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Objective: To determine if recent growth in hospital and physician electronic health record (EHR) adoption and use is correlated with decreases in expenditures for elderly Medicare beneficiaries.

Data Sources: American Hospital Association (AHA) General Survey and Information Technology Supplement, Health Information Management Systems Society (HIMSS) Analytics survey, SK&A Information Services, and the Centers for Medicare & Medicaid Services (CMS) Chronic Conditions Data Warehouse Geographic Variation Database for 2010 through 2013.

Study Design: Fixed effects model comparing associations between hospital referral region (HRR) level measures of hospital and physician EHR penetration and annual Medicare expenditures for beneficiaries with one of four chronic conditions. Calculated hospital penetration rates as the percentage of Medicare discharges from hospitals that satisfied criteria analogous to Meaningful Use (MU) Stage 1 requirements and physician rates as the percentage of physicians using ambulatory care EHRs.

Principal Findings: An increase in the hospital penetration rate was associated with a small but statistically significant decrease in total Medicare and Medicare Part A acute care expenditures per beneficiary. An increase in physician EHR penetration was also associated with a significant decrease in total Medicare and Medicare Part A acute care expenditures per beneficiary as well as a decrease in Medicare Part B expenditures per beneficiary. For the study population, we estimate approximately $3.8 billion in savings related to hospital and physician EHR adoption during 2010–2013. We also found that an increase in physician EHR penetration was associated with an increase in lab test expenses.

Conclusions: Health care markets that had steeper increases in EHR penetration during 2010–2013 also had steeper decreases in total Medicare and acute care expenditures per beneficiary. Markets with greater increases in physician EHR had greater declines in Medicare Part B expenditures per beneficiary.