SAN FRANCISCO – Amid the “most perilous time we’ve ever seen,” healthcare IT and innovation can drive fundamental changes in the U.S. healthcare system, David Brailer, MD, former federal healthcare IT czar, told attendees at the Health Tech Investment Forum here on Tuesday.

While the nation hasn’t made meaningful progress in driving systemic changes in the way healthcare is delivered, entrepreneurs, investments in disruptive technology and support from state leaders will get America to the other end of healthcare reform, said Brailer, founder and chairman of Health Evolution Partners.

Proposals for new taxes and cutting Medicare benefits should be scrapped in favor of focusing on innovative solutions that bring long-term efficiencies that embrace quality and the right treatment at the right time, he said.

Despite the economic downturn and the “tremendous nervousness” among investors, “capital will find a way” to fund innovation, he said, adding, “The bright spot is health IT.”

The $37 billion allotted for the Office of the National Coordinator for Health Information Technology in February was a “tremendous commitment” that has made ONC the fastest growing federal program in history. The biggest beneficiaries of the federal stimulus funds for healthcare IT adoption are the electronic health record companies, he said.

While Brailer applauded the $500 million set aside for health information exchange, or HIE, he noted that changes in privacy policy, while socially appropriate, would make HIE more difficult. He also decried the notable absence of funding for personal health records.

With 75 percent of hospitals already committed to healthcare IT implementations, the federal stimulus funding is basically a subsidy - and not a stimulus - to these hospitals, he said. The real test will be whether small hospitals, with less staff, dollars and resources, can find products that fit into their environments. If they do, “the impact could be quite powerful,” he said.

“Health IT probably is and rightfully should be center stage,” Brailer said. “This is a promising scenario. We’re in for a long course, but there is tremendous opportunity on the entrepreneurial side.”