Perspectives on Health Reform January 2009 The Federal Role in Promoting Health Information Technology Modern health care systems need health information technology (HIT), including electronic health record systems, to perform to their full potential. Getting doctors and hospitals to adopt HIT, however, will require overcoming a host of financial, By David technical, and logistical obstacles. Through the power of policymaking, there are a Blumenthal, number of actions the federal government can take to ease providers’ fears and help M.D. pave the way. U.S. health care providers make minimal use of health information technology (HIT), especially compared with other health systems in the industrialized world. Right now, for example, about 17 percent of U.S. physicians and perhaps 8 per- cent to 10 percent of U.S. hospitals have at least a basic electronic health record (EHR) system. In most European countries, as well as in New Zealand and Australia, 80 percent to 100 percent of primary care physicians have EHRs (although adoption rates for specialists and hospitals are far lower). Virtually every developed country has made a national commitment to increasing use of EHRs by their clinicians. In the United States, there is widespread agreement that wiring the health care system is fundamental to enhancing quality and containing cost—and thus improving overall system efficiency. There is also increasing agreement that the federal government has a role to play in realizing the potential of HIT. What fol- lows is a brief review of the critical challenges facing federal policymakers, an outline of policy options, and a discussion of the continuing controversies sur- rounding the push for expanded adoption of HIT. To download this publication and learn about others as they become available, visit us online at www.commonwealthfund.org and register to receive Fund e-Alerts. Commonwealth Fund pub. 1230 Vol. 2 2 T he  C ommonwealth F und Critical Policy Challenges forget that flu shot,’ or ‘it’s time for a mammogram’). To increase the effective use of electronic health sys- But decision support can do even more. It can let a tems, private and public agencies and groups must doctor know which diabetics need to increase their accomplish, at a minimum, the following tasks: insulin or get their eyes checked, or tell a doctor how to adjust drug dosages in special situations (for 1. Get doctors, hospitals, and other health care patients with kidney failure, or patients on anticoagu- providers to acquire and use electronic lants) that require nonstandard dosing or frequent dos- health records. age changes. 2. Get those electronic health records to “talk Unfortunately, many existing commercial soft- to one another” by becoming interoperable. ware systems lack such capabilities. And even when systems have them, doctors still need help learning 3. Get providers to use EHRs to improve how to use various functions. Unless the systems pro- quality and efficiency in the provision of viders buy have all necessary capabilities, and unless health care services. clinicians are motivated and able to use them, a nation- wide effort to promote HIT could be doomed. Convincing doctors and hospitals to adopt HIT requires overcoming financial, technical, and logistical obstacles. Doctors and hospitals are unsure they will What Can Government Do? realize any financial gains from EHRs, and the sys- To see what the federal government’s options are, it is tems are expensive: about $40,000 per physician, and helpful to divide up the problems and their solutions. roughly $5 million to $10 million for the typical, aver- age-sized hospital. Providers are also afraid they might 1. Stimulating adoption of electronic health records. pick the wrong system—one that is outdated or clunky. As noted, the barriers to adoption are financial, techni- And they often lack the trained personnel and know- cal, and logistic. Federal funding—especially for how to support and maintain HIT. financially weak or troubled providers such as solo The obstacles to making systems interoperable physicians, community health centers, safety-net hos- are more fundamental. Though sharing information is pitals, and critical-access hospitals—could help over- good for patients and for the health system as a whole, come these obstacles. Support could take the form of doctors and hospitals don’t themselves gain much by Medicare and Medicaid incentives (extra payments sharing health information with other providers: for adopters) or grants and loans made directly by the indeed, they are afraid they will lose patients by mak- federal government or channeled through state- or ing it easier to move among the competing clinicians community-level organizations. in a community. Therefore, from the perspective of Many experts prefer the idea of using grants providers, there appears to be no business case for and loans and creating state or local HIT-support orga- exchanging health information—it is a public good. nizations, because this approach may help address Still another major challenge faces government technical and logistical problems. Community-based and private advocates of HIT: It is one thing to get a groups or HIT agencies could organize “geek squads” computerized workstation onto a doctor’s desk, but it to help doctors and hospitals implement and maintain is quite another to ensure that the computing capability their systems. They could also provide training to help and software make the providers smarter, more effi- providers make use of the quality and efficiency cient, higher-quality clinicians. The payoff from HIT improvement functions of the records. Under this sce- comes from what is called computerized decision sup- nario, the federal government could invite states or port, which, in its simplest form, reminds clinicians to local communities to submit applications that would get needed tests or provide certain treatments (‘don’t be reviewed and approved on a competitive basis. P erspectives on H ealth R eform : T he F ederal R ole in P romoting H ealth I nformation Technology 3 For some fearful doctors and hospitals, 3. Creating incentives to use EHRs to improve quality however, no amount of support or funding may be and efficiency. sufficient to spur adoption in a timely manner. It may Even supporters of HIT have one overriding fear: that be necessary, therefore, to make receipt of Medicare the nation will invest billions of taxpayer dollars in payment conditional on adoption of EHRs—or, less EHRs and data exchange, and nothing will happen— drastically, to reduce payments for providers without the nation’s health will not improve, costs will not go them. Finally, to prevent physicians from buying down, public satisfaction will not increase. How might substandard EHRs that lack the capability to perform this occur? The great dangers are that providers will essential functions, a federally chartered group could acquire EHRs, but those EHRs will not have the com- review and certify records to ensure that physicians puterized decision support that makes them effective. and hospitals know they were getting their money’s Or they may have the necessary capabilities, but pro- worth. The Bush administration created such an entity, viders won’t know how, or be motivated, to use them. the Certification Commission for Healthcare To avoid this, at least three things must happen. Information Technology, which is a private sector First, the vendors of records must produce user-friendly group working on contract with the federal systems that have the ability to improve provider perfor- government. Its track record and support will clearly mance; federal certification would help in this regard. be important policy issues for the Obama Second, providers will need a lot of hand-holding, administration and the new Congress. through the “geek squads” mentioned above and other means. Third, and perhaps most important, the health 2. Stimulating interoperability. care system will have to reward—or force—providers Because of the public-good nature of health informa- to improve their performance, so that they will be tion exchange, many experts believe that governmental motivated to buy capable systems, get the help they support will be necessary to create and sustain mecha- need, and use the systems to their full capacity. Changes nisms for EHR interoperability within and between in payment systems to incent quality and efficiency local markets. There are two essential elements to improvements are thus a vital part of HIT policy. making this data exchange happen. The first is to make sure all certified records have the capacity to exchange 4. Stimulating technical progress. information—meaning that some group must set stan- Much remains to be learned about the best ways to dards for packaging information and then require that computerize health care processes, stimulate the spread EHRs conform to those standards. The second require- of HIT, and measure its benefits and risks. A commit- ment is the development of an agency or group in ment to research and development in this area is an local markets that forges connections among doctors, essential part of any national policy. hospitals, laboratories, pharmacies, and other health care groups, and then facilitates the flow of informa- Continuing Controversies tion among these entities. Such a local body is neces- 1. Top-down or bottom-up? sary because the providers themselves have no finan- Debate continues about whether it would be better for cial incentive to make data exchange happen and, the federal government to directly support the adoption therefore, to sustain the capability for that exchange. of HIT—with grants, loans, incentives, and penalties— Other alternatives: Medicare could compensate or merely fund research and development that would providers more for participating in data exchange, stimulate innovation and adoption by individual doctors which would create a business case for doing so, or and hospitals. Some experts believe that the EHRs now refuse to compensate them unless they participated available on the market are too costly and complex in data exchange. and lack essential features to ensure quality. These 4 T he  C ommonwealth F und observers fear that by spending large sums on subsidiz- 2. Do EHRs really improve health system performance? ing currently available technology—such as the billions The evidence that wiring the U.S health system would discussed in the context of the Obama stimulus pack- actually save money and improve quality of care is age—the federal government may encourage providers fragmentary, which heightens fears that a big HIT push to adopt records that are imperfect and expensive and will be disappointing. At the same time, the limited will soon be outdated. Better for the government, they information available suggests that EHRs and other say, to support researchers to develop innovative new HIT applications do, indeed, improve quality and effi- products that might be available free to all clinicians ciency. A RAND study (challenged by some experts) (so-called open-source software)—a cheaper and better projects that the health system would save $77 billion approach that would prevent the existing software annually upon full implementation of an HIT system. companies from gaining a chokehold on the market and The Congressional Budget Office recently estimated stifling technical progress. that requiring physicians and hospitals to have EHRs A counterargument is that doing this amounts to as a condition of participation in Medicare would save letting the perfect be the enemy of the good. Countries the federal government $33 billion over 10 years, a around the world are adopting existing systems to number that does not include private sector savings. good effect, and here in the United States a number of Most physicians with EHRs are very satisfied health care organizations, such as Kaiser Permanente, with them and can point to specific instances in which Geisinger Health System, and the Marshfield Clinic, these devices improved the quality of care they have done the same thing. Existing EHRs could be provide. Similarly, the leaders of organizations that better, but while we wait for a bottom-up approach to have implemented EHRs find them an enormous work (if it does), we will sacrifice important opportu- aide to improving quality of care. Beyond this, it is nities to save money and improve quality of care. almost inconceivable that, 20 years from now, we Furthermore, if we change incentives in our payment would be satisfied with a health are system that does system to reward quality and efficiency, doctors and not take full advantage of the power of electronic hospitals will demand improved and more capable sys- technologies. tems from vendors. David Blumenthal, M.D., M.P.P., is director of the Institute for Health Policy at Massachusetts General Hospital and Samuel O. Thier Professor of Medicine at Harvard Medical School. Previously, he held posts as senior vice president at Boston’s Brigham and Women’s Hospital and executive director of the Center for Health Policy and Management at Harvard’s John F. Kennedy School of Government. During the late 1970s, he was a professional staff member on Senator Edward Kennedy’s Senate Subcommittee on Health and Scientific Research. Dr. Blumenthal is the founding chairman of AcademyHealth, the national organization of health services researchers; national correspondent for the New England Journal of Medicine; and a trustee of the University of Pennsylvania Health System. He can be reached at dblumenthal@partners.org. Editorial support was provided by Christopher Hollander. P erspectives on H ealth R eform : T he F ederal R ole in P romoting H ealth I nformation Technology 5 The Bottom Line manage information exchange and incentives for pro- Though imperfect, the evidence is strong enough to viders to share information. validate the common-sense conviction—bolstered by Third, federal authorities should support international experience—that modern health care sys- research and development designed to improve the tems need HIT to perform to their full potential. The capabilities of HIT, evaluate its effects on health care question is what the federal government should and quality and efficiency, and improve the effectiveness can do to speed HIT’s adoption and effective use. of its implementation. To begin with, financial support of health infor- Fourth, government can hasten the adoption and mation technology seems appropriate through several effective use of HIT by focusing attention, through mechanisms. First, the federal government should pro- payment reform, on the ultimate purpose of this tech- vide assistance with purchase and implementation of nology: the improvement of health system perfor- HIT systems for providers that lack the financial mance. Payment reform is a vital catalyst to almost means to do so; these include safety-net and critical- every effort to solve the nation’s health care problems, access facilities and small physician practices, espe- and HIT is no exception. cially primary care providers. A preferred method of Finally, federal authorities can encourage HIT providing this support may be through local entities— adoption by creating national regulations and standards state and local governments, local nonprofits—that in several areas that will improve the confidence of would be tasked not only with dispensing the funds doctors and patients alike in the electronic manage- but also with organizing technical support and training ment of health information. These areas include the for providers. development of sound guarantees of data security and Second, the federal government should provide patient privacy, as well as the certification of records financial support for information exchange in local that have the capability necessary to support health communities. This support should probably consist of system improvement. a combination of direct grants to organizations that The mission of The Commonwealth Fund is to promote a high performance health care system. The Fund carries out this mandate by supporting independent research on health care issues and making grants to improve health care practice and policy. Support for this research was provided by The Commonwealth Fund. The views presented here are those of the author and not necessarily those of The Commonwealth Fund or its directors, officers, or staff.