Healthcare providers want reform but fear cost is too high

by Steve Ragan - Jun 8 2009, 17:10

A recent survey published by healthcare connectivity solutions and services provider IVANS has shown that healthcare providers believe in the importance of reform, but are concerned about the consequences that proposed approaches could have on their businesses and patients.

The survey, the results of which come from more than 500 U.S. healthcare providers, outlined that the proposed approaches to healthcare reform (e.g., pay-for-performance and national health insurance) simply do not align with the way healthcare providers operate their businesses today, leaving providers skeptical about how they can move from point A to point B.

Those surveyed offered the opinion that, in order for healthcare reform to succeed, more modern approaches in how IT is used in healthcare are essential. Providers will require additional education and resources to institute healthcare reform, the published results state.

More than 50 percent of the healthcare providers IVANS spoke to believe the billions of dollars from the American Recovery and Reinvestment Act (ARRA) earmarked for healthcare information technology (HIT) will have little to no success in encouraging HIT adoption.

"Providers are diverse and significant attention from the government needs to be placed on addressing their different needs." said Clare DeNicola, president and CEO of IVANS said.

"A small nursing home in a rural area will have IT requirements that vary from a multi-facility hospital. The interests and concerns of all involved stakeholders need to be met for a meaningful use of HIT to occur," she added.

This is where the catch comes into play. Advancements in IT cost money, no matter how you look at the problem or solution. Sadly, to this day you can walk into a doctor’s office and see outdated technology in place. Things like analog fax machines, ancient computers that maintain patient billing information and records, and lastly, the wall of folders where all the practice's medical histories are stored. Records are expected to go digital, but that type of advancement is expensive and, for some providers, will mean a complete overhaul of the infrastructure.

[Note: For the record, the wall of folders exists because of a law that requires providers to keep records for a set amount of years. According to a source who works for a hospital chain here in Indiana, the records have to be kept for 5-10 years. If the folders are for pediatrics, then the records are to be kept for life. Even if they are digitized, they can only be scanned in batches. This impracticality means only new chart entries are made digitally, leaving the rest to reside on the wall.]

Most healthcare providers are compensated under a fee-for-service model. That is, the more services they provide, the more they are paid. Not surprisingly, those who took the IVANS survey cited payment cutbacks from Medicare (81 percent of respondents) and commercial health insurers (46 percent) as the biggest external threats to their revenue -- followed by a decline in patient healthcare spending due to the current economic environment (33 percent).

Say what you will about the inflated costs of medical services, we all know they are seriously overpriced, but those fees are the bread and butter of the healthcare industry. If the insurance companies cut funding, we pay the difference. The same goes for cuts from the government when they slice and dice Medicare coverage. In addition, those funding cuts mean that providers are forced to skip IT upgrades.

Even healthcare providers think the fee-for-service model is flawed, so some experts are pushing a pay-for-performance system. According to the IVANS survey, while 72 percent of healthcare providers believe a pay-for-performance model could lead to improved patient outcomes, 79 percent believe it would also increase business costs, most likely due to increased reporting and record-keeping requirements.

Damned if you do, damned if you don’t. It seems that, no matter what, there is no simple solution to the problem. The only thing that's certain is that healthcare providers need more funding and they need to use this funding to upgrade their outdated technology.

Another option is national health insurance, which is a popular solution. The vast majority of those who talked to IVANS (75 percent) think a national health insurance plan will actually reduce the quality of care or, at best, have a neutral affect. A further 41 percent think this type of plan can reduce costs, while 22 percent think it will actually increase costs, and 13 percent said it would have no affect at all.

Proposed approaches to reform, including pay-for-performance and consumer-driven healthcare models, are largely intended to provide greater transparency into healthcare costs and outcomes, the IVANS survey said.

"Providers, payers and consumers would become more accountable for results and therefore, more careful in the use of healthcare resources," it added. "Many healthcare providers see the benefit of this transparency, but are concerned about the costs of providing it on their already-stretched budgets."

According to the results, providers are already investing in IT to some degree with wireless networks, business continuity technologies, and connectivity to remote locations already in place for 44, 40, and 35 percent of those surveyed. With that said, notice that none of those figures mentions Electronic Health Records (EHRs) --mainly because EHRs are in a class of their own.

ARRA calls for EHR adoption by 2014, and 66 percent of those surveyed said they will have a positive impact on their business. Yet, only 39 percent said they plan to implement it within the next 12 months.

Current provider adoption rates are pegged at only 17 percent and 10 percent for doctors and hospitals, respectively, the IVANS survey pointed out.

"Dr. David Blumenthal, the new National Coordinator for Health Information Technology, has acknowledged some of the reasons for this lackluster success, including upfront cost and perceived lack of ROI, privacy and security laws, and concerns with understanding and using EHRs," it states. 

"Not surprisingly, healthcare providers who responded to IVANS survey cited 'lack of awareness/expertise' as the second most common barrier to implementing technologies, such as Electronic Health Records. Dr. Blumenthal himself notes when discussing the adoption of EHRs that simply having a function isn't enough: 'We need to ensure that physicians can actually use it,'" the survey results add.

"While there are many pieces to the healthcare puzzle that still need to be figured out, the use of HIEs (Health Information Exchanges) and EHRs will create greater information transparency and will play a critical role in whether healthcare reform succeeds or does not," commented DeNicola. "The government needs to get tactical about what qualifies for the funding and what doesn’t as providers are wary to start implementation without this understanding."

Healthcare is a mess, and there is no clear solution to cleaning it up. The government should step in, but it should not take over the healthcare industry. Everyone involved needs to pitch-in and help move things along on the technology adoption and educational fronts.

However, cost remains a core issue, which leads to slow technological advancement. Until the associated cost of healthcare IT is evened out, meaning healthcare providers work out a way to get more money coming in or at least halt the loss of revenue while maintaining high quality care, the process is stalled. This can lead to a number of issues for the average person, including privacy risks from the lack of security, higher healthcare costs or, in some cases, a drop in overall care quality -- and no one wants that to happen.

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