Healthcare Reform Takes More than Technology & Government

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.

Health realities
1. Medical practices are based on processes that are more than 30 years old.
2. We have automated bad practices (patient flow, billing, lab results reporting, even EMR based on old charting processes).
3. Claims systems are old and antiquated, designed and built on manual adjudication processes that are also more than 30 years old.
4. Customer service systems still rely too much on manual intervention and low paid, well meaning people.
5. Physicians are afraid to invest in technology because they believe most have proven difficult to implement and they delivers little value.
6. Practices are usually not business process or efficiency driven; therefore, most are over-staffed and under-funded.
7. Customer service organizations in health insurer organizations are based on phone calling and manual answering processes due to inefficient claims and payment systems with poor or incomplete information.
8. Investing in good process and good technology is considered too expensive or is rarely based on a proven return on investment strategy.
9. Little emphasis is placed on the following:

1. Process improvement
2. Process quality
3. Return on investment tracking
4. Information and process integration
5. Provider continuum of care integration
6. Information engineering of lifelong medical records
7. Defining an efficient and effective care payment system
8. Bottom's up approach to healthcare efficiency in this order:
   • Physician
   • Practice
   • Community
   • Region
   • National
9. Not a top-down approach, which has failed healthcare for over 30 years.
10. Government should provide sound, quick funding from the following:
    • Immediate 100% double tax credits on costs/investments expended for process improvement, technology, and community integration (healthcare is a local issue—HIE: Health Information Exchange projects have local merit and local value)
    • Immediate incentives to physicians and practices who invest in the above based on bank-backed low cost or interest free loans (with government guarantees) with five-year paybacks or easy to get grants (not too much paperwork) with no payback other than proof of implemented process improvement and tangible ROI.
    • Tax-free investment: Dollar for dollar for the first $200,000 invested by a physician per year in process improvement through technology based on a 24- to 36-month tracking period.
    • Where does the money come from: Not new taxation
      1. From a 10% surcharge on all new government projects in all areas (based on healthcare being the primary motivator for both political parties).
      A 5% government surcharge on all existing government funding (because so many believe good healthcare is a right).
      2. All investments tied to a five-year forecast of real dollar savings on process efficiencies from practice and managed care organizational process improvement. All the while being backed by a tangible study that can be tracked and reported quarterly on industry progress to Congress and the general U.S. population. All invested funds should yield a 3 to 1 ROI.

What can be accomplished
If all this was accomplished and there could be a grassroots approach to process improvement and industry integration, I am convinced the following could become a reality based on what happened in other industries:

• Healthcare costs would be reduced overall based on administrative cost savings by at least 20%.
• Healthcare industry would improve quality through information integration and dissemination of better data.
• Patient care costs would decline and premiums would be lower based on better tracking of chronic care and wellness processes.
• More people could be insured due to declining premiums and more efficient processes driving real costs down.
• No government intervention other than financial support for process improvement and technology investment would be necessary.

This would result in the U.S. leading in both clinical care processes and the administrative process models for high efficiency and quality.

All of the above has never occurred in the 25-plus years I have been in healthcare.

My challenge for the industry and the government is (to put their money where their mouth is) and put this processes into action and create real healthcare change that promotes:

• Implementing process improvement projects and systems (bring quality into healthcare processes)
• Deploying value-based health information technology based on measurable ROI
• Creating measurable results tracking systems that prove real savings, value, and increased coverage for more people

Government must support the industry, but allow the industry to make the changes necessary to create a new model for healthcare.

The industry must encourage and demand change and cooperation from all providers in order to implement a new more efficient, cost effective, quality-driven health system.

Providers must take responsibility to invest in change, improve processes, and implement health information technologies to support health information exchanges, electronic health records, and patient collaboration. This is not rocket science, but looking at our progress one might be inclined to believe it is becoming a close second in the race.

We are closing out the first decade of the 21st century and we have continued to make little change. It is time for change, and it must be initiated by the industry, not the government.