Healthcare Information Technology (HIT)

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1 Healthcare Information Technology (HIT) Why State Governments Must Help Create a National Health Information Network Ian C. Bonnet Deloitte Consulting LLP October, 2005

2 State Leadership in developing a National Health Information Network Key Takeaways The promise and the hype Health Information Network characteristics Health Information Technology (HIT) Health Information Exchange (HIE) The Complexities Barriers Taking Action Defining solutions specific to your state Removing barriers / implementing incentives Market alignment Capturing shorter term opportunities

3 The promise and the hype Health Information Network characteristics Health Information Technology (HIT) Health Information Exchange (HIE) The Complexities Barriers Short term action / long term planning

4 Continued increase in national healthcare cost $1.8 trillion spent on healthcare in times the $696 billion spent in 1990 Almost 7 times the $246 billion spent in 1980 Expected to be $2.8 trillion by 2010 Source: Centers for Medicare and Medicaid Sevices, NAtional Health Expenditure Estimates

5 Continued pressure on state governments State health benefits cost over $240B in times the 90B spent in 1990 Expected to be over $370B by 2010 Decreases in Federal funds for Medicaid and other programs Source: Centers for Medicare and Medicaid Sevices, National Health Expenditure Estimates

6 Certain cohorts will only become more costly Medicaid Enrollees and Expenditures on Benefits, by Eligibility Category, 2003 Source: Kaiser Commission on Medicaid and the Uninsured estimates based on Congressional Budget Office and Office of Management and Budget data, 2004.

7 The age wave is about here

8 The prognosis is mixed at best Rockefeller Fiscal Studies show six straight quarters of real adjusted tax revenue growth, after nine straight quarters of decline. But how many of your states look like this picture when considering Medicaid alone

9 Technology may be the answer to balance the equation Healthcare Cost Healthcare Industry Administrative Inefficiencies and Quality Challenges Financial Resources A National Healthcare Information Network that consists of health information technologies and sharing of data between those technologies is the answer

10 Types of Health Information Technology EMR EHR PHR CPOE An Electronic Medical Record is a digital record found in a unique care setting (e.g. the physician office or the hospital) and containing data specific to that care setting. An Electronic Health Record is a digital record compiled from multiple disparate clinical systems (e.g. EMRs) creating a longitudinal and aggregate display of those data for the user (e.g. record generated by a RHIO). A Personal Health Record is a digital record that is person centric and controlled by that person; it s data is at least self reported by the individual but may be augmented by data inputs from health plans or providers, and this digital record is likely maintained by some form of custodian. Computerized Provider Order Entry includes a set of tools that electronically enable certain processes like writing and filling of prescriptions.

11 Perspective on the value of Health Information Technology HIT adoption in most hospitals and doctors offices results in savings of $77 billion or more. Largest savings from reduced hospital stays, reduced nurses administrative time, and more efficient drug utilization. Computerized Provider Order Entry systems eliminate nearly 200,000 adverse drug events could be eliminated each year saving $1 billion Patients 65 or older would account for the majority of avoided adverse drug events. Source: Can Electronic Medical Record Systems Transform Health Care? Potential Health Benefits, Savings, And Costs Richard Hillestad, RAND Corporation, Journal of Health Affairs, 2005

12 Perspective on the value of Health Information Technology for the physician practice Study of solo or small-group primary care practices using EMR software The average practice paid for its EMR costs in 2.5 years and profited handsomely $23,000 in net benefits per FTE provider per year Improvements in clinical coding drive improvements in billing directly contributing to financial gains Source: The Value Of Electronic Health Records In Solo Or Small Group Practices, Robert H. Miller, Christopher West, Tiffany Martin Brown, Ida Sim and Chris Ganchoff, Journal of Health Affairs, 2005

13 Perspective on the value of Health Information Technology Computerized Provider Order Entry (CPOE) is only one form of HIT CPOE systems shown to reduce medication errors by more than 50% in inpatient settings Avoid more than 2 million Adverse drug events annually (130,000 of which are life-threatening) Annual cost savings of approximately $44 billion Source:CITL, The Value of Comuterized Provider Order Entry in Ambulatory Settings

14 Perspective on the value Health Information Exchange Healthcare Information Exchange and Interoperability (HIEI) enables the electronic flow of information among medical organizations e.g. a specialist treating an individual with multiple chronic conditions can have easy access their complete list of medications to avoid prescribing contraindicated meds a primary care physician can gain insight into doctor shopping by a patient seeking narcotics Standardized HIEI would deliver $77.8 billion in annual savings Providers realize annual new returns of $33.5 billion with full implementation of standardized HIEI Other stakeholders, such as labs, payers, and pharmacies, would also benefit from standardized HIEI Source:CITL The Value of Healthcare Information Exchange and Interoperability (HIEI),

15 The timing is right for HIT adoption and connectivity Movements in the Healthcare Industry 80s 90s 00s Administrative Data Exchange Continuum of Care Management Hospital Mergers and Acquisitions Physician Practice Ownership Community Health Information Networks ehealth dotbombs Consumer Directed Healthcare Pay for Performance Healthcare Information Technology Advances in technology and lessons learned with connectivity plays make the market ripe for evolution

16 The promise and the hype Health Information Network characteristics Health Information Technology (HIT) Health Information Exchange (HIE) The Complexities Barriers Short term action / long term planning

17 In order to achieve the promises of HIT and HIE, critical enablers must be addressed

18 HIT and HIE components in action

19 The Market is moving on HIT and HIE Regional Health Information Organizations (RHIOs) Focused on Health Information Exchange Generally not-for-profit According to ehealth Initiative over 100 initiatives around the country Hospitals and Health Plans poised to invest in physician automation Real question is what will come first RHIO Other form of PHR

20 The Federal Government is moving on HIT Health and Human Services adoption and connectivity Office of the National Coordinator for Health IT Pilots for connectivity of HIT users Harmonizing the numerous technology and nomenclature standards Certification of technologies Study of Privacy and Security regulatory variability American Health Information Community Funding of community initiatives Legislative and regulatory US Senate - S.1418 Wired for Health Care Quality Act US House - H.R st Century Health Information Act US House - H.R Medicare Value-Based Purchasing Safe-harbors to anti-referral laws

21 HIT - What century technology is this?

22 The promise and the hype Health Information Network characteristics Health Information Technology (HIT) Health Information Exchange (HIE) The Complexities Barriers Short term action / long term planning

23 We will not reach the cost savings from HIT in the short term EMR adoption If providers aren t using it, digitized data aren t there rendering efficiencies and connectivity moot Standards adoption if systems can t talk to each other, connectivity is moot Aggregator viability without a sustainable business model, community connectivity may stay sporadic

24 HIT adoption is NOT wide spread US Physician Distribution by Practice Size % EMR Adoption by Practice Size 9+ 19% Solo, 43% 100% 90% 80% 70% 60% 57% % 50% 40% 30% 23% 35% 20% 13% % 10% 0% Solo Source: Commonwealth Fund: Physicians Slow to Adopt Health Information Technology And, with a 1% annual increase, we re not getting there fast

25 Barriers to HIT adoption (purchase and effective use) Money Upfront capital Configuration and ongoing maintenance Initial decreases in productivity and revenue Anti-referral and other laws inhibit others from paying for it Benefits (financial and quality) Require persistence Contexts are different (Emergency Department vs. Primary Care) Business challenge Understand the clinician perspective WORKFLOW changes are a primary reason HIT is not purchased and used or connectivity leveraged Risk of picking the WRONG technology Connectivity - minimum data set and GIVE ME ONE VIEW not lots of portals Numerous misaligned incentives Cost avoidance accrues to bearer of risk Cost avoidance without corresponding increase in productivity could mean lower revenue

26 Barriers to connectivity - STANDARDS Data elements alone only have a 60% overlap (alignment) hence the need for harmonization

27 Barriers to connectivity - without viable data exchange utilities, we re left with some very interesting experiments Value proposition for clinical data exchange not clear Finding a sustainable business model (purely on clinical data exchange) is challenging for RHIOs Governance across diverse organizations Regulatory variability on privacy and security Clinical data is viewed as competitive asset by collaborators Providers patients are customers = financial assets

28 The promise and the hype Health Information Network characteristics Health Information Technology (HIT) Health Information Exchange (HIE) The Complexities Barriers Short term action / long term planning

29 So what should states do 1. Don t get caught up in macro economic hype 2. Address barriers and incentives 3. Align with federal activities 4. Pick a short term win 5. Drive collaboration

30 Demand clarity on expected outcomes in your specific state Macro economic promises are based on averages Demographics Payor and reimbursement mix Provider mix Public program approaches $77 Billion benefit promoted by RAND study Assumes 95% adoption Assumes, among other things, decreases in nursing administrative inefficiency Outcomes expectations should be realistic and State specific Greater adoption of Health Information Technology and health information exchange do provide value and must be achieved; our expectations should be kept in check

31 Hype Meter - Consider the promises of outsourcing vs. what many organizations have realized Source: Deloitte Consulting Outsourcing Study, October-December 2004

32 Address incentives and barriers Money Pay for Purchase Pay for Use Pay for Connectivity Pay for Outcomes Money Tax incentives Low interest loans Legal/Regulatory Physician anti-referral laws Privacy Security Medical Malpractice

33 Align with Federal efforts American Health Information Community Standards Harmonization Privacy and Security regulatory variability analysis Legislation on connectivity financing Safe-harbors

34 Quick wins might prevent this headline in 2015 Here s what they were saying in 1995 Throughout the country, a revolution is taking place that promises to change the way physicians get information from hospitals, payers and related organizations Rather than storing hospital and payer data in large databases, most CHINs will simply provide the connections between networks. Even if it takes a few years to introduce some of the advanced features, CHINs with basic functions--joining payers and hospitals and physicians --are clearly on their way" Source, June 1995 ACP Observer, copyright 1995 by the American College of Physicians By Edward Doyle

35 Short term win - the Personal Health Record Coordinate with other payors Solution development Economies of scale Leverage administrative data from Medicaid program Claims and pharmacy Establish tracking and payment for accrued benefit Provide clinical settings with high impact data sets Medications and Allergies Diagnosis and Procedures Mitigates short term issue of limited EMR adoption Promote wellness and better engage covered populations

36 Why should state governments take a leadership position around HIT and HIE HIT adoption and connectivity must be increased State expenditures on employee health and health programs can be positively impacted As a payor, states are in the position to track the accrued benefit and reward accordingly Policy capability can increase incentives and remove barriers The HIT stakeholder diversity requires the convening power and consensus building of state government

37 Ian C. Bonnet Deloitte Consulting, LLP

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