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The Healthcare Blog

Shahid Shah

Why Healthcare IT is in the state that it's in

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Earlier this week Nari Kannan asked "Why is Healthcare IT slated to become a Huge Gold Rush?"

His question is prudent and timely but his comparisons may not have really hit the mark. Let's look at the examples he gave and try to explain why healthcare IT is in the shape that it's in and why money and technology alone are not going to solve the problems.

In Banking, he said "consumers do loads of Internet banking". This is true -- however, the complexity of a banking transaction dwarfs in comparison to an average healthcare transaction (a bank transaction probably has only 5% the complexity of a healthcare transaction). And, if most banks were 1 or 2 person small businesses (like most healthcare businesses are -- over 70% of healthcare is conducted in and most doctors work in less than a 5 to 10 person office) then dealing with them would be difficult, too. For example, small community banks don't have nearly the same technology and super duper online presences as large national banks do; this is similar in healthcare (large players have decent, if not stellar, technology in place.

In finance he said "Transactions, accounting and all aspects of strategy and operations are all digital and computerized." Again, true -- but the majority of financial firms are not 1 to 5 person operations: most stock exchanges, credit card companies, and financial instrument producing firms aren't small businesses. As a better example, look at accounting and tax preparation offices -- there are very few small offices that are technologically savvy; there are no standard rules by which they run and you can't go from one CPA to another and reuse your data unless you manage your own data. If you're comparing the majority of small office doctors to large financial firms that's not a good comparison. If you compare large healthcare businesses with finance firms that's a fair comparison -- and you'll find there's plenty of use of technology to deal with healthcare financial transactions just like normal financial transactions; however, dealing with complex clinical data is a whole 'nother story.

Nari rightly went on to talk about Insurance, manufacturing, resource planning, and other industries. But, the same issue applies -- comparing apples (small "mom and pop" businesses like doctors offices) with oranges (larger firms). Small/tiny firms in all industries are technologically behind because it's tough to work without IT departments.

Nari stepped up and said "there is absolutely no reason for the accounting part of healthcare to be in the 19th Century with scribbles on paper!". However, he's not correct about the fact that the accounting of healthcare is done on paper; in fact, most healthcare financial transactions are conducted electronically through clearinghouses. The clinical parts, however, are almost all paper.

Towards the end Nari said "healthcare advocates are quickly running out of credible excuses on why 30% or all healthcare costs are wasted on repetitive, useless, clerical labor ...on why the same information needs to be entered manually into 30 different forms!" Most of us in healthcare IT couldn't agree more -- that you shouldn't have to fill out the same forms over and over again.

However, thinking that technology will solve this problem is the first mistake. Imagine saying that we'll fix the issues of legal tort reform by adding technology; imagine saying that we'll fix our political process with technology; imagine saying that we're going to tell all CPAs, accountants, and engineers to do business the same way. It just won't work.

For us techies and engineers, imagine that someone told you that as a software engineer you weren't producing good code but by giving you a new IDE and forcing you to use it that it would solve our problems. Even as technologists, look at how much paper we deal with everyday: if we can't get rid of paper, how can non-technologists?

The issues around healthcare will first be solved by incentives, second by consolidation, and third by political and financial healthcare reform. Here's how:

Improving incentives

Today, doctors are paid to see us in the office. Yes, that's right -- your doctor doesn't get paid unless you come to the office to see him. Imagine if your bank couldn't make any interest or fees off your money unless you came to the branch office. What incentive would there be for a bank to allow you to use an ATM?

As long as we don't pay doctors for e-mails, phone calls, virtual visits, telemedicine, and other things it won't matter how much high technology we have. Once we start paying them for taking care of us and not for seeing us and not prescribing medications no amount of technology can be developed that will help reduce time and improve productivity.

Let's look at other industries -- if you spend 15 minutes with your lawyer on an email, he gets paid for it. Your doctor could spend all day with you on email and not get compensated. Same goes for your CPA. It's more valuable for a hospital to keep you another day if the insurance company will pay for it than it is for them to let you out earlier. Hospitals make more money if you get an infection rather than if you don't.

If you dig deeper into healthcare, the majority of the problems are around incentives and the fact that they are setup to do the opposite of what we want. Efficiency in healthcare is not rewarded -- that's why there is inefficiency. It's not a surprise to anyone in healthcare who pays attention to root causes rather than the surface.

Most doctors offices today have the capability to run labs in their office, hospitals have very high tech MRI machines, we have tons of great technology in healthcare for doing healthcare. Because doctors get paid for doing tests, they do more of them than we ever need (30% of all tests are unnecessary). Hospitals get paid more for an MRI than for a simple x-ray so we have more MRIs done than we need to. This is simple capitalism and economics: we humans do the things that we're incented to do. Doctors and hospitals admins are human after all.

Consolidating the market

There are too many small offices to improve technological effectiveness; name a single industry with tons of mom and pop shops that is "paperless" or "technologically advanced". We probably can't -- take a look at small mom and pop jewelry stores, restaurants, convenience stores, etc: can you go from one restaurant to another and they remember your preferences? I doubt it. Ask a CPA what happens when a small business or solo entrepreneur comes to them with information about their business at tax time: boxes of receipts comes to mind, not a "paperless system". But, come tax time for medium to large businesses CPAs have a little eaiser time because systems are in place (efficiencies are rewarded). Same goes for hospitals -- small ones do a inefficient job, larger ones are better in some cases

While I don't advocate it, getting rid of the small physician practices (although that's happening already because they lose so much money given our broken health insurance system), unless we can consolidate mom and pop small cottage healthcare businesses into larger healthcare enterprises that can effectively implement technology we'll stay in pretty bad shape.

Take away

As someone who's seen the ups and downs of the healthcare IT spectrum in the trenches at small and large healthcare settings, I'm afraid that we're going to put too much reliance on technology and forget that simple capitalist rules: the market creates the kinds of businesses we have and the market can fix it if the incentives are properly aligned.

I would be the first to say that we need to improve the usage of healthcare IT; but, first, we need to create the environment in which such technology may actually be useful and could flourish.

This is not an excuse from a healthcare IT guy -- i spend half my time on non-healthcare clients and know exactly what technology we need in healthcare. I wrote this posting because if we try to dumb down the problems in healthcare we'll think that technology can solve the issues without more fundamental change and we'll be back to this same place in 10 years.

1 Comment

The point about reform that keeps being missed is that nothing is being taken away, but we are simply being handed another option and that is what we as Americans want isn't it?
We should have the right to shop around for the doctor we want and a government run health plan running in conjunction with the private sector gives every American that right and then some. There was an interesting article that actually gave some startling facts about where America sits in line amongst other nations when it comes to health care and gave a very broad perspective.
Technology in health care is where we really hold the reigns, but technology is also holding us back in a way. We need get our information and communication technology up to date, to format them in such a way the if someone was vacationing in FL, but was from AZ and needed treatment, the primary care physician could go to the patient's file and simply zip it over to the facility in which the he/she was being treated. It is simple technology but has yet to be structured for the entire medical community and that is sad to say, considering how far along we have come in the technological age.

Shahid Shah blogs about healthcare IT with an emphasis on e-health, EMRs, data integration, and legacy modernization. .

Shahid Shah

Shahid Shah is the CEO of Netspective, a Java/.NET enterprise architect, a Microsoft Architect MVP, and SOA consultant/speaker who specializes in healthcare IT with an emphasis on e-health, EMRs, data integration, and legacy modernization. He also served as HIMSS Enterprise IT Committee Member. Over the last 15 years Shad has held healthcare IT positions including Virtual CTO for CardinalHealth's CTS unit, CTO of a Electronic Medical Records (EMR) company, a Chief System's Architect at American Red Cross, Architecture Consultant at NIH, and SVP of Healthcare Technology at COMSYS.


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