Fixing Healthcare - Is it an IT issue?

As a member of the Seattle Tech Startup community I subscribe to a great email distribution of local entrepreneurs. Today there was a lively debate about the recent news that the Obama administration idea of computerizing our nations health records. More details from this CNNMoney article - “Obama’s big idea: Digital health records”.

Since most members of the list are technologist, there was a huge debate about XML/HTTP and which technology standards would best be used to solve this problem. Being a technologist myself I would love to have jumped into that debate, just for the gear head thrill of it… but alas it misses the big point. So here was my decided non-technical reply to the group.

First of all, if any of you are really interested in exploring this issue/business deeply, I strongly recommend participating in the Health2.0 conference series. You can learn more about it here:

Last fall there was a great conference (3rd so far) where the primary focus was “User Generated Healthcare”… the conference was loaded with tons of great panels and keynotes. There was a great deal of discussion of the potential of an Obama administration (this was before the election) and the implications it would have on the health care industry moving forward.

There were many many “web” and “technology” companies presenting their various solutions for how to lower health care costs and more importantly how to “democratize health care” (I use the phrase very loosely).

The debates between technologists at the conference were not unlike the thread we’re having hear… in fact all the ideas discussed here are already being worked on by at least a half dozen companies in this space.

Which is a nice segue into the primary concern raised at the conference…. Peter’s email is introduces the concept nicely.

Date: Tue, 13 Jan 2009 10:28:36 -0800
From: Peter Denton
Subject: Re: [SeattleTech] Web app required. Budget: $100 Billion

Totally not trying to be naive here, but is there really incentive for the
hospitals, insurance companies, private practitioners, dentists, cosmetic
dermatologists to do this?

These companies not only lack incentive for progress… they actually have disincentives to make change. In fact, the argument made by most of the people in the trenches of Health 2.0 is that it is exactly _NOT_ in the interest of these entrenched companies to support this progress, and many of them are proactively taking steps to prevent progress.

Given there are countless examples of the federal
government truly showing its inability to create large, performing data
systems, is it going to convince the healthcare industry to work together
and create more risk in a risk-infested industry?

If only that were the biggest problem. Most of the companies in this space explicitly make money off of the inefficiencies in the market. Cleaning up those inefficiencies will negatively impact their bottom line, and they are therefore motivated to work against this progress.

I know that healthcare is a great national investment, as it is 99% a domestic product, but is this a good approach?

I’ll admit to being a bit cynical about this, but I’d almost be willing to bet that the whole idea of “standardized medical records” is a red herring intentionally suggested by the lobbyists to create a giant bureaucratic failure, in order to prevent real progress and reform.

Normally I’d argue for the free market approach, but the problem with health care today is that it is not a free market, but instead a market which is easily manipulated by the power brokers (in this case the insurance companies, pharmaceutical companies, etc). Although I’m not necessarily a fan of socializing these types of programs, I suspect that the only way to really reform this system is to create a single public system for health care… (universal health care, single payer, etc…)

The end result of such an effort would be a great deal of business carnage in some huge names, massive loss of wealth of investors in these companies, a huge short term burden on the tax payers, but at the end of the tunnel, potential for much more cost effective and higher quality health care for all of us.

Note to all of us on this list: Our own companies would greatly benefit from a reduction in health care costs… as it is one of the largest expenses we face in growing our companies.

7 Responses to “Fixing Healthcare - Is it an IT issue?”

  1. January 14th, 2009 | 12:27 am

    Electronic Medical Records will require adoption of an internationally recognized data standard. There is precedence in this in the ICH E2B standard for pharmaceutical adverse event reporting. HL7 standards are forming around electronic medical records. Instead of waiting for government/industry/insurance to develop the standard, the open source community should embrace this challenge and develop cloud-based services around the evolving HL7 standard.

    As a member of the Seattle Tech Startup community, is this something that seems feasible?

  2. January 14th, 2009 | 12:38 am

    Greg, I am a huge believer in the power of technology to revolutionize the efficiency of systems. I am an equally big believer in the power of “democratization” — turning the keys over to the people within the system — to force change.

    From a technology perspective, Cloud Computing, open source software, and the language an platform advances that have happened in the last 10 years make it much more economically feasible for “citizens” to build the kind of world class IT infrastructure necessary to take on this IT challenge.

    So to answer your question directly, “As a member of the Seattle Tech Startup community, is this something that seems feasible?”, yes, as a member of the Seattle Tech Startup community I believe it is technically feasible to build the kind of standards based platform you’re discussing.

    However, I will admit I am skeptical that “if we build it they will come”…. My fear is that the powers that be, in this case insurance companies, pharmaceutical companies, and the like, will intentionally obfuscate the process to prevent adoption from occurring. Sadly, this is a political process in which the people with the most money at stake are pretty well entrenched into the system.

    My gut tells me that unless there is a mandate to adopt such a system, then it won’t matter if we build it.

    Please convince me I’m wrong!

  3. James
    January 14th, 2009 | 12:43 am

    Nicolas Hanauer (Second Avenue Partners) had an interesting take on technology applied to health services at his “Breakthrough Thinking” presentation via NWEN last month.

    One example he used was a startup they’re funding that implements a very different health care service delivery model. Interesting political challenges wrapped around the technical ones, too. The deck is at the link, but there was a lot more off-script as the audience was all over this.

  4. E.F.
    January 14th, 2009 | 7:34 pm

    I’ve noticed that paperwork abounds when values conflict, in other words, one way to fight someone in a bureaucracy is to force him to do more paperwork. Anywhere you have a lot of paperwork, you usually have two or more institutions or factions fighting one another.

    A case in point: once I met a woman with two part time jobs as a medical records “coder”. I asked her what a “coder” did, and she said, in effect, ‘In the morning I work for a hospital, and I take the doctor’s case records and try to split up the procedures into smaller and smaller parts, because the insurance companies pay more if you charge for each stitch and pill a la carte - one charge for anaesthetic, one for the incision, one to find the appendix, etc. When I am done, the hospital sends my work to the insurance company for payment. In the afternoon I work for an insurance company, and they pay me to examine the bills coming in from the hospitals, and to lump together all the little procedures into one big procedure (appendectomy, for instance), because the insurers pay less that way’.

    This is the kind of problem that computers cannot solve, whether they are being programmed by the government or by private industry. They need to change the rules of the game at more fundamental levels.

  5. January 14th, 2009 | 8:46 pm

    I couldn’t agree more. That’s my point exactly… without a mandate from a higher authority to force people to change their practices in this regard (for example: mandating a single payer system, with a single standard for accepting bills) I don’t see how the “free markets” would ever allow this to change.

  6. FA
    January 20th, 2009 | 1:58 am

    What happens if countries in the EU actually roll out a solution? Will America fall behind? Looks like the NHS in the UK are moving (perhaps slowly) towards standards and solutions. Those companies who partner with them would surely have a good ‘in’ when they try to sell into America?

  7. January 20th, 2009 | 11:29 pm

    @FA, I absolutely believe that the US is falling behind the rest of the world partly because of our broken health care system. If the EU rolls out a workable standardized solution to this, I am convinced it will have a direct impact on US businesses and markets.

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