By Holstein, William J.
Chief Executive (U.S.) , No. 216
What's needed are common standards, privacy assurances. BY WILLIAM J. HOLSTEIN
It seems like such a no-brainer: Introduce more information technology into the relatively primitive U.S. health care system to drive out huge amounts of waste, thereby lowering costs and improving the quality of care.
But, in fact, it is a monstrously complex challenge-and not because of technological problems per se. The real stumbling blocks are human and institutional. Doctors and nurses are not trained to embrace IT, and are suspicious that too much computerization could be used to measure their performance. Doctors and hospitals don't really have an economic incentive to drive down costs because, at the end of the day, they expect that insurance companies and private employers will pay the tab. Insurers and employers want greater automation, but don't necessarily want to pay for it. Even if they did, they would lack the power to impose it on hospitals, doctors and nurses.
Understanding the real nature of the challenge might start the journey toward lasting solutions, participants at a Nov. 29 roundtable in Chicago concluded. The session, called "The Role of Information Technology in Creating a New Health Care System," was sponsored by the Blue Cross and Blue Shield Association. The subject was, and remains, timely because the Bush Administration has appointed a "czar" to champion the issue-David J. Brailer, whose title is National Coordinator for Health Information Technology within the Dept. of Health and Human Services.
The heart of the problem is that the health care industry is so fragmented and in some ways, still a cottage industry, said Gail Boudreaux, president of Blue Cross and Blue Shield of Illinois. "There are multiple parties, all with different economic benefits and outcomes," Boudreaux explained. "And those who fund one piece of the technology may not get the benefit of the investment, and that's part of the challenge."
Another fundamental problem is that there are no consistent standards to guide more computerization. Participants noted that the current systems used by hospitals, doctors, insurers and employers are not interoperable. "It's really about human behavior and process changes," said Mychelle Mowry, vice president of global health industries for Oracle. "We could have the best technology, but if we don't understand how to improve our processes and then support those new processes with the technology, then we haven't accomplished anything."
Just how many administrative dollars could be saved? Out of a total health care bill of an estimated $1.7 trillion, certainly tens of billions. But no one really knows for sure because of the complexity of the system. Scott Serota, CEO of the entire Blue Cross and Blue Shield system, which insures more than 94 million Americans, says his administrative costs are less than 10 percent of premiums. "But there are administrative aspects of physicians' offices, hospitals and pharmaceutical companies," Serota said. "Everybody has their own administration. We consider that a medical expense, but if you break it down to their level, it's an administrative expense."
It may be wrong, however, to concentrate on merely improving administrative costs. The real need is to change the behavior of physicians and patients. "How can I take care of diabetic kids over their life at a case rate that can be reduced by 40 percent?" asked Edward Sellers, CEO of Blue Cross and Blue Shield of South Carolina, which handles 400 million claims a year. "Let's go to work on that, and your savings will fall out of that. You've got to focus on diagnostic outcomes," not just administrative costs.
Much of the discussion focused on the computerization of individual health records, which are still overwhelmingly paper-based. Computerizing them obviously poses issues of privacy, which would have to be managed well, but pressure could be building to introduce more computerization. …