You probably remember the last time you bought a computer. And you probably know
exactly how much it cost you.
But the same probably can’t be said for when you got your last tetanus shot,
or how much your last medical procedure really cost.
According to health care industry experts and policy makers, Americans are
dangerously disconnected from vital information about their own health and
blind to the real costs of health care in the U.S., which has risen from 4
percent of GDP in 1950 to 16 percent today.
The costs are more than simple macroeconomic indicators; skyrocketing health
insurance premiums are often cited as the main reason businesses can’t
afford to give employees better wages.
The impact of this ignorance is even more
profound; more than 400 refugees from Hurricane Katrina arrived in Houston-area hospitals needing to continue their chemotherapy treatments, but
couldn’t tell health care providers about the current state of their
But that might change soon.
Employers, as well as state and federal agencies, are pushing a variety of
IT-based initiatives that may well begin having tangible effects within five
years. Those efforts are concentrated in two areas: data collection and
Networking the system
The health care industry has been widely credited with adopting advanced
clinical technology, but it is also criticized for very poor penetration levels
of management IT.
As an industry, health care spends between 2 percent and 4 percent of revenues on IT infrastructure, compared with 10 percent for the financial services
industry, according to Ron Paulus, CTO and innovation officer
for Geisinger Health System.
Geisinger has created a network that provides health care for 40 Pennsylvania counties,
making patient health records accessible at any affiliated hospitals and
Geisinger also collects data on 42 different medical processes and publishes
scorecards allowing patients to make informed decisions about their
The data collection also serves another critical purpose, which is to
promote better quality health care and, as a result, lower costs.
Paulus told internetnews.com that Geisinger is “looking to establish
best practice standards” in health care by getting commitments from its
affiliated doctors and hospitals to adhere to those standards 100 percent of
“We’re so confident about it that, if there are any complications requiring
readmission, we will not charge anything for that follow-up care… We’ve
seen some pretty remarkable increases in performance.”
However, Geisinger is in a fairly unique position as the major health care
facility for over 2 million people. Now, several states and the federal
government are trying to replicate this model through the creation of
networked regional health information organizations (RHIOs).
On Jan. 22, IBM (Quote) will report on a pilot project
funded by the Office of the National Coordinator for Health Information
Technology (ONCHIT) connecting a RHIO in upstate New York to a hospital in
Raleigh, N.C., and another smaller RHIO in rural North Carolina.
“The goal is to allow any authorized person to see patient data on any
patient in the system,” explained Joe Josenski, program director for health
care and life sciences at IBM Research.
The ONCHIT has funded three other similar pilots across the country. New
York is one of several states with its own health IT (HIT) program,
and has budgeted $1 billion to fund a variety of health information
In the private sector, IBM announced that it would invest $20 million in two
separate projects involving health care infrastructure.
IBM has also contributed over 160,000 lines of code to an open source
initiative for networking health care networking across the country.
Google (Quote) is also connected to health. It recently launched Google Co-op, which allows individuals to rate physicians and physicians to recommend trusted online sources of medical information.
Next page: The cost of performance
Pay for performance
Better-quality care through more accessible information is one of the
outcomes that policy-makers and experts expect from HIT. And better-quality
care is expected to reduce overall costs.
But drastically reducing costs is another goal of this effort and is
probably the one facing the most resistance from physicians, insurance
companies and hospitals alike.
Caregivers are often unwilling to be measured because, they say, health
care is not easily quantifiable and is influenced by factors outside their
control, such as poverty and genetics. Hospitals rarely disclose costs, and
insurers are unwilling to share payment schedules for competitive reasons.
But that, too, is starting to change.
New York, for instance, has begun publishing a report card measuring the performance of hospitals
and costs charged by insurers for certain procedures.
And a little-known provision in the year-end tax package passed by the 109th
Congress will require the Centers for Medicare and Medicaid Services (CMS)
to implement a pay-for-reporting system by July.
The system created by CMS will reward physicians who participate in
IT-supported data collection by making them eligible for a bonus of 1.5
percent of their total revenues from Medicare and Medicaid, according to
Christine Bechtel, director of government affairs for the American Health
According to Paulus, the CMS is also punishing hospitals that fail to
provide quality data by holding back annual cost adjustments. “People resist, but the fact is they adapt to it, and as systems get better, data reporting gets easier and better.”
The federal government has been leading the pay-for-performance charge. Health & Human Services secretary Mike Leavitt predicted that
within five years, “the word ‘value’ will be a standard part of the medical
He called on the nation’s largest employers to join him in putting pressure
on insurance and health care companies to make the industry’s finances more
transparent and quality-based.
Jaz-Michael King, senior director of corporate development at health care IT
organization IPRO, which developed the New York scorecard, explained
that government and employers are gaining negotiating power in pricing that
they never had before.
“They’re not looking for the cheapest, they’re looking for the best value,”
Congress has also made it easier for hospitals to subsidize purchases by
individual physicians who can’t afford to pay for IT systems on their own by
exempting those kinds of fiduciary arrangements from a law policing
But the health care industry will have several obstacles to overcome before
it can boast robust patient information networks and more cost-effective
Paulus said that one of the first lessons at Geisinger was that new
technology can introduce new kinds of errors if it’s not accompanied by a
He said Geisinger learned this the hard way when it implemented a new
in-patient pharmacy system before ironing out new workflows involving the
physician ordering system.
“Technology alone is not enough — workflow redesign has to go along with
it,” he said. He said research has shown that “mortality increased after
systems were implemented because of workflows and systems that people were
not prepared for.”
Another issue involves privacy. Currently, many networks still refuse to
share information with other health organizations because of conflicting
rules about handling special classes of information like mental health and
substance abuse and the form of patient consents. Some RHIOs, for instance,
require patients to explicitly opt in to their networks, while others require
them to opt out.
Ultimately, however, there seems to be real momentum for change and many
opportunities for systems vendors.