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Healthcare Reform Takes More than Technology & Government

Bill Bysinger, for HealthLeaders Media, June 17, 2009

In 2004, I wrote an article titled "How to Pay for Healthcare Reform," which was quoted in other articles at the time on the economic crisis in escalating healthcare costs and the threat of government intervention. I authored other articles in the 1990s about how technology could help create healthcare efficiencies, and I wrote extensively in the late-1990s about how HIPAA would help revitalize healthcare and improve information for quality, efficiency, and standardization.

Here we are at the end of the first decade of the 21st century and still healthcare is inefficient, costly, in most cases terrible at customer service, and constantly in financial crisis. Since the 1970s, people have postulated that U.S. healthcare is in trouble and we need to do something to make it better. However, little has changed and the same problems have persisted since the 1970s.

Don't get me wrong, I believe we have the best care in the world. However, I also believe we have the most inefficient healthcare processes in the world, which has led to the continuing financial crisis.

I began my professional career as an industrial engineer in the early-1970s. I analyzed process manufacturing systems, inventory control, accounting models, and manual tasks performed by trained workers. What I learned from this experience, and also while studying Edward Deming and Peter Drucker, was that well meaning people can create very inefficient processes, broken systems, and costly output.

Thus, it is not the clinical care that is the problem. It is the administrative processes that surround clinical care that creates the increases in rapidly growing healthcare costs, healthcare system inefficiencies, and opportunities for error in all aspects of patient care, as well as, practice, facility, and health insurance operations.

In addition and compounding the problem, health information technology (HIT) has been proposed as a solution that can help if process change is addressed as part of the HIT implementation. In healthcare, we are not only hampered by bad processes, but in some cases we have automated bad process, and thus created faster bad process. In the banking industry, this is the old story of buying loan systems that help create more bad loans.

In order to solve this 30-year downward spiral momentum in healthcare, three rules need to be observed:

  1. 80% of healthcare is operated out of practices with fewer than five physicians and therefore these are considered small businesses.
  2. All solutions must be simple to understand and easy to implement.
  3. The majority of funding must be directed at this 80% of the healthcare industry, not the large payers and large hospitals or research facilities (where typically the government puts its funding resources).

No matter how much money is thrown at healthcare for technology, it may not achieve the benefits expected.

As for the estimated savings of trillions of dollars, I remember being involved in developing HIPAA when we told the government that it would also save trillions of dollars in administrative simplification. It did not, and these new healthcare reforms will not if the real problem is not addressed.

Here are the facts and fallacies about governmental promises for better healthcare broken into three categories:

Government
1. Government focuses on the wrong things and does not really understand the industry.
2. Government thinks intervention can create change, it does not.
3. Government puts the majority of the money in the wrong places (large institutions and academic research studies)
4. Government should support the industry, but not dictate to the industry as we have witnessed lately in the automobile manufacturing business. Nationalized healthcare will create more inefficiency as has been demonstrated by other governmental healthcare initiatives like Medicare and Medicaid.

Basics
1. Systems create value if they are built on sound, efficient process.
2. Systems do not deliver value if they are not implemented with new processes.

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