HIEs Impact on Healthcare

Jan. 1, 2008

I have had the unique honor of meeting many hospital CEOs, CIOs, medical directors and physicians across the country and the world. The one thing that is evident from conversations I’ve had with them is that the pace of change in the healthcare provider industry has never been as rapid as it is now. The pace at which services are leaving hospital settings for ambulatory outpatient, ambulatory surgery, nursing home and home healthcare has quickened. Home health is a reality for more people than ever, exemplified by the success of Visiting Nurses of New York. Holistic retirement and healthcare organizations such as Erickson Health (Baltimore) have done a great job of keeping older residents healthy and out of the hospital. The mix of patients that access in-patient care also is shifting more towards those on Medicare and Medicaid, or on charity care, a result of the aging of our population and the rising number of uninsured. Insurance premiums are rising at more than double the rate of inflation, due to higher utilization and newer and expensive healthcare services. In addition to raising premiums, payers are also beginning to squeeze hospitals on reimbursements. “Pay-for-performance” is one of the tools that insurers are employing in order to cut back on reimbursements. Insurers are also very concerned about patient compliance and damping increased healthcare consumption.

I have had the unique honor of meeting many hospital CEOs, CIOs, medical directors and physicians across the country and the world. The one thing that is evident from conversations I’ve had with them is that the pace of change in the healthcare provider industry has never been as rapid as it is now. The pace at which services are leaving hospital settings for ambulatory outpatient, ambulatory surgery, nursing home and home healthcare has quickened. Home health is a reality for more people than ever, exemplified by the success of Visiting Nurses of New York. Holistic retirement and healthcare organizations such as Erickson Health (Baltimore) have done a great job of keeping older residents healthy and out of the hospital. The mix of patients that access in-patient care also is shifting more towards those on Medicare and Medicaid, or on charity care, a result of the aging of our population and the rising number of uninsured. Insurance premiums are rising at more than double the rate of inflation, due to higher utilization and newer and expensive healthcare services. In addition to raising premiums, payers are also beginning to squeeze hospitals on reimbursements. “Pay-for-performance” is one of the tools that insurers are employing in order to cut back on reimbursements. Insurers are also very concerned about patient compliance and damping increased healthcare consumption.

A closed loop HIE system that pulls labs, radiology groups, hospitals, physician practices and patients into one integrated system serves the best needs of the patients, while simultaneously positioning your institution in a strong leadership position for years to come.

This creates a challenging environment for healthcare provider organizations, but it also creates remarkable opportunities for those who want to proactively lead their organizations to embrace and thrive in this environment. Organizations that recognize this opportunity will get ahead and forever change their standing in the markets in which they operate. Genomic medicine will be a reality in less than five years. Biotech medicine is a reality now and is growing in scope. Forward-thinking healthcare provider organizations should take advantage of the unprecedented opportunity HIE technology offers to not only survive this era of tumultuous change but also to actually lead and thrive, and in fact, increase their market presence like never before.

Multiple Strategies

What strategy makes the most sense for forward thinking hospital CEOs? While I am no medical doctor to advise hospital executives in areas of care delivery, I can certainly provide guidance on business strategy.

First and foremost, you want to lock in your referral base of physicians and the mindshare among residents in your community. Protecting your credentialed community of physicians so that they continue to bring patients to your hospital is paramount. Equally important is ensuring that citizens in your community rely on your organization’s healthcare expertise for all their health related needs—not just for healthcare visits. In the Internet era, that means you have to communicate with them on the Web. For instance, you want your local community to use your health information services to manage their personal health information. If you cede this space to a third party, the third party is in a position to redirect your patients to one of your competitors who may be willing to pay more to get access to those patients. Several major technology companies have either announced or are already implementing a strategy to directly reach patients. This constitutes a significant threat to the sustainability of a hospital’s traditional dependence on physician referrals to keep business coming to the hospital. Would you want to run the risk of a patient moving to a different healthcare provider because they provide better Web-based access to their healthcare information? In the era of instant access to information and greater transparency, this is a real threat to your business. If you are the pre-eminent healthcare provider in your region, you need a real strategy to use health information technology to connect with your referral base of providers and the patients you serve.

Forward-thinking healthcare provider organizations should take advantage of the unprecedented opportunity HIE technology offers to not only survive this era of tumultuous change but also to actually lead and thrive.

Secondly, once you have taken steps to keep your referring physicians happy and not straying into a competitor’s orbit, you want to use this opportunity to lower your operating costs. Two areas that provide opportunities are: 1) The transaction costs of acquiring information when patients visit your hospital; and, 2) Reducing the costs of distributing clinical information to your referring community. An efficient HIE solution allows you to capitalize on both opportunities. It also has the added benefit of helping retain your referring physicians. Imagine a situation where independent physicians prefer to refer their patients to your institution over others because you provide the highest quality care, you keep them electronically informed of their patients’ progress at your institution, and you provide the best experience for their patients, including access to their patients’ information.

A closed loop HIE system that pulls labs, radiology groups, hospitals, physician practices and patients into one integrated system serves the best needs of the patients, while simultaneously positioning your institution in a strong leadership position for years to come.

Thirdly, you need a strategy by which you can diversify your business mix. An over-reliance on inpatient-admissions and ED-admissions has the potential to be the “Achilles heel” of your business. Many hospitals have diversified and provide lab services, radiology services, cardiology services, home health, assisted living and skilled nursing facility, outpatient clinics and more. Let’s assume that you made the strategic choice to diversify your health services mix to take advantage of the changing nature of healthcare needs. The last thing you want to build is a set of siloed health information services that confuses patients and provides disjointed care.

Protecting Your Referral Base

Connect with your hospital’s physician referral base and enhance its overall experience, thereby preserving and growing that base. Encourage your referral base to plug into a “health information” bus, one that every member of the referral base relies on.

Consider using the safe harbor provided by Stark laws and anti-kickback statutes relating to the donation of technology to referring physicians.

Do not allow third parties (such as federal, state or local governments, vendors, payers, employers, HSA databanks, unaffiliated software companies or competing providers) to take charge of your patients’ private medical data and then begin dictating unfavorable terms for access to the data. When you are the leader in your healthcare market, you want to extend that leadership on the Web.

Adopt an incremental approach (with costs of under $2,500 per physician) that does not require a massive up-front investment from the hospital, such as would be necessary when donating a full EMR (costing up to $25,000 per physician). Large IT projects have a high failure rate. You want to start small and prove the viability of the system in your local environment before making bigger bets. Work only with vendors who are willing to partner with you in such a model.

Controlling Costs Through HIE

You can control the cost of providing healthcare in situations where Medicare/Medicaid payments are capped (such as, DRG payments to hospitals) by searching electronically for previous lab results, medications and radiology results. Thus, unnecessary studies can be avoided, resulting in a significant cost savings. Avoiding a single radiology study that was redundant can save you hundreds of dollars.

Diversifying

Would you engage more confidently in mergers, acquisitions and investments in new care delivery initiatives in different care settings (such as, homecare, long-term care, minute clinics) if you knew that there would be a way to integrate the clinical data from these various settings once the acquisition was consummated?

The emerging healthcare environment that demands highly customized care, where transactions are electronic and where costs are drastically reduced, requires an electronic exchange platform. Is your organization preparing for this world, which is probably less than five years away? Could your organization use this as the opportunity to lead the market you serve?

The healthcare environment is changing at a rapid pace. The impending retirement of the Web-savvy baby-boomer generation is going to change how healthcare providers interact with each other and their patients. While some major providers will be unprepared for this change, others will proactively anticipate trends and accelerate their leadership position, improving their own position in the market and enhancing the quality of care for the patients they serve. Where does your organization stand on this spectrum?

Prem Urali is president and CEO of HealthUnity in Bellevue, Wash.
Contact him at 425-454-6699 x201.

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