Thursday, October 23, 2008

Dear Mr. President

Technology Review, a great publication from MIT, asked me to write a letter to the incoming President, summarizing the healthcare IT agenda for the next administration. Here's what I wrote:

Dear Mr. President:

As you know, the United States is spending 16 percent of our gross domestic product on health care, a percentage that is likely to rise. That might be reasonable if we were getting correspondingly high quality, but we're not. While we have some of the best individual-care facilities in the world, our system does not rank well against other industrialized nations on basic health measures.

Health-care information tech­nology is one of the major tools the United States can use to constrain cost increases and enhance quality. To date, the U.S. has adopted electronic health records (EHRs) at a much lower rate than most other industrialized nations, including Germany, Canada, the United Kingdom, and Australia. The U.S. spends 43 cents per capita on health-care IT, compared with $193 per capita in the U.K.

Incentives to introduce EHRs and a compelling business case for continuing to use them are crucial to getting the technology adopted on a wide scale. In the outpatient setting, implementing a system of EHRs that providers can easily share costs those providers $40,000 to $60,000. Yet most of the benefits go to payers and purchasers--often the U.S. government. To fix the misalignment, the government should offer incentives directly to providers.

We need to be careful, though, about what actions the government takes. A recent Congressional Budget Office report concluded that imposing penalties for failing to adopt health IT would be more cost effective than providing financial incentives. Primary-care physicians in the U.S. are already struggling with high costs and low reimbursement. Asking them to comply with another unfunded mandate based on penalties rather than incentives won't solve the problem, because it doesn't acknowledge the underlying economic misalignment that has discouraged adoption in the first place. The result won't be more EHRs; it will be fewer medical students choosing primary-care careers, which will fuel even greater increases in health-care costs.

I recommend a three-point plan for your administration:

(1) Provide incentives through Medicare for the adoption and use of EHRs. Target these incentives so that cost savings are shared with clinicians.

(2) Encourage insurers to provide incentives for hospitals to adopt CPOE (computerized physician order entry). This technology, which lets physicians communicate treatment instructions electronically, is the most important tool hospitals can introduce to improve their safety, quality, and efficiency of care.

(3) Continue to provide federal funding for technology and policies that encourage interoperability between health-care providers.

If we coordinate the care of all Americans and ensure that every person has a lifetime electronic record, we will enjoy safer care at a reasonable price.


mxganse said...

Thanks John,

Although I'm a politician and sure to screw it up royally, I'll be sure to use this as a guideline when it comes time to develop my healthcare and technology policies.



ps: Don't think I forgot about the 200$ you owe me for the exotic mushrooms I smuggled in for you!

Ralph Bernstein said...

IT, properly deployed, can certainly help. But it's also important that hospitals improve how they operate. Books such as Lean Hospitals by Mark Graban can be a resource for these improvements. I've also written about what some hospitals are doing in my blog, Lean Insider,

Anonymous said...


You reference Medicare as a program that should offer incentives to providers to adopt health inforamtion technology. I wanted to mention that the same CMS also admisters Medicaid and similar incentives could be considered there. Looking at incentives that benefit both programs might leverage the benefits further and spread the use of these technologies to a wider range of patients. Medicare's patient mix would hold little benefits as far as extending EHR to pediatrics, for example. Medicaid would cover this well.

Caston Thomas @ Voalté said...

John, Wanting clarification on one item in this post. You mentioned "The U.S. spends 43 cents per capita on health-care IT..." My math puts that at roughly $13M for the US. Can you double check that figure or provide a source? I'd like to use it in my presentations and need to know more about what goes into that figure.


John Halamka said...

The reference I used for IT spending is

(Anderson GF, Frogner BK, Johns RA, Reinhardt UE. Healthcare spending and use of information technology in OECD countries. Health Affairs. 2006; 25(3): 819-31)

Per the comment about Medicare, I should have also included Medicaid to ensure all children are covered. I'm meeting with the AAP in December to discuss the best way to include children in our national IT efforts

Anonymous said...


Glad to see you look at adding Medicaid. However, I wanted to note that while Medicaid does indeed cover a wide swath of children, it also has an enormous role in care for the aged, blind, and disabled (ABD).

To put these two populations in perspective, Medicaid/CHIP in Texas pays for the births of about 55 percent of the babies in our state. On the flip side (quoting from my memory), the ABD population accounts for about 21 percent of our clients, but 61 percent of our expenditures.

So, ABD accounts for roughly one in five clients, but needs close to 2/3rds of the budget.

This ABD population is a place where EHR and other aspects of health information technology has a lot of potential to improve care and save money.

I work in this policy area and would be happy to supply additional information. I can also assist with pointing you to some of the innovative things being looked at by state Medicaid programs in the area of health information technology. Texas Medicaid, for example, assembled a first-of-its-kind claims-based EHR for foster-care children called the Health Passport. This program is now being evaluated for expansion into the larger Medicaid population.

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