How will Electronic Medical Records (EMRs) improve quality and reduce costs?

I started working in health care in 1994 in Boston, after working in high technology since the early 1980s.  One of the first things that struck me was the relative lack of competition in the local health care industry.

Few distinctions between health care "competitors"

There was relatively little differentiation, from a prospective patient's perspective, between hospitals-other than care level and location.  When I polled my friends and colleagues, I realized that they could distinguish between Boston's famous tertiary hospitals and the community hospitals-but couldn't cite differences within either group.

By the same token, there was little differentiation among payers.  From an insured's perspective, they all had the same provider panels and offered pretty much the same benefits.  As for employers, at that time, they had to patch together national networks, since, at the time none of the local payers offered a comprehensive national network.

As a newcomer, I wondered about this.  Why didn't one hospital brand itself as the choice for women requiring surgery as they approached middle age?  Why didn't one HMO promote its coverage for snowbirds?

Focus on market dominance

Since then, ambulatory centers have carved out some of the hospitals' most profitable services as improving technology has enabled them to do so.  Hospitals consolidated, and partnered with community hospitals to gain market control-ultimately squeezing out some of the smaller, weaker players.

Eventually, the tertiary hospitals spread out to the suburbs, competing with the community hospitals, to control the supply chain.  At about the same time, hospitals invested in technology and new construction to build Centers of Excellence in a belated attempt to distinguish their institutions from the competition.

Value remains constant, prices rise

Nevertheless, I never witnessed the level of differentiation, or increased value, that usually accompanies competitiveness in other industries.  As a business owner and a consumer, my observation was that care was good (although there was greater and greater reporting of quality problems) and prices kept rising.

As for payers, I can't comment on their competitiveness.  As a small business owner, I'm not in their target market-larger employers.

Will the next decade bring increased competition?

This morning, however, I got a very different impression when I attended the Massachusetts Technology Leadership Countcil's Health Care Seminar: Using Technology to Improve Care While Right-Sizing Costs, via Better Health Analytics.  That said it was only half way through the presentation that I grasped the full impact of the ARRA incentives to implement electronic medical records.

I had been reading for years that the hope was that electronic medical records would lower health care costs, reduce medical errors, improve access to data, improve health care quality, and improve care.  Nevertheless, I've been waiting for evidence.

Will EMRs fulfill the promise of improved quality and decreased costs?

I live in MA, which already has relatively high EMR adoption (40% compared with 20% nationwide).  Nevertheless, quality has been difficult to measure and costs have risen, rather than dropped.  Moreover, one of my colleagues, a physician at a hospital system, suspects that at least some of his peers don't review records-given the number of duplicate tests, he sees ordered on a regular basis.

What I hadn't taken into account, however, is that the existence of medical records opens the door to competition.  This dawned on me as I listed to Dana Gelb Safran, the Senior VP of Performance Measurement and Improvement at Blue Cross Blue Shield of Massachusetts.

Motivating cost-effective care

Dr. Safran talked about the rising cost of health care, the relatively poor health outcomes the US gets for its health care dollar relative to other countries, and the problems associated with paying for services rather than outcomes.  She then discussed some of the steps her organization has taken to motivate cost-effective care.

BCBS of MA will be contracting with hospitals and physicians together offering global payments across the continuum.  It will tie payments to growth in the CPI and offer significant incentives to improve care and reduce waste.

Apples to apples comparisons

What really caught my attention, however, was when Dr. Safran spoke about what she saw when her organization looked at physician treatment patterns across very narrow episodes of care.  By looking at otherwise healthy patients, who have a single ailment in common, they are effectively able to compare apples to apples.

This ability addresses a major concern, that physicians have had in the past.  That concern is that patients are not widgets, and co-morbidities make it difficult to understand and compare treatments and cost-effectiveness.

What BCBS has found, much like Wennberg before them, is that there is tremendous variation in treatment patterns (even within a single health care practice).  Consequently, BCBS has asked physicians to come up with tighter guidelines for best practice.

Publicly available comparative data may spur competition

At that moment, the power of automated medical records became clear to me.  In addition to providing caregivers with complete information about a patient, automating and centralizing medical records facilitates comparisons across patients, and also across providers.  Once comparative data becomes publicly available, there is the potential that competition will spur health care quality improvements and drive down health care costs.

Physicians under pressure from all sides

The next speaker, Todd Lowthers, Manager of Physician Services, Northeast PHO, spoke about the increasing pressure that health care providers are under due to the threat of Medicare payment reductions, increasing federal and state legislation, and requirements of insurers' contracts such as those described by Dr. Safran.  It was then that another piece of the puzzle hit me.

Changes to Medicare may also drive competition

As the largest health care payer, Medicare effectively determines payment rates.  Up until now, Congress has intervened to prevent Medicare from reducing physician payments.  If Congress allows Medicare to reduce payments, or includes all physician services in global payment rates, it will have a huge impact on competition.

Despite EMRs, lots of missing data impedes progress

Mr. Lowthers' talk highlighted some of the gaps in data that make it difficult for physicians to measure and control quality.  Examples included the ability to see what was ordered but not who ordered it or whether the patient acted on the order, the lack of a single patient portal,  the inability to get aggregated data sets for patient panels across all payers, and a national master patient medical number that would enable accurate association of all of a patient's health care data.

EMRs also require clinical integration

The final speaker, Dr. Jonathan Niloff, Founder and CEO, Medventive and a gynecology oncologist spoke about the need to design EMRs for clinical integration-and the steps his company has taken to do so, and to address some of the issues that Mr. Lowthers raised.

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