THCB

Healthcare is Different

I’m often asked why healthcare has been slow to automate its processes compared to other industries such as the airlines, shipping/logistics, or the financial services industry.

Many clinicians say that healthcare is different.

I’m going to be a bit controversial in this post and agree that healthcare has unique challenges that make it more difficult to automate than other industries.

Here’s an inventory of the issues

1.  Flow of funds – Hospitals and professionals are seldom paid by their customer.   Payment usually comes from an intermediary such as the government or insurance payer.  Thus, healthcare IT resources are focused on back office systems that facilitate communications between providers and payers rather than innovative retail workflows such as those found at the Apple Store.

2. Hiring and training the workforce – Important members of the workforce, the physicians delivering care, are seldom employed by the hospital.   This is rare if not non-existent in any other industry.  It’s as if Toyota built a factory that anyone can use but does not hire or train the workers who build cars.   If someone wanted to create a Toyota with wings and an outboard motor, they would have the freedom to do it.

3. Negotiating Price – Reimbursement no longer is based on a price schedule hospitals and professionals can control.   It is based on a prospective payment model such as DRGs that someone else designs and dictates.   Where else in the US do prices get dictated to a firm?

4. Establishing referral relationships – We cannot market services to those who control our patient flow due to Stark anti-kickback regulations.   In other industries, you can build relationships, offer special incentives, and arrange mutually beneficial deals to develop your referral business.   In health care, it’s illegal even when unilaterally funding an action would make things easier for both parties and the patient.

5. Standardizing the product – In most industries, the product or service can be standardized to improve efficiency and quality.   In health care, every person is chemically, structurally, and emotionally unique.   What works for one person may or may not work for another.   In this environment, it is difficult to standardize and personalize care in parallel.

6. Choosing the customer – In most other industries, you can chose with whom you do business.    Not so in health care.   If you have an emergency department, you must provide treatment even if the customer has no means to pay.

7. Compliance – Data flows in healthcare in increasingly regulated.    What other business, including the IRS, is required to produce, on-demand, a three year look back of everyone who accessed your information within their firm.

As I noted in my recent post about the Burden of Compliance “the more complex a health system becomes, the more difficult it becomes to find any system design that has a higher fitness.”

We are successfully automating healthcare workflows, motivated by HITECH incentives and the requirements of healthcare reform.   The 7 characteristics above have required vendors to create full featured software applications and organizations to create complex rollout/funding models that take time.  By 2015 we will be there and I will be proud of all we’ve accomplished, given that the constraints on the healthcare industry are truly different than industries which have been earlier adopters of technology.

John Halamka, MD, is the CIO at Beth Israel Deconess Medical Center and the author of the popular Life as a Healthcare CIO blog, where he writes about technology, the business of healthcare and the issues he faces as the leader of the IT department of a major hospital system. He is a frequent contributor to THCB.

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Jason_Lockette_MD_MBATariqDrabugrass juicePaloAltoDocsantosh Recent comment authors
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Jason_Lockette_MD_MBA
Member

Your second bullet point implies that hospitals should be at the center of, or in control of the delivery of healthcare. I propose that one of the reasons more physicians are not employed by hospital systems is because most hospitals have done such a poor job managing their employed physician work force. Hospitals treat physicians like they have treated other hospital employees for years. They hire a physician, give them a brief orientation and then transplant them into a setting that is made up of people who were chosen by, and often report to, someone entirely different from the physician’s… Read more »

TariqDrabu
Member

Interesting blog.
Source: http://tariqdrabu.co.uk/

grass juice
Guest

My relatives always say that I am wasting my time here at net, except I know
I am getting knowledge everyday by reading thes fastidious articles.

santosh
Guest

Wonderful and very interesting blog, it is really helpful. I like it. Look forward to reading more your words.

IT & Healthcare can be more useful if collaborated together.
EMR(a software for doctors)

Merle Bushkin
Guest

Not to beat a dead horse, but those commenters who insist that understanding the business of healthcare is not for physicians, or who don’t think it respectable to acknowledge that healthcare is a business, will find an article in today’s NY Times interesting.

http://www.nytimes.com/2011/09/06/business/doctors-discover-the-benefits-of-business-school.html?_r=1&ref=health

claire
Guest
claire

great article! healthcare may have challenges but it def should stick to its goal. to serve people better.

Claire
diabetesshield.com

pcp
Guest

“Some hospitals and specialists are reimbursed a lot more than others for the same work even though quality and outcomes are often no better.”

Agree.

The hospitals are paid too much, the specialists are paid too much, and the insurers agree to pay too much. Everybody’s making a buck except Quack and me. But we’re responsible for solving the problem?

I think not.

As medicine in this country rapidly changes from a profession to a investor-backed business, the profit motive will only become stronger.

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

Well said, my esteemed colleague.

Barry Carol
Guest
Barry Carol

“go where the money is” Pcp — That would be hospital based care and care provided by hospital owned facilities including imaging centers. PCP referrals to specialists and for tests have a direct influence on where patients receive care. Some hospitals and specialists are reimbursed a lot more than others for the same work even though quality and outcomes are often no better. The 99213 PCP visits are not the issue. Scooters are an issue for CMS to deal with. Pricing information would be helpful to both patients and referring doctors in pushing back against the high cost providers. Insurers,… Read more »

Merle Bushkin
Guest

“I don’t think you’re understanding the text here. This article is an explanation why medical practice is different from running a business.” Craig, I understand the point of this blog very well. Of course medicine at the micro level is different from other professions. But at the macro/management level it is not. It iS a business. No one is trying to turn you into an accountant or marketer or a lawyer, but If you and every other care provider ignore the fact that healthcare IS a business — in fact the biggest business in our economy — and fail to… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

Medicine is a business on the macro level. Very well, we need people to manage that, but they should not be doctors. I am supposed to do the best I can for a patient, regardless of ability to pay. If the patient can’t or won’t pay, then I advise the next best thing. And if not that, then so on. But I cannot have a conflict of interest, balancing the needs of the patient with the needs of society. I suppose what we could do is have a position of “rationers” whose job is to deny and cancel as many… Read more »

Barry Carol
Guest
Barry Carol

“I’m trained to perform a diagnostic workup and then find a treatment.” Craig – Of course you are and when you and your colleagues do that job, you collectively drive most healthcare spending. Yet resources are finite. You don’t consider it part of your job to know or care about costs. Yet if someone else, like insurers or CMS tries to care about costs, you and your colleagues complain that these outsiders are interfering with your ability to practice as you see fit and in your patient’s best interest. The healthcare system is not financially sustainable if costs continue to… Read more »

pcp
Guest

” you collectively drive most healthcare spending. Yet resources are finite. You don’t consider it part of your job to know or care about costs.” I’m sure Quack, like every other primary care doc I know, knows exactly how much the services he provides cost. And they’re a bargain, and represent a tremendous return on investment for the system. But don’t hold him (or me) responsible when insurers voluntarily pay 1000% above overhead for scans and tests so they can increase marketability of their product. Don’t blame him for the billions in “facility fees” that encourage inefficiency. Don’t blame him… Read more »

Merle Bushkin
Guest

No one “hates” you for being a doctor. But no one likes you for being disrespectful of others and what they do. It’s very unbecoming.

If you think you haven’t demeaned others, you’d better re-read your comments, both word and tone.

I also suggest you learn somehing about the business operations of your practice and hospital, and show those who run them the same kind of respect you want them to show you. For if they fail to do their jobs well you may not have a place to ply your trade no matter how important you think you are!

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

Mr. Bushkin, I don’t think you’re understanding the text here. This article is an explanation why medical practice is different from running a business. The point is I’m not an accountant, or a rationing officer, or a lawyer or a hedge fund manager. Doesn’t mean that I hate them or demean them, just that I’m not them and my role is fundamentally different from theirs. When health care policy people get on the boards here and post comments like, “Why can’t doctors be more like X businessmen,” I get a bit irritated. I’m not trained in accounting, and should not… Read more »

Merle Bushkin
Guest

Craig, it’s clear that you don’t have a clue what other professionals do, the pressures they feel, or the impact they have on hundreds or thousands of people. Worse, you appear to be too self-absorbed to be interested in learning. You treat patients when they are ill. Their employers live with them when they are ill and well. They give them jobs and pay them wages or salaries that enable them to fulfill their potential as human beings, educate themselves and their children and raise their standard of living and that of everyone around them. When you have shouldered a… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

“Stop demeaning everyone else and what they do,” Strange, I don’t recall demeaning anyone in this thread. It is true I don’t really find trial lawyers and insurance authorizers and bureaucrats all that useful, if not downright parasitic. But I don’t recall demeaning teachers, laboratory techs, soldiers, clerks or police officers. Ahem. How do you know that a physician’s shoes are the only shoes I’ve walked in, eh? Physicians are in a special category because we are regularly responsible for people’s lives. Maintaining them. Saving them. I do find it interesting how people hate us for assuming this responsibility. I… Read more »

Barry Carol
Guest
Barry Carol

“I’m not responsible for people’s financial lives or their social lives, I’m responsible for their *lives.*” With all due respect, this is one of the biggest problems with the financial or business side of healthcare. Doctors drive most healthcare spending through their decisions to order tests, prescribe drugs, admit patients to the hospital, refer them to specialists, consult with patients and perform procedures themselves. Yet, most never considered it part of their job to know or care about costs. If the local AMC charges 5-10 times more for an MRI than a nearby non-hospital owned imaging center, it’s not your… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

“If I were in your shoes, I probably would view my job the same way you do, at least until new payment models and incentives reward doctors for helping both individual patients and the system at large to save money. Maybe ACO’s with shared savings rewards for doctors might offer some promise here.”

No. This is what I have social workers for. I really don’t have the time to sit and do financial counseling. Heck, I don’t even have enough time to do all the medical counseling I need to do.

Merle Bushkin
Guest

Graig, you’re right. I’ve never taken care of patients as a care provider. But I’ve been a patient and I’ve taken care of sick kids and sick parents. I’ve also worked with businesses in a great many industries. And trust me, the issues and complexities in healthcare, while obviously not identical at the micro level, often are similar to those in other industries at the macro level. Any responsible professional worries about his clients, employees, shareholders and communities in which they operate – even when “at home relaxing” just as you do. Their welfare, success and livelihood often rest in… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

Mr. Bushkin, “You mistakenly equate “objective” with irrational.” Um, no. I don’t. You don’t understand the mentality of sick people. In extremis, the two are not so clearly separable. “I sense you think I am dismissive of the pressures and responsibilities doctors feel and, therefore, are defensive when you see me lumping doctors in with lawyers, Indian chiefs and even business executives. If so, you are very wrong. I have great respect for care providers at all levels and often wonder how they tolerate the misery they confront – whether in an OR or a nursing home. However, they aren’t… Read more »

Merle Bushkin
Guest

Margalit and Craig, I’m amazed that you accept any part of JD’s perverted perception of the world! Healthcare ISN’T different from other industries. Saying it is, doesn’t make it so. It only blinds you to solving its problems. JD, since when is an industry defined in terms of it’s consumers rather than it’s providers? The auto, entertainment, utility, electronics, computer, construction, food, aerospace, retailing, financial services and other industries all must satisfy their customers in order to survive and prosper but their “most important participants” are NOT their customers — they are the companies or organizations, and their people, that… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

Mr. Bushkin, You misunderstand me. Taking care of a patient can never be “just a business.” You do what is best for them, not what is best for you. This often involves doing things for free. It involves worrying about them even when you are at home “relaxing.” It involves getting up in the middle of the night to see them, often for inconsequential things. You can’t monetize that. Since when is a sick person seeking care “irrational?” Since all the time. They come with their diagnosis and treatment plan that would be all wrong for them and possibly kill… Read more »