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Republished with permission from Crain's Detroit Business

Hospitals spend more on IT to save money, coordinate care

By Michelle Martinez
Crain's Detroit Business

Narendra Kini has spent the past four years trying to accomplish a deceptively simple proposal: ridding hospitals of paper records.

Kini, the senior vice president of clinical and physician services at Novi-based Trinity Health, is part of a group performing a $285 million technology overhaul by 2008 in 23 Trinity hospitals in seven states, including five in Southeast Michigan.

Called Project Genesis, it aims to integrate electronic patient information with the latest in treatment
standards and medical research.

The first phase, installed in about 2001, created a repository of electronic medical records and an online drug system that flags potential problems with patient prescriptions.

By project's end, doctors will order patient care online, telling hospital staff in real time what needs to be done. Test, lab and imaging results, as well as detailed patient medical histories will be available by glancing at a few screens on a laptop or a handheld device.

Better information will allow doctors to manage patient loads more efficiently, prioritizing sicker patients during rounds and monitoring the progress of those with chronic illnesses.

Trinity Health isn't alone. Similar projects have sprouted in hospitals nationwide. In Southeast Michigan, hospitals are investing more than $700 million over the next five years to update older, clunky systems and to kick paper out of their processes.

The national importance of hospital IT investments was signaled in January when President Bush
appointed David Brailer, a physician and economist, to ensure that all hospitals will be wired by 2014. If successful, analysts say the U.S. health care industry could get between $80 billion to $140 billion in cost savings a year.

And the Detroit Regional Chamber put the topic of health care IT investment on the agenda for the Mackinac Policy Conference.

More importantly, doctors say, the new technology could help save lives. About 98,000 people die each year in the United States because of medical error, national numbers show.

The new technology "reduces the variation and opportunity for error," Kini said, but also
gives hospitals a starting point for standardizing care around practices medical evidence shows produce the best patient outcomes. Better care means hospital costs go down as errors are prevented and patients are treated when they are less sick.

For the hospitals that get it right, it could also mean higher levels of reimbursement.

Health care purchasers and insurers are increasingly offering higher fees to hospitals that perform well on specific quality parameters. Blue Cross Blue Shield of Michigan paid out $1 million to physicians in April that met agreed upon improvement guidelines for chronic illnesses such as
diabetes and heart disease.

The Centers for Medicare and Medicaid Services rolled out a program in January with 277 hospitals. Top performers in five sets of patient care receive a 1 percent to 2 percent boost to their fees. Hospitals that don't meet CMS' quality benchmarks receive reimbursement cuts.

Big employers are encouraging the trend. The Big Three automakers and the United Auto Workers led the Detroit-based Health Alliance Plan, Henry Ford Health System and the Blues last year to come up with their own online drug system. The pilot is already active in 10 Henry Ford primary care centers, said Francine Parker, CEO of HAP.

Eventually, doctors say, insurers could start to weed out lower-tech hospitals from their networks. "I don't think that, long-run, CMS and the bigger, private payers will allow you to participate with them unless you're electronic," said Thomas Malone, executive vice president and chief medical officer of The Detroit Medical Center. "They want some comfort that the data that you're reporting is truly your data."

Last week, the DMC's board of directors approved spending $36 million over two years to continue building its infrastructure.

The investment will give the DMC a state-of-the-art order entry system for physicians. But getting there is often a daunting prospect.

Despite the new spending, hospitals have lagged other industries in information technology for years. At the end of the 1990s most American industries were spending about $8,000 per worker for IT, while the health care industry spent just $1,000 per worker, U.S. government numbers show.

Hospitals are playing catch-up now at a time when many are just barely profitable. Hospitals in Southeast Michigan average a 2.4 percent operating margin, said Elliott Joseph, CEO of
Warren-based St. John Health in an interview last month, and are nervously eyeing proposed cuts to reimbursements from Medicaid, which insures one out of seven Michigan residents.

Three-quarters of health care executives said their IT budgets will increase next year; about 56
percent said the increases would be at least 6 percent, according to a recent survey by the Healthcare Information and Management Systems Society. But the same survey said 20 percent of executives cited a lack of money as the biggest barrier to using new technology.

Providing hospital boards with hard proof of savings derived from IT investments is tough. Providers say they will have to monitor years of quality measurements and outcome improvements before they can assign cost savings specifically to the new systems. The current evidence supporting
IT spending is promising, but anecdotal.

During the past four years, Trinity's drug system alone flagged more than 25,000 potential
reactions, saving Trinity between $1,200 and $6,000 for each incident, Kini said.

Henry Ford is spending about $100 million over the next six years to take its CarePlus system to the next generation. "We believe it will lead to cost savings," said Robert Enberg, medical director
information technologies at Henry Ford. "But we don't know how much."

The results could also improve as IT systems are better integrated into hospital processes. Changing entrenched hospital systems takes time. Trinity estimates that more than 300 business processes will be changed by Project Genesis.

"It's not just about installing the technology," said Mary Trimmer, senior vice president of Project Genesis operations. "It's about changing the basic underlying processes in the hospital. That's a huge cultural change."

Trinity is working with large groups of physicians and clinicians to hone the technology to fit
their needs. Screens that alert doctors to possible drug interactions are important, but without appropriate filters the alerts multiply like e-mail spam. Even the device that physicians use to enter orders is a critical decision; devices that are too big or small will make electronic order entry too cumbersome to become ritual.

Other hospitals are working to rid the technology of similar bugs.

"It will be a total change in how we work," Malone said. And system updates will have to keep pace with medical knowledge, a never-ending process.

Even after hospitals learn to use the technology to integrate their own systems, there will still be more work to be done. The full payoff from IT spending will come when disparate provider systems can communicate with each other across cities or across the country - an important tenet of Bush's health care IT directive.

That will require a common national language to identify patients and treatments, doctors say, so that a person's medical history could be understood the same way anywhere in the United States, a difficult proposition.

The shorthand doctors use to describe patient ailments and treatments is as varied as they are, and there is little agreement on the definition of such basic terms as "examination," physicians say.

The Bush administration has budgeted just $125 million for the national IT push for fiscal year
2006, which may not be enough to make much progress.

Independent physicians would also have to accelerate IT buys, a tough proposal for many smaller offices. About 56 percent of Michigan physicians were using computers to link to labs, hospitals and pharmacies, said a new survey from the Michigan State Medical Society, which represents 14,000
Michigan physicians. But only 26 percent used computers to access medical records.

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Michelle Martinez:
(313) 446-1622,
mlmartinez@crain.com