The digital transformation of health care

The arrival of the Internet offers the opportunity to fundamentally reinvent medicine and health care delivery. The "e-health" era is nothing less than the digital transformation of the practice of medicine, as well as the business side of the health industry. Health care is only now arriving in the "Information Economy." The Internet is the next frontier of health care. Health care consumers are flooding into cyberspace, and an Internet-based industry of health information providers is springing up to serve them. Internet technology may rank with antibiotics, genetics, and computers as among the most important changes for medical care delivery. Utilizing e-health strategies will expand exponentially in the next five years, as America's health care executives shift to applying IS/IT (information systems/information technology) to the fundamental business and clinical processes of the health care enterprise. Internet-savvy physician executives will provide a bridge between medicine and management in the adoption of e-health technology.     

Where does informatics fit in health care organizations?

Why is medical informatics important to health care leaders? As an emerging science, informatics focuses on applying computing and communication technology to decision making for clinicians and managers. It enhances the understanding of how information and communication systems can impact the work health care managers must accomplish. As the cost of technology for digital information management continues to decline, organizations and individuals will look for ways to offset the human costs of managing and conveying information. The way of the paper medical record is being replaced by the less expensive and more efficient digital information systems. Leaders of health care organizations need to look for every opportunity to deploy networks and computers to reduce the labor costs of data collection, storage, retrieval, and analysis.     

The information revolution: opportunities and pitfalls for patients and providers

The Information Revolution is changing everything in our world. Although this era is developing and evolving, some have described networks, globalization, diffusion of power away from professionals, and information overload as direct results of the Information Revolution. These megatrends are affecting every person and every organization in the world, and this article examines them to see how they might affect medicine and the delivery of health care in the millennium. What is truly significant about the changes brought about by the creation of cyberspace is that through computers, digitized information can be inexpensively and quickly transmitted anywhere in the world. Many of the traditional ethical and professional standards of medicine are feeling the strain of being applied to the strange, unfamiliar world-cyberconsultations and other virtual medical applications are explored. Physicians who understand this revolution will have a far better chance of controlling their destinies--and more importantly, aiding their patients in the quest for good health.     

The managed care world order. The revolution is here

What are the belief clashes caused by the shift from a fee-for-service medical setting to a managed care environment? Right now, most physicians are enculturated in the old world order that emphasizes physician autonomy, control, security, and specialness. Physicians feel squeezed--by third-party payers wanting to be involved in the decision-making process of care delivery and by a new focus on teams versus the captain of the ship role. When traditional expectations clash with a changing reality, most people feel stressed. Physicians are no exception. If physicians have clear and realistic expectations, they can better cope with the uncertainties they face. And, the only realistic expectation in the medical profession is increasing uncertainty. Here are 10 predictions of what is happening in the health care industry--a list of the belief clashes that are so unsettling to those practicing medicine.     

System reform in integrated health systems

As the debate progresses on health care reform and the ultimate form of the U.S. system, important lessons can be drawn from examinations of other health care systems. From the U.S. perspective, European health systems appear to have a certain homogeneity about them. Americans tend to look at all European arrangements as single-source financing systems. Because these systems all provide universal coverage, the assumption is that there must be a strong cohesion and similarity among them. Viewed from the European perspective, the reality appears to be rather different. In this article, the health cae systems of Nordic countries are analyzed in terms of their differences both from other European systems and from the United States approach.     

Global theory and the nature of risk, Part 2. Towards a choice-based model of managed care

Orthodox managed care depends on top-down, command and control techniques to squeeze efficiency out of the system. But for every unit of economic good this approach produces, two or three bad units come as result. The key to moving to an environment where value and efficiency become self-sustaining is to structurally recognize the medicoeconomic reality of medicine: the episode of care. The episode forms a natural unit of analysis that not only renders costs and outcomes information translucent and accessible, but it also forms the natural conduit through which premium dollars can find their optimal value. By bifurcating probability risk from technical risk and allocating them in the ex ante and ex post markets, respectively, health care insurers and providers return to their rightful economic roles, and to their appropriate fiduciary duties. And patients regain some semblance of reasonable sovereignty in managing their own medical affairs.     

Health care fraud and abuse. What physician executives need to know

Fraud and abuse, which can occur in all industries, also exist in the health care industry. This problem is compounded by the reality that "American medicine, although undergoing evolution, now faces changes of a magnitude that has never before been encountered." These changes are creating new realities for physician executives and also new challenges. As there are changes in business practices, there will be changes in how fraud occurs in health care. Physician executives need to be sensitive to the possibility of fraud and abuse as an unwanted component in medical losses in managed care systems.     

The ascendancy of primary care: permanent or temporary?

The conventional wisdom strongly suggests a health care provider food chain for the future: Primary care physicians (PCPs), principally family practitioners, on the top playing the lead role, distantly followed by specialists, with hospitals and other ancillary services even further down the line. Is this a reasonable expectation? Will PCPs dominate the new systems? Or will they be but one of many equally necessary components of these developing integrated health care delivery organizations? Looking at the various models now developing, it would seem that future integrated delivery systems will utilize both PCPs and specialists, but with strong augmentation from a diverse assortment of other health care professionals, including nonphysician providers, educators, and administrators. To separate the illusion of primary care dominance of the coming health care system from the likely reality, we should first determine what is driving the apparent present demand for primary care physicians. Next, we will examine the possible and probable reactions to that demand from an economic standpoint and from the points of view of both health care professionals and the public. Finally, we must try to picture how health care provider organizations of the future are likely to look and how they will integrate their health care professionals.     

Community health information networks. Threat or opportunity in the doctor-patient relationship?

The last half of the 20th Century has been witness to numerous changes in the delivery and financing of health care services. These changes have impacted the one-to-one doctor-patient relationship that may have existed in the past to become a complex of relationships. The contemporary physician collaborates with many other professionals to assist in the delivery, financing, and monitoring of health care services. These clinicians and other professionals require access to patient information to deliver care and secure payment. The patient understands this. Yet the patient has concerns about the widening circle of persons authorized to access his or her information. These concerns have been amplified by the development of community health information networks--(CHINs). This article focuses on CHINs, both patient concerns and the role physicians can take in developing them.     

The computerized patient record and confidentiality. The nabobs of negativism are wrong

The handwritten medical record has been the method of choice for documenting health care data since the last millennium. Given this successful tenure, it would be natural to greet any new information system that purports to be an advancement with skepticism. Moreover, physicians as a group are hardly progressive. Yet health care is taking a giant leap and is finally accepting computerization. The advantages and drawbacks of computerized information systems have long been thoroughly tested in such diverse industries as the military, banking, and the airlines. It is difficult to imagine any of these industries in their modern form without an advanced information system.     

Capitation and informatics

When physicians, hospitals, and allied health professionals bill for services they render, their information processing requirements are relatively simple, at least compared to those of capitated organizations. When payers (insurers or employers) accept financial risk for the health care services of beneficiaries, they have usually invested in claims processing, membership tracking, and, under managed care, utilization review and provider profiling systems. But payers, for the most part, have not invested in electronic collection of clinical information about beneficiaries, nor have they tended to keep all claims they have processed in electronic form for study after accounts are settled and payments disbursed. In this article, we will explore why informatics is so important to capitated organizations and why payers that have traditionally taken financial risk for insuring the health care costs of populations are also learning about the importance of informatics.     

The Informatics Institute: why do we need it?

Why should physician executives care about medical informatics? For that matter, what is medical informatics anyway? Broadly defined, medical informatics is the study of the collection, storage, retrieval, and analysis of data and information in health care to support clinical and administrative decision making. Informatics is important because, in the past 10 years, powerful computer, software, and information technologies have been developed to enable health care organizations to automate some of the work of decision making, for improved quality of care and cost control, and for successful managed care contracting. This new emphasis on informatics in health care was the impetus for the founding by ACPE earlier this year of The Informatics Institute, which will be involved in educational and research activities in the growing area of medical informatics. In this new column in Physician Executive, Dr. Marshall Ruffin, President and CEO of the Institute, will discuss the role of medical informatics in health care delivery and financing and its relation to physician executives.     

Building a vertical provider system

There is probably no geographic area in the United States in which the health care environment is more turbulent than that of Southern California. Long before President Clinton's proposals began serious national debate on health care reform, a massive provider-driven realignment of the system was occurring in that region of the country. Multispecialty medical groups have generally led the way and have acquired ever larger managed care populations through merger and acquisition of other groups and practices. Hospitals, hampered by large fixed capital bases, have struggled to reinvent themselves as cost-effective and primary care-friendly environments in order to be attractive to managed care physicians. Almost ignored in this reconfiguration has been the university teaching hospital. This article discusses one attempt to reconcile contractually an integrated, capitated, and managed care-oriented health care system with an academic medical center in a strategic alliance.     

Health care futures. What lies ahead? Where are we going? Panel discussion

Who would have guessed that managed care would dominate the health care industry in the final two decades of the millennium? That physicians would be joining labor unions? Or that they would be going back to school to become Fellows of the American College of Physician Executives? To find out what may be in store for health care in America five to 10 years hence, The Physician Executive asked nine health care experts to participate in a two-part panel discussion. Here's what they see ahead in managed care, information technology, and biotechnology. Part 2 will appear in the July/August Issue of The Physician Executive.     

Health care reform. Pan American Uni-Care Health Insurance Plan

Something is definitely wrong with the American health care system. Too many citizens are denied health care, and health care costs continue to rise at an uncomfortable and intolerable rate. Ensuring care for all is a paramount goal. There is no way to simultaneously cover everyone; leave the reimbursement of physicians unrestrained; ensure instantaneous access to every imaginable high-technology service; subsidize the world's costliest and least efficient health bureaucracy; and contain costs. Widespread dissatisfaction in all quarters--physicians, hospitals, third-party payers, regulators and consumers--has led to an avalanche of reform proposals. Rapidly changing social, political, and economic environments; rising fiscal pressure; and an evolving understanding of the major determinants of health have also created pressure for changes. There are some new and hopeful signs that America is facing up to the need for changes in the health care delivery system. The Pan American Uni-Care Health Plan that is described in this article may serve as a reasonable balance among these competing priorities.     

The brain drain.

The adult human brain weights around three pounds. Yet it is capable of feats that dwarf those of the most sophisticated computers. The sad fact is, those brains are largely wasted in modern organizations. Instead of tapping the full capacity of the human brains that could make our organizations more efficient and effective, we allow them to lapse into an inexcusably large amount of wasted activity. What is needed by the health care field, in a time that demands more with less, is more sensible use not only of its manpower but also of its brainpower.     

Cost-effectiveness and coverage policy.

Cost-effectiveness analyses have become a pervasive element of health care. But they have not had a major impact on medical coverage policy. The challenge of implementing cost-effectiveness as a medical coverage criterion is related to the following issues: (1) Contract language does not include cost-effectiveness as a coverage criterion; (2) cost-effectiveness analyses often take the societal, population-based perspective, while health care is delivered on an individual basis; (3) there is no standard methodology for cost-effective analysis; (4) there is no explicit cut-off between cost-effective and cost-ineffective; and (5) cost-effectiveness analyses are not time sensitive.     

Standardizing medical data

Congress passed The Health Insurance Portability and Accountability Act of 1996 in the doldrums of last Summer, and promptly charged the National Committee on Vital and Health Statistics to begin working on the regulations that will help providers, payers, and all members of the public adhere to the spirit of the law. What does this legislation portend for the health care industry? Standardization of information systems will play a large role in assuring the portability of health care insurance from one employer and payer to another in this legislation. Accountability, too, will depend on those same data standards to allow comparisons of processes and outcomes of care across health plans, providers, communities, states, and regions. In fact, without standardized data describing patients and their treatments, there can be no comparisons of their outcomes of care, or the processes used to treat them.     

The hidden competitive weapon supporting innovation in health care

It is trite to say health care is experiencing an era of unprecedented change. However, with the preoccupation with reimbursement and economic reform, it is easy to focus on this single dimension and lose sight of the pervasiveness of the need for continuous change throughout the entire health care organization. Health care organizations that will emerge as leaders within the industry will have incorporated not only radical changes to deal with new patterns of reimbursement, but also simultaneous changes in core medical services--changes that not only incorporate new technology, but also push down costs. They will also have to cope with radical changes in information and quality systems. Physical facilities will look less like citadels, and new flexible architectures will emerge. Coping with transportation logistics and remote site service provision will be part of the new industry. Patients will become full partners in ?health,? requiring very different approaches to patient education and involvement in prevention, not simply treatment. Indeed, without belaboring the almost endless list, it is impossible to think of a single dimension of health care that will be untouched.     

Effectiveness, accountability, and efficiency

Management of health care is compromised by its singular reliance on billing information--i.e., a claims trail tells little of what providers think. It relates to neither prevention of disease nor reduction of unnecessary health care costs. Billing information is not the substrate to be used in the pursuit of appropriateness, effectiveness, and value. To improve medical management of health care, a protected, but accessible clinical database is needed.