Government Incentives Build Empires

The American Medical News reports that Fitch, a global investment rating service, found that incentives paid to hospitals for the adoption of electronic health records (EHR) went to increased profits.  Fitch also concluded that:

“…the hospital companies analyzed in the report are not expected to use their positive cash flow to reduce debt. They are expecting acquisitions of other hospitals to remain a top priority. Fitch could not provide specifics on expected acquisition activity, but did say that Community and HCA had the most acquisition activity in 2011.”

A paradox in free market societies, especially the United Sates, the belly of the beast, is that pro-market advocates often support giving corporations incentives to meet public policy goals. One would assume in a capitalist economy private companies would make investments that boosted their revenue and profit.  If government payments are contingent upon EHR adoption it would seem a sound business decision to make those investments to get the money. Corporations adapt their behavior to attract business from other corporations, why should they be treated differently by public purchasers?

One result of using public dollars to finance private corporations is that we lose control over how that money is spent.  In a public health care system if the money is not needed for EHRs then it could be repurposed to improve access, or quality, or some other democratically decided upon goal, rather than financing corporate empires.

The Link to the American Medical News article is:

http://www.ama-assn.org/amednews/2012/05/14/bise0516.htm

EHRs, Labs and the Toronto Launch

On November 19, a lively group gathered in the back of the Free Times Café for the Toronto book launch of False Positive.  Twenty-five books were sold and, in an unexpected twist, electronic health records, EHRs or sometimes EMRs, dominated the discussion.

The EHR connections with labs were three.  First, the cost of using for-profit information technology companies, like private labs, is hidden from decisions on front line care, yet it represents a significant public expense, probably more for IT than is paid to private labs. Canada’s Infoway, a national non-profit organization funded with five billion dollars of public money to develop a national EHR, spends the vast majority of its money on private sector information technology providers. Similarly, most provinces and territories have EHR programs which include Ontario’s scandal ridden eHealth.  Among its other responsibilities eHealth is tasked with implementing the Ontario Laboratory Information System with its private sector providers.

Second, despite all the money and years of effort, the success at developing integrated EHRs has been, how shall we say, a disappointment.  As with the use of for-profit labs, we have a situation where significant sums of public money are transferred to for-profit firms adding to the cost of the public system, with no extra benefit.  While it has not been studied in-depth, it is a reasonable observation that the contracting to for-profit information technology companies has produced way less benefit than private labs. And for-profit labs have set back the delivery medical laboratory services in Canada.

Finally, a focus of laboratory system modernization in the United Kingdom, Australia, the United States, as well as Canada, has been the development of electronic processes to order tests, track specimens and report results.  Labs results have been a primary focus of the larger project of developing a full patient electronic record. A few places, like Wales and Nova Scotia, have been recognized for success in system wide electronic lab records.  In both these examples all the medical laboratories are public non-profit institutions, though private firms were used to develop the IT infrastructure.

EHRs and medical laboratories both highlight the large sums of money that are spent, largely under the radar of public discussion, on for-profit companies.  This allows governments to claim that they are supporting a public system while enriching private friends and driving up the cost of public health care. It also has removed this for-profit public health care from significant academic scrutiny.  In both cases while much work has been done on the technical aspects of the services little has been done on the impact of its ownership, funding and organization.

Testing Expensive

A story about American medical laboratories needing to update their Information Systems (LIS) to match the rapid adoption of electronic medical records (EMR) in health care organizations caught my attention.  It said that lab managers should think of their LIS as they think of their cell phones and be ready to update to the latest’s gadgets and models as often as every year.

This pressure is driven by government policy that is rapidly expanding the use of EMRs in Health Maintenance Organizations, other primary care practices and the new Accountable Care Organizations being set up under the Affordable Care Act. Competition between laboratories to provide services to these organizations means that their LIS has to be compatible with a wide variety of EMRs.  This is a significant difficulty for American labs which has spawned another IT business sector: establishing compatibility between laboratory record systems and the different EMRs used multiple providers.

Canada has been going through a similar evolution, though with a few key differences.  All hospital laboratories in Canada are non-profit and rely on public funding.  In some provinces, like Nova Scotia, this has made the coordination of inpatient laboratory services across the province relatively easy.  Similarly, because all lab work is processed in the public system, all of a patient’s results are available through this integrated network. The problem has been linking the hospital labs to family medical practices: a simpler problem than trying to link multiple laboratory systems with multiple providers.  Nova Scotia has been able to set up a structure that allows community providers, as well as hospital services, easy access to all of a patients lab results.  All doctors’ offices have not yet taken advantage of this service, largely because of a lack of resources, but it is operational and waiting to be used.

A second story from the United States talked about the advertizing that laboratories, even in small states like New Hampshire, are doing to attract the business of the new Accountable Care organizations.  Once again Canada is largely spared this problem.  Even in the provinces with for-profit labs providing insured medically necessary services, while there are extra administrative and advertizing costs, they are small compared to the costs in the US.  These two examples from one health care sector go a long way to explain why American per capita health care costs are so much higher than ours, and both are higher than all other OECD countries.

These American examples come from articles in the Dark Daily, an electronic bulletin that provides news, analysis, trends and management innovations for clinical laboratories and pathology groups.