Medical Device Link.

Originally Published MX November/December 2005

INFORMATION TECHNOLOGIES

Industry experts look at the current status of IT adoption for medical products—and for the healthcare system in general—and examine what developments are next in line.

Moderated by Steve Halasey

Throughout 2005, MX has featured a special series on information technology (IT) in healthcare. Operating under broad definitions of both IT and healthcare, the series has explored business systems, manufacturing systems, embedded software and systems in devices, as well as what end-users are seeing in their facilities. All of these elements have an influence on the way medical technology executives develop their product lines.

Over the course of this year-long journey, MX has identified three broad categories of stakeholders in healthcare IT efforts: suppliers of manufacturing and business systems to medtech manufacturers, the makers of next-generation IT-based medical devices and systems, and developers of practice-management systems and the government agencies involved in the federal electronic health record (EHR) initiative. Those within each category have their own pattern of understanding, goals, and capabilities.

For this final installment in the series, MX brought together a panel of healthcare IT experts for a roundtable discussion moderated by MX editor-in-chief Steve Halasey (see sidebar). In this excerpted version, participants discuss the current shape of the field, challenges related to the adoption of healthcare IT systems, and how medical device manufacturers should be planning to do business in the emerging IT-rich healthcare environment.

MX:There seems to be a disconnect between companies that design and develop IT systems, medical device manufacturers, and end-users. Is this problem real or perceived? Do the differing views and goals of healthcare's various stakeholders represent a problem in their own right?

Rod Piechowski: It is a huge problem, and people are just beginning to grasp the nature and size of the problem. Whenever we talk about who the stakeholders are in healthcare relative to any particular issue, it is easy to come up with a handful of them. But then healthcare people have a natural tendency to segment themselves, and you start getting substakeholder groups, each of which believes that it has a unique way of doing things. That makes it far more complex when you try to integrate all of this and find some method of implementing IT in such a way that everybody benefits equally.

Tim Gee: Medical device companies have always thought in terms of embedded systems, and now they are faced with this whole new area of general-purpose computing technology. They aren't fully aware of it yet, and they haven't yet figured out how to interface with it. One of my hospital clients had to send back about eight wireless electrocardiogram (ECG) carts because the manufacturer did not build-in the right kind of wireless local area network (LAN) security. Using those devices would have compromised the hospital's entire wireless LAN security scheme, so the hospital had to pass on them.

Lori Hack: We certainly have heard stories to that effect as well. Taking a systemwide perspective is really the key. From the level of the chief financial officer throughout the whole system, it is critical that the delivery system and the manufacturers understand that innovatively solving the health delivery system's business problem may require fresh thinking. They have to look at a device that typically was used in a single department and think about its use across the system. That leads to the issues of connectivity, performance, and integration, which have never been considered either by the manufacturer or by the end-user.

David Lansky: Well, the disconnect among stakeholders is a reality. So there are people of great goodwill in various consortia, associations, and other mechanisms trying to seek out areas of interest in which we can all move in a common direction.

There is a consensus that, absent financing reform, it will be very difficult to override the short-term business incentives of these players—whether they are hospitals, doctors, medical product suppliers, or drug companies. They all have pressing business interests that they need to address. Without some reorganization of their financial imperatives, they all say it will be very difficult to make significant progress on the government's EHR initiative.

Standards Progress

Are the organizations that are developing standards moving fast enough organizationally to keep pace with the moving target of healthcare?

Mark Leavitt: Some feel we are moving too slowly, and others feel we are moving too quickly. We have been slow to agree upon standards to solve all of these problems because they are complicated. A bigger reason is the financial incentives are not in place to encourage the adoption and integration of pervasive IT. Physicians only get paid more if they do more procedures. They do not get paid more for accurately transmitting information to prevent an error.

At the same time, in the last two years, we have seen a rapid advancement of the federal government's role in leading both the public and the private sectors to develop and deploy these standards. Besides my work at the Healthcare Information and Management Systems Society (HIMSS; Chicago), I am involved as chair of the Certification Commission for Healthcare Information Technology (CCHIT; Chicago), which is bidding on a federal contract to certify electronic health record systems. Although in the first year that might not include certifying their interface with devices, it certainly would in future years.

Jay Srini: Industry is not moving fast enough. That is the reason that the U.S. Department of Health and Human Services' national coordinator for health information technology, David Brailer, MD, PhD, has been working to lay new foundations. The first area of concern is to harmonize existing standards. And once we have adopted appropriate standards, then we have to identify parties that will certify the compliance of EHR systems to those standards.

Affordable IT?

The concern is commonly voiced that devices with high-technology components increase the overall cost of healthcare, and certainly increase the expenses that hospital systems and practitioners have to outlay to have those products. How do solutions that are in the pipeline or that already exist look in terms of affordability?

Srini: Right now, the pricing of healthcare IT systems is so high—and the risk is so great—that neither employers nor third-party payers are willing to invest in them. If demand were to rise to the point that IT system suppliers could recoup their costs and make reasonable profit margins by sheer sales volume, system sales would likely increase.

If the restrictions of the Stark and antikickback statutes are modified, a lot of the larger provider organizations will be able to provide IT services on a pay-as-you-go basis to smaller provider organizations. In this way, large organizations could achieve economies of scale and provide services at cost levels that small physician groups could afford.

Where has the ball been dropped on reimbursement and what now needs to be done?

Thomas McCausland: I am an advocate of market economy. When you talk about the biggest influencers of what gets done in healthcare, from a payment standpoint, it is the Centers for Medicare and Medicaid Services (CMS; Baltimore) and the insurance companies. They can single-handedly create the rules that can change the system.

CMS is aware of all of the issues that healthcare is going through, and it knows that there is no amount of government money that can be allocated to solve this problem. It has to be accomplished through incentives that CMS creates, and that is why officials are beginning to talk about measuring performance and linking differentiations of payment to those measurements. It is an effort for CMS to take the first step in creating quality awareness and payment differentiation.

How are healthcare stakeholders responding to pay-for-performance proposals that are coming forward?

Lansky: Ultimately, improved performance and outcomes are the desired goals of the healthcare IT transformation. So it is important that any new financing incentives reward the provider for benefits that ultimately accrue to patients. We want to see health outcomes improved by virtue of using these technologies; we don't want to buy technology for technology's sake.

There is a balance to be struck between encouraging the initial adoption of technology and overcoming the barriers of capital and adoption costs. But we must also keep our eye on the prize of improving health outcomes and making sure that financial rewards are used to stimulate such improvements.

Hack: At the Health Technology Center (San Francisco), we are working closely with CMS on two fronts. One is to help the agency identify early on the high-value technologies, such as medical devices, that will be influencing the way that the healthcare sector addresses business problems and clinical-care issues. In this way, in the two-to-five- and five-to-10-year time frames prior to the release of those devices, CMS can prepare to make quicker decisions about reimbursement for the medical device components used in treating clinical conditions.

Secondly, we see pay for performance as the carrot for installing some of these IT systems that our organizations need. In five years, this is really going to be the way that business is conducted. Personal health records are coming, and patients will expect their electronic medical records to be available. That is added incentive for an organization, and that is the way that reimbursement should occur.

Gee: For both medical device manufacturers and for hospitals, it comes down to making wise investments in existing technology. There are many opportunities for medical device companies to add value and differentiate their products by adding connectivity today without having to worry about reimbursement and all of these other longer-term structural issues. There are a lot of opportunities for hospitals to accrue benefits by investing in technologies that give them operating advantages and increase patient safety and satisfaction—even if they don't reduce full-time equivalents or other hard-dollar costs.

Reengineering the Infrastructure

What is the best way to get the healthcare sector's incentives aligned with the goals for an EHR system that everyone seems to have in mind?

David Merritt: Doctors do need a financial incentive to adopt health IT. Most doctors are interested in moving from a paper-based system to an electronic system. But they're not doing so, because it either would cost too much money or would upset their work flow too much.

Today, small clinical practices are simply not adopting any technology, and many times it is because they don't have the financial wherewithal to do so. Nearby large hospitals often have fairly robust health IT systems, and they might be able to provide assistance to smaller clinics. But the Stark and antikickback statutes essentially prohibit hospitals from reaching out to their doctors and equipping them with health IT.

Both hospitals and providers are fully behind reforming the Stark and antikickback statutes to address this issue. One hospital system on the West Coast told me that if these reforms were made—and if they are clear-cut and workable—within 12 months it would equip 6000 physician offices that do not currently have any health IT systems.

Broadening Involvement

What is most important for each of the sectors to be doing to drive the future of IT? Is there a need for a broader meeting that would involve a wider range of these sectors?

Hack: There is a need for broader communication than what has taken place in the past, and we are starting to see that occur through the development of state initiatives and through the regional health information organizations. That seems to be a way to pull together all of the disparate parties to sit down and try to tackle some of the healthcare industry's big business problems, from the EHR to basic connectivity and what needs to be housed within an individual physician's office.

Gee: You could use point-of-care work flow automation as a model of what is going on in the market. The caregiver and the patient are in the middle, and they are surrounded by all of these different devices, ranging from infusion pumps, patient monitors, and nurse-call systems to order-entry systems, results-reporting systems, and the EHR. The customer wants one solution, and obviously there is no single vendor that supplies all of those products.

This is not a situation that is going to be solved by top-down standards being imposed on the industry. It will require a lot of business development and alliances among vendors that are not necessarily direct competitors, but that have never worked together before.

Merritt: For healthcare professionals and hospitals, the most important thing is to get their hands on this technology. Study after study has concluded that using health IT will not only improve quality of care but will also save money.

Manufacturers like Siemens and EHR vendors such as IDX (Burlington, VT) and Allscripts (Chicago) should continue to roll out products that anticipate the standards now under development and are able to be upgraded in the future to meet the needs of an interoperable system.

Finally, consumers absolutely have to get engaged in this debate. The word interoperability is probably foreign to 99% of the population, and so is the concept of being actively engaged in one's own healthcare.

Lansky: I agree that providers have to get their feet wet in IT. However, I would emphasize that they need to be selecting products and services that are interoperable and conform to standards. And they should work with vendors that are actively participating in the standards process, so they have a sense that those suppliers are committed to being part of a larger information stream. There are still a number of products and services out there that are very proprietary and aren't really oriented toward interoperability.

In terms of the consumer sector, I agree that pursuing a personal health record is important. Consumers should also ask their doctor to communicate via e-mail. This should be simple, since e-mail has permeated every other aspect of our lives; but unfortunately it is still almost foreign to the patient– provider relationship.

Are organizations moving in the right direction to broaden the involvement of others outside of their traditional member bases?

Piechowski: You are seeing that in a lot of organizations. I know the National Alliance for Health Information Technology (Chicago) was set up originally to reflect that. Our members are IT vendors, manufacturers, payers, and providers. And we are seeing a growing component of people that you would not normally consider to be healthcare organizations. It sounds like a lot of the information that we need comes from the very people who do not have the time to participate in this process. Physicians are currently paid by the procedure. For every day they spend sitting in meetings to help IT suppliers decide how systems need to operate, they lose money. And we are squeezing them out of the equation. Maybe there is some way that they can be compensated to participate in this process.

McCausland: Siemens is spending a lot of money to educate its people about the business of healthcare. What is the business of being a family practitioner? What is the business of being a cardiologist? What is the business of running a hospital? What processes exist throughout an entire organization? This knowledge will help us understand all of the issues that healthcare professionals face.

We say that we want to be a solutions company. But you cannot be a solutions company unless you know the problems of your customers.

Copyright ©2005 MX