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Published: 6/15/05
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Can a National Healthcare Information Network Work?

Stakeholder Incentives
What are the incentives for all of the industry’s players to bring their records online? Some proponents of the network cite financial services as a good model of the potential gains when an entire industry bands together to build a common base of information technology. But Cindy Vanderlinde-Kopper, principal in Booz Allen Hamilton’s health and insurance group in Chicago, says that she doesn’t think the analogy quite works. “In that case, there was a clear value proposition and economic benefit from collaboration. It was crystal clear, scale sensitive, and with heavy fixed costs,” she says.

Aggregated data could be collected in such a way that researchers could monitor the health of the whole country.
While Vanderlinde-Kopper says she can see the advantage such a system might have for the federal government and for consumers, she argues that the business value of incorporating all those records into a single system is less apparent for other players. “If I’m a leading national insurer, I already have my own good claims databases, and I can get a lot out of those databases. It’s not clear yet what else I get from certain pieces of clinical data, although I’ll buy in theory that it’s a good thing for the patient.”

It may be an easier task to get insurance companies to eventually agree to participate in a national system than it is to convert the nation’s physicians to a new way of working. “Physicians are not used to new things, and in contrast to some other kinds of workers they think they should have the power over this,” Pauly says. “So a lot of the challenge here is going to be to offer sufficient incentives of one kind or another to physicians to get them to go with the program.”

The government is emphasizing various carrots to promote the creation of an electronic system, but Pauly says that Medicare might have enough market power to convert many physicians to a single protocol. A mandate from Medicare “would probably not bring in every doctor — the pediatricians wouldn’t care — but it would have a big impact if the word was, ‘Unless you do this, Medicare won’t pay you.’”

After all, it’s worked before: Pauly points out that pharmacies joined an electronic system for just that reason. “They’re all hooked into computers, using more or less uniform standards to process payment for drug insurance. It was in their interest to be able to get insurance payments for the drugs they were dispensing,” he says.

Less Is More
Barry Jaruzelski, a New York–based vice president and managing partner of Booz Allen Hamilton’s technology practice, argues that the experience of creating industry-wide information networks in other sectors, including financial services, does provide some hints about setting up such a system.

“Less is more,” Jaruzelski advises. “Often, particularly when it gets into the political realm, which this one does, people come up with very ambitious visions of information architecture, of all the things we can do,” he says. But many of the features that make a project sound great in a speech can also make it extremely difficult to execute. “The more ambitious the idea is, the lower the probability it’s going to happen.” Given all the stakeholders in the system, he says, adding a single piece of information probably increases the complexity of the task not arithmetically, but geometrically. Plus, given the lack of money in most parts of the healthcare system, “if too many players needed to throw out 80 percent of their infrastructure to create the network, it’s not going to happen.”

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