Code Red: Two Economists Examine the U.S. Healthcare System

April 28, 2010

Health Information Technology — So Near and Yet So Far

Filed under: Efficiency,Health IT,Health services research — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 8:32 am

In the current issue of Health Affairs, which is devoted to health information technology (HIT), one article describes key issues for successful adoption of HIT in medical homes. (Medical homes are integrated, team-based primary care practices.) The list of issues is daunting, including the need to integrate HIT across providers, the need for clinical decision support, and the need for outcomes measurement. As I read this and other articles in this issue I was struck by an overwhelming feeling of déjà vu. Ten years ago I described the key issues for HIT in my book, The Economic Evolution of American Healthcare. I had learned from hands on experiences with physician hospital organizations (PHOs) and integrated delivery systems (IDSs) that success depended on good management information systems, which in turn required HIT. I also learned that successful HIT would require integration across providers, decision support, and outcomes measurement. Deja vu indeed.

So what has been going on in the past decade? Seemingly everyone has become a believer in HIT. But no one talks about PHOs or IDSs very much. The medical community has embraced “new” organizational forms like medical homes and accountable care organizations, which aren’t all that new when you look at them closely. They are largely PHOs and IDSs in new clothing. But these new organizations are struggling and the reason is simple. It’s the HIT, stupid. It doesn’t matter how you dress up the health provider organization. If the organization cannot measure its performance, and if the market does not reward the organization for delivering value, then the organization will never fulfill its potential.

What makes the article on medical homes particularly interesting is its juxtaposition against an interview of David Blumenthal, current national coordinator for HIT (our nation’s “HIT czar”), by David Brailer, who held the same post under President Bush. The interview is remarkable in part because it is remarkably short on specifics, even for politically appointed policy makers. But the part that really caught my eye was Brailer’s effusive praise for Blumenthal’s creation and implementation of the “meaningful use” criterion, as in individual providers can get subsidies for adopting HIT if they can establish a meaningful use for it. Several other articles in the same issue described various creative ways of establishing meaningful use.

This is when I realized that the two Davids, and by extension the national leadership of the HIT movement, have entirely missed the point of HIT. HIT is not a tool for the individual provider. It is a tool for the market. In economics parlance, HIT displays a huge externality – when one provider adopts it, others benefit. More importantly, HIT increases the effectiveness of managers, payers, and patients, for example by facilitating quality evaluation. In a nutshell, it does not matter whether individual providers can find a meaningful use for HIT. The market will make meaningful use of HIT. I could not find any mention of this meaningful use in the interview or any of the other articles in Health Affairs.

And therein lays one of the biggest problems with our health care delivery system. It is run by doctors who believe that all problems have medical solutions. (Blumenthal and Brailer are both doctors.) And so they require that providers have their own private “meaningful use” justifications for HIT when the most important meaningful use of HIT is by the market. This requirement stymies HIT adoption and forces HIT to accommodate the needs of providers, rather than the needs of the market. Dr. Brailer should not have praised Dr. Blumenthal for creating a new bureaucratic tool (that is what it boils down to, as “meaningful use” is a tool for doling out federal subsidies.) He should have excoriated him for setting up such an unfortunate road block to successful market-based health care.

I admit that we are closer than we were a decade ago. At least we have an HIT czar. The next step is for the HIT czar to understand in the broadest sense why HIT is important. I fear that that will not happen until the HIT czar is a manager, not a doctor.

1 Comment

  1. You are right on target, David! Yes, I am a physician, but I am also a Kellogg MBA….and I have been fighting the battle you describe for years. For healthcare, I am always reminded of two axioms: (1) The true mark of insanity is doing the same thing(s) over and over and expecting a different outcome(s) and (2) The more things change, the more they stay the same. With healthcare reform upon us, I think we all will soon see/realize just how much “insanity” and “sameness (no change)” we actually have.
    More specifically, on HIT, it seems we are off by one consonant. There is all this talk at various and sundry levels about “meaningful use”, but the focus is actually more on the “meaningful useR”. Two very different concepts/constructs, and this focus often leads to the “meaningful ‘loser’”. Whatever happened to “market-driven healthcare”? It is less a question of what providers (more global than just physicians) need, and more of what the customers want. Needless to say, a (market) focus on the latter will certainly (I hope) drive the former….and not the other way around.

    Comment by Mark Dietz — May 6, 2010 @ 9:27 am


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