Can Obama's Health IT Subsidy Spur Widespread Adoption?

(MoneyWatch)  The timeline and cost for widespread EHR adoption might be considerably greater than the Obama Administration envisions, according to some health policy experts. President Obama has called for the government to spend $50 billion over five years on health IT, and about $20 billion has been earmarked for that purpose in his economic stimulus package. But some experts, including David Brailer, former national coordinator for health IT, note that studies have estimated that it would cost $75 billion to $100 billion to implement EHRs nationwide. These observers also believe it would take up to 10 years to achieve this goal.

However, Brailer points out that even $100 billion is a relatively small sum in a $2.2 trillion healthcare industry. And in the long run, he says, a fully functioning, national health information system could save $200 billion to $300 billion a year by reducing duplication and errors, decreasing fraud, and facilitating better care coordination.

The Congressional Budget Office estimates that, without any incentives beyond those provided in current law, 45 percent of hospitals and 65 percent of physicians will have adopted "qualifying" health IT by 2019. If the health IT provisions in the stimulus package are adopted, the CBO report predicts, the rates would rise to 70 percent for hospitals and 90 percent for physicians. Those provisions would reward providers that acquired EHRs and, eventually, would punish those that didn't through differential Medicare payments.

The operative term here is "qualifying." If that means fully functioning, certified EHRs, U.S. health care has a long way to go. The latest figures show that only about 4 percent of physicians have such systems. While it's harder to measure hospital adoption, fewer than 10 percent of hospitals have computerized physician order entry systems, and only a handful of facilities are fully electronic, according to the definition used by HIMSS Analytics, the consulting arm of the Health Information Management and Systems Society (HIMSS).

Of course, $50 billion is a lot of money, especially compared to the financial peanuts that the Bush Administration tossed at health IT. (While Congress was also partly to blame, the gap between the Bush team's rhetoric and spending on health IT was symbolic of much else.) But even so, Brailer notes, hospitals will have to spend multi-billions to implement health IT. It's hard to see where they're going to get the money as their finances continue to slide.

As for physicians, medical societies applaud the Obama initiative, and a new online survey of Allscripts customers showed that most of these physicians are eager to accept the promised government largesse. The only serious disagreement they have is among themselves: Large groups (many of which have EHRs) favor having the government pay for the use of electronic records, while smaller practices want the money upfront to acquire EHRs. The survey's most promising finding is that 68 percent of the respondents would participate in a "pay-for-purchase" offer similar to the one proposed in the stimulus package. That indicates that a combination of carrots and sticks might move the needle on physician adoption.

One curious survey finding is that one of 10 respondents have received an offer from their hospital to subsidize an EHR purchase under the exception to the Stark self-referral law. Aside from the fact that many respondents already have EHRs, other surveys indicate that a very small percentage of hospitals are providing Stark donations to community doctors.