Seventeen years ago, David W. Bates of Brigham & Women’s Hospital in Boston and Lucian Leape, MD, of the Harvard School of Public Health, with others, published a seminal, though controversial, paper in the Journal of General Internal Medicine titled “Incidence and Preventability of Adverse Drug Events in Hospitalized Adults.”
The paper stated that computerized prescription order entry (CPOE), if widely adopted, could significantly reduce hospital-based medical errors, which a later Institute of Medicine report — equally controversial and now 10 years old — said took as many as 100,000 lives a year in this country.
The controversy arose over whether the technology could live up to its safety and savings potential, whether it was affordable, and whether doctors would accept keyboards replacing pens. Today, many believe that health information technology in several forms will be adopted widely and soon. And hundreds of vendors, as well as federal and state governments, say the result will be increased patient safety and reduced health care costs. Billions of tax dollars are slated to bring the ideal to maturity, but exuberance notwithstanding, controversy remains — and the role health plans will play in implementation is unclear.
Where they stand
If health information technology is viewed as a pyramid based on cost and functionality, its base contains personal health records (PHRs, which patients can view and change), and CPOE systems (which are hospital-based and may or may not involve clinical decision-making support). The next layer contains electronic medical records (EMRs), generally defined as practice-based information systems, which may contain PHRs and generally offer electronic prescribing and patient recordkeeping capabilities.
The next layer is electronic health records (EHRs), which are basically EMRs that are interoperable within a health system, tying practices with hospitals and, at an integrated health system such as Mayo Clinic or Kaiser, tying hospitals with each other.
Finally, the apex contains what have come to be called health information exchanges (HIEs), which cut across systems and are designed to offer regional (and perhaps eventually nationwide) interoperability. The HIE software in itself is not tremendously expensive, but a health information exchange is composed of several expensive EHR systems.

The type of system purchased — paid for by providers, often with the help of government and foundation grants — is determined primarily by the structure of medical practices and hospitals. The evidence, based on data that are a few years old, shows that smaller practices in rural areas go for some form of EMR, although the costs of such systems can easily run into hundreds of thousands of dollars and may continue to be prohibitive for many solo practices.
Billions of gigabytes
Large practices, containing specialists and primary care practitioners, and practices that are closely affiliated with a hospital or health system, favor the more expensive EHR. Larger regional hospital and health systems (say, hospitals in New York City or integrated systems such as Kaiser) are already developing highly integrated EHRs, tying them to outside practices and hospitals, laying the foundation for regional HIEs.
Hundreds of billions of gigabytes of health information are now being collected in electronic medical records, according to PricewaterhouseCoopers, which conducted a survey last year of more than 700 health care executives to determine the value of the data.
Three-fourths of the respondents agreed that data could be mined from the health system to improve patient care, predict public health trends, and reduce health care cost, but 90 percent said that lack of standards, privacy concerns, and technology limitations are holding back progress.
Money is flowing — gushing, actually — into HIT. Kaiser has spent $4.2 billion in the last several years to develop its EHR. Under the Healthcare Efficiency and Affordability Law for New Yorkers, about $250 million is allocated to grants for regional health systems to create HIEs, defined by the National Alliance for Health Information Technology as “the electronic movement of health-related information among organizations.” That is the largest state grant program of its kind.
Encouragement
Last year’s $27.3 billion HIT incentive in the federal Health Information Technology for Economic and Clinical Health Act (HITECH), which was part of the American Recovery and Reinvestment Act of 2009 (“the stimulus”), will encourage doctors, hospitals, and health systems to consider the purchase of some form of electronic information system, or to expand the technology they already own.
“How the stimulus bill and these various technologies will affect our health care system will depend on choices that have yet to be made,” says Mark Frisse, professor of medical informatics at Vanderbilt University. “It is not a foregone conclusion that adoption will be widespread or that savings will accrue. There is promise in this technology, but you can’t predict how legislative initiatives will translate into meaningful outcomes.”
The Obama administration’s goal, laid out in several policy statements and reflected in congressional measurements of the effect of proposed health reform initiatives, is the computerization and standardization of all health records within five years, a goal that many experts believe to be unrealistic.
Studies by Harvard, Rand, and the Commonwealth Fund have shown that such a goal will cost $100 billion or more over the next decade — the minimum number of years needed to realize the $200 billion to $300 billion a year that government officials say a fully computerized national health record system could save our economy.
In reviewing the effect of HITECH, the Congressional Budget Office did report that, at least with regard to federal health programs, “accelerating the adoption of health IT would result in reductions in health care spending. Those reductions would be realized by, among other things, reducing the number of inappropriate tests and procedures, reducing paperwork and administrative overhead, and decreasing the number of adverse events resulting from medical errors.”
Predicting “near universal adoption over the next quarter century” of EHRs and its cousins, the CBO also reported that HIT “could improve the quality of care provided to patients by improving the information available to clinicians at the time of treatment, by encouraging the use of evidence-based medicine, and by helping physicians manage patients with complex, chronic conditions.”
But the CBO also warned that “the use of health IT could also increase some costs because improved adherence to treatment protocols could increase the amount of care provided.”
Structure in place
“We know what needs to be done,” says Stephen Schoenbaum, MD, executive director of the Commonwealth Fund’s commission on a high performance health system. “It’s feasible to at least make a lot of progress on this in the next five years.”
It is true that the technology exists and that adoption is accelerating. But it is equally true that as of now, we are far from a national network of interconnected health information — the kind of system that would result in significant savings.
The National Ambulatory Medical Care Survey (NAMCS), a federal annual survey of visits to office-based physicians released last December, found that 41.5 percent of physicians reported using all or partial EMR/EHR systems (a partial system does more than just billing, perhaps electronic prescribing, but falls short of inclusive patient recordkeeping) in their office-based practices in 2008. The survey predicted that level of adoption for all or partial systems would rise to 43.9 percent last year. In 2007 it was 34 percent.
It is worth noting that in that survey, only about 8 percent of the nation’s 5,000 hospitals and 17 percent of its 800,000 physicians have what the NAMCS calls a “basic system,” which it defines as capable of patient demographic information, patient problem lists, clinical notes, orders for prescriptions, and laboratory and imaging results. In 2008, only 4.4 percent of physicians had fully functional systems, which include all functions of basic systems plus medical history and follow-up; orders for tests, prescription, and test orders sent electronically; warnings of drug interactions or contraindications; highlighting of out-of-range test levels, and reminders for guideline-based interventions.
“The value of this technology lies in a seamless system of EHRs,” says Ann S. O’Malley, MD, a senior researcher at the Center for Studying Health System Change, “but we are far from that.” A study she published online in December in the Journal of General Internal Medicine found that “a gap exists between policymakers’ expectations that current commercial EMRs/EHRs can improve patient care and clinicians’ real-world experiences” with the technology.
“Health plans have an important role to play in overcoming these issues, especially with regard to payment,” says O’Malley. “They need to help support practices, especially small- to medium-sized practices, in the adoption of this technology.
“They also need to work with vendors so vendors meet the needs of clinicians, and they need to work with state and local authorities in development of standards that enhance the coordination of care. Physicians will quickly adopt this technology if coordination of care is made a priority by payers.”
The fact is, O’Malley and others say, the true potential, in terms of cost and savings, of electronic health records will not be met until all players in the health care industry make a financial commitment. “Current expectations are not realistic,” she says, “not with the confines of the current payment system.”
Contributing editor Martin Sipkoff can be reached at MSipkoff@ManagedCareMag.com
Kaiser Permanente’s EHR reduced the total doctor office visit rate by 26.2 percent between 2004 and 2007, says Terhilda Garrido, Kaiser’s VP for strategic operations.
“Our experience has been overwhelmingly positive,” says Aetna’s Dan Greden, about the company’s use of PHRs. Those with chronic conditions use PHRs the most.