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Failure is Not an Option

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By MARGALIT GUR-ARIE Picture 1

2010 is drawing to an end amongst a flurry of activities in the Health IT field. In a few short days 2011, the year of the Meaningful Use, will be upon us and the stimulus clocks will start ticking furiously. In addition to the yearlong visionary activities from ONC, December 2010 brought us two landmark opinions on the future of medical informatics. The first report, from the President’s Council of Advisors on Science and Technology (PCAST), recommended the creation of a brand new extensible universal health language, along with accelerated and increased government spending on Health IT. Exact dollar amounts were not specified.

The second report from the Institute of Medicine (IOM) is a preliminary summary of a three-part workshop conducted by the Roundtable on Value & Science-Driven Health Care with support from ONC, and titled “Digital Infrastructure for the Learning Health System: The Foundation for Continuous Improvement in Health and Health Care”. The IOM report, which incorporates the PCAST recommendations by reference, is breath taking in its vision of an Ultra-Large-System (ULS) consisting of a smart health grid spanning the globe, collecting and exchanging clinical (and non-clinical) data in real-time. Similar to PCAST, the IOM report focuses on the massive research opportunities inherent in such global infrastructure, and like the PCAST report, the IOM summary makes no attempt to estimate costs.

Make no mistake, the IOM vision of a Global Health Grid is equal in magnitude to John Kennedy’s quest for“landing a man on the moon and returning him safely to the earth” and may prove to be infinitely more beneficial to humanity than the Apollo missions were. However, right now, Houston, we’ve had a problem here:

  1. The nation spent upwards of $2.5 trillion on medical services this year
  2. Over 58 million Americans are poor enough to qualify for Medicaid
  3. Over 46 million Americans are old enough to qualify for Medicare
  4. Another 50 million residents are without any health insurance
  5. The unemployment rate is at 9.8% with an additional 7.2% underemployed
  6. This year’s federal deficit is over $1.3 trillion and the national debt is at $13.9 trillion

In all fairness, the recent Federal investments in Health IT were spurred by the HITECH Act, which was a part of the ARRA, a recession stimulus bill aimed at injecting money into an ailing economy and creating jobs, while improving national infrastructure. It was not explicitly intended to reduce health care costs or improve access and affordability (that came later with PPACA). Perhaps adding an EHR to every doctor’s office was viewed as the first step towards building the Learning Health System. However, somewhere along the road to fame EHRs were magically endowed with powers to provide patients “with improved quality and safety, more efficient care and better outcomes”. Perhaps these claims came from EHR vendors’ glossy marketing collateral, or perhaps it was just wishful thinking, or perhaps this was a forward looking statement for the fully operational grid of a Learning Health System, or maybe this is just incorrect use of terminology. Health IT is much more than EHRs and Health IT can indeed help improve efficiency, i.e. cut costs, in several ways.

Administrative Simplifications

Section 1104 of the PPACA contains a roadmap for administrative simplifications “to reduce the clerical burden on patients, health care providers, and health plans”. Eligibility transactions must be standardized and deployed by 2012, electronic payments by 2014 and claims, certifications and authorizations by 2016. Physicians spend about 14% of revenue on billing and insurance related functions, while hospitals spend 7% – 11% and health plans spend around 8%, not to mention the aggravation involved. Why do we have to wait 6 years before this particularly wasteful activity is completely addressed? If there is a place where health care can learn from other industries, this is the one. Both the banking and retail industries have solved this problem many years ago. It is trivial to imagine swiping a magnetic card at the doctor’s office to verify eligibility, obtain authorization, and exact dollar amounts for patient responsibility, while initiating a real time payment transaction from insurer to provider. The complexities of a thousand different plans can be easily accommodated by computer algorithms and the technology is available in every supermarket and every gas station. For all those joining Congress in 2011 with the intent of altering PPACA, could we alter Section 1104 and shorten the timeline by a few years?

Fraud

The National Health Care Anti-Fraud Association estimates the costs of health care fraud to be 3% to 10% of expenditures. Despite all the publicity, credit card fraud is estimated to cost 7 cents per each $100 in transactions, or 0.07%, with issue resolution times estimated at 21 hours. This is yet another lesson health care can learn from the financial industry. Granted, purchase patterns in health care are different than the market at large, so the anti-fraud algorithms will need to be tweaked and specialized. Computers are very good at this and from watching the President’s bi-partisan meeting on health care reform last year, I thought this is one area where everybody agrees that something needs to be done. There is nothing tangible in PPACA regarding the use of Health IT for fraud reduction.

Duplication of Tests

If you prescribe electronically through Surescripts, you can see a patient’s medications list courtesy of the PBM. PBMs and insurers know exactly what medications they paid for. They also know exactly what procedures, tests and visits they paid for, and who performed them. Would it be a huge stretch of imagination to envision a display of the last 6 months of tests paid by the insurer every time you attempt to order a test? No, insurers don’t have the results, but if you saw that the patient had an MRI last week, would you order another one today? Or would you call the facility for a copy? When you prescribe electronically, the PBM insists on showing you the formulary and drug price for the individual patient. Why not show you prices for the tests you are about to order, and help you and the patient choose lower priced facilities, just like they steer folks to prescribe generics? This has nothing to do with clinical decision support or changing the way medicine is practiced. These are examples of very simple, common-sense, immediate solutions for reigning in costs without disturbing quality of care.

The Global Learning Health System presents a compelling vision. I wish that the President would commission the necessary budget estimations, go before Congress and in a JFK style oration request appropriations for defeating Cancer (or some other scary thing), appropriations which will include funding for the Learning Health System global grid. It is possible that if such Learning Health System existed today, or could be quickly deployed, it would provide solutions for most health care problems we currently have. However, it is pretty clear that such a system will take many years and many billions of dollars to build. In the meantime we have an immediate problem, which requires an immediate solution with immediately available tools, and no, failure is still not an option.

Margalit Gur-Arie blogs frequently at her website, On Healthcare Technology. She was COO at GenesysMD (Purkinje), an HIT company focusing on web based EHR/PMS and billing services for physicians. Prior to GenesysMD, Margalit was Director of Product Management at Essence/Purkinje and HIT Consultant for SSM Healthcare, a large non-profit hospital organization.

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78 replies »

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  38. Those born poor are neither lazier nor dumber than those born rich. They are just less lucky….
    you don’t measure at birth margalit you measure when they reach death or the end of their productive years. The stats I posted show termendous movement from poverty up 1 or 2 quintiles. Those with inteligence and work ethic don’t stay poor.
    Those in their 30s-60s that are poor are less productive, lazier then those that have more wealth

  40. Margalit, superb post with analysis that, in itself, is so logically sound and airtight that it renders hope that we might just get through this healthcare maze after all. Keep it flowing…

  41. As a descendant of a dirt-poor illegal who invaded this continent when it was under a previous regime 375 years ago, this is getting too ugly for me.

  42. I should know better, but here it goes….
    Those born poor are neither lazier nor dumber than those born rich. They are just less lucky….
    This country was built on repeated invasions of dirt-poor people who over hundreds of years supplied the fodder for wealth creation… in more ways than one.

  43. YUP
    Poverty persistent in USA? Gee — that couldn’t a result of dirt-poor illegals invading the USA, could it?
    Understanding the denominator is as important as understanding the numerator. Someone tell that to Robert Reich.
    ———-
    just yahoo search quintile high earners or hours and all sorts of facts come up showing the reason for the increase in prosperity is our poor are lazy and stupid

  44. just yahoo search quintile high earners or hours and all sorts of facts come up showing the reason for the increase in prosperity is our poor are lazy and stupid
    http://www.nber.org/digest/jul06/w11895.html was the last one you mentioned
    as an employer I’m always shocked at what you get for minimum wage, there are millions of people who aren’t worth $2.00 per hour let alone $7 plus depending on where you live

  45. FACTS ARE BRUTAL
    FACT: The top 25% ($68,000+) pay 87% of federal personal income taxes.
    http://www.ntu.org/tax-basics/who-pays-income-taxes.html
    Dang! How much more can OWEbama grab?
    As for 2009 tax collections — a bunch of tax-funded Harvard buddies of OWEbama FORGOT to note that 2008 was a NEAR-DEPRESSION. Duh.
    As for post-WWII prosperity — well, gee, all the USA has to do is destroy Japan and Germany again! Because the USA was prosperous while Japan and Germany rebuilt!
    If someone does NOT have a background in math, statistics, economics, accounting and finance (Robert Reich) — they should stop popping-off about macro-economics.
    It is just wasting everyone’s time. Thanks.
    ———–
    “The top went from 58 to 66, so the rich have assumed more of a burden then they has before.”
    Isn’t this the natural outcome of assuming a larger piece of the national wealth pie?

  46. “spend a few nights in the the hood and tell me they are only making 16K per year”
    Who is “they”?
    “By contrast, adults in the top quintile work an average of 34.6 hours per week”
    34.6 hours per week doesn’t strike me as “working hard”.
    And how about the vast majority in between the highest and the lowest quintiles?
    Where are you quoting from, Nate?

  47. Nate: My point was that, as Frank said, percentage of taxes paid by the top quintile went up during the period studied, but income for that quintile went up much more-that is, the tax/income ratio decreased for the top quintile. Which means that, as tax burden for the total population is decreasing, it’s the middle class that’s getting the shaft.

  48. “In 1983, the most poorly paid 20 percent of workers were more likely to put in long work hours than the top paid 20 percent. By 2002, the best-paid 20 percent were twice as likely to work long hours as the bottom 20 percent. In other words, the prosperous are more likely to be at work more than those earning little. This trend has been a puzzle for some economists.”
    What crazy anti liberal talk, those actually working more earn more…something should be done to stop that, we need to tax those that do work so the people that dont work can make just as much….. right Margalit,
    Wonder what happened in the 60s and 70s that allowed poor people to work less but live better….odd

  49. what would you have expected it to go up pcp? Did you know the value of used cars deceases most years? Thats becuase they are of less value. Compare the hours worked and education level of the lowest quintile
    “Between 1979 and 2002, the frequency of long work hours increased by 14.4 percentage points among the top quintile of wage earners, but fell by 6.7 percentage points in the lowest quintile.”
    “Hours worked differ substantially across income levels. Adults in the lowest quintile work an average of only 14.4 hours per week, less than one-half of a typical 40 hour workweek. By contrast, adults in the top quintile work an average of 34.6 hours per week.”
    And keep in mind that is reported income, spend a few nights in the the hood and tell me they are only making 16K per year.

  50. Exactly, Ms. Gur-Arie.
    In the article that Frank has so kindly referenced, we see that income for the lowest quintile has gone down 2%, while that for the top quintile has gone up 55%. And that’s only up until 1997.

  51. “The top went from 58 to 66, so the rich have assumed more of a burden then they has before.”
    Isn’t this the natural outcome of assuming a larger piece of the national wealth pie?

  52. “Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.”
    In 1950 what percent of the population was paid by the federal government just for being a citizen? Did we have earned income tax credits for kids? income taxes have become a liberal wealth redistribution tool, of course the percentage has dropped. When almost half the population pays no income tax or gets a refund after paying no to little income tax what did you expect?
    Where does your argument account for other taxes like real estate and sales tax?
    When since 1950 has our unemployement been this high?
    http://www.bls.gov/cps/prev_yrs.htm
    well look at that, except for 1982-1983 it has never been that high. in fact it is 2-3 times higher then usual.
    Wonder what would happen if employement income dropped 10-20% from unemployement and recession, and we started giving income tax refunds to people who dont pay income tax……
    tax rate comparison is meaningless, if anything compare effecive tax rate paid.
    http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml
    lowest Quintile had an effective income tax rate of negative 6.5%. Oddly that wasn’t reflected in Margalits argument. According to Margalit they should be paying 10-15% but in reality they are getting back 6.5%. Thats a 16.5% to 21.5% difference. What value is it arguing or discussing rates that don’t exist?
    http://www.cbo.gov/ftpdocs/30xx/doc3089/EffectiveTaxRate.pdf
    page 187 is interesting, the poor went from -0.3 in 1979 to -2.1 in 2000. Your right tax burden has decreased, not sure you can really call it a burden when your being paid taxes.
    The top went from 58 to 66, so the rich have assumed more of a burden then they has before.

  53. “Because, with the amount of inflation over a century, that’s a meaningless figure.”
    To bad no one has ever figured out a way to invest for inflation.
    “Total of all taxes paid by all Americans divided by total of all income earned by all Americans.”
    Here is the real answer, you want to cover or avoid the question of who is paying less and who is paying more. You want to partner the argument that America as a whole” pays less with the argument the rich dont pay their fair share to increase taxes only on that small class of people that don’t deserve their wealth.
    If people started seeing that 45% of the population wasn’t paying federal taxes or that the rich pay the vast majority of all taxes already then people might start thinking it is distribution of taxes that are a problem and not the amount.

  54. “Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.”
    USA Today, 5/10/2010

  55. TRY THINKING — USUALLY DOESN’T HURT (MUCH)
    “tell us where that bottomless pit of TAXES is.”
    Well, as total tax burden on the American population is at the lowest level since the Truman administration, I think it’s safe to say we’re nowhere near the bottom currently.
    >> Total? Total average? Total marginal? At the median? Or the mean?
    >> No limits to spending — spending is LIMITLESS. And the SPEND-O-CRATS have proven that!
    —-
    Maybe it was the 1950s and 60s, the period of the greatest economic expansion in the history of this country, when the top rate was 88%?
    >> You left out tax deductions and tax shelters. That affects the marginal rate. Duh.
    —-
    Here are the tax rates since 1913. Very enlightening…..
    http://www.taxfoundation.org/files/fed_individual_rate_history-20101220.pdf
    >> You left out tax deductions and tax shelters. That affects the marginal rate. Duh.
    —
    RETIRE OWE-BAMA IN 2012!!!