Health care information technology [HIT] “is not ready” warns Dr. Scot Silverstein, a clinical IT expert on the faculty at Drexel University’s College of Information Science and Technology. Writing on Roy Poses’ Health Care Renewal at the end of last week, Silverstein argued that Health IT “is dangerous in unqualified hands, which most every medical center and physician office is in 2011 (i.e., an IT backwater).
“The field of health IT [has] somehow [been] transformed from an experimental field into the 'savior of medicine’” Silverstein added, “without the proof of value and safety that would ordinarily be required to move an experimental technology from lab to national rollout. Per the Washington Post, this process appears to have been a highly politicized one, favoring the corporate elites. The Washington Post’s 2009 article on the influential HIT vendor lobby ‘The Machinery behind Healthcare Reform’ is at this link.”
Set Silverstein’s words side by side with what software expert Dan Fornes had to say on The Health Care Blog yesterday, where he reported that vendors selling health care software are “spending like crazy,” and a larger picture begins to emerge.
Fornes, founder of the “Software Advice” blog, is considerably more enthusiastic about the current state of Health Care IT than Silverstein. Nevertheless, Fornes points out that the market has been moving at warp speed. (Apologies for a anachronistic metaphor from the hi-tech explosion 1990s. But sometimes it is helpful to realize that we have seen a phenomena before.)
“Most software markets evolve over a twenty or thirty-year period,” Fornes writes. “Consider the enterprise resource planning (ERP) market: the first ERP vendors were founded in the early 1970s, but rapid growth and innovation continued until about the year 2000. The [Electronic Health Record] EHR market, however, will mature in the next five years. This is because healthcare providers are buying EHR systems sooner than they otherwise would, to make the most of massive federal subsidies and avoid penalties. Consequently, EHR vendors are in a mad rush to gain market share.” (See this HealthBeat post on “Irrational Exuberance Over Electronic Medical Records.”)
When he speaks of “massive federal subsidies,” Fornes is referring to the $27 billion that Medicare and Medicaid is giving out under the Health Information Technology for Economic and Clinical Health (HITECH) portion of the American Recovery and Reinvestment Act (ARRA) of 2009. The HITECH program began this year. A doctor who adopts electronic health records (EHRS) can receive up to $44,000 under Medicare and $63,750 under Medicaid, while a hospital can receive millions of dollars, depending on its size. (In just four years, hospitals and doctors will be subject to financial penalties under Medicare if they are not using electronic health records.)
Vendors “that win will own a massive customer base paying recurring support fees,” Fornes explained. “Those that lose will become irrelevant from a market share standpoint and will be ingested into a larger vendor (if they’re lucky; some will just go broke). As a result, EHR vendors are increasing their R&D budgets to develop new features and meet meaningful use criteria. Their marketing colleagues are spending heavily on demand generation and brand building. These vendors have no choice but to win today’s market share battle.”
Fornes is primarily worried about what the mad dash for customers will mean for vendors; the weakest will be trampled underfoot. But he also worries about the customers faced with too many choices: “The EHR and practice management markets have always been highly fragmented into hundreds of software vendors, largely as a result of the need to service small and demanding local practices. . . . It’s tough for providers to assess the financial viability of private EHR vendors. Software Advice offers our Guide to Assessing Medical Software Vendor Viability, but the industry really needs a trusted third-party to evaluate the 400 plus vendors.
“Organizations like CCHIT, InfoGard and ICSA Labs are all certifying EHRs against functional criteria. However, buyers also need the equivalent of an A.M. Best or Moody’s to rate the financial health of EHR vendors. . . buyers must be careful not to become collateral damage as the fierce battle for market share plays out. It’s important to determine which vendors are closing business, growing their revenue and building a sustainable, profitable business. Providers should keep in mind that their success is tied to the success of the software vendor that will enhance and support their EHR system in years to come.”
Too Many Buyers, Too Many Sellers, Too Little Information
I am hardly an IT expert. But I have spent enough years observing markets—stock markets, real estate markets, and most recently, our health care market—to recognize a big, bright Bubble when I see one. Eager to take advantage of fat federal subsidies, too many buyers, with too little information, are scrambling to purchase health IT. And, as is always the case, too many sellers are all too eager to satisfy the buyer’s desire to part with his money.
But many vendors won’t have the resources to follow through on the services and training that they promise. Or, they will be too busy chasing the next customer to meet their commitments. More importantly, the majority of HIT vendors cannot fathom what it’s like to work in an ER or a busy primary care office, and so they cannot begin to grasp precisely what doctors and nurses need.
Let me be clear. I understand that we need health care information technology. (I wrote about how important electronic health records can be to patients earlier this year.) Premiere health care organizations in the U.S.—including the VA, Kaiser and the Mayo Clinic—have demonstrated how valuable Health IT can be. But in each case, developing health care IT required fortitude, time, and top-down planning. Even then, there were serious and sometimes hugely expensive glitches along the way.
Yet when it comes to spreading Health IT nationwide, we have decided to “let the market decide” which products doctors and hospitals should buy as we try to speed up the roll-out of healthcare IT nationwide. The result? Laissez-faire chaos.
No doubt some physicians and hospitals are making wise decisions, but this is hardly a transparent market. Those who support rapid conversion to electronic health records point out that the money in the HITECH Act “lit a fire” under health IT. This is precisely what worries me. In any market, a bonfire of cash creates a dangerous stimulus.
I think Fornes is on the right track when he suggests that “the industry really needs a trusted third-party to evaluate the 400 plus vendors.” But I have to object when he names Moody’s as a model. During recent bubbles, Moody’s has not covered itself with glory. We need a truly independent private sector or quasi government agency, a group like FASB (the Financial Accounting Standards Board) which has shown courage and integrity in a number of cases when the political pressure was intense. (I wrote about FASB in Bull).
Ideally, any third-party board sorting out health IT solutions would be made up of physicians and nurses who are IT experts. (They do exist.) Experienced professionals could then identify those products which would be most practical for a small physician’s practice, a large hospital, an ER . . . . Interoperability is, of course, key.Yet vendors don’t always take that into account. I can think of at least one brand-name hospital in Manhattan that has IT in its ER that doesn’t talk to the IT in the rest of the hospital. How could a hospital possibly buy technology for the ER that isn’t compatible with the IT they’re using elsewhere?
They didn’t buy it. The system was “sold” to them. In theory, Health IT consultants steer providers away from impractical decisions. But even conscientious consultants add another layer of costs to health care. And, as any shrewd businessman will tell you, too often, the value that consultants bring to the table is not equal to the price that they charge. When it comes to healthcare reform, we just cannot afford to let middle-men boost costs.
“Defunding” Electronic Health Records
Returning to Silverstein’s post, Friday he reported on a new bill in the House of Representatives, the ‘‘Spending Reduction Act of 2011’’ that would call a halt to government subsidies for health care IT by “defunding” HITECH. (Note: we’re not talking about defunding part of the Patient Protection and Affordable Care Act signed by President Obama last spring. The money for HIT is part of the financial stimulus package of 2009.)
“It looks like HITECH is one of a number of spending extravaganzas now on the proposed chopping block,” Silverstein wrote, adding: “I can't be too sorry about this.”
He argues that “this country cannot afford HITECH at this time. The money would be far better spent at this time on care of those who cannot afford it. HITECH appeared as if out of nowhere,” Silverstein observes, “with little to no input time from stakeholders. This suggests lobbying by those with conflicts of interest to push this bill onto the public, affecting their medical care without informed consent (see Silvestein’s March 2009 post "Draft Patient Rights Statement and Informed Consent on Use of HIT").
This is why Silverstein says “I would not weep for the HITECH act's passing. It would allow the restoration of health IT back to an unrushed and careful endeavor. It would also give time to work out the significant issues causing health IT difficulty (such as raised in 2009 by our National Research Council) before we embark on national diffusion.
“In other words, its passing would reduce risk and help restore an essential level of sanity and due diligence to the healthcare IT sector, now afflicted by irrational exuberance bordering on delirium.”
I greatly appreciate Silverstein’s unflagging commitment to warning us that Heath IT is not ready for prime-time. Yet, I wouldn’t want to see HITECH lose its funding. It would be too hard to get that money back, and ultimately health care providers will need subsidies in order to purchase this much-needed technology. More to the point, it is extremely unlikely that this House bill will ever become law. Even if it made it through the Senate, President Obama would veto it.
That said, I definitely would like to see the process of adopting HIT slow and perhaps the House bill will generate a conversation about the mad rush to fund EHRs. Ideally, Congress would postpone the 2015 deadline when doctors and hospitals will be required to pay penalties if they don’t have electronic health records in place. This would give the government time to set up a third-party board made up of health care providers who are successfully using HIT, and have no financial stake in the industry. Meanwhile, buyers would have time to do due diligence before making decisions. At the same time, the government could stretch out EHR funding, distributing HITECH money over the next six to eight years.
“Free market competition” may have worked well when it came to bringing IT to banking. But medicine is far more complicated. And in the health care marketplace, most buyers are not IT experts. Even worse, the sellers themselves are often in over their heads; they truly don’t understand the needs of the health care marketplace, or the products that they are touting. They are surprised by the glitches that their customers experience.
The more I think about it, the more I am reminded me of the bull market of the 1990s. Then, as now, neither buyers nor the analysts, brokers and financial planners who sold them stocks possessed the knowledge that they needed. “Momentum” was all as the pace of investing quickened. As for the “collateral damage”—our economy is still recovering from the 1990s.