Interlocking forces in healthcare IT

Through a combination of government and tech forces, health care is moving from an IT backwater to a heavy investor in both bureaucratic and innovative technology. The influence of various stakeholders can be seen throughout the transformation. Some factors are market enhancing, some are market constricting, and each stakeholder has a separate agenda. But consumers and their patient data tend to be the common levers by which the industry participants are seeking advantage. And consumers are simultaneously gaining and losing control in the process. In that sense, the sector provides an illustration of how consumer IT, enterprise entities, and government regulators intersect.

Between government coercion and market incentives, healthcare IT has thus become a swirling mix of the onerous and the opportunistic. It has become an open tap of tech spending and investment at the keg party of rising medical costs—even while savings are soberly pursued. Not surprisingly, early results are a tumult of the inefficient and the effective, determined by the motivation behind the investment. Significant promise is often jumbled in with an explosion of bureaucratic waste.

Doctors’ varied acceptance of new technologies

Doctors and other medical professionals are on the front line of new technology use. This week we saw stories that demonstrate how mixed the reception can be for technologies in the sector:

The UC Berkeley data science blog last week posted an infographic with various electronic health record adoption rates, including the office-based physician use of EHR jumping from 18% to 78% between 2001 and 2013, and percentage of physician offices using EHR jumping from 50.3% in 2013 to 61% in 2014. There is a gap between hospital and health system-owned offices’ greater adoption than independent locations and variation in adoption from state to state. But the largest differences are seen by specialty, ranging from 80.6% use with dialysis down to 35.9% use for preventative medicine.

In turn, consumers within the medical system are likely to experience a range from the traditional, face-to-face interaction with a doctor to a doctor intently focused on the keyboard, googling and typing away—while only occasionally tossing a question out to the patient.

That IT use is only becoming more central to professionals across the medical profession is evidenced by Dell’s announcement this month of a partnership with the Texas A&M Health Science Center to create an academy for continuing healthcare IT education.

Other stakeholders influencing technology adoption

Along with the doctors and other medical professionals, there are four other constituencies influencing health IT use and spending:

  • Coercive government, with its imposition of mandates and incentives, such as for EHR and EMR investment and the Affordable Care Act. The Office of the National Coordinator for Health Information Technology this month introduced a plan to link patients’ EHRs to a national web of databases and government oversight. This follows the carrot-and-stick stimulus spending and requirements to adopt the technology, as well as the several-times-delayed, in-process, move to ICD-10 coding.
  • Cost-conscious, corporate health system participants. Mark Bertolini, the chairman and CEO of Aetna, recently offered an insurer’s perspective of how IT can help make inroads cutting the estimated 30% waste in the American healthcare system. Although he also advocates the interoperability of records, the key opportunity he sees is in the higher deductibles that are common under the Affordable Care Act. Higher out-of-pocket costs provide more incentives for consumers to weigh the benefits of services and to find cost effective providers and solutions within their networks.
  • Creative innovators, or the startups and startup investors in new health IT. Healthcare IT startups have attracted growing interest from private and public investors of various types. The sky-high IPO of Castlight Health, a cloud-based healthcare management solution for the enterprise (another major party in healthcare spending), served as confirmation for some that health IT has reached a bubble phase. Various roundups of health tech innovation are rife with applications advanced by startups. For example, one recently profiled startup employs telemedicine to improve at-home care after a patient has been released from the hospital, in order to reduce costly readmissions. (Telemedicine is a technology where regulation still impedes its adoption, due in part to in-state medical licensing requirements.)
  • Consumers, who are the actual healthcare customers. The increased nationalization of healthcare services (with the Affordable Care Act and Medicaid expansion) and consolidation among hospitals and providers at the local level (which has been accelerated by the effects of the ACA) work to reduce free market competition in health care. However, there are two other factors that are infusing some market-oriented forces into the sector: 1) Higher deductibles and generally increasing health costs give individual customers more incentive to avoid unnecessary care and to opt for lower-cost treatment where possible, and new technology is bringing more information and patient control to healthcare consumers.

Florida Hospital Celebration Health was profiled this week for its use of the GetWellNetwork in-hospital system for providing interactive patient services via in-room television sets. This is the sort of innovation that provides patients more responsive service, while also cutting hospital nursing and other labor costs. Many more innovations, such as healthcare wearables (e.g., FitBit, diet applications, home medical testing and monitoring systems), also support consumer-led healthy living and health care. (For more on healthcare wearables see the recent Gigaom Research report, The Internet of Things and the future of health care.)

Implications

In short, we see the following:

  • Increased technology use is enabling more government influence and control such that we see government often simply mandating higher levels of automation and technology use.
  • Doctors and other medical professionals have a mixed response to new technology. Among them, there will be leaders and laggards in technology use—as long as laggards are permitted.
  • Increased healthcare IT spending is a boon to the tech vendors who serve them, and a flood of innovation is opening doors for new entrants to find a niche in the market.
  • Surviving providers within the healthcare ecosystem gain from consolidation, which is fueled by the economies of scale in implementing technology and managing the burdens of regulation. This reduces consumers’ power in the market. Yet, those providers also gain from imposing the market discipline of higher out-of-pocket costs onto consumers through the higher deductibles that help mask overall rising costs in insurance and care.
  • Consumers gain from greater automation insofar as more information, self-monitoring, and healthcare decision-making is placed in their hands, although some of the associated automation and regulation is less beneficial.

Thus we see a very market-driven move toward placing more healthcare technology in the hands of consumers. In some aspects, this gives healthcare customers more control.  But this development also empowers healthcare providers to gain from what has been structured as cost-saving incentives for consumers. With fewer providers in local markets, consumers have fewer market choices, which limits their influence over pricing. Individual doctors can choose their adoption of some technologies, but are forced to adopt and respond to others. Government can more easily regulate and control with greater technology adoption.

There are hints of counterbalancing market forces—e.g., if broader geographic telemedicine licensing is permitted—but in the current environment, healthcare IT is an example of how even consumer-driven technology adoption and investment can give and take in the market, variously, for different market participants.

Learning from health care

Whether to utopian or dystopian ends (e.g., a new survey finds 69% of healthcare professionals believe the Affordable Care Act increases or significantly increases risk to patient security and privacy), Obamacare and other healthcare regulation in the U.S. are forcing healthcare IT investment to unprecedented levels. From this Petri dish of experimentation are emerging clues for other industry sectors as to how sufficient levels of automation enable more applications and utility from the data and networks that have been formed.

Regulation forces and encourages IT investment

The Health Information Technology for Economic and Clinical Health (HITECH) Act, which was part of the 2009 stimulus bill, offers incentives through 2015 for adopting ‘meaningful use’ of electronic health records. After 2015, those incentives change to penalties for failure to adopt ‘meaningful use’—although those requirements are still being tweaked. And there’s more coming. Just this month, the FCC announced the formation of the Connect2Health Task Force to encourage wifi use in healthcare. As FCC chairman Tom Wheeler explained, “We must leverage all available technologies to ensure that advanced healthcare solutions are readily available to all Americans, from rural and remote areas to underserved inner cities. By identifying regulatory barriers and incentives and building stronger partnerships with stakeholders in the areas of telehealth, mobile applications, and telemedicine, we can expedite this vital shift.”

Patterns in the impact of heavy investment

Recent announcements in a range of areas demonstrate how healthcare is becoming a bellwether of next-stage technology applications:

  • Since its launch just over a year ago, the CommonWell Health Alliance, a health information exchange among a growing number of health IT providers has found burgeoning demand. CommonWell started a rollout to initial healthcare providers in December; and by one report, nearly half of the physicians groups planned to join an HIE. Somewhat akin to the associations that banks have long had to support credit card networks, healthcare providers are finding business and consumer benefit to the coordinated sharing of certain patient data.
  • A new meaningful use requirement to automate laboratory findings of notifiable diseases to public health authorities will go into effect in 2015, with a predicted, immediate doubling of cases reported. Thus, regulatory compliance can be expanded, becoming more pervasive and absolute, once certain levels of automation are common or required within an industry.
  • Increased video consultations and other new means for patients to access the healthcare system. One healthcare IT study predicts a 25-fold increase patient use of in-home video consultations with their doctors in the next four years. Last week, an industry group in Australia called upon the Australian government to adopt a formal teleheath strategy. After its IPO this week, Castlight Health, which offers an enterprise cloud healthcare cost tracking and savings solution for employees, saw its already generous $16 offering price soar to $40, bringing a company with $13 million in 2013 revenues to a $3 billion valuation. We can marvel at social media today, but the surface has barely been scratched on the levels of communication and data analysis that will become commonplace for customers of all types.
  • A Rhode Island hospital is experimenting with the use of Google Glass in emergency rooms, and a new study shows that ER doctors with access to such information—and therefore a better understanding of the patient’s situation—are 30% less likely to admit them for presumably unneeded hospitalization. Already the cost savings in this informed reduction of caution have worked out to an overall savings of approximately $20 per emergency room visit. The implications of expanded levels of employee access to information are still emerging.
  • Epic, a major IT provider to large healthcare providers, has enabled its customers to share access to their systems via their Community Connect program. (E.g., the Singing River Health System’s offering.) A study finds mixed results for those smaller, indirect customers who gain new technical capabilities leading to more regional sharing of patient data, but also lose critical control over some system-imposed processes as well. This model was also pioneered by banks in the early days of automated bank operations, and it became a precursor to subsequent, massive bank consolidation. Additional rounds of efficiency and, yes, consolidation, may be expected in other industries as their business becomes more technology based.
  • The challenge in measuring value as ROI. Not only is quality treatment a challenge to measure, but a healthcare IT consultancy that tracks value according to how advanced a provider is on the eight-step EMR Adoption Model finds that significant quality improvement does not occur until the sixth step is reached. Thus, IT ROI must be considered more broadly than it has typically been calculated in the past, and many benefits of automation will only emerge once a critical mass has been achieved. Yet, the ongoing cost of such broadly implemented systems may itself fuel mergers and consolidation.

CIOs and CTOs should be leading their firms’ anticipation and understanding of both incremental and disruptive patterns of technology-driven change. (As much, of course, as such change can be foreseen.) Patterns of adoption tend to see-saw between industries for specific applications, but new applications emerge from systems implemented for more limited purposes—and many companies can find likely examples of coming change in other sectors.

Retailers can look to healthcare for lessons in security

With retailers destined to stumble from their tightrope walk between privacy and security requirements and the use of new customer information, it is instructive to look at the implications and consequences of HIPAA privacy and EHR mandates and incentives in healthcare.

Healthcareitnews.com is a veritable legal blog documenting various costs for transgressions by healthcare IT buyers and vendors alike:

Breaches such as one revealed this week can tap both medical and credit card data. A four-year HIPAA breach was also reported in December. As HITN reports:

“HIPAA covered entities and, more recently, business associates can be slapped with up to $50,000 fines per HIPAA violation due to willful neglect that goes uncorrected. Entities could face $10,000 per violation due to willful neglect when the violation is properly addressed.”

Further, the costs of meeting the regulations and requirements can be steep when an implementation simply goes awry, rather than sparking fines or a liability suit. The Maine Medical Center slipped into the red when its Epic EHR implementation went over budget, with nearly $55 million in its latest additional spending required for staff training alone.

Retailers are forced to traffic in sensitive customer data by dictate of the market; healthcare organizations, by the government. But it is likely that laws will be passed to enforce greater penalties for retail transgressions than are paid presently. Both industries will need to further ruggedize systems handling new levels of private customer data.

Healthcare case study as positive contagion

There’s applicable cross-industry wisdom in a case study informationweek.com has on one hospital network’s incorporation of comprehensive new systems. Partners HealthCare and its predecessor hospitals have been innovators in technology for half a century (back to Mass General’s MUMPS system that has evolved through current use today).

Some of the best practices noted in the article include the CIO working closely with a ‘chief health information officer’ MD executive leader of the new system, with CIO James Noga commenting that he doesn’t “see Partners eCare as an IT initiative at all. We’re just providing enabling technology.”

Noga says, “If you really do it correctly and take on the clinical transformation — that’s really where the expense lies. It’s in the people. It’s not in the hardware, and it’s not in the software.” He estimates that a straight health IT implementation itself could be done for a third of clinical transformation that Partners is undertaking.

Partners is replacing a custom system that it had developed before its capabilities were available on the market, and the firm is looking toward APIs to enable customization going forward. Noga suggests it takes doctors six months to get up to speed on the clinical use of electronic records, and Partners is well beyond that curve: I had a specialist at their Brigham and Women’s hospital gush while showing me their piloted, integrated capabilities as part of the ‘future of medical care’ over a decade ago.

Partners’ rollout of the Epic solution, with database capabilities that trace back to MUMPS, is staged and selective. Partners’ already successful patient portal will not be replaced, but its collections/revenue cycle will be—before the more sensitive, costly, and transformative clinical systems follow.

The case study is a good read with an approach that is applicable across industry sectors today.

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