Electronic Health Records Spurred By Insurers, Economy

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Pressure from insurance companies and the need to reduce costs because of the recession have encouraged U.S. physicians and hospitals to adopt health information technologies, including electronic health records, according to a member of President-elect Barack Obama's campaign health care advisory committee, Bloomberg reports.

Speaking at a forum co-sponsored by Nasdaq OMX and Leerink Swann on Monday in New York, Glen Tullman, CEO of Allscripts, said the need to cut costs and reduce the risk of medical errors has spurred more physicians and hospitals to switch to computer-based health records systems.

According to Tullman, Allscripts, the largest U.S. provider of software to physicians, has seen a fivefold increase in the number of physicians who are using electronic prescribing technology. Tullman added that this "dramatic acceleration" in the switch to EHRs might reduce the need for $50 billion in public financing under Obama's proposal for the growth of health IT (Nussbaum, Bloomberg, 12/9).

He said, "I think he is absolutely committed to using information technology as a key part of his platform," adding, "I also think that we should assume that there will be strong investments." However, he said, "I'm just not sure that there will be $50 billion" (Wisenberg Brin, Dow Jones, 12/8). Tullman said it might be difficult to amass such a large amount of funding as part of another economic stimulus package. Tullman suggested that federal spending in the future be combined with physicians' use of EHR systems that could be developed as loans "to ensure doctors have some skin in the game."

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Tullman said, "I see information technology doing for health care what it's done for every other industry and that is taking costs out and putting more quality in," adding that the Obama administration "sees electronic prescriptions as not just an efficiency issue, but as a public safety issue" (Bloomberg, 12/9). Tullman said, "President-elect Obama has been very clear ... that he is going to aggressively promote electronic health records, and he's a strong believer in electronic prescribing" (Dow Jones, 12/8).

A Boon for Health IT Companies

George Hill, vice president for investment banking at Leerink, said that companies that specialize in developing health IT systems for hospitals and physician clinics likely are going to benefit from the increasing use of the technologies. In an interview after the forum, Hill said that companies such as Allscripts, McKesson, Quality Systems and Cerner "have experienced breakneck growth despite the lack of funding" from the government, adding, "The train on this has left the station." Allscripts now serves about 25,000 physicians with e-prescribing software, up from 5,000 about one year ago, according to Tullman.

Tullman noted that states now are offering more money to spur the growth of health IT, and CMS has modified its Medicaid and Medicare reimbursement payments to include a 2% incentive to encourage hospitals to upgrade their records systems with health IT and a 2% penalty within two years for hospitals that do not adopt health IT (Bloomberg, 12/9). "That change in CMS has absolutely driven our results," he said, adding, "What that tells us is that the CMS carrot-and-stick approach has been successful in getting physicians' attention" (Dow Jones, 12/8).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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