Australia's great e-health vision continues to stall with new research showing that greater use of ICT in the health sector could generate savings worth more than $1.5 billion per annum.

The research sets out the cost of a health care system that operates in disconnected silos pointing out that the bulk of ICT investment has been directed at the development of large, closed monolithic systems.

Released by the Australian Centre for Health Research, the report strongly supports the introduction of online information sharing and an e-health network to transform the health care sector.

The report's author, Monash University professor, Michael Georgeff, said today providers operate in disconnected silos that hinder continuity of care.

"The business model we use in health is based on an industrial enterprise where the focus is often on the management of physical resources with very little attention to the management of knowledge," he said.

"In business, high priority communications is handled electronically but in health care it is pen and paper delivered by hand.

"No less than 25 percent of all Australians suffer from a chronic illness and nearly every one of them would be better off with improved knowledge sharing and more effective management of patients."

For example, Georgeff said over 50 percent of doctors do not follow best practice guidelines and up to 50 percent of patients with chronic diseas are hospitalised because of inadequate care management.

Moreover, home monitoring of patients can reduce emergency room visits by up to 40 percent, hospital admissions by 60 percent and length of hospitalisation by up to 60 percent.

"Instead of the industrial model we need a knowledge enterprise model, the kind that is typical of Google, Amazon and eBay," Georgeff said.

"The knowledge enterprise is characterized by networked information, support for autonomy and personalisation, and the use of systems that are open, adaptive and distributed.

"But not many are thinking this way in healthcare. We are still planning, standardizing and buying the big systems. These kinds of healthcare systems currently being rolled out in the UK require massive investment - up to 10 percent of annual health care expenditure."

Georgeff said some states are moving to mandate a limited number of "authorised applications" rather than setting up the infrastructure that would allow for a multitude of interoperable systems.

"It is difficult to think of anything more likely to kill innovation or more antagonistic to the Internet revolution than the restriction of an entire industry to a limited number of standard software applications," he said.

Georgeff said the 'electronic health record' is universally seen as the key to better knowledge sharing in health care.

"But it is the connectivity of the players that is the key. Without it, without the connectivity to populate and to access health data - health care will remain a world of disconnected silos of information," he said.