Can IT Save the Healthcare Industry?

By Jeffrey Rothfeder  |  Posted 11-01-2004 Print Email
Everyone agrees that the healthcare system is gravely ill. IT can help, but only if the industry's competing interests can be realigned.
A healthcare industry consortium in California may have discovered the perfect way to convince physicians in the Golden State to provide high-quality healthcare: Pay them bonuses to do so.

In 2003, under a program that has spawned imitators nationwide, the Integrated Healthcare Association, which brokers partnerships among medical providers and payers, debuted a program in which six health insurers, representing 7 million patients, measured the level of medical care doled out by 45,000 doctors, based on a set of performance measures.

The doctors who scored best received a tidy windfall from the insurers at the end of 12 months. In all, the top-ranked physicians logged about $50 million in bonuses in the first year of the pay-for-performance program.

Health professionals generally agree on what constitutes superior clinical and patient satisfaction standards—everything from the use of appropriate medication to timely access to care to appropriate communication between doctors and patients—and these criteria became the basis for measuring physician performance in the California project. But the program's developers decided to add another, more unconventional benchmark: investment in information technology.

Ten percent of the rankings were based on whether physicians had installed electronic records systems in their practices and were using clinical decision-making tools when seeing patients.

The results were telling: Physicians who spent the most on computer systems also scored highest in clinical and patient satisfaction.

"There's no doubt that IT makes a difference in quality of care," says Tom Williams, IHA executive director and a 25-year veteran of health insurance administration. "The IT component provides the structure to support the process of clinical care. When you undergird the process with a good foundation, you will get a better outcome."

Williams is so convinced of the value of information technology that IHA has doubled its weight in the physician performance rankings for 2005, to 20 percent.

While IT can help, its impact is limited as long as healthcare remains the poster child for dysfunctional business models. In the fun house that is the healthcare industry, hospitals and doctors have no incentive to cut costs and to become more productive because so few of their consumers—that is, patients—are footing the bill.

The task of paying falls primarily on insurers, which are obviously interested in trimming the costs charged by providers, but only by using their vast numbers of customers as leverage to dole out less money, rather than by installing technology to create the collaborative networks that could improve communications between payers and hospitals.

But by squeezing providers, insurers frequently end up lowering the quality of healthcare that patients receive. And even though they feel the pain of the industry's acutely ill business model, patients can't complain when they are asked to pay higher insurance premiums for lesser care; in most cases, they have no other place to go. In such a distorted business environment, with thousands of organizations sharing a growing economic pie that survives despite the turmoil, the idea of investing millions of dollars in innovative computer-based solutions to streamline operations and upgrade quality is anathema.

"Healthcare is a trillion-dollar-plus market, and IT spending has been little more than an afterthought," says Jeffrey Green, director of compliance for financial solutions at Laserfiche, an electronic records provider based in Long Beach, Calif. "There are thousands of companies with a stake in the market and no dominant firms to drive automation or demand more efficient behavior."



 

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