Like many industries, healthcare is increasingly turning to IT to improve its effectiveness and efficiency. However, this is not an easy undertaking. It poses many hurdles and challenges in areas such as interoperability, privacy and business process pressure, just to name a few.

The healthcare industry, again like many others, is trying to do more with less. IT seems to hold the key to achieving this goal. However, where IT is concerned, healthcare is at the back of the pack, according to Joanne Galimi, research director for Gartner in Lowell, Mass. In addition, she says, “We’re seeing (particularly as it relates to staffing) that the number of staff within [healthcare] IT is at the lowest level since 1999. Over the years, IT staffing has been decreasing.”

Despite those statistics, or perhaps in light of them, President Bush announced last year his goal to have a personal electronic health record (EHR) for the majority of Americans by the year 2014, a goal that can only be achieved through the use of IT. This EHR would be created using an “efficient, effective and uniform architecture to store and retrieve the healthcare information collected throughout a person’s life,” according to Marc Holland in his 2006 Health Industry Insights report entitled “Consumer Attitudes Toward EMRs (Electronic Medical Records), EHRs and the Privacy of Health Information.”

The governmental goal of EHRs and a National Health Information Network (NHIN) is not the only driver toward IT. Others include disaster recovery, which would keep, for example, important medical information from being lost after a catastrophic event such as Hurricane Katrina. Health plans and associations rewarding physicians who adopt technology are playing a role, as is the growth of industry research focused on the business case for IT adoption. Other key drivers continue to be reducing medical errors, improving cash flow and addressing regulatory compliance challenges.

Much skepticism surrounds EHRs and the proposed NHIN. One problem is the lack of awareness of the government’s initiative, as demonstrated in the 2005 Health Industry Insights’ U.S. Healthcare Consumer Survey. Seventy percent of the 1,095 respondents to the survey were completely unaware of the Bush Administration’s initiative. Among those aware of the initiative, most were skeptical that its goals would be achieved. The two most important challenges to meeting the 2014 goal, according to respondents, were 1) overcoming privacy and/or security issues, and 2) complexity and cooperation within the health industry. (See Figure A.)

Complicating matters even more is the fact that the healthcare industry as a whole today is “highly fractionalized” and “very local in nature,” notes Holland, program director of health provider research for Framingham, Mass.-based Health Industry Insights. In fact, he says, “60 percent of all U.S. healthcare encounters annually are delivered in practice of one to three physicians. Those are the providers who have, historically, the least interest in automation, the least budget for it and the lowest rate of adoption.”

So how do we realistically transition from these fractionalized medical silos into a national healthcare network, and do so in eight years? Is it possible? The healthcare industry is in a state of flux as it scrambles to try to achieve the government’s 2014 goal. But a long list of important IT issues facing the healthcare industry need to be addressed before that goal can be reached.

Some of the key issues include interoperability, integration, privacy and security. Others include automating and digitizing workflow processes, patient safety and medical errors, ROI, IT budgets, costs associated with healthcare, Internet access, funding, outsourcing, fraud and abuse, business intelligence, analytics information management, staffing, clinical order entry, automated documentation, compliance, and standards.

What to Do?

Where should an organization begin in order to ease this transition to IT? That’s the million-dollar question. From a healthcare executive’s point of view, Holland says, the key is “how to harness the power of IT to transform the organization to improve the quality of service, satisfy customer demands and improve patient safety.”

The industry is beginning to realize that technology can hold the key to reducing skyrocketing healthcare costs. “Healthcare is coming to the point where it believes IT can help to alleviate some of the mistakes that are made in the management of a patient,” notes Jocelyn Young, research director for Datamonitor in New York City. “The IT system in healthcare is going to become much more of a ’must have’ as opposed to a ’nice to have.’”

Tommy G. Thompson, independent chairman of the Deloitte Center for Health Solutions, concurs. He declared in his 2006 report entitled “Promoting Physician Adoption of Advanced Clinical Information Systems” that he believes technology can help solve the problem of medical errors, which currently are the eighth leading cause of death in the U.S.

Toward that goal, organizations are spending more on their IT budgets. Although healthcare IT staffing is at its lowest point since 1999, healthcare IT budgets do not reflect that. “IT operating and capital budgets are increasing slowly, but increasing every year,” says Gartner’s Galimi.

As a result, “We’re seeing the intersection of a lot of key trends that are going to drive technology further and further into the healthcare industry on the provider side,” Health Industry Insights’ Holland points out. “We’re starting to see even smaller hospitals, clinics and physician offices install better, more sophisticated care management systems. These are the providers that traditionally have been very late to adopt technology and are reluctant to spend a lot on it.”

In addition, he continues, “We’re seeing systems at a very attractive price point enter physician offices that automate handling patient appointments, sending out bills, sending out claims, sending out reminders, etc. “We’re now seeing the established physician practice management system vendors integrate the ability to capture information about clinical aspects of a visit.”

The industry is on the right track. Datamonitor forecasts North American healthcare provider and payer spending on IT to total $39.5 billion by 2008, largely driven by the government mandate of EHR adoption. Market research firm Forrester expects 2006 budgets at North American hospitals to be 3.1 percent higher than their 2005 versions, adding that this growing healthcare spending is more likely to go toward new applications, new storage systems, new integration projects and improved disaster recovery efforts. (See Figure B.) As it turns out, this figure is in line with IT spending in other industries, which average a 3.2 percent rise.

Things to Address

Still, numerous issues need to be addressed before EHRs or an effective NHIN truly become realities. For one thing, the industry is struggling with what exactly defines an EHR. Standards need to be put in place across the board. Lab tests, for example, are called one thing at one reference laboratory and something completely different at another, notes Lynne Dunbrack, program director for health payer research at Health Industry Insights. There is a significant effort underway to standardize on the clinical side, she adds. “In order to build a national information healthcare network, the industry needs to define the roles these standards are going to play,” points out Datamonitor’s Young.

In addition, the industry needs to come to agreement on how the various components of a nationwide health information technology system will interoperate, as well as how it will be funded. Because the healthcare industry is so large and so mission-critical, it cannot afford much downtime as a whole in order to put the right pieces in place. So funding and adoption are paramount.

The industry remains highly localized. Currently, Health Industry Insights’ Holland points out, patients can go to a multi-specialty group practice in most American cities and towns and have to walk copies of their paper charts or X-rays down the hall to another doctor. Many analysts believe we’ve let the cart get in front of the horse. “We really have to lay the local infrastructure before we can really start laying the national grid,” Dunbrack notes.

Because of that, Holland believes the government’s 2014 goal of an electronic personal health record is “very ambitious. At the rate things are progressing, I have questions as to whether that will happen on time,” he admits.

He likened the NHIN to the nation’s highway system. The government was very proud it built these highways when it did, he points out, but at the time, few people used them. Is that going to replay here? “We may have an elaborate series of highways but not a lot of cars on them,” he acknowledges. Regardless, we are beginning to see the digitization of personal health records and the ability of patients to carry that information with them. In addition, efforts are underway to make those records portable and accessible over the Web, even putting them on smart cards.

Those developments lead to privacy and security issues. Do we as individuals want all of that information? Do we want control over who sees it? Will it be shared with parties we don’t want to have access to it? The government needs to have a sense of how the public is going to react. Many questions need to be addressed. How voluntary will the system be? Will patients be able to electronically give permission for viewing their records, opt in or opt out for different organizations, or provide something in between?

Upcoming Developments

The future of the healthcare industry, particularly as it relates to IT, does look bright. We are at an important crossroad. We should see some healthy investment in IT services and hardware in the next three to five years as storage systems begin to play a key role in storing digital images. However, we can expect major investments in hardware and software to give way to investments in software and services, notes Datamonitor’s Young.

One area in which we will see that scenario is in the move from traditional channels, such as call centers, into web-enabled channels or portals, according to a Datamonitor presentation entitled “Business Issues and IT Priorities Among U.S. Healthcare Providers and Payers.” As a result, the level of interactivity that payers need to offer through portals will have to increase to offer more personalization.

Gartner’s Galimi expects a large increase in business process management in the healthcare industry as well, because these tools can be incorporated throughout an organization, she says. She adds that the ability to automate processes among departments will play a role in integration between departments—a necessary ingredient in achieving local, regional and national healthcare networks.

Galimi lists the following as the top four trends for the next 10 years in healthcare IT: 1) consumers taking on a greater role in healthcare, financial and treatment decisions; 2) the need for knowledge through business intelligence and analytics for future competition; 3) continued consolidation of both payer and provider markets; and 4) resource shortages that will redefine roles and use technology to replace clinicians.

Marc Holland of Health Industry Insights believes we will start to see a demand for interconnection between hospitals and home care agencies, hospitals and pharmacies, and hospitals and physician offices.

On the payer side, we can expect to see payers serving up claims data and rolling that out through provider portals to create payer-based health records, notes Health Industry Insights’ Dunbrack. In addition, she forecasts increased reliance on collaborative portals with more self-service activities, and a transformation of payers from pure claims processors to care managers. “Through that, we’ll see an increased use of advanced analytical tools to identify patients most at risk,” she adds.

Beyond the five-year mark, “IT in the long term is going to become much more integrated into the delivery of patient care,” predicts Datamonitor’s Jocelyn Young. “The main challenge or concern or objective is really to be able to automate and digitize processes and share that across entities,” she adds.

She believes that 20 years out, we’ll be looking at how the delivery of medicine can become much more personalized. Eventually, she says, we’ll be personalizing care and treatment over a patient’s lifetime, not just treating diseases and symptoms as we do today.

“Technology is getting more sophisticated and able to satisfy more providers’ business processes,” Holland notes. “This is opening up a whole realm of IT-supported care that could potentially transform the industry and the whole model by which care is delivered.”

He points out that a number of vendors are banding together to introduce a whole new set of products to create a completely new generation of remote patient monitoring devices. “If the promise of this technology can be fulfilled,” he says, “this can have a significant impact on the delivery of care and the fundamental structure of the industry.”

To sum up: outsourcing, business process management, analytics and business intelligence in the healthcare industry will play key roles in leading us closer to EHRs and an NHIN. This is an exciting time in the field—another step toward the healthcare of the future.

Robyn L. Wright is a technology writer based in Phoenix.