Lessons from Credit Bureaus for Improving the Market for Electronic Medical Records

By Richardson, Craig; Hall, Mark et al. | The Journal of Consumer Affairs, Fall 2010 | Go to article overview

Lessons from Credit Bureaus for Improving the Market for Electronic Medical Records


Richardson, Craig, Hall, Mark, Madjd-Sadjadi, Zagros, The Journal of Consumer Affairs


Electronic medical records (EMRs) have tremendous potential to lower consumer medical costs and improve quality, yet their use in the United States remains extremely low. We explain the reasons for this market failure and then document the strikingly parallel problems in the lending market one hundred years ago. We investigate how the evolution of credit bureaus helped address market limitations in lending, and ask whether similar entities--what we call health information bureaus--might overcome similar problems in EMR adoption and interconnection.

**********

There are numerous clinical, academic, research and administrative uses for a patient-based electronic medical record (EMR), which stores a person's complete medical history in a digitized form. Patients can take better charge of monitoring their health; doctors and hospitals can simultaneously view and share information and research labs have new sources of medical information. Hillestad et al. (2005) estimated that EMR implementation in the United States at a 90% adoption rate could eventually save over $77 billion annually in medical costs. Costs of adoption would average $6.5 billion per year for inpatient systems and $1.1 billion per year for outpatient systems (Hillestad et al. 2005), so the annual net savings to society could eventually reach over $68 billion a year. Despite these advantages, fewer than 5% of US physicians and hospitals use full-scale EMRs (Cutler, Feldman, and Horwitz 2005; DesRoches et al. 2008; Jha et al. 2006, 2009).

There are four significant reasons. First, one person's savings is another person's loss of income. Taylor et al. (2005) points out that EMR adoption would save an estimated 404,000 lives through improvements in disease management and prevention, but providers would bear "annual revenue decreases of $51.7 billion for hospitals, $11.6 billion for physician services, and $13.5 billion for pharmacies" (p. 1237). (1) Second, as a network good with high fixed costs, EMRs' unit value rises exponentially as the number of units or users in the market increases. Thus, there is little benefit to be an early adopter (Taylor et al. 2005). Third, when one provider shares electronic patient information with another health care provider, the record transforms from the doctor's private property to a quasi-public good. Ironically, doctors and hospitals do better financially if their information sources are more inefficient (Grossman, Kushner, and November 2008; Kleinke 2005). Fourth, providers adopting EMR technology capture only 3.1% of the total social benefits (calculated using data from Exhibit 2 in Hillestad et al. (2005). Private insurance companies, Medicare, Medicaid and eventually consumers of medical care are the primary beneficiaries, yet these groups do not directly pay for the maintenance of the EMRs (Hillestad et al. 2005).

Given these roadblocks to an efficient market outcome, the question is: Which combination of government regulation and private incentives would steer the market in the right direction? Rosenfeld, Zietler, and Ferguson (2004) suggested that the best way to solve this market failure is for public and private insurers, who are among the primary beneficiaries from EMR technology, to play a larger role in footing the bill. Insurers could pay for EMRs through financial incentives that reward or penalize providers and patients, based on their use of EMRs.

Even if insurers provided financial incentives, two inherent problems would remain. First, there are high transaction costs related to gathering large numbers of buyers and sellers of EMRs to the negotiating table to agree on a uniform standard. Financial support by insurers does not solve the problem of different insurers adopting incompatible systems, or their unwillingness to provide information to others when their subscribers switch to competing insurers. Second, health care providers have an array of preferences regarding EMRs, depending on factors such as the size of the practice and age of the physician (Centers for Disease Control and Prevention 2005).

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Lessons from Credit Bureaus for Improving the Market for Electronic Medical Records
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.