing to market
various types of PHRs. These PHRs have a wide
range of diverse architectures and functions, ranging
from “stand-alone” PHRs that do not integrate with
any other systems to “tethered” PHRs that provide a
patient oriented view integrated with other electronic
health information1. There is also growing interest
and excitement on the part of patient and patient
organizations as to the potential for PHRs to improve
healthcare.
With this background, however, the actual
quantifiable value of PHRs has yet to be
demonstrated. No published reports on PHRs have
analyzed their value on a large scale or compared the
value of different types of PHRs. Here we present a
thorough value analysis of the potential value of
PHRs to the US.
Methods
To assess the value of PHRs the Center for
Information Technology Leadership (CITL) followed
a four-step value assessment methodology that we
have previously developed and used in several other
assessments of emerging health information
technologies2-5. This four-step process includes:
1. Technology definition and data collection
2. Taxonomy definition and evidence framework
3. Evidence synthesis
4. Model development
1. Technology Definition and Data Collection.
Although many definitions of PHRs exist, we used
the Markle Foundation PHR description:
“The Personal Health Record (PHR) is an Internet-
based set of tools that allows people to access and
coordinate their lifelong health information and
make appropriate parts of it available to those who
need it.” 6
We then completed a comprehensive literature review
looking at the impact of PHRs. We identified 22
words or phrases related to PHRs and searched
PubMed, Business Sources Complete, and ABI
/Inform which yielded 493 references. The
references were further reduced to 265 by limiting to
peer-reviewed references in English over the last 10
years (1997-2007). Abstracts were obtained on the
265 references and two researchers reviewed each
abstract and agreed upon 137 articles to be fully
abstracted based on the relevance of the abstract.
2. Taxonomy definition and evidence framework.
After the literature review, we developed a PHR
taxonomy and evidence framework to organize our
PHR value analysis.
Our PHR taxonomy is based on categorizing PHR
functions on the information needed and how it is
used within a PHR from the patient’s perspective.
CITL envisions PHRs operating as PHR systems6
encompassing both infrastructure functions, defined
as those functions that collect data and allow patients
and external parties to view it, and application

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functions, defined as functions that allow patients to
manage their own health and participate in two-way
data exchanges (transactions) with health entities.
Privacy and security features are also included in the
PHR system and “surround” both infrastructure and
application components.
Within in the PHR framework, which is described in
more detail elsewhere7, we envisioned four PHR
architectures, based on the primary source of data for
the PHR, including provider-tethered, payer-tethered,
third-party, and interoperable PHRs. Provider-
tethered and payer-tethered (both linked only to
healthcare data within their own organization’s
information systems), and third-party PHRs all exist
today, with interoperable PHRs representing a future
type of PHR based on robust standards for electronic
healthcare data exchange.
3. Evidence Synthesis. We used this PHR framework
to organize and integrate data from the literature and
experts to determine the value of PHRs. The
evidence pointed to value clusters – general areas
where PHRs have or could have value. From these
value clusters, we identified PHR functions with
potential value. We chose to model eight PHR
functions that demonstrate the potential effects of a
range of infrastructure and application functions, both
for administrative and clinical purposes (Table 1).
Within the PHR infrastructure, value was estimated
for sharing complete medication lists in a PHR
leading to a reduction in drug-drug interaction
adverse drug events (ADEs) and for sharing complete
test results in a PHR thereby avoiding of redundant
tests. Within PHR applications, value was estimated
for congestive heart failure (CHF) remote monitoring,
smoking cessation management, appointment
scheduling, pre-encounter questionnaires to collect
administrative information for new patient
encounters, medication renewals, and e-visits. The
impact of these functions derived from reducing both
administrative costs and healthcare utilization costs.
For our PHR benefit model, we recognize that a large
number of PHR functions could exist in future PHRs,
yet a very small number of existing PHR functions
have any proven value today.
PHR Benefit Function Type
Sharing Complete Medication Lists I
Sharing Complete Test Results I
Congestive Heart Failure (CHF) Remote A
Monitoring
Smoking Cessation Management A
Appointment Scheduling A
Medication Renewals A
Pre-encounter Questionnaires A
E-visits A
Table 1. Representative PHR benefit functions categorized by
application (A) functions or infrastructure (I) functions.
The eight benefit functions we choose to model based
on the existing PHR literature have different value
propositions based on PHR architecture (Table 2). In
general, the value proposition of a given benefit
function within a PHR architecture is dependent on
the data available within that PHR architecture and
the degree to which the PHR function allows
automated data processing through the PHR. For
example, with appointment scheduling, medication
renewals, and pre-encounter questionnaires, we
assumed that all PHR architectures would have secure
messaging and so could support these activities
through this tool. However, provider-tethered and
interoperable PHRs could automatically integrate
information from these secure messaging enabled
administrative functions into their non-PHR
scheduling, medication renewals, and pre-encounter
questionnaires systems because of the known data
structure standards in use in the provider-tethered and
interoperable systems. This facility for automated
processing of PHR data dramatically increases its
value. Third-party and payer-tethered PHRs with
these functions could only provide non-standardized
data that would still require some manual processing,
and so these functions in these architectures would be
less valuable.

4. Model Development: Next, we developed a

computer model to integrate all of our cost and
benefit evidence and extrapolate this information to
the national level. Because our literature review
yielded relatively little quantitative evidence
regarding PHR costs and benefits, we augmented our PHR Function PHR Architecture
Provider- Payer- Third- Inter-
literature derived model parameters with expert Tethered Tethered Party op.
opinion and related evidence from non-PHR sources. Sharing Complete Medication - - - ++
Lists3
Our model consisted of a PHR benefit model and a
Sharing Complete Test - - + ++
PHR cost model which were then combined to assess Results3
the net value of PHRs. CHF Remote Management2 + + + +
Smoking Cessation + + + +

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Management2 Table 3. Estimated number of unique PHR installations to cover
Appointment Scheduling1 ++ + + ++ 80% of the US population by PHR architecture.
Medication Renewals1 ++ + + ++
Pre-encounter Questionnaires1 ++ + + ++ Results
E-visits2 + + + +
Table 2. Relationship between PHR function and PHR Based on our PHR value model, the annual benefits
architecture (- no value model, + value through manual data of the PHR functions we modeled ranged from $9
processing, ++ value through automatic data processing).
1
Administrative, 2Clinical and 3Infrastructure functions.
million for complete medication lists to $7.9 billion
for complete test results (Table 4).
Clinical functions were either self-contained (CHF
PHR Function Annual Benefit by PHR Architecture
remote monitoring and smoking cessation) and ($, millions)
required manual processing, or required review and Provider- Payer- Third- Inter-
action by a provider (e-visits). Therefore, the value Tethered Tethered Party op.
Sharing Complete
proposition did not vary by PHR architecture because 0 0 0 9
Medication Lists
each architecture used data in the same way. For Sharing Complete
infrastructure benefits, we assumed automated 0 0 3,300 7,900
Test Results
processing of a complete medication list and CHF Remote
6,300 6,300 6,300 6,300
automated processing of complete test results only in Monitoring
Smoking
the interoperable PHR, with the ability to manually Cessation 1,040 1,040 1,040 1,040
check PHR data for possible redundant tests in the Management
third-party PHR. Appointment
170 71 71 170
Scheduling
For our PHR cost model, we determined a Medication
1,100 490 490 1,100
representative mean PHR application development Renewals
cost of $450,000 per application, including: Pre-encounter
72 18 18 82
Questionnaires
programmer costs to design, develop, build and test
E-visits 4,800 4,800 4,800 4,800
the application; management and support costs; and TOTAL 14,000 13,000 16,000 21,000
core knowledge management development costs. We Table 4. Annual potential benefits by PHR function.
also developed infrastructure cost models to build and
implement each of the four PHR architectures. These Application costs were less than infrastructure costs
infrastructure cost models were adapted from several and initial acquisition costs were greater than annual
sources8-10. All costs included initial acquisition costs costs both for single installations and for the 80%
as well as annual costs. Primary differences in costs roll-out (Table 5). When combining application and
came from differences in interface costs and typical infrastructure costs, third-party PHRs had the highest
costs to implement at scale given the architecture (i.e. initial and annual costs for a single PHR installation,
the typical number of patients that a single type of while provider-tethered PHRs had the highest initial
each PHR would be provided to). and annual costs to provide PHRs for 80% of the US
population.
For our national model, we determined the number of
PHR Total costs for Total costs for
installations for each of the four types of PHR
Architecture single installation 80% of US
architectures needed to cover 80% of the US ($, millions) ($, billions)
population (Table 3). Costs were projected over a I A I A
10-year period for installation, adoption, and use, Provider-Tethered 2.8 1.2 130 43
with a normalized three-year installation rate and, Payer-Tethered 2.7 2.1 4.7 2.0
Third-Party 6,600 1,600 21 4.9
five-year adoption rate. We assumed going from 0%
Interoperable 3.5 3.5 3.7 1.9
PHR use in the first year to full use by 80% of the US Table 5. Total initial (I) and annual (A) costs by PHR
population at end of year 10. All modeling was done architecture for single installation and 80% roll-out.
using Analytica – a decision science modeling
software package11. Details of our cost model are When we integrated the 10-year roll-out period into
described elsewhere12. our analysis, all PHRs demonstrated initial net
PHR Number of Installations to cover 80% negative value (Figure 1). The interoperable PHR
Architecture of the US population (#) had the earliest break-even point, by the end of 3
Provider-
26,478 provider organizations13,14 years, followed by the payer-tethered and third-party
Tethered PHRs by the end of year 4. Provider-tethered PHRs
Payer-Tethered 706 payers15
Third-Party 3 third-parties (Microsoft, Google, Dossia)
do not break-even point during the 10-year period.
Interoperable 428 regions2,13,16 Table 6 shows the steady state net value and the

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minimum number of patients per PHR installation to large number of provider and payer organizations that
obtain a steady state net positive value. must each install their own PHR. Therefore, on the
$40 national level, third-party PHRs have very good
$20 economies of scale, although on a per-installation
$0 basis are the most costly, because of the larger
number of people that a single third-party PHR is
Net Value (billions)

-$20

-$40
-$60
-$80
-$100
-$120
1 2 3 4
Provider-Tethered
Figure 1. Annual net value over 10-year roll-out period.
PHR Steady State
# of Users Per
Architecture Single PHR Net Value
($/yr, billion)
Installation to
Break Even
Provider-Tethered -29 59,000
Payer-Tethered 11 62,000
Third-Party 11 47,000,000
Interoperable 19 52,000
Table 6. Annual steady state value PHR by architecture.
Discussion
Our initial analysis presents the first assessment of the
potential economic value of PHRs to the US. It
demonstrates that although to implement any type of
PHR throughout the US will require between $4 and
$130 billion in initial capital and between $2 and $43
billion in annual support. These expenses, in most
cases, will be recouped by the projected $13 to $21
billion in annual potential benefit.
In the cost analysis, each PHR architecture has a
similar set of core components. Differences in PHR
architecture costs lie in user support and data storage,
which may vary for a single installation, due to
variable number of users, but at the national level are
equivalent since all PHR architectures serve the same
national population. Differences in costs also lie with
matching services, which are only required by third-
party and interoperable PHRs, as well as the number
of interfaces that are more numerous for these two
types of PHRs. These differences stem from the
assumption that these PHRs are not a source of
healthcare data themselves, but must interfaced with
primary data sources.
The third-party PHR has the highest single
installation cost primarily because of the need to
build numerous data interfaces to the multiple data
sources needed to populate this PHR with data.
However, the costs for a single installation are
superseded in a national PHR roll-out because of the
expected to be able to service.
This juxtaposition of the costs to build a single
instance of a PHR system and the costs to roll out
these systems nationally is also demonstrated through
the interoperable PHR. Because this PHR is built
5
Year
6 7 8 9 10
around the assumption of interoperability data
Payer-Tethered Third-Party Interoperable standards, the initial costs are much lower than third-
party PHRs because a relatively small number of
interfaces need to be developed and implemented to
obtain access to a wide range of data. Also, this PHR
is designed to take advantage of healthcare value
exchanges in local medical markets, and thus the
number of installations to cover the majority of the
US population is less than for provider-tethered and
payer-tethered PHRs. As with other analyses13, this
analysis clearly points to the significant value of data
standards for use with PHRs.
On the benefits side, even our eight PHR functions
demonstrate tremendous potential value, and PHRs
could have many more similar functions. There is a
trade-off between application functions that are used
more frequently and have a lower their impact per
use, such as appointment scheduling, versus functions
that may be use less frequently but have a higher
impact per use, such as CHF remote monitoring. Our
analysis also indicates that PHR infrastructure
functions themselves could provide up to 1/3 of the
value of PHRs and could by themselves cover many
of the initial and ongoing costs of PHRs over an
extended period.
E-visits, replacing face-to-face visits, have the
potential to address a wide range of chronic and acute
(non-emergent) healthcare issues, and therefore
represent a large area of potential PHR benefit in our
model. Because of the diversity of the care needs
addressed by this PHR function, significant benefits
might be realized using e-visits to replace face-to-face
visits. However, the value of e-visits is very
dependent on the costs associated with these visits.
In our model, we assumed the current standard: that
providers are not reimbursed for e-visits. We
recognize that to provide value, providers need to
offer e-visits, payers need to reimburse them, and the
e-visits themselves need to use the provider’s time
more efficiently and effectively. E-visits could also
provide value to patients and employers by
diminishing travel time and decreasing time lost from

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work. However, these are not direct costs to the
healthcare system and were not estimated in our
analysis.
Our model also illustrates the value of interoperability
between PHRs and EHRs. Appointment scheduling,
medication renewals, pre-appointment questionnaires,
and sharing of complete test results were modeled in
two ways. The first way modeled the data supporting
these functions being provided electronically but still
requiring manual processing. For example, a PHR
appointment scheduling function sending a secure
message to a provider’s office that then still needed to
be manually entered into the provider’s appointment
scheduling system. The second way envisioned data
from PHR functions that allowed for automatic
processing of the data from the PHR to the EHR,
analogous to how several on-line services allow for
direct scheduling of airline flights. Although the
initial costs of building to a data standard structure
are roughly the same as building to a unique, non-
standard data structure, the benefits of a totally
standardized and automated PHR function are
significantly greater than one that still requires some
degree of manual data processing because of a
unique, non-standard data structure.
One of the challenges we faced in modeling the value
of PHRs, which our model clearly demonstrates, was
to think of all of the constituencies involved in a
PHR. Our analysis helps identify costs and benefits
to payers and providers who currently bear direct
healthcare costs. We recognize that many others,
especially patients, but also employers and non-
healthcare related corporations, may derive
significant benefits from PHRs. Benefits may include
improved convenience, quality of care, safety,
communication, record keeping, and efficiency
through the use of PHRs. However, the evidence for
hard cost savings and value by these other groups,
including patients, has not been demonstrated, and
was not included in our model. Additionally, our 10-
year installation, adoption, and use estimate may be
overly optimistic and will vary by PHR architecture.
Conclusion
PHR systems, although costing billions of dollars to
implement and maintain, with even a small set of
functions, could provide significant net benefit to the
US healthcare system through many billions of
dollars in potential cost savings to the healthcare
system. Keys to achieving this value include
developing and adopting of standards electronic data
exchange among PHRs, design of business models
that align who is paying for and receiving the benefits
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from these systems, and deployment strategies that
maximize the number of users per PHR installation.
Acknowledgement
CITL's PHR project was funded through the
generosity of the Hewlett-Packard Development
Company, InterComponentWare AG, Kaiser
Permanente, and the Microsoft Corporation. In
addition, CITL is supported by unrestricted funding
from the Healthcare Information Management
Systems Society (HIMSS), the Hewlett-Packard
Development Company, InterSystems Corporation,
and Partners Healthcare.
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