A not-for-profit research organization supported by 18 leading healthcare organizations last week unveiled a road map-and a public financing vehicle-for jump-starting the industrywide adoption of information technology.
The proposal calls for creating a healthcare information technology revolving-loan program funded mostly by the federal government and administered by states. To reach the "critical mass" of funding needed to get it off the ground, the authors are calling for a public investment of $1 billion per year for a minimum of five years, with the federal government contributing $800 million and states contributing $200 million.
The states would in turn transfer the funds to independent not-for-profit organizations established to decide what projects should receive loan financing and on what terms. Such revolving-loan fund programs eventually become self-sufficient as loans are repaid with interest.
The 34-page report was produced by the Health Technology Center, a not-for-profit research and education organization based in San Francisco also known as HealthTech, and Manatt, Phelps & Phillips, a national law firm with offices in Los Angeles, New York and Washington.
"Only one participant in our healthcare system has both the capital and incentives to catalyze systemwide healthcare information technology both financially and strategically: the public sector," the authors state in the report.
The authors are banking on the widely held belief that information technology will play a key role in any solution to reduce costs and improve quality of care. "While the American healthcare system has pioneered dramatic advances in some areas, such as pharmaceuticals, medical imaging and medical devices, it is extraordinarily backward in the most basic uses of information technology," they state in the report. They noted that the Centers for Medicare and Medicaid Services estimates that it could save more than $26 billion annually simply by putting its claims processing on an electronic data interchange system.
David Rosen, president and chief executive officer of MediSys Health Network in New York, said a publicly funded loan program seems to be the only viable solution for his "three financially distressed hospitals." Bringing MediSys into the 21st century would take yearly investments over an undetermined period of time, he said. MediSys is a member of HealthTech's information technology working group.
"What we cannot afford in this country is a Darwinian approach to the rollout of information technology," Rosen said. "We all have an interest in preventing errors and automating processes that will save costs, and certainly we have an interest in implementing the clinical systems that will improve the quality of care. There's got to be a funding mechanism that allows this to happen."
There are precedents for such public/private partnerships, most notably in water and transportation, said William Bernstein, co-chair of Manatt's government advocacy and policy division and an author of the report. If the experience of the transportation industry is any indication, for every dollar that the federal government invests, the loan fund reaps as much as $1.80.
"We became convinced early on that the size of the problem was large and a giveaway would never be politically acceptable," Bernstein said. "We also thought it was important that it not be administered by the federal government because healthcare is local, local, local."
The Washington-based eHealth Initiative, a coalition of more than 60 healthcare organizations, has agreed to take on the lobbying effort, Bernstein said. As a not-for-profit, HealthTech cannot lobby Congress for the legislation and appropriation that the proposal requires.
"I think the next step is to try to get people to read and understand it and digest it," Bernstein said.