If your doctor pulls out a Palm Pilot instead of a prescription pad on your next visit, it may be that the region's largest health insurer helped pay for it.

Highmark Inc. yesterday said it would establish a $26.5 million fund called the Highmark ehealth Collaborative, to encourage doctors in Western Pennsylvania to invest in electronic tools for writing prescriptions and keeping patient records.

The idea is to add technology that lowers health care costs and reduces the medical errors that can arise from a doctor's indecipherable prescription orders, said Highmark's chief executive officer, Dr. Kenneth Melani.

The money will come from the more than $2 billion in financial reserves that Highmark has amassed from profits on its health insurance business. The effort will be overseen by the Pittsburgh Foundation.

Highmark declined to estimate the savings it believes the technology will yield.

But a report in September by the research firm Rand Corp. estimated that the U.S. health-care system could save $162 billion a year through the widespread use of health information technology such as e-prescriptions.

And the Leapfrog Group, a Washington-based information clearinghouse and advocacy organization established by large corporations that purchase health care, estimates that more than 1 million medication errors occur annually in hospitals, often because of illegible handwritten prescriptions.

The technology would allow physicians to view information about less expensive drugs while they are in the act of prescribing and to receive immediate feedback about adverse interactions their medication choices may cause with other prescriptions their patients already are taking.

Dr. Melani said the $26.5 million investment for the electronic prescriptions initiative made more sense than simply lowering insurance premiums because it would create savings that are "exponential and ongoing" compared with "one-time, small savings" that lower premiums would achieve.

Doctors seeking technology grants from the fund would be required to co-invest. The fund will pay 75 percent of costs for approved technologies, not to exceed $7,000 per physician.

Highmark estimated that the costs of setting up electronic prescription and patient record systems would run $9,000 per doctor. That would suggest the funding, which is not expected to be available until spring, would support technology installations for 4,000 to 6,000 physicians.

Insurers, health care researchers and others nationwide have been advocating greater investment in health care information technology not just to cut costs but to improve patient care and reductions in medical errors.

The health care industry has lagged others in making those investments. The Foundation for eHealth Initiative, for example, has estimated that the financial services sector invests 11 percent of revenues in information technology, while the health care industry invests only 2 percent.

Citing a study published in the public policy journal Health Affairs, Highmark said only 15 percent to 20 percent of physicians' offices have adopted electronic technology related to clinical decisions. Physicians have mainly used information technology in non-clinical activities, such as billing.

Dr. Tom Mattei, who heads the clinical, social and administrative sciences division of Duquesne University's School of Pharmacy, sees "pros and cons" in Highmark's plans.

Among the problems: Information technology can drive medical decisions, he said, in ways that produce short-term savings at the expense of long-term "outcomes" -- for example, choosing the least expensive medication to treat an illness may not be the best clinical or economic choice.

Highmark noted that doctors will be able to override alternatives presented by the technology.

Dr. Mattei also said that, depending on the technology chosen, electronic systems can introduce new kinds of errors in prescription orders while eliminating those associated with handwriting. A misplaced decimal point in a dosage is one example, he said.

Overall, however, research from hospitals that have implemented electronic prescription order entry systems suggests that the number of errors is reduced, Dr. Mattei added.