E-medical Records: What Seems to Be the Problem?

There are lots of challenges, but financial disincentives may be the biggest.

This version of this article originally appeared in Computerworld's print edition.

It's been about three years since San Diego's five major hospitals first convened to discuss sharing electronic medical record data in an effort to improve diagnoses, reduce errors and improve the quality of patient care. The group held several meetings and entered discussions with a vendor as a possible corporate sponsor -- and that was that.

"It really didn't go anywhere," says Dr. Joshua Lee, medical director of information services at the University of California, San Diego, Medical Center, one of the participants in the EMR discussion. While the system would have had a clear public health benefit, it was not in each hospital's economic self-interest to pursue it. "The financial and oversight responsibility would fall on the medical centers, even though it's a very intangible benefit to the medical centers," says Lee.

Today, if a child who is a UCSD patient at the pediatric clinic at 7910 Frost St. in San Diego is admitted to the emergency room at Sharp Memorial Hospital at 7901 Frost St., the only way the ER doctor can view that child's known medical problems, allergies, prescriptions and other health data is by calling UCSD HealthCare, making a records request, and waiting for the information to be printed and either faxed or physically delivered on paper. Conversely, any treatments or medications given at Sharp won't be entered into the patient's EMR in the UCSD system. "It's not like we don't share on paper, but we don't institutionally share data," says Lee.

The situation in San Diego is the norm rather than the exception, but it doesn't have to be that way. "We have had the technology to do this for 30 years," says Shaun Grannis, medical informatics researcher at the Regenstrief Institute, an Indianapolis-based research organization that spearheaded a metropolitan health information exchange in its home city. One of the first U.S. regional exchanges, the Indianapolis system is used by 34 health care providers.

Rather than requiring member providers to change their internal systems, the institute wrote middleware that integrates data from all of those proprietary systems and organizes it into a single data model. "We wrote the interface engines that do all of this stuff," says Grannis. If members simply want to view integrated patient data, they log into the community electronic health record (EHR) Web site. Alternately, the institute can push data out to providers that have their own EMR systems.

Ultimately, technology isn't the problem. Granted, the health care industry has been held back by loose and overlapping technical standards and by poor interoperability among the different types of health information systems sold by hundreds of vendors. But the biggest obstacle may be a payment model that offers little financial incentive for most health care providers to invest in using electronic records internally, let alone share them with other providers.

Electronic records systems do yield some savings, particularly in the area of filing, but the savings often aren't enough to justify the cost -- especially for single-physician and small group practices, which make up more than half of the health care services in the U.S.

Even in Indianapolis, there is no viable long-term business model for the health information exchange, and not all members have their own EMR systems. "We are largely grant-funded," Grannis says. Once those grants come to an end, other revenue sources must be found to sustain the programs.

The Business Problem

Just getting health care providers to migrate from paper to electronic records systems is a challenge.

"The provider bears the cost, but most of the benefits accrue to other parties," mainly "payers" -- insurance companies -- and patients who reap the benefits of higher-quality care, says John Halamka, CIO at Harvard Medical School and Beth Israel Deaconess Medical Center in Boston and a Computerworld columnist.

Among the benefits for patients is prevention of adverse reactions to drugs. But while providers recognize the benefits, they aren't rewarded for improved patient care and safety, says John Quinn, chief technology officer at Health Level Seven Inc. (HL7), a health data standards development organization in Ann Arbor, Mich.

A recent study on the value of computerized order-entry systems for clinical use found that only 11% of the return on that investment goes to the provider. Most of the rest benefits the payer, says study co-author Blackford Middleton, who is corporate director of clinical informatics research and development, and chairman of the Center for IT Leadership at Partners HealthCare System Inc. in Boston.

"We're not reimbursed for using better systems to take better care of patients, says Mark Leavitt, chairman of the Certification Commission for Healthcare Information Technology. Ironically, the financial systems are a different matter. "Everyone makes darn sure those work, because if you don't send [insurance reimbursement information] in the right format, you don't get paid," he says.

Historically, the adoption of computers in health care has been driven by the need to bill for services. That hasn't changed, Leavitt says.

The same problem arises with regional health information exchanges, such as the one briefly considered in San Diego. "If I send electronic information to Sharp [Memorial Hospital], I don't really benefit. It costs money to do this, and it doesn't really help our margin," says Lee. "It's good for patients, but it's almost an unfunded mandate."

On the other hand, says Leavitt, "if you're not able to cover the last mile and get that record to the other institution, it won't affect your reimbursement at all."

Shared EHRs can help providers avoid duplicating tests. But providers are compensated for procedures given, not those avoided. "The cost to the payer is diminished, but so is the reimbursement to the radiology department and the radiologist," says HL7 CEO Charles Jaffe.

"The problem we have in this country is a lack of business reasons for integrating," Jaffe explains. "What is the business case for two competing hospitals to share data? None."

On a national level, the inability to exchange health information has public health consequences. About 47 million Americans move every year, but for the vast majority, medical records -- even electronic ones -- don't follow the patients. That can affect continuity of care.

"Nirvana is when in every transition of care, a clinical summary will be pushed to the next caregiver," says Halamka. Today, that information is still printed and forwarded on paper. If the patient is lucky, his new provider may scan the paper records into its own system, where they will be available as viewable but nonsearchable image files.

Robert Smith is associate chief of staff for health care analysis at the Veterans Administration San Diego Health Care System, which also participated in the regional exchange discussions. He thinks that the advantages in quality of health care and patient safety are "worth every cent."

The VA has developed its own EMR system and can share patient data with any VA hospital in the country, as well as with some U.S. Department of Defense medical facilities. But VA San Diego can't exchange data with non-VA health care providers that its patients use.

The Duke University Health System has integrated the data from its disparate systems to create a unified EMR system. CIO Asif Ahmad says the benefits have been worth the considerable effort involved. The hospital is using business intelligence tools to comb through clinical data in an effort to improve the quality of patient care and is using predictive analytics to help avoid potentially adverse reactions to drugs and improve patient safety. But it is not yet sharing health care record data outside of its own provider network.

Show Me the Money

The lack of consistent standards and the plethora of proprietary vendor offerings contribute to the problem, but those issues are slowly being resolved. Improving interoperability will make building an EMR infrastructure and EHR exchanges easier and cheaper, but it won't solve the incentive problem.

First, there are the upfront costs for getting all practices on EMR systems. Leavitt says the typical cost of such a system ranges from $15,000 to $50,000 per doctor. "Smaller practices can't amortize it," he says.

"Doctors are not going to do this on their own," says Halamka. "Hospitals have to pay for them to acquire it, and payers have to provide incentives for them to use it."

He says thanks to a 2004 reinterpretation of the Stark Law -- federal legislation that prohibits doctors from receiving subsidies from institutions to which they refer patients -- hospitals can subsidize up to 85% of nonhardware implementation costs for private practices. By using a software-as-a-service model for delivering EHR systems, those practices can reduce upfront hardware costs. "Software as a service is cheaper because of economies of scale achieved through central hosting and procurement," Halamka says.

But although Beth Israel Deaconess has made it a policy to offer EHRs to nonemployee doctors, many hospitals, faced with tight budgets, are unlikely to fund such programs without an economic incentive to do so.

There are secondary costs as well. Staffers must learn a new EMR system and often must change their business practices to accommodate the way it works. In some cases, the implementation of a system can take four to six months and cut back the number of patient visits by as much as 50%, says Grannis. "That's a big barrier to face. And they're not computer scientists, so it's a strange new world," he says. While practices do see some savings by reducing costs in areas such as filing, "none of these value propositions are home runs," says Grannis.

HL7's Jaffe says that if the market isn't providing incentives to doctors to make the transition, the government should do so in order to improve public heath. "In the U.S., [the government] has budgeted $75 million for health care IT. In England, it's £1 billion. It's disheartening," he says.

The U.S. Department of Health and Human Services does have one small program under way. In what project officer Jodi Blatt calls a "pay for performance demonstration," the Centers for Medicare & Medicaid Services are in the process of recruiting 2,400 practices in 12 locations this year to participate in a study. Physicians can earn up to $58,000 -- group practices up to $290,000 -- in incentives over the course of the five-year program by demonstrating improvements in patient care as a result of having implemented EMR systems. "We believe the incentives are substantial enough to reduce the barriers to practices," she says.

However, there are 921,904 physicians, 723,118 practices and 5,756 hospitals in the U.S., according to the American Medical Association and the American Hospital Association. Given those numbers, it's not clear that the incentive program will enable the industry to meet President Bush's stated goal that it provide most Americans with interoperable EHRs by 2014.

Brokered Solution

If all hospitals and physicians used EMR systems and met the standards for interoperability, more regional exchanges -- and even national information exchanges -- could start to develop. "A hospital in Miami could contact a hospital in San Diego and do some sort of exchange. That's in the ideal world," says Blatt.

But who will pay for that remains unresolved. Grannis says Regenstrief is working to find a sustainable economic model for health information exchanges by providing value-added services beyond basic health-record sharing. For example, the institute has received separate, ongoing funding for a service that uses data in the EHR exchange to quickly identify disease outbreaks (see "Seven Years And Counting: National Disease-Tracking System Still Unfinished"). But today, Grannis acknowledges, the exchange still depends on "a patchwork of funding."

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