Dogged Optimism: Five Innovative Aspects of HITECH

If you’re a dog (an innovator), what’s there to smile about over HITECH?  Quite a bit.

In the first post of this series, I suggested that HITECH favors cats by about 60/40 and noted that the single most cat-like feature of HITECH is providing incentives for physicians and hospitals to acquire and implement EHRs  — but only EHRs. Reader “Mark” commented:

“How does this work out to 60/40? Looks to me like 100% cats.”

Let’s look a bit deeper to see how HITECH creates opportunities for disruptive innovation . (As a refresher, the cat POV is that HITECH stimulus funds should simply pay directly for EHR technology — that providers will figure out how to use the technology to improve quality and outcomes; the dog POV is that HITECH should pay for improved quality and outcomes — change incentives and IT will naturally follow. See the first post for more detailed explanations.)

The next three posts in this series will examine various aspects of HITECH from differing points-of-view:

• What’s dog-like (innovative)?  — today’s post.
• What’s cat-like (protecting incumbents)?
• What’s yet to-be-determined (TBD) or unclear?

The Need for Innovation

Lack of innovation is the heart of the problem in today’s health IT marketplace. Writing specifically about the market for hospital EHRs, my colleague David Kibbe and I have previously characterized the prevalent HIT business model:

• Proprietary, non-interoperable software
• Low volume, high margin sales (there are only about 5,000 hospitals in the country)
• Customers (hospitals) have high needs for installation support and customization. Customization for individual customers further challenges opportunities for creating interfaces and achieving interoperability.
• High costs of purchase and installation result in high switching costs and customer lock-in.

We questioned whether interoperability was in the economic interests of current health IT vendors:

• Interoperability will tend to commoditize data and reduce opportunities for high margin pricing
• Interoperability will reduce customer needs for software customization
• Interoperability will reduce switching costs and potential for lock-in
• Although it might seem contradictory…hospital customers aren’t asking for it

The market for physician EHRs is very similar.

What’s needed are technology and business models that will create disruptive innovation  in today’s HIT marketplace.

How Does HITECH Create Potential for Disruptive Innovation?

Here are five aspects of HITECH that lay groundwork for future innovation in health care:

1. HITECH is a Clear Statement of HIT Policy for the Future
2. “Meaningful Use” Requirements for EHRs Incentivize Quality Improvement
3. $2B Discretionary Funding is Provided to the Office of the National Coordinator (ONC) of HIT
4. Accelerated ePrescribing Adoption Can Save Money and Improve Quality
5. Providing Access to Health Information in an Electronic Format Promotes Data Liquidity

1) HITECH is a Clear Statement of HIT Policy for the Future. The enactment of the HITECH Act has put to bed the issue of WHETHER we are really serious about  HIT as necessary infrastructure for more effective and less expensive health care. It is an unambiguous statement of intent and policy to move forward in achieving interoperability of health information and in promoting data liquidity

Dogs everywhere are ecstatic. You’d have to believe that there’s a vast left/center/right wing conspiracy to believe that that HITECH truly isn’t a major shift in HIT policy.

Even the staunchest defenders of the status quo are recognizing this:

“The world changed yesterday at 1 pm Mountain time,” Steve Lieber, President of the Health Information Management Systems Society (HIMSS), told over 1,500 attendees of a webinar on February 18. These new times, Lieber said, “will require our vendor community to react a little bit differently and change business practices.” Lieber said that health information technology vendors will need to be, in his words, “more forthcoming” as well as “make absolute iron clad binding agreements.” [Jane Sarasohn-Kah writing in the Health Populi blog]

What’s different?  Didn’t President Bush say in 2004 that every U.S.citizen should have an EHR within 10 years?

Yes, but the words were never matched by actions and funding indicating that advancement of health IT was a national priority. President Obama has described HITECH as a “down payment” in broader national health care reform efforts.

2) “Meaningful Use” Requirements for EHRs Incentivize Quality Improvement. Yes, HITECH is cat-like in that it provides $17 billion in direct funding for EHR technology — and only EHR technology. This aspect of HITECH preserves the status quo by limiting investment in MANY other promising technologies.

However, while HITECH provides incentives for physicians and hospitals to acquire EHRs , it does not reimburse directly for the acquisition of EHR technology.  Physicians cannot simply send in a copy of the sales receipt for their EHR and say “Please reimburse me.”

Instead, HITECH makes a critical distinction — it pays for “meaningful use” of certified EHR technology.  As written in the legislation, “meaningful use” will require use of ePrescribing, “electronic exchange of health information to improve the quality of care, such as care coordination”, and reporting on clinical quality measure. Regulations will be enacted more precisely to define “meaningful use”.

3) $2B Discretionary Funding is Provided to the Office of the National Coordinator (ONC) of HIT

While HITECH only provides DIRECT funding for certified EHR technology, it does provide INDIRECT funding for a much broader range of potentially useful technologies.

The ONC is given $2 billion in discretionary funds.  While the funding for EHRs will not start to flow until 2011, this discretionary funding will start to flow almost immediately.  The legislation suggests (but does not limit) uses for these funds:

• National HIT architecture
• Development and adoption of EHRs
• Best practices training and information
• Telemedicine infrastructure and tools
• Promoting interoperability of clinical data repositories
• Best practices to protect information
• Expanding HIT in public health departments
• An HIT Research Center and extension program
• State grants to promote HIT
• Loan programs to facilitate adoption of EHR technology [Michael Paddock, HIMSS webinar ]

Other aspects of the stimulus bill provide separate, additional funding for other innovative technologies and initiatives: Rural Telemedicine and Broadband; the Broadband Technology Opportunities Program; Indian Health Service Funding; Construction, Renovation, and Equipment for Health Centers; Comparative Effectiveness Research Funding; and Health Information Exchange/Regional Grants.

4) Accelerated ePrescribing Adoption Can Save Money and Improve Quality

In the Healthcare Technology News blog , Rich Elmore writes about a study commissioned by the Pharmaceutical Care Management Association. The authors examined HITECH’s requirement that EHRs include ePrecribing functionality and concluded this would double projected adoption in 5 years.  They estimated 75% of physicians will be using ePrescribing by 2014.

ePrescribing is a valuable application of technology — it can increase patient adherence to prescribed treatment regimens, reduce medical errors, and prevent unnecessary hospitalizations.

5) Providing Access to Health Information in an Electronic Format Promotes Data Liquidity. One of the least discussed features of HITECH is potentially the most important.  Section 13405 extends patient access to health information under HIPAA.  In short, when patient health information is available in an electronic format, care providers are required to provide the information to the patient (or their designee) in an electronic format.

While this provision will take time to kick in, it’s the beginning of the end of photocopies of medical records. This aspect greatly promotes data liquidity — the appropriate flow of health information between care providers and between care providers and patients.

What other aspects of HITECH do you see as potentially promoting innovation? Please comment.

The next blog post will examine positive aspects of HITECH from the cat POV.