On Saturday, in his weekly radio address to the nation, President-elect Barack Obama proposed modernizing the health care system by investing in “cutting edge technology and electronic medical records“:
In addition to connecting our libraries and schools to the internet, we must also ensure that our hospitals are connected to each other through the internet. That is why the economic recovery plan I’m proposing will help modernize our health care system – and that won’t just save jobs, it will save lives. We will make sure that every doctor’s office and hospital in this country is using cutting edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes, and help save billions of dollars each year.
Less than 25 percent of hospitals, and less than 20 percent of doctor’s offices, employ health information technology systems (HIT). Estimates vary, and real-life experience is limited, but one group of researchers found that implementing health IT would result in mean annual savings of $40 billion over a 15-year period.
A fragmented health care system, “difficult-to-demonstrate HIT return on investment, and first-mover disadvantage” help explain why the market has failed to deliver HIT and underscore the importance of Obama’s leadership on the issue. For instance, while insurance companies, to a greater extent than providers, “could benefit from reduced costs in moving from a paper-based system to electronic health records,” the costs of implementation are far higher for providers. An analysis by the Center for Information Technology Leadership (CITL) found that “while providers are footing the bill for HIT, they may experience only 11 percent of the potential gain. Other stakeholders, payers principally among them, may reap 89 percent of the gain.”
Until gains are distributed a little more equally, medical providers will resist adopting HIT. Fortunately, the federal government, along with several state governments, have begun investing heavily in HIT systems. The Veterans Affairs Administration’s successful VISTA system “has had a profound influence on the quality and efficiency of clinical care and data management in the nation’s veterans hospitals.”
Meanwhile, in Pennsylvania, Gov. Ed Rendell (D-PA) has established the Pennsylvania Health Information Exchange Governance Structure to develop and manage a statewide electronic health record system. Gov. David Paterson (D-NY) announced in 2008 that his state awarded $105 million in grants for the development of health information technology and Gov. Janet Napolitano (D-AZ) signed an executive order in May 2008 directing state agencies to work with the Arizona E-Health Connection to promote the expansion of e-prescribing.
Still, the greatest HIT innovations may belong to the Taiwanese. As T.R. Reid reported in his ‘Sick Around The Word‘ documentary, “Taiwan designed its new health system using state-of-the-art information technology”:
Everybody here has to have a smart card like this to go to the doctor. The doc puts it in a reader, and the patient’s history, medications, et cetera, all show up on the screen. And then the bill goes directly to the government insurance office and is paid automatically.
As a result, Taiwan has the lowest administrative costs in world, less than 2 percent. In the United States, administrative costs eat up 22 percent of health care spending.