^{Posted on July 21, 2004}

A private health care information technology system

Health and Human Services
July 21, 2004
The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care
By David J. Brailer, MD, PhD, National Coordinator for Health Information Technology

Conclusion

Health information technology provides a mechanism for refocusing care delivery around consumers without substantial regulation and industry upheaval. Information technology can result in better care (care that is higher in quality, safer, and more consumer responsive) and at the same time, more efficient (care that is appropriate, available, and less wasteful). There are very few other alternatives that can achieve both of these goals in a balanced and timely manner.

A national strategy for HIT is needed to achieve this change. This strategy should inform clinical care by introducing EHRs on a widespread basis everywhere clinicians provide treatment. It should interconnect clinicians to allow them to share data in a seamless and secure manner that protects patient privacy. It should customize health information and care so that consumers can have more control, more treatment options, and more choice of providers, including clinicians who may be at a distance. It also should improve population health by monitoring health care delivery in a simple and timely fashion so that quality, public health risks, and clinical research can be enhanced.

The changes that will accompany the application of information technology to health care will be difficult and will challenge fundamental assumptions that have been long held. However, this change is inevitable, needed, and beneficial. Actions can and should be taken to ensure that this change happens sooner rather than later, is more widespread rather than less, and also improves health care quality while addressing health care costs. The actions that are taken over the next decade will ensure that the best health care can be delivered to Americans, and that lasting and positive change in the health care industry will result.

And from the report:

Public-Private Leadership

Low adoption and use of HIT are attributable to many factors, including a
challenging marketplace and a previous lack of cohesive federal policies supporting it. Leaders across the public and private sector recognize that the adoption and effective use of HIT require a joint effort between federal, state, and local government and the private sector.

The private sector role

While the federal government plays an important role in HIT adoption, the effective use of, and value creation from, this technology lies predominantly with the private sector. The federal government will provide a vision and a strategic direction for a national interoperable health care system, but will rely on a competitive technology industry, privately operated support services, and shared investments in HIT adoption. The private sector must develop the market institutions to deliver the products and services that can transform the paper-based health care system into an electronic, consumer-centered, and quality-based system. The private sector can best ensure that HIT products are successfully implemented in ways that meet the varying needs of American health care across settings, cultures, and geographies. The private sector can also continue constant innovation in HIT and ensure that products are delivered on an affordable basis.

Federal and state governments have delegated most components of quality assurance to voluntary private organizations, including but not limited, to the JCAHO, NCQA, the National Quality Forum, residency review committees, and others. This will be true of quality and performance accountability in the future world of HIT. New market institutions need to be developed that can support clinician adoption of HIT, provide interoperability, and enhance the value realized by these investments. Close collaboration between public and private sectors can develop new methods for improving care without creating unnecessary regulation and minimizing reporting burdens on private industry.

The federal role

The federal government has substantial cause for addressing HIT adoption. Although the public is only now becoming aware of errors and mistreatments
in care delivery, the incidence and severity of errors has been known by researchers for some time. The health status of Americans is lower than it
would be if care were seamless, timely, and evidence driven. Health care
inefficiency and quality problems create economic burdens on other industries. When working Americans spend large shares of their time moving between physicians, dealing with the morbidity of improperly treated chronic illness, handling care burdens for their elderly parents, and recovering from errors and unnecessary therapies, the productivity of the American labor force, and America’s position as a global output leader, is harmed.

The federal government has numerous means of stimulating change in the health care industry, even if most of that change occurs in the private sector. While the federal government should not seek to reform health care without industry collaboration through the use of information technology, neither should it let the status quo exist simply because change will be difficult, complicated, and challenging to the industry. The DoD and VA are major federal health care delivery organizations and, increasingly, contractors for care in communities across the United States. The lessons these organizations have learned about HIT are an invaluable national asset and should be diffused through relationships with private delivery networks. Also, the Federal Employees Health Benefits Program (FEHB) contracts for care in most urban markets across the United States, and can drive positive economic change in general care delivery. Beyond finance and
contracting, the current operation of the health care industry results from a vast
patchwork of federal regulations that create many unintended inhibitory consequences for quality and efficiency.

The full report (178 pages):
http://www.hhs.gov/onchit/framework/hitframework.pdf

Press release:
http://www.hhs.gov/news/press/2004pres/20040721a.html

Comment: The private, competitive market has produced for us computers that are powerful yet inexpensive. Software that is used widely is quite inexpensive, and that in the public domain is essentially free after the initial development costs. With inexpensive computers and software developed in the public domain, the cost of an integrated health care IT (information technology) system should be quite modest. And the return in error reduction and administrative efficiency would far more than offset any real costs.

The Veterans Administration is far ahead of the rest of the nation in developing and utilizing an integrated IT system. And this has been developed in the public (government!) sector. Many other nations with universal health care systems have also introduced integrated IT systems primarily through the public sector.

What has the magic of the competitive marketplace produced in the way of an
integrated IT system to this date? High costs, very poor penetration, and system failures! Competitive market theory dictates that we should be leading the world with a high quality health care IT system at a low cost. What went wrong?

First of all, a fragmented system of multiple private plans, public programs and uninsurance does not provide an infrastructure that is very conducive to an integrated IT system. A single payer system, or, at minimum, a highly regulated system of universal coverage through multiple plans, would provide a framework that would ensure adaptability of an integrated IT system. Of course, a single, publicly administered system would be much preferred for an integrated IT system.

But the greatest difficulty with private IT solutions lies in the very nature of these marketplace models. Their goals are, above all, to maximize profits and to maximize the market price of their shares. To achieve those goals, corporate behavior varies from that of a public entity that has a simpler goal of establishing an effective and efficient high quality system that serves the heath care system and its patients well. The public system does not have to be concerned about being a successful business enterprise, but the private model does.

What might the private sector do that doesn’t serve our interests well? They will produce products that command the highest prices that the market will bear. They will design the products to provide a continuing revenue stream. Once gaining a significant share of the market, they will design incompatibility with other systems in an attempt to garner the entire market. They will design obsolescence into their systems to ensure future markets for their new innovative products. They will partner with and perhaps acquire other related entities that can expand profit potentials through greater control of components of the health care system which their products can influence. Although these are good business practices, they are terrible policies for our health care system.

But without market incentives, wouldn’t innovation be suppressed? We have market innovations now, and they have not resulted in the IT developments
that we desperately need. Public innovations have been effective in developing systems in other nations and in the VA that are already working. If private entrepreneurs can develop innovations that could benefit a public system, there is no reason that they couldn’t be sold to the government to place in the public domain. But they should be priced to reflect costs plus a fair one-time profit. We really don’t need more superfluous profit centers in our health care system.

The health information technology report released today should alarm us all.
Although we all agree on the importance of an integrated IT system, the Bush
administration is limiting the role of the government to being an enabler that encourages the private sector to develop a successful business model. Rather than higher quality at a lower cost, we’ll end up with mediocrity at a much higher cost, wasting even more of our health care dollars.

We desperately need strong leadership from our government in developing a
health care IT system that will serve us all well. But based on the current leadership that has failed to address even the fundamental issue of adequate
health care coverage for all, it is unlikely that we’ll see any enlightened leadership on this in the near future. But that said, “Watch this swing!”