Thursday, March 24, 2005

No Doc Left Behind??

Excerpts from Cover Story Business Week Online

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The Digital Hospital How info tech saves lives and money at one medical center. Is this the future of health care? For years health care has missed out on the huge benefits that information technology has bestowed upon the rest of the economy. Hospitals were not only cheapskates when it came to investing in computers and Web technologies but also had a knack for wasting the money they did spend. During the 1990s, productivity in health-care services declined, according to estimates from Inc. That's a huge underachievement in a decade of strong gains for the overall economy.All of that may be beginning to change. Hospitals such as Hackensack, along with insurers and the government, are stepping up their investments in technology. For hospitals, there's more motivation than ever: The government and private insurers are beginning to pay hospitals more for higher-quality care -- and the only way to measure quality, and then improve it, is with more information technology. Hospital spending on such gear is expected to climb to $30.5 billion next year, from $25.8 billion in 2004, according to researcher Dorenfest Group.

Dollars are dandy. Even more important, though, hospitals finally seem to be figuring out how to make their tech investments pay off. Clumsy, sluggish first-generation systems have been tossed out. Hospitals are listening to doctors and nurses and installing laptops, software, and Net technologies fine-tuned to the rhythms of their work. The results are beginning to show up in national statistics: figures that health-care services productivity has risen about 2% annually since 2001, albeit at a slower pace than the overall economy.
Refining the SoftwareIs this the beginning of a sea change or a false start? That question is being hotly debated. Skeptics abound. Most recently, a high-profile study published in the Journal of the American Medical Association in early March showed that a tech system used by the University of Pennsylvania's hospital to prescribe drugs created new ways to make errors. Why? In one example, it scattered patient data and drug-ordering forms over so many different computer windows that it increased the likelihood of doctors ordering the wrong medications. "Hospitals need to make the systems work with the way medicine is practiced," says Ross Koppel, the study's lead author and a professor at the University of Pennsylvania.

While hospitals have always been devoted to saving lives, they're turning to tech now because of a fundamental change in U.S. health care. Pay for performance, that central tenet of Corporate America, is making its way into the world of health care. Medicare is leading the way. It set up a trial with 277 hospitals in which it's paying juicier fees for high-quality results in five treatment areas. "We're trying to create the business case for more coordinated, efficient care, and inevitably that means more investment in tech," says Dr. Mark McClellan, the head of Medicare.It's quite a start. Medicare's trial suggests better information can lead to better care. The evidence? Since the 277 hospitals began gathering performance data and entering the spotlight of being publicly measured against their peers, the average quality-of care-scores have increased 6%. "This gave hospitals a chance to see if public measurement and incentives would let them improve, and it has," says Stephanie Alexander, senior vice-president at Premier Inc., a research co-op of 1,500 hospitals that helps run the Medicare study.Private health insurers are moving toward pay-for-performance, too. Over the past two years, WellPoint Inc., UnitedHealth Group, and many other insurance companies have begun rating hospital treatments and rewarding high-quality care. Here's how it typically works: A hospital gets a fixed up-front fee for, say, a heart bypass. If the hospital scores high on quality for bypasses, it will get a bonus on top of that fee, usually 1% to 4%.So why not jump in with both feet? Hospitals have financial constraints on their ability to purchase technology. There are competing demands. And while most hospitals can issue debt, they typically only do so for big-ticket items, such as a new building. For tech investments, hospitals pay for what they can out of cash flow. And cash isn't easy to come by these days. The nation's 5,760 hospitals have seen average profit margins fall for eight years, according to the American
Most important, doctors remain the key to hospitals' success. Wooing them is an extremely delicate task. Only 7% of doctors actually work for hospitals. The others are essentially independent operators who are not required to do what hospital administrators want. Many are wary of gadgets that take extra time or interfere with their work. But they aren't Luddites. Most are willing to experiment with new technology.The key to winning them over? Hackensack and others must make sure the technology saves time, is easy to use right from the start, and doesn't get in the way of patient relationships. Over the past two years, Hackensack began the task of getting doctors to embrace the technology. It has made large strides.The story of Hackensack is no simple parable. Doctors and nurses grouse about the new tech systems. Software fails; Web sites crash. The reality is that bringing technology into health care is messy. So don't take these notions on faith. Read on.

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