The Real Healthcare Reform

By: Jonathan M. Fritz and Craig J. Johnson

The U.S. healthcare industry is on the verge of undergoing a decade of transformation – wait … you’re already thinking of the Health Reform bill!No, this column has little to do with the Patient Protection and Affordable Care Act passed six months ago. The real healthcare game-changer came over a year earlier and we are finally about to witness its impact – one that will be far greater than most of us will probably ever notice from the Health Reform bill.

Title XIII of the American Recovery and Reinvestment Act of 2009 (commonly called the “Stimulus Bill”) is called Health Information Technology for Economic and Clinical Health (HITECH) Act. Passed in February of 2009, it created an incentive program to encourage healthcare providers to convert to electronic health record (EHR) systems. Providers who participate in Medicare or Medicaid are eligible to receive significant payments over the next few years by demonstrating “meaningful use” of an EHR system.

The Center for Medicare and Medicaid Services (CMS) released its regulations governing the incentive payments program in mid-July and has since authorized three entities capable of certifying an EHR system as qualifying for incentive payments. The incentive program began for hospitals on October 1 with two of the certification bodies releasing their first batch of certified EHRs and component parts. The program will officially begin for office-based physicians on the first day of 2011.

Participation in the EHR incentive payments program isn’t as optional as it might sound. After the program ends, providers that have not converted will not only have missed out on the incentive money but will also begin receiving lower payments from Medicare and Medicaid, amplifying their competitive disadvantage with those who participated. Through revisions to the proposed rules, the types of eligible providers have been expanded and the standards for qualifying EHR systems have been lowered. As a result, within a few years the vast majority of health care providers will be using meaningful IT systems and gain comfort with the ever expanding relationship between IT and health care.

You may be wondering how this impacts the startup community given that large, established corporations will likely eat up the EHR market. Your skepticism is probably rights – the chances of a young company getting up to speed in this area in time to participate in the program are low, but this is only the first step in an enormous market of IT opportunities for years to come. We know the EHR vendors are going to pave the roads, but the innovative, mobile companies can develop better tires, faster engines and Bluetooth.

Evidence of the emerging marriage between healthcare and IT is abundant. For example, the practice of telemedicine is expected to expand significantly as a result of the Health Reform bill’s emphasis on increased access and cost savings. CMS issued a proposed rule at the end of May streamlining the credentialing process for telemedicine providers at distant hospitals, and the FDA and FCC established a partnership to expand wireless medical technology.

The movement isn’t limited to the public sector. Managed care organizations are experimenting with the cost savings generated by remotely monitoring patient vital signs. Industry giants are forming joint ventures, such as GE and Intel in home health care and Aetna and IBM in Web-based database systems. The Mayo Clinic Center for Social Media was established and recently announced the formation of the Social Media Health Network – an online community of healthcare providers that will share resources related to health related social-networking. Some industries, such as pharmacies, are taking efforts just to make sure they don’t fall behind the blistering pace of technology innovation.

This is just the beginning. Between the Health Reform bill increasing access to healthcare and emphasizing cost savings, and HITECH linking reimbursement rates to meaningful EHR systems, healthcare IT will be utilized in some form by every American in the near future. Putting an EHR system in every doctor’s office is step one, now let the innovators create and capitalize on the next generation of technologies.

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