Only a small fraction of physicians use an electronic health record system (EHR) in their practices and many are low-tech. While health information technology (HIT) advocates often lament this fact, they miss the many good reasons physicians do not adopt the latest technology in their practices.

Only a small fraction of physicians use an electronic health record system (EHR) in their practices and many are low-tech. While health information technology (HIT) advocates often lament this fact, they miss the many good reasons physicians do not adopt the latest technology in their practices.

Hospitals are the major buyers of healthcare equipment and the major investors in infrastructure. They deliver capital-intensive services, borrowing to finance a massive capital outlay for a structure or a piece of equipment and then provide low-marginal cost services for high prices to service the debt. Tightening credit markets have put this model in jeopardy. Standard and Poor’s Capital IQ reports that as of October 2008, 74 percent of the health sector’s publicly traded debt has been downgraded to “junk” (rated below BBB). Now is a difficult time to be selling capital-intensive systems to hospitals.

In contrast, physicians tend to focus on delivering care with a minimum of capital investment and a maximum of expensable (and, ideally, reimbursable) consumables. They increase cash flow first and cut expenses second. Suggesting a five-figure investment per physician on an EHR addresses neither.

Why HIT Fails

Physicians recognize that many process improvements in the health system do not benefit them. A system that reduces office visits, tests or procedures reduces their revenue and legislative mandates, grants and government initiatives do nothing to correct this. Many advocates highlight these reductions, but in a fee for service model, even errors can be profitable for providers.

In one such list of the benefits of HIT, 63 percent of the “savings” reported were either items profitable to providers or costs not borne by them. Subtracting out these “benefits” from the calculation turns the 5-year ROI negative for all but the largest practices.

The benefits to even large practices are unproven: In Kaiser Permanente’s failed Hawaiian EHR project, the vendor established a poor relationship with the Kaiser team, resulting in conflict, delay and cost overruns. After 28 months, the $442 million system was scrapped and replaced with another EHR.

Even with successful implementations, a struggling economy can cause problems, many of which result from a history of friction between HIT advocates and patient-facing providers. Despite the desire to revolutionize care, transformation cannot come overnight — the field is not tolerant of failure and stakeholders do not agree on what a transformed system should look like. The process should be developed and delivered in an agile model — one where candidate systems are rapidly prototyped, tested and modified, applying a medical process to medical systems. Unfortunately, this kind of open-ended development often does not match with a facility’s budgeting process, and as experienced at Kaiser in Hawaii, a process of continuous improvement can be very expensive.

What do providers want? Physicians are overloaded; revenue opportunities are increasingly scrutinized and HIT systems increase that scrutiny. Physicians want systems that streamline their workflow, increase their revenue, expedite reimbursement and reduce their costs. They want their patients to benefit from their services. Physicians address medical error through increased vigilance and not computer algorithms, and except for Medicare’s “reasonably preventable” conditions, minor mistakes can be profitable.

More critically, several experiences have identified errors introduced by HIT systems. In 2005, physicians from the University of Pittsburgh reported that after deploying a CPOE system, infant mortality increased in their facility. Aspects of user interface design can cause the wrong drugs or diagnoses to be selected.

Goals for Vendors

It is clear that none of the major systems available on the market can address all these issues. However, regulators are working to lock-in the current model. For example, the Certification Commission for Health Information Technology (CCHIT) certification requires “clinical templates,” making it impossible to certify innovative systems that manage workflow in a different paradigm. No legislation “requires” CCHIT certification, but it was created to provide some protection in litigation. Without that protection, funding development and selling the product becomes impossible. Given the challenges, it is not surprising that Google chose to launch a non-HIPAA-compliant health offering and groups such as Health 2.0 focus almost entirely outside of formal healthcare.

To move forward, HIT vendors should turn their attention from facilities to physicians. With the credit crisis, hospitals will not be making capital investments for small gains in efficiency. Physicians will be open to ways to improve their process and HIT systems that provide them will be welcome. Some key goals:

Share the risk: HIT vendors typically ask for large, up-front capital expenditures on promises of future benefits. Those benefits generally have not appeared. If vendors believe these promises, they should share the risks and deliver their products in a software-as-a-service model.

Reduce the friction: HIT failures have revolved around the sales of incomplete or inappropriate systems. Vendors need to offer complete, working systems and a uniformly positive experience from early adopters. Healthcare is an industry of best practices and HIT systems should not require extensive (and expensive) customization.

Address issues impacting valuation: Government and vendor groups should loosen their hold on HIT standards. An industry that cannot sell to more than 4 percent of the market does not know what the standards should be. Service levels, reliability, privacy and security, and compliance with applicable laws must become standardized. Everything else should be open to innovation and may the best system win.

Align incentives: Most critically, physicians should be compensated for providing the best and most effective care. Instead of a system of penalties and bonuses, physicians should be offered generous new revenue opportunities around well-care, whether in the form of disease management or diet and exercise supervision. Physicians would re-engineer their care model if they were offered, for example, one-half the savings from reduced hospitalizations in such a model.

Physicians recognize that many process improvements in the health system do not benefit them. A system that reduces office visits, tests or procedures reduces their revenue and legislative mandates, grants and government initiatives do nothing to correct this.

A National Imperative

Americans pay the most in the world for their care, both in absolute terms and as a percentage of GDP, and receive uneven and unpredictable quality. As with other industries, Americans should re-engineer their care around information systems to increase efficiency and cut costs. However, the incentives created by the complexity of health financing make it challenging to deploy, as HIT users are typically not the primary HIT beneficiaries.

Until insurers and employers who benefit from the cost reductions and efficiency gains engendered by HIT are able to finance its adoption, it will be difficult to deliver the maximum value to patients — and to the system overall. Still, there are many opportunities to tailor systems to particular constituencies, and with a tight focus on the needs of the customer, compelling value can be created.

Peter Schmidt is director of Cronus Partners LLC. Contact him at 203-642-0200 or at [email protected].

Sponsored Recommendations

Care Access Made Easy: A Guide to Digital Self-Service for MEDITECH Hospitals

Today’s consumers expect access to digital self-service capabilities at multiple points during their journey to accessing care. While oftentimes organizations view digital transformatio...

Going Beyond the Smart Room: Empowering Nursing & Clinical Staff with Ambient Technology, Observation, and Documentation

Discover how ambient AI technology is revolutionizing nursing workflows and empowering clinical staff at scale. Learn about how Orlando Health implemented innovative strategies...

Enabling efficiencies in patient care and healthcare operations

Labor shortages. Burnout. Gaps in access to care. The healthcare industry has rising patient, caregiver and stakeholder expectations around customer experiences, increasing the...

Findings on the Healthcare Industry’s Lag to Adopt Technologies to Improve Data Management and Patient Care

Join us for this April 30th webinar to learn about 2024's State of the Market Report: New Challenges in Health Data Management.