MaSSSoftech

Local employers are heaping praise on the expansion of health information technology to be financed by pending national health care reform legislation.

That doesn’t quite compute: The bills being debated call for little health IT expansion beyond a proposed online marketplace to shop for plans. Still, employers that think health IT will drive any successful reform effort can stay juiced. It’s just that health IT’s multibillion-dollar jolt will come from another source.

“The significant investment in HIT was made through the stimulus bill,” said Robin McClean, a government relations specialist for Cerner Corp., a Kansas City-based vendor dedicated to taking the clipboard out of medicine.

Business views the electronic patient chart as a long overdue no-brainer, and reform advocates tout it as a cost-cutting offset to pricey reforms. But initially, health IT expansion won’t come cheap. The federal stimulus act President Obama signed in February provides nearly $54 billion for it, McClean said.

That includes about $35 billion for temporary Medicare and Medicaid reimbursement bonuses for providers who demonstrate “meaningful use” of health IT, she said. Scheduled to begin in 2011, the payment bonuses will total as much as $64,000 a physician and as much as $11 million a hospital.

Reform advocates hope the incentives — and eventual penalties for those who don’t meet the yet-to-be-released meaningful-use standards — will make interoperable electronic medical record systems standard by 2014.

They say that will lead to huge health care cost savings. But the savings remain hard to quantify outside of studies conducted to encourage government spending on health IT.

In 2005, a RAND Corp. study partly financed by Cerner found that widespread adoption of electronic medical record systems could save the U.S. system $81 billion to $162 billion a year.

Two years later, The University of Kansas Hospital began installing an electronic medical record system with a five-year capital and operating cost of $51 million. Installation is expected to be done next year, when a computerized physician order-entry system will be rolled out, allowing 950-plus doctors, residents and students to enter orders electronically. But Chris Hansen, KU Hospital’s chief information officer, still can’t quote expected returns on investment.

Judging from progress reports from the federal committee developing the meaningful-use standards, Hansen said, he’s confident KU Hospital’s electronic medical record system will qualify the institution for reimbursement bonuses.

“But if we spent $51 million and get $11 million back (in bonuses) — that’s not an ROI I would take to the board,” Hansen said. “I’m not even sure the system will save us money (in the short term). But I think it will provide additional data that will position us better to save money in the future.”

Lori Mallory, CEO of Kansas City Internal Medicine, said the practice installed an electronic health record system from Allscripts-Misys Healthcare Solutions Inc. five years ago. Mallory was not able to quantify a return on investment, either.

But “there are cost savings,” she said, noting the reductions in space needs, staff time and duplicate tests that electronic records make possible.

Other savings are expected to accrue long-term from improvements in care quality facilitated by electronic records. Mallory said that one of those improvements is e-prescribing, which eliminates errors in interpreting doctors’ handwriting and allows the practice to identify and alert patients taking recalled drugs.

The Allscripts system also allows Kansas City Internal Medicine to improve care, and presumably reduce the cost of care, for patients with chronic conditions. For instance, Mallory said, the system allows the practice “to identify patients who may have uncontrolled diabetes and develop a proactive patient outreach plan to bring them back in to better manage their chronic condition, which is truly wonderful.”

Bill Bruning, CEO of the Mid-America Coalition on Health Care, said the large, savvy employers the organization represents know that savings also can result from employees getting more engaged in their health through electronic access to their charts and online wellness programs. For employers that self-insure, reductions in employee claims result in direct and immediate savings, he said.

“Over time, there will be a clear return coming out of electronic records that can be exchanged among providers,” Bruning said. “But it’s unclear how long it will take and to whom the benefits will most directly accrue.”

Dr. John Yeast, vice president of medical affairs for Saint Luke’s Hospital, was also short of ROI statistics. But he said there’s little question that increased spending on health IT will lead to big long-term savings through the improvements in how providers are paid and how they treat patients.

Computerized physician order entry, for instance, uses embedded alerts to advise doctors when they are varying from agreed-upon evidence-based treatment protocols. Those protocols will continue to be refined as widespread use of electronic records delivers megadoses of new outcomes data that can be aggregated and mined by medical researchers.

Toward that end, Cerner’s McClean said, the stimulus act includes $10 billion for health IT research by the National Institutes of Health, plus $1.1 billion for evidence-based research.

In addition, Yeast said, health IT expansion should help facilitate a shift away from the current fee-for-service payments, in which doctors have an incentive to order more visits and procedures.

Yeast envisions a new world in which electronic systems track — and providers get paid for — things such as e-visits, medication management and condition tracking that improve quality and minimize costs.
What are electronic medical records, and how do they cut costs?

Electronic medical records are the computer-generated records that care providers use to collect and store data about patients and their medical histories.

Electronic health records are subsets of EMRs that are owned by the patient and accessible by multiple providers via some type of health information network.

Here are some of the ways electronic record systems can cut health care costs:

• Systems that require computerized physician order entry include embedded alerts and protocols that help providers make the best care decisions. This can minimize lengths of stay, complications and readmissions.

• In the future, proof that doctors have followed evidence-based protocols accessible through EMR systems may be considered grounds for avoiding or minimizing malpractice claims. This will reduce costs associated with “defensive medicine.”

• Medication data stored in the records can prevent adverse drug-drug, drug-lab and drug-allergy interactions.

• E-prescribing prevents errors in interpreting handwriting and allows patients who are taking recalled drugs to be identified and alerted.

• Care for patient populations with chronic conditions, such as diabetes, can be tracked electronically, allowing doctors to notify patients who have missed a recommended test or procedure. This can prevent complications and higher-cost procedures such as amputations.

• EMR systems allow providers to mine outcomes data to show they have met various quality measures. Government and private payers are increasingly using such metrics to justify differentials in payments to providers.

• By following patients to multiple points of care, electronic records prevent one provider from ordering a test that has just been administered by another provider.

• Costs associated with transcribing a doctor’s notes, and filing and storing paper documents can be eliminated.

• Widespread EMR use will produce megadoses of outcomes data that can be mined by researchers. This will lead to refined evidence-based protocols, which should improve outcomes and lower costs.

• Improved data collection could help facilitate a shift from a fee-for-service payment system that creates incentives for more visits and procedures to one with more rewards for high-quality outcomes and efficient care, such as e-visits, preventive measures and patient education.

• Patients become more engaged in their health through easy access to their medical records. It is widely thought that this improves wellness and lowers cost.