HIT Challenge -- Making the Medicine Go Down

By John Ballard

Health Information Technology is to wasted revenue what tapeworms are to nutrition.
If waste is part of the revenue stream, then reducing waste reduces revenue.
Most people would reply "So what?" until they realize that reduced revenue leads to reduced profits, especially if you are selling something that is part of the "waste,"

Regardless of any position about legislation being crafted, surely no one remains who is unaware that a big part of healthcare inflation is administrative inefficiencies and unnecessary procedures. Aside from the fee-for-service billing model (which is the equivalent of selling loaf bread by the slice) even the most dedicated hard-core opponent of reform can't argue that administrative waste, mostly redundancies, can be reduced.

Dr. Halamka poses this scenario:

You can imagine the following conversation:

"Hi - I'm from your local health information exchange. You may know that over 20% of lab and radiology tests ordered in our state are redundant and unnecessary. We're solving that problem through interoperability and we need you to invest $300,000 in capital plus $100,000 per year to connect to our state wide exchange. When it's all working, we'll eliminate all the redundancy, reducing your lab and radiology income by 20%. "

This is what we call an oh-shit moment. All this electronic record stuff is great until it gets into MY business. Who wants to go along with a program that promises to cut into my business?

Dr. Halamka uses the word interoperability but the end result is the same. Interoperability is great for patients, a benefit to society, but can create a loss of income for some stakeholders. How do we sell it?

He proposes five ways to make this bitter medicine go down.

1. Health Reform - if healthcare reform aligns incentives for wellness and care coordination, stakeholders will be incentivized to share data. For example, if medical error is no longer reimbursed and hospital readmissions become a cost rather than a profit center, care summaries are likely to be shared among providers and data sharing between patients and providers will be used for home monitoring and keeping patients out of the hospital.

2. Meaningful Use Metrics/Pay for Performance
The HIT Policy Committee has proposed 29 metrics for 2011 - 17 measures of quality and 12 measures of meaningful use. Although the definition of meaningful use will not be published until next month, It is likely that clinical summary data exchange between organizations, e-prescribing, electronic laboratory workflow, quality measurement, and public health will be included. Thus, for organizations to claim their stimulus funds, they must be interoperable. Exchanging data between facilities within an organization does not count, per Dr. Blumenthal's recent newsletter. Many private insurers also ofter pay for performance incentives for reduced readmission rates, appropriate testing, and medication management. The combination of stimulus funds, Medicare Part D funds, and private insurer pay for performance should provide a reasonable incentives.

3. Peer pressure
I've seen several types of interoperability "peer pressure" in our communities. Primary Care physicians would rather work with specialists who can exchange clinical data, ensuring a closed loop referral workflow. Specialists who are not interoperable are likely to experience a decline in business. Among hospitals, our local CEOs have decided that healthcare IT should not be be considered a competitive asset for any one organization, it should raise the bar for all organizations to improve the health of the population. Thus, each CEO had decided to eliminate silos and share clinical summaries at transitions of care, even if this means exchanging data between competitive organizations.

4. Cost avoidance
The NEHEN network has eliminated paper for 90% of the administration transactions in Massachusetts, taking the cost of claims submission from $2.50 to .25 . We've been able to make the ROI/business case for funding interoperability operations based on cost avoidance. Clinical data exchange also has cost avoidance. ePrescribing eliminates the need for staff to process refills and reduces calls/pages to clarify prescriptions. Malpractice assertions are less likely when care is coordinated among patients and provides. Disease management programs administered by payers and case management activities are more efficient when data is shared electronically.

5. Increased business
Providing interoperable connections in and out of an organization should make that organization a more attractive business partner for clinical collaboration, clinical research, and diagnostic services. I recently was asked to enable data sharing between BIDMC  [Beth Israel Deaconess Medical Center, where Dr. Halamka works] and a business partner. I was told that interoperability was a significant value add to the relationship.

Thus, although there may be a short term misalignment of incentives caused by reducing redundancy and waste, the are many reasons to implementation interoperability for the long term. With new regulations and healthcare reform on the horizon, I'm hoping it becomes a business imperative!

Let me splain a couple of things here.

NEHEN (#4 ABOVE) stands for New England Healthcare EDI Network. "EDI"is short for electronic data interchange.
If you read stuff like I do you may have scanned past the most important part of this post about cost avoidance.

The NEHEN network has eliminated paper for 90% of the administration
transactions in Massachusetts, taking the cost of claims submission
from $2.50 to .25.

This is not just important.
From two and a half bucks to twenty-five cents is not chicken feed.
This is huge.

Imagine what will happen when this kind of efficiency starts eating away at Medicare and Medicaid "redundancies."  I read somewhere that simply by switching Medicare from the EOB model to monthly billing statements will result in multi-million dollar savings as well as an easier to discover way of revealing fraudulent claims. This is another example of why I keep saying that even in the absence of legislation health care reform is already under way. 

Reductions of readmissions and errors will be welcomed by all, even if it means less revenue. No one will argue that errors and incomplete outcomes are worth additional trouble even if they do enhance the revenue stream. Besides, if private insurance companies are already on the wagon it must be okay. After all, they seem to be driving the forces otherwise arrayed against legislative progress. 

I don't look for peer pressure to be a big seller. When thousands of
physicians and other professionals decide to join the teabaggers in
their quest to prop up the train wreck now passing for health care in
America, I'm not impressed. But in the same way that the El Pasos and Intermountains of the country continue to do what they do, peer pressure will incrementally make its mark.