Cats and dogs: Can we find unity on healthcare IT change?

By Matthew Holt
12:48 PM

This blog first appeared at The Health Care Blog. - Ed.

Those of you paying attention for the past few days might have noticed on the one hand a sense of optimism and unity as Barrack H. Obama, somewhat somberly, began his Presidency.

Meanwhile, over the past few weeks the fur has been flying among the electrons on THCB while some very knowledgeable and opinionated health care wonks and geeks have been battling it out about what exactly we should be doing in terms of Federal health care IT spending.

Given that even among you smart THCB readers this may be all a little perplexing, I’m going to try to try to make what I hope are some elucidating comments to put this argument in context. I’m doing this partly because I’m perplexed too, but also because I think that there is some hope for a middle road.

First the basics: As sometime THCB contributor & ubberCIO John Halamka makes clear in this excellent post about The Greatest Healthcare IT Generation, some $20 billion of the soon to be passed “spend it as fast as you can” stimulus package is going to be targeted towards health care IT. Now that’s by no means the biggest part of the $800 billion or so package, and it’s not even the biggest part of the health care spending in the bill; that’s the closer to $87 billion or so going to support Medicaid—although that will mostly will be replacing cuts being forced on states. Let’s be clear, this package’s main role is to stop the patient from bleeding out and will probably need to be joined by a bank restructuring the likes of which we’ve never seen. Health care is a sideshow, but $20 billion is still $20 billion, and given that the current health IT market is only between $20 & $30 billion annually, it’s a huge potential increase for the industry.

This spending is separate from any larger health care reform proposed by Obama, even though it appears that such a reform package is fairly likely to appear in Congress as soon as Daschle, Baucus and Kennedy get their ducks in a row. And of course, most of the issues that divide THCB’s various commentators on health IT are rooted in problems that only a major reform can solve. And realistically even those most optimistic about the prospects for reform don’t believe that the Obama/Daschle/Baucus plan will get at the core problems of the US health care system any time soon.

The underlying problems: American health care has two linked and intertwined problems. First, (and it is first) due to America’s unique political history, most of the pain of dealing with increasing health costs is deposited on a poor (or soon to be poor) and relatively powerless minority of the population - the sick who are uninsured and underinsured. No one is really responsible for their financial well being, nor is any entity forced to make their cost of care equal to that of the rest of society. So the health care system has reacted rationally over the years by increasing what it charges the majority, and not worrying too much about that minority even as it grows. Every other rational country instead distributes that cost evenly by putting (more or less) everyone in the same financial pool, and puts someone (usually the government) in charge of the total cost of the system to society. The US is different, as it’s the only place where for the players in the system doing more means getting more absolutely. Everywhere else, the rest of society stops the health care system arbitrarily grabbing more resources.

The process whereby the health care system grabs more and more in the US comes mainly via an incredibly strong supplier community that has political control over the large share of spending that is government funded, and economic control over the main providers of private spending - employers. Of course it may not feel that way to the suppliers in the system but the numbers (share of GDP going to health care more than doubling over 30 years) don’t lie.

This leads to the second problem: The mechanism of that provider control is a payment system that encourages piece work, acute care, fixing rather than prevention, specialization over primary care, and - not least - big hospitals over community based clinics. Now as Atul Gawande points out in the New Yorker this week, it’s not as if every other country does exactly the opposite, but the scale by which we’ve tipped over here is unprecedented. And multitudes of articles on THCB over the years prove it out, and show that it’s very hard to change that status quo.

This starts to get us back to IT. The first significant use of IT in health care in the US was in large hospitals primarily aimed at accounting (and billing) for piece work. Eventually most large and many smaller hospitals began to extend their IT capabilities to automate other aspects of their activity, but even among the most sophisticated, the role of IT supported rather than transformed the way they delivered care. The goal of the hospital is after all for the hospital to thrive and prosper, not for the community to improve the care it gets at a lower cost. This has continued as IT investment has picked up, especially since 2003, and of course it’s been reflected in the stock price and profitability of the winners in health IT, notably Cerner and Epic.

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