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Is there a business case for information technology?

From the November ACP Observer, copyright © 2004 by the American College of Physicians.

By Charles K. Francis, FACP

As evidence continues to mount that information technology can improve the quality and safety of health care, virtually all health care stakeholders—from the Institute of Medicine to key policy-makers—are convinced that investing in technology is long overdue.

This year, the federal government has earmarked $152 million in its proposed fiscal year 2005 budget for health information technology initiatives. It also named David J. Brailer, MD, PhD, as the nation's first national health information technology coordinator. In addressing ACP's Board of Governors this fall, Dr. Brailer made it clear that putting information technology within reach of primary care physicians is his No. 1 goal. (See "Governors discuss Medicare fees, expert panels, more.")

The College has solidly endorsed the goal of widespread information technology adoption. Earlier this year, I testified before the House Committee on Ways and Means Subcommittee on Health, telling its members that the College fully supports creating incentives to encourage wider use of information technology and system "interoperability."

But major obstacles stand in the way of those goals. The lack of national communications standards is a very high hurdle. And while everyone talks up the many quality and safety advantages of electronic health records (EHRs), payment methods often work to penalize physicians who invest time and money in those systems.

Good business?

Studies show that in some states, such as Massachusetts, as many as one-third of all physicians are using EHRs. But nationally, the percentage of doctors who've made that investment may be as low as 5%.

Why so few? Individual information systems still can't communicate with other systems. And even if they could, we continue to have no single uniform information technology "language." For drugs alone, there are at least 12 different systems for naming medications, their ingredients, dosage and route of administration.

Removing that obstacle will take a huge financial commitment. According to the Dec. 4, 2003, Wall Street Journal, for instance, England has committed $17 billion to wire all of that country's hospitals, clinics and physician offices, and give each of its 50 million citizens an electronic medical record by the end of next year. While this administration's proposed $152 million is a good start, it's a long way from the kind of investment needed to make national interoperability a reality.

At the same time, physicians aren't embracing new technology because investing in EHRs, despite projected patient care advantages, may not make good business sense. The systems are costly and pose substantial economic risks. Studies show, for instance, that upfront costs of hardware, software and infrastructure can run as high as $30,000 per physician.

Add to that ongoing costs, including Internet access, training and maintenance, and a host of EHR-driven practice disruptions, and it's clear that not investing in information technology may be the more rational choice for most physicians at this time.

Right now, neither physicians nor hospitals have funding resources that can help. And physicians are being asked to take on this additional financial risk at a time when recent modest annual 1.5% physician reimbursement increases are threatened by a payment decrease as early as 2006, if the flawed sustainable growth rate (SGR) formula is still in place.

The SGR doesn't take information technology investment into account in determining physician fee updates. It does, however, create volatile payment swings that undermine practices' ability to make sound business decisions. And it induces greater use of physician services through new coverage decisions and quality improvement initiatives, which may help patient care but further hurt physicians' bottom line.

Financial penalties

Physicians are avoiding information technology for another reason: Public and private payment mechanisms actually discourage doctors from investing in information technology.

The current Medicare resourced-based relative value scale (RBRVS) is a case in point. It does not recognize the incremental costs of using an EHR or other information technology. Instead, it considers such solutions to be "atypical" services that aren't reimbursable under Medicare. In fact, information technology now offers few economic benefits to physician purchasers—a situation that must be turned around to stimulate investment.

The College has proposed ambitious legislation to do just that. We want to see Congress pass a law creating a revolving health information technology loan program, modeled on the current student loan program, for physicians and other providers.

We need a grant program to provide direct dollar subsidies to physicians, as well as tax credits available to physicians in solo and small practices, in return for physicians' participation in performance measurement and quality improvement programs made possible by information technology.

We need to replace the flawed SGR formula and build codes into the Medicare RBRVS system to reward evaluation and management services assisted by EHR and electronic decision-support tools. And we need separate reimbursement for telephone and e-consults, as well as case management fees to give physicians incentives to use information technology in managing patients with chronic illness.

At the same time, we must make sure that physician incentives are free from Medicare budget-neutrality requirements. We think there is a strong, latent demand for information technology among physicians and hospitals that will be activated by available capital. With financial incentives, physician investment in information technology could prove to be a sound business choice, as well as a key clinical tool.

But much more than rhetoric and endorsements are needed. Instead, we need fundamental reform to realign physician reimbursement with the mission of the College and with society's needs.

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