The difficult economic times have "further deteriorated” the Medicare Trust Fund and the program that pays for Part A hospital services will be exhausted by 2017 unless there is "prompt action" to safeguard the program, according to a report released today by the Medicare Board of Trustees.

The Part A fund will be exhausted two years earlier than the trustees predicted in last year's report because of "much lower projected payroll tax income as a result of the recession."

"Total Medicare expenditures were $468 billion in 2008 and are expected to increase in future years at a faster pace than either workers’ earnings or the economy overall," the report says.

"These projections demonstrate the need for timely and effective action to address Medicare's financial challenges" with consideration of reforms "in the relatively near future.  The sooner the solutions are enacted, the more flexible and gradual they can be."

Health and Human Services Secretary Kathleen Sebelius said the report "should trouble anyone who is concerned about the future of Medicare and healthcare in America." She calls it "a wake-up call for everyone who is concerned about Medicare and the health of our economy."

She says the Obama administration "isn't just worrying; we're doing something about it," and called for actions that "go beyond the cost-savings policies in the President's budget.  The only way to slow Medicare spending is to slow overall health system spending through comprehensive and carefully crafted legislation."

One key, she says, is to "fix what's broken in the rest of the system" by assuring better healthcare for uninsured Americans before they are eligible for Medicare. Part of the problem today, she says, is that when seniors and the uninsured do become eligible, "they are less healthy and cost the system more."

She adds, "Reform can't wait. All of us in the administration look forward to working with Congress to make reform a reality."

Approximately 45.2 million people are covered by Medicare: 37.8 million aged 65 and older, and 7.4 million disabled.

Assume for a moment, there will be enough stimulus money to cover the cost of your electronic medical record system. Also assume that you receive the funds prior to your investment, so cost is not an issue. Will your EMR project succeed?

The healthcare industry, has been discussing, testing, and building electronic medical records for 20 years. And yet, the latest study by HHS shows that less than 2% of hospitals have a fully functioning EMR and only 8% to 11% have at least one area fully digital. So, when I see surveys stating 75% of hospitals think cost is the biggest obstacle to implementing an EMR, something doesn't ring true. Until hospitals address all of the barriers, they won't be successful.

Why has success been so elusive? There are six stages to implementing an EMR and each has its own pitfalls. Hospitals can improve the success rate if they recognize the risks at each stage and plan accordingly—especially if the stimulus money reduces the cost barrier.

1. Determine readiness to tackle the EMR. This is a basic planning step, but in practice it's often overlooked. So much time is spent justifying the investment and getting it approved in the budget, no one wants to look back and see if the organization is really ready. Basic issues like prerequisite applications and network capacity will come out in the wash, but other issues lurk in the background. The two biggest are inaccurate or incomplete data and a resistant organizational culture. Both will kill an EMR project if they are not spotted and addressed prior to the implementation.

2. Identify the needed components of an EMR. Everyone has a sense for what a fully digital hospital might look like with every record, test, procedure, image, and file online. But reality is not so clear. The EMR is really a poorly defined term. Vendors and analysts have different definitions for what constitutes an EMR. Too often, the buyer and seller have different definitions and therefore different expectations of what the new system will be able to do. In addition, no one can implement a full EMR at once; the big bang doesn't work. So, the organization must define what components of an EMR have the biggest impact on the hospital and prioritize what will be done first.

3. Select a vendor. There is nothing more basic than contacting vendors, arranging demos, and soliciting user feedback. But how often does the decision come down to vague statements like "either one of these systems will meet our basic needs, but this one seems more cumbersome to use?" This is such a common response that it could be a symptom of a problem—not a conclusion. The evaluation team often sits through canned demonstrations by the vendors, has limited time to devote to the process, and feels ill-equipped to evaluate the systems. In the end, the demonstrations are not easily compared one to the other and do not represent how the system will be used by the hospital. So the team draws conclusions in a very subjective manner.

The solutions to the three barriers above are basic pre-project blocking and tackling. The fundamental problem is that most organizations rush through these steps, which plants the seeds of future failure. In my opinion, 25% of EMR projects fail because of one or more of these three issues.

4. Implementation and training. This is, of course, where many projects fail. In some cases, mistakes in the first three steps come to roost and show themselves here. In others, failures in this stage cause the project to break down. One common pitfall is letting the vendor build the project plan. For example, timelines are governed by the vendor's resource constraints and the project steps are very general or written in complex technical terms. As a result, it is difficult to really know how the project is progressing until it is well behind schedule.

The other pitfall occurs at the training stage—especially when the project is behind schedule. Management presses for the go-live date and as a result, training schedules are compromised. Organizations give training less time than is needed and assume once users are trained, they will recall the functions they were taught. In fact, most students go into information overload within a few hours because they are taught aspects of the system they may never use. In addition, the class may be held hostage by tangent discussions and business process questions. These slow the class to a crawl, time slips away, and the instructor rushes through the remaining material to finish on time.

In my opinion, another 25% of EMR projects will fail because of these issues. If the project makes it through this stage without too many delays, the organization is usually ready to celebrate success. The project may be a technical success, but it is not an operational one at this point. There is still a 50% failure rate that occurs after go-live.

5. Manage adoption rates of the EMR. This is one of the toughest and most overlooked aspects of the project. In it, hospitals have to confront the natural inertia of an organization to change. The system has been installed properly and users trained, but we just can't get widespread use of the system. There is a vague passive resistance, as well as, users who think "If I just keep my head down, this too will pass." Poor adoption rates ruin the return on investment, and the longer it goes on, the more it erodes the enthusiasm of the early adopters.

Before organizations' celebrate success, they should implement a measurement system that will track usage and publish the results. Build an incentive program that rewards the behavior you want and be sure all members of senior management are visibly behind the effort. This is the single biggest pitfall to a successful implementation—35% of EMR projects will fail because the organization does not effectively manage adoption.

6. Ongoing maintenance and support. Organizational knowledge about information systems has a half life, like a radioactive material. It is most potent within the first few months of implementation and then slowly deteriorates if not renewed. This occurs for two reasons. First, employee turnover slowly reduces knowledge of the systems, especially if the departing employee is expected to train his or her replacement. The second driver involves new releases of the software. Sometimes new releases are not installed so new features are not available. Other times, the organization does not utilize the new features and continues to use the software as it was originally implemented.

Adequate staffing, funding, and new hire training can alleviate the risk of this barrier. In my opinion, the final 15% of EMR projects will fail because of these issues.

So, while the experts weigh in on whether $19 billion is "enough of a stimulus" to get the healthcare industry to adopt electronic medical records, an equally important question is whether the stimulus money is enough. Clearly, it is not. Unless healthcare organizations address some of these basic issues that have plagued them for the past 20 years, EMR adoption will still be spotty at best.

General Electric announced last week that it will spend $3 billion over the next six years on healthcare technology in an effort to lower healthcare costs and improve health quality around the globe.

Through the "Healthymagination" initiative, the company will also commit $2 billion in financing and $1 billion in related GE technology and content "to drive healthcare information technology and health in rural areas."

"With our technology, rural and urban areas and developing countries can have access to the best technology, affordably," said GE Chairman and CEO Jeff Immelt in a statement.

GE's goal is to launch at least 100 medical technology products that "lower cost, increase access, and improve quality by 15%," said GE Chairman and CEO Jeff Immelt, at a conference announcing the initiative in Washington last week.

Oxford Analytica, an independent, international research and consultancy firm, is reviewing GE commitments in products and services innovations to determine if they meet these standards.

GE will be "accelerating health information technology, improving access, and really driving health into the home and into more preventative settings," Immelt said.

For example, GE representatives noted that more than two billion people do not have access to basic elements such as clean water or the ability to see a doctor or visit a health clinic. To address this need, GE has created maternal and cardiac care products for rural and developing markets:

GE pledged to expand its maternal infant care product offerings by 35% and will invest and scale its work with Grameen Bank to 10 countries by 2015. GE has previously partnered with the organization and has now agreed to the joint goal of creating a sustainable rural health model that reduces maternal and infant mortality by more than 20%.

And through its Developing Health Globally initiative, GE is expanding the number of public health clinics it supports in developing markets from 30 to 100, starting with six new clinics in Cambodia in 2009.

A major focus of the Healthymagination initiative is to improve availability of electronic medical records, and GE worked with the Mayo Clinic and Intermountain Healthcare to develop physician decision support through IT in the form of evidence based care. The system will be launched commercially in 2010.

In addition, GE Capital will provide $2 billion in financing to help health providers in rural and underserved areas get access to more innovation that improves health and reduces the cost of care. GE will focus financing to assist in the adoption of EMRs and health information exchanges. By accelerating EMR and HIE adoption, GE expects to help remove billions of dollars in cost from the health system while improving access to better and more affordable care.

The company is also investing in wellness and healthy worksite programs to reduce health costs for GE and its employees.

"We're going to get better at promoting employee health at the 600-plus GE locations around the world," said GE Vice Chairman John Rice in a statement. "By making the well-being of our employees a priority and giving employees the tools they need to make healthy choices, we're going to control our own costs."

GE also announced the formation of GE Health Advisory Board that will monitor the program, provide direction, and report on its progress. It includes some big names: former U.S. Senators Bill Frist and Tom Daschle are on the board, as is Devi Prasad Shetty, MD, chairman of the Bangalore, India-based cardiac care hospital Narayana Hrudalaya.

The board will "advise GE on its health efforts, investments and policy and will participate in regular public reporting on GE's performance," according to a release.

Through this Healthymagination initiative, GE hopes to improve its business model while at the same time doing its part to help global healthcare.

"Healthcare is an important industry that is challenged by rising costs, inequality of access and persistent quality issues," Immelt said in a statement. "Healthcare needs new solutions. We must innovate with smarter processes and technologies that help doctors and hospitals deliver better healthcare at lower costs."