As U.S. President Barack Obama refocuses efforts on universal
healthcare, the burdensome question of how to fund it all returns. But
without a handle on the rising costs in the current healthcare system,
the possibility for new coverage seems a pipedream. A recent report
from the Board of Trustees of Social Security and Medicare indicates
that the trust fund supporting the federal Medicare program will be
insolvent in 2019—a full seven years sooner than previously projected.

Additional statistics indicate just how dire the healthcare cost
situation is becoming. According to figures from the White House, “the
U.S. spent approximately $2.2 trillion on healthcare in 2007, or $7,421
per person—nearly twice the average of other developed nations.”
Statistics from the Congressional Budget Office estimate that by 2025,
“one out of every four dollars in our national economy will be tied up
in the health system.”

With U.S. healthcare expenses and health insurance premiums
skyrocketing in response, the current administration and Congress are
turning their efforts to tech implementation in the sector as a way to
curb expense. President Obama’s $787 billion stimulus plan allots $19
billion for health information technology, in an effort to push common
protocols in the space, including interoperable electronic health
records that could easily move between clinicians, diagnostic
facilities, hospitals, and pharmacies.

A Congressional Budget Office (CBO) cost estimate released in March
2009 detailed that the stimulus plan, officially known as the American
Recovery and Reinvestment Act of 2009, provides funding for expanded
use of health IT—an effort to “reduce on-budget direct spending for
health benefits by Medicare, Medicaid, and Federal Employees Health
Benefits (FEHB) programs by $12.4 billion” over the 2009-2019 period.
While implementation of the health IT provisions in the stimulus plan
would account for increases in the “on-budget deficits by a total of
$18.3 billion over the 2009-2019 period,” according to the CBO, “it
would increase the unified budget deficit over that period by an
estimated $17 billion.” The CBO reports that the offset in spending
increases will come from the reductions in Medicare spending in later
years, resulting in a savings after 2014. The added benefit, says the
CBO, is the accelerated use of cost-saving IT bleeding over into the
private insurance sector, resulting in lower health insurance premiums
for employers.

Too much of a good thing?

But is technology the saving grace that Congress and the current administration think it is? According to Rick Gilkey,
executive director of the Center for Healthcare Leadership and a
professor at the Emory University School of Medicine in the department
of psychiatry and in the Goizueta Business School department of
organization and management, there is a right and a wrong way to go
about implementing technology initiatives in the healthcare space.
First, he notes, medical practitioners need to delineate between
“technology implementation on the clinical vs. the business side of the

Doctors certainly haven’t been shy to employ cutting-edge technology
when it aids diagnosis. But there are also drawbacks to the advances
these kinds of technologies can provide, admits Gilkey. “Our Social
Security and Medicare systems were generally based off of the German
model, and financial projections were made given a much shorter
lifespan of 65 years or so. Life expectancies are extending out, and
while people are living longer, and that is a good thing if the quality
of life is high, the extension of life and the additional healthcare
costs associated with it are also a big driver of the expenses in the

Gilkey notes that the overuse of medical diagnostic technology is
playing a role in the burdensome costs of the system. Although he
doesn’t fault the practitioners, he admits that the legal ramifications
and the expectations of patients are making doctors extra careful to
employ the latest and greatest technology available to diagnose a
medical problem. “There needs to be a genuine discussion on how
healthcare is used in this country,” he adds. “We need to have quality
of life discussions, and we need to address tort reform on the medical
malpractice side.”

The business side of the shop

But on the back office side of hospitals and medical practices,
technology has been a godsend for harried nurses and secretaries. Paper
was fast-becoming the enemy of the hospital office manager. Between
patient records, insurance reimbursement requests, and x-ray images,
the practitioner’s file cabinet was a growing storage and privacy
menace. IT is easing the burden of imaging data retrieval, patient
recordkeeping, and the insurance reimbursement process.

Gilkey admits that depending on the doctor’s office and the
hospital’s size, the level of technology employed can certainly differ.
“It’s a mixed deal,” he says, “as there can be huge inefficiencies that
still need to be addressed.” Often, he notes, clinicians and nurses
will need to repeatedly input the same computerized patient data into
separate computer systems within one hospital’s separate divisions,
insurance processing systems, or between affiliated doctor practices.
“We need to learn to use technology better to run a leaner operation,
giving access to laboratories, clinicians, specialists, and insurance
companies—to access data to improve efficiency, costs, and quality all
at the same time.”

According to Sunny Sanyal, chief operations officer for
McKesson Technology Solutions (MTS), an Alpharetta, Georgia-based
healthcare technology solutions provider, framing the tech debate may
be half the battle. “When we talk about healthcare IT, we really need
to talk about the improvements to care and access that technology will
provide, and not just the cost-savings,” he notes. “Technology reduces
waste. The goal should be a safer, better-connected and more efficient

The main benefit of technological solutions will be freeing up
clinicians to perform medical care vs. more time-consuming
administrative tasks. “When nurses access patient records
electronically to input data at patient bedside from wireless
handhelds, it saves the steps it would take to walk back to the nurses’
station to transcribe that information from the paper chart. If you
aggregate all of the hours saved, much of that time could be devoted to
care or the savings could be passed on to Medicare or the insurance

Mistakes in medicine dosaging or other hospital foul-ups are also a
costly and horrible problem for doctors and patients, and Sanyal says
that cutting-edge technologies can help to prevent the inevitability of
human error. “There are bar-coding technologies used for patients to
identify their name, medical information, or allergies.”

Bumps in the road

But change is not always the doctor’s friend, says Goizueta’s
Gilkey. “Doctors are always early adopters of technology on the
clinical side, especially when there are less invasive ways of doing
things.” But he admits that they are much slower to adopt IT changes on
the business side, as physicians are often unwilling to devote time in
their overworked day to anything they believe to be outside of their
clinical role.

Sanyal does note that physician behavior and attitudes about
technology can impede the IT effort. “The deployment process can help
to resolve this one, since many of the current generation systems are
much simpler to use than the ones that came before,” he adds. Many of
the clinical systems are now web-based and easier to understand and
use, making doctors and nurses much more likely to employ the new
technology. Additionally, Sanyal says that medical schools are
facilitating the change in clinician attitudes to IT. “Today, nursing
students are readily using electronic systems to input patient
information, and they much prefer not having to worry about the paper

The cost hurdle may be a bigger one to solve. Sanyal argues that
when presented with the actual cost-savings, the implementation of a
new records-keeping system, for example, can be more enticing. He adds
that the onus is on IT solutions providers to appropriately assess the
initial cost outlay for the respective medical practice or facility.
“You have to understand the needs of a large health system that might
look to a $20 million transformation vs. a small clinic in need of a
$500,000 system.” Systems can be designed for large repositories of
information to be stored at the medical facility, or information can be
accessed through a web portal and stored by the healthcare IT provider.
Sanyal says that the technological solutions that can be offered to
providers are many, including such things as better collections
management, resulting in a significant and relatively quick cost

Getting on the same page

Beyond the cost concerns, the healthcare IT sector must resolve the
standards debate. For technology to take deep root in the healthcare
sector and bring clinicians, specialists, hospitals, insurance
companies and diagnostic centers together, IT specifications and
protocols must use a common tech language. Certainly, much
standardization has occurred as far as medical terminology, disease
reporting, and diagnostic coding.

Sanyal points to the efforts made by the accredited standards
developing organizations operating in the space and garnering the
support of healthcare IT providers, including Health Level Seven (HL7),
an Ann Arbor, Michigan-based organization developing standards for
clinical and administrative data. But HL7 is not the only organization
handling the issue. “It’s an evolutionary process,” admits Sanyal. The
many healthcare IT companies, in addition to other healthcare
stakeholders, represent the membership of the various standard bearing
industry associations, such as the Healthcare Information and
Management Systems Society (HIMSS), Integrating the Healthcare
Enterprise (IHE), Electronic Health Record Vendors Association (EHRVA),
and HL7.

The acceleration of the standardization movement could be in the
works, with HIMSS, IHE, EHRVA, and HL7 coming together in 2005 to join
forces and carve out territory within the space to work on protocols.
Sanyal believes that the latest stimulus spending in the healthcare IT
space could be the needed jumpstart to get consistent standards in
place for medical records.

However, clinicians do still fear security breaches with electronic
medical data, and this is something that the standard bearers and the
IT providers must address, says Goizueta’s Gilkey. Americans are
obviously very protective of their medical information, and rightfully
so, he adds. Of course, the Health Insurance Portability and
Accountability Act (HIPAA), enacted by Congress in 1996, mandates
privacy protection of patient medical data, which all clinicians,
hospitals, pharmacies, and insurers must follow. But Sanyal believes
the IT industry is providing the needed encryption, firewalls, and
privacy technologies to prevent hacking. Of course, the threat of
security breaches will continue to be one of the biggest and evolving
concerns for health care IT providers and medical practitioners.

The change needed

Goizueta’s Gilkey believes that whatever the concerns of clinicians
may be, getting them to understand the benefits that tech can play in
facilitating universal healthcare will be essential in getting their
buy-in. “Technology can help to resolve some of the costs associated
with the complexities of the system,” he says, “such as digitalizing
medical records. There is a potential for economies of scale that a
centralized system offers, and we could have the ability to look at
best practices, as well.”

Even with the noted cost-savings and quality improvement incentives,
selling clinics and smaller hospitals on the initial outlay for
operational improvements will continue to be a tough one, says Steve Walton,
associate professor in the practice of information systems and
operations management at Goizueta. Not only will clinicians need to be
sold on tech changes, those on the management side of hospitals and
clinics—the people responsible for operating budgets—must also be the
drivers of change.

Walton believes that the continuous trumpeting of the benefits of
the “paperless office” has led many hospital officials to get a bit
cynical about the use of IT. “There have been some technologies that
have sizzled, and others that have fizzled out,” he says. For the right
IT solutions to succeed, notes Walton, “we need to be honest about what
works, and we need to move the debate away from technology being the
only solution to the cost problem. We have to make sure that everyone
understands that IT is a solution in a broad tapestry of changes needed
in the healthcare system today.”