Health IT: Unlocking the Logjam

By M.L. Baker  |  Posted 2004-11-24

Health IT: Unlocking the Logjam

Nearly everyone agrees that done well, health IT will save both lives and money. But right now, the technology often costs doctors more than it saves. Insurance companies want more data about how programs save them money, and vendors are having trouble creating and supporting products at affordable rates.

John Glaser is CIO of Partners HealthCare System Inc., an integrated health care delivery system based in Massachusetts that includes Brigham and Womens Hospital and Massachusetts General Hospital. Glaser was chair of the group at the highly respected Markle Foundation that concluded that there was no viable business case for outpatient physicians interested in using information technology to support their clinical practices.

Doctors who adopt health information technology will take a financial hit, said Glaser in an interview with "The average EMR [electronic medical records system] costs $10,000 to $12,000 a year. The average economic value is about $20,000 a year. But two-thirds of the economic value falls to payer or employer."

But payers and employers arent eager to hand out checks to doctors who start using health information technology. "Payers are getting beat up for having high premiums, and now theyre being told that they have to pay more to doctors," said Glaser. "They are nervous about expenses that go up and dont have benefits to go with them."

So payers are more willing to provide incentives for doctors to use e-prescribing systems. Not only is this technology less costly, it can start cutting costs for prescription drugs immediately by encouraging doctors to prescribe the least costly drugs.

Payers are also interested in the cost-benefit ratio of programs that manage patients with chronic diseases. These make sure patients take certain medications, track their symptoms and get preventive care, with an aim to keeping these patients from needing expensive hospital treatment. But an analysis from the Congressional Budget Office found no evidence to conclude that such programs save money, increasing uncertainty.

Sam Nussbaum, vice president and chief medical officer of Anthem Insurance Companies Inc., told attendees at a recent health care IT conference that the analysis was flawed. He presented two studies showing that disease management programs are incredibly cost-effective.

Next Page: The effectiveness of intervention programs.

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At Anthem (Blue Cross and Blue Shield licensee in nine states), the 11 percent of health plan members with chronic conditions incur 43 percent of health care costs. To see how effective intervention programs could be, the company compared 13,000 patients who were either involved in an intervention group or not. Anthem tracked whether patients with congestive heart failure weighed themselves daily, whether patients with diabetes monitored their blood glucose levels and received cholesterol screenings, and other measures.

All in all, the studies found that patients in the intervention group went to the doctor and the emergency room less often. Another study by Health Management Corp. on tens of thousands of patients calculated an 11 percent savings for patients enrolled in a disease management program, or a return on investment or a savings of $2.84 for every dollar spent.

However, Nussbaum admitted that one reason the program was cost-effective was because patients remained in the programs long enough for the savings to accrue to the patient.

Partners Glaser said that insurance companies are reluctant to sponsor programs unless the payoff comes within a short period of time, like a year or two. Otherwise, a patient is likely to switch health plans, and the benefit of a companys investment would go to a competitor. In other words, its not in an individual insurance companys best financial interest to help a healthy 30-year-old become a healthy 60-year-old.

But this would most definitely save Medicare money, and the idea that CMS (Centers for Medicare and Medicaid Services) should provide financial incentives to promote healthy lifestyles crops up regularly in discussions of who should pay for what in health information technology. The deficit will certainly discourage such spending, but last week health IT czar David Brailer said CMS planned to move quickly toward reimbursing doctors for programs that keep senior citizens healthy. However, that does not necessarily cover directing 20-year-olds into smoking cessation programs, and IT will not necessarily be a component.

Still, any disease management program will almost certainly require IT to find eligible patients, said Glaser. And if CMS moves in this direction, the insurance companies are likely to follow. "The big payers wait to see what the feds do," he said.

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