The Business Case for Informatics Solutions

Call to Action Medical Informatics Carrots or Sticks? Extracting Value from IT Is IT Necessary?

Call to Action!

The IOM points out that there is a "growing recognition that a stronger information technology (IT) infrastructure is integral to addressing such national concerns as the need to improve the safety and quality of health care, rising health care costs, and matters of homeland security related to the health sector." A series of critical events have made the need for change more urgent. The Secretary of HHS in May 2003 established the Consolidated Health Informatics (CHI) Initiative and called upon several groups to establish standards for medical data to be used by Federal agencies, which pay for 40% of healthcare. The IOM established an aggressive schedule for itself and the industry. The IOM organized, with HL-7, the Electronic Health Collaborative (EHC) and published the essential elements require in the EMR in late August 2003, now available online. In Nov 2003, the IOM released Patient Safety: Achieving a New Standard of Care, a landmark book making the case for informatic solutions and laying out a rapid rollout of EMR functionalities. In addition, Congress is finalizing legislation to establish PSOs which will accept reports on medical adverse events. The IOM envisions such reports eminating from an EMR that, in the course of routine care, collects information relevant to safety.

The IOM proposes an aggressive rollout of functionalities in healthcare environments. In their Letter Report (Table 1), the Committee on Data Standards for Patient Safety sees deployment of most functionalities within 24 months.

Medical Informatics

The business case of medical IT includes ... Improved patient safety and reduced liability risk Improved customer service and satisfaction Reduced transaction costs for clinical tasks Better information for managers Reduction of hassles; more focus on core activities

Technology deployed in the clinical arena offers advantages at all steps:

1. Improved scheduling, including reminders
2. Improved registration at point of care
3. Improved data availability to providers at the point of service
4. Enhanced use of algorithms, guidelines and patient education and disease management tools
5. Order entry (CPOE) of laboratory test, prescriptions, consults and other services
6. Reminders and alerts to avoid errors
7. Ready access to data between encounters to facilitate communications about refills, lab reports, and general medical issues.
8. Improved communications between healthcare providers about consultations, transfering care responsibilities (signout), and reconciling multiple variable.
9. Decision support for complex problems using advanced methods (see Data: Maximizing Value with Advanced Methods).
10. Support for research while conducting routine healthcare functions (see Research document).

Patient safety issues are discussed in greater detail in another document: The Problem.

Carrots or Sticks?

In their Letter Report, the Committee on Data Standards for Patient Safety of the IOM conveyed the following:

"Government health care programs, along with various private-sector stakeholders, are considering options for encouraging the implementation of EHR systems by providers. To achieve widespread implementation, some external funding or incentive programs will be necessary (Institute of Medicine, 2001, 2002a). For example, the Centers for Medicare and Medicaid Services might provide some form of financial reward to providers participating in the Medicare program that have deployed EHR systems. On the private-sector side, various insurers, purchasers, and employer groups are instituting quality incentive programs for specific EHR system functionalities, such as computerized provider order entry for prescription drugs and electronic reporting of performance measures (National Health Care Purchasing Institute, 2003). In addition, a number of employers, health plans, and physicians have recently formed a coalition called Bridges to Excellence, which will provide financial bonuses to providers to encourage improved patient care management systems, including EHR systems (Bridges to Excellence, 2003). Another option is to provide grant funding or access to .low-cost. capital to enable providers, especially those with a safety net role, to invest in acquiring EHR systems (Health Technology Center and Manatt, Phelps and Phillips, LLP, 2003). Certain regulatory strategies might also be pursued, such as requiring providers to have an EHR system as a condition of participation in Medicare (Department of Health and Human Services, 2003)."

JCAHO also is imposing new Patient Safety Goals, some of which will benefit from technology tools.

Is IT Necessary?

Nichols Carr's basic points ... Spend less by rigorously reviewing IT investments. Buy only after standards and best practice solidify. Focus on the risks, not the opportunities.

The IT community was rocked by Nicholas Carr's bold Harvard Business Review On Point article "IT Doesn't Matter." He eloquently enunciates the thesis that IT confered a strategic advantage as it was introduced, but now it is becoming a commodity available to every competitor. He provides analogies in railroads and electricity ... strategic in the beginning and now simple, but required infrastructure commodities available to everyone.

HBR received numerous letters, which provide a medley of reactions which are very helpful in evaluating the role of IT:

• Innovative applications of technology were not given their due (see below: Extracting Value from IT).
• IT can be used to bring about new business practices
• IT is not stable and dynamic performance improvements are continuing in basic architecture and design
• The gap between IT’s potential and business’s realization of that potential has not narrowed.
• Driven by Moore's Law, transaction costs decrease continually
• The marginal costs of information goods does not rise with increased sales; it drops asymptotically.
• Competitive advantage is not the result of personal computers. It is the result of effective management by skilled and highly motivated people.
• There are as yet enormous gains in value to be delivered in health, education, entertainment, business services, and especially government.
• The value is in the message, not the means of conveyance. IT can extend the value of information.
• IT does matter ... because the intelligent and innovative application of information solves business problems and creates customer value at high speed, low cost, and the right scale.
• Carr’s historical analogies to other infrastructure technologies are not convincing.
• IT never mattered. What matters are the people who invent information technologies and who deploy and use them
• The key difference between IT and Carr’s other “infrastructure technologies” is that the latter perform functions that lie outside human capabilities. By contrast, much of IT mirrors and amplifies the brain’s key information-handling activities: processing, storage, and transmission.

Extracting Value from IT

US Productivity Growth 1995-2000 published by McKinsey & Company in 2001, was the first careful study of the impact of technology on growth in other industries. Key McKinsey points ... Generally speaking, the most successful applications of IT appear to have been industry-specific applications (“verticals”), with direct impact on the core activities of the industry, as opposed to support activities. Many industries realized little gain because the IT support activities did not contribute to the core business. Good ROI was realized when technology fundamentally changed the way a company delivered goods and services.

The Carr and McKinsey treatises carry several messages for healthcare IT. Healthcare administrators have spent most of the capital and operating budgets in IT on back office functions. To paraphrase Carr and McKinsey, IT has become a routine commodity in healthcare for many supporting business functions (billing, materials management, etc.). This has produced little change in the way business is done and has largely been a black hole, consuming resources and not contributing to the bottom line.

IT penetration at the point of care is not mature in healthcare. IT is minimally deployed in the core business venues where services are delivered and where the greatest return is to be expected according to the McKinsey observations. For example, only 6% of hospitals use Compuerized Physician Order Entry (CPOE). IT can be expected to confer strategic advantages and better bottom lines when it is employed in the core business: direct clinical care activities. The recent experience with PACS emphasizes the value of IT in direct clinical care.