Oct 31 2006

Bringing Health Care into the 21st Century

State governments begin to deploy IT to improve health-care services and cut costs.

MIKE INMAN, COMMISSIONER OF TECHNOLOGY for the Commonwealth of Kentucky, knows firsthand why the country needs to digitize its health-care system. Recently, Inman needed medical tests performed at three labs, and he didn’t want to wait for the labs to mail the results to his primary physician and specialists. So he hand-delivered the lab results — and, in one case, faxed them — to his doctors, so they could quickly make a diagnosis. If his health-care providers had supported electronic medical records (EMRs), the labs could have electronically transmitted the results to his doctors immediately.

“E-health will leverage technology for better collaboration and treatment,” Inman says. “Current inefficiencies add significantly to the cost of health care.”

Many states have embarked on e-health initiatives to improve services and make health-care operations more efficient, which will result in substantial cost savings. Today, most medical record keeping, billing and other administrative tasks are paper-based. Improved technology would save the country’s health-care system $81 billion annually through streamlined administrative operations, better coordinated care and reduced medical errors, which would have the added benefit of shortening hospital stays, according to a 2005 study by the RAND Corp., a nonprofit research organization based in Santa Monica, Calif.

In 2004, President George W. Bush made health IT a national priority by announcing the goal for all Americans to have EMRs by 2014. The U.S. Department of Health & Human Services is leading the charge, providing funds to help public/private partnerships build and test medical health exchanges.

Last fall, the department awarded four consortiums $18.6 million in grants to develop prototype networks to share information among hospitals, labs, pharmacies and physicians. The federal government is also working to establish national standards for data exchange, privacy and security.

State governments have a vested interest in improving the health-care industry. They are among the largest payers, providers and purchasers of health care, buying health-care premiums for state employees and offering health services to millions of residents through Medicaid or state children’s health insurance programs, according to a report by the National Association of State CIOs (NASCIO), which is based in Lexington, Ky.

Most states are in the initial phases of implementing health IT, and many have recently launched efforts to create statewide health information networks. Michigan’s state government, for example, launched its e-health initiative last summer by holding focus-group meetings with health-care providers, insurers, consumers, employees and unions in which they discussed the goals of and barriers to adopting health IT, says Michigan CIO Teri Takai.

A broad coalition of health-care providers, government health and IT officials, and others have split into workgroups, focusing on clinical, financial, legal, regional and security issues. This fall, they will make recommendations to the governor on how the state can best move forward on e-health, Takai says.

State CIOs will play a critical role in the nation’s e-health efforts by helping different stakeholders make technology decisions to build statewide networks, says Wisconsin CIO Matthew Miszewski. In many states, e-health initiatives have resulted from grassroots efforts. For example, health-care providers have collaborated and built networks to share information on patients. Most of these collaborations are regional (regional health information organizations, or RHIOs) and include health departments, universities and insurance carriers.

State CIOs will need to keep tabs on the federal government’s efforts to create standards. They will also need to upgrade their state’s health infrastructures to support e-health applications and integrate them, not only with the RHIOs that exist in their own states, but with other states’ health networks as well. Eventually, a national health information network will be created and information will flow seamlessly across it, so when a vacationing Colorado resident enters a hospital in California, the staff can quickly and effortlessly pull up the patient’s records.

“CIOs are in a unique position because they sit on top of the infrastructure that will be leveraged to make this happen,” says Miszewski, whose state has laid the groundwork for e-health by installing fiber-optic cable in every county. “CIOs have to use that leverage and work as mediators. Their role is to bring people together, have them work cooperatively and build networks, not just through the state, but beyond the state, so they can share information.”


Although health IT is still an emerging area, many states have developed initial e-health projects — such as telehealth networks, which allow doctors to treat rural patients remotely — that have already been successful. Because of the many facets of health care, states have tackled implementation of health IT in different ways, points out NASCIO Senior Issues Coordinator Chris Dixon. “Every state is feeling the pain on this, and because states have different demographics and geographies, they’re taking different approaches to eliminating the pain,” he says.

Florida’s Medicaid program, for example, has equipped 3,000 physicians with personal digital assistants (PDAs) so they can wirelessly send prescriptions to their patients’ pharmacies of choice, says Florida Medicaid Pharmacy Director Jerry Wells. Electronic prescriptions eliminate potential errors from handwritten prescriptions.

The technology also provides an updated database of patients’ prescription histories, allowing physicians to make sure their patients are not “doctor-hopping” to fill prescriptions. It also helps ensure that patients are taking their prescribed drugs, Wells says. If a patient’s blood pressure is not under control, the doctor can check the database to verify whether the prescription has been refilled. The doctor can then remind the patient to take the drugs every day.

The technology includes clinical support tools that automatically check the drugs being prescribed against the drugs the patient is already taking, to protect against adverse reactions, Wells says.

Florida’s state legislature funded the program to the tune of $3.8 million for 1,000 physicians in 2003 and allocated another $5 million to add 2,000 doctors in 2004. The program pays for PDAs, software and subscriptions to cellular data services, which allow doctors to wirelessly connect to the state’s Medicaid pharmacy database. The state also makes the technology available to doctors who prefer computers that are not handheld.

Doctors are writing fewer prescriptions and hospital admissions are decreasing because the program has reduced adverse drug reactions, Wells says, adding, “The program has more than paid for itself.”


The state of Texas is using smart cards to help cut Medicaid costs and improve service. For two years, the state has tested smart cards as a faster, more efficient alternative to the paper-based system used to authenticate and verify each patient’s Medicaid eligibility, says Noel Villarreal, director of business services at the Texas Health and Human Services Commission.

Today, Texas mails a new identification form that details health-care eligibility to each Medicaid recipient every month, a costly process. When they attend doctor’s appointments, they give their forms to medical staffers, who phone Medicaid or check the state’s Medicaid eligibility system over the computer. Once the patient’s eligibility is confirmed, staffers place patients in the queue to see the doctor. Check-in can take 15 to 30 minutes.

With smart cards, the check-in and verification process takes about 45 seconds, Villarreal says. Health-care providers are given terminals with card readers and biometric scanners. Patients swipe their smart cards on the readers and press their index fingers on the scanners to authenticate their identity. If there’s a match, the terminal automatically checks the Texas Medicaid eligibility system to confirm the patient’s eligibility, he says.

The first pilot program has been a success, and Texas has chosen a vendor for a second pilot program in Travis, Cameron and Hidalgo counties. About 2,000 health-care providers and 160,000 Medicaid patients are taking part.

The state has spent about $10 million on the project so far. If the second pilot program is successful, Texas will develop a statewide plan to deliver smart cards to every patient and check-in terminals to every Medicaid provider who sees patients. In the future, the state hopes to pack the smart cards with other information, including immunization records, prescription histories and drug allergies.


In 2005, Kentucky’s legislature created an e-health board to oversee the development of a statewide e-health network. The board, made up of university administrators, government health-care officials and health professionals, is developing a strategy of action.

Its first initiative is to connect existing online patient medical information. Within a year, the board plans to create a secure online data warehouse that links residents’ medical and prescription records held by the state, Medicare and Medicaid providers, insurance companies and pharmacies, says Inman. The goal is to create a Web site similar to the one created after Hurricane Katrina that made medical and drug records available online to help physicians care for displaced victims.

Inman believes Kentucky can quickly and economically develop a similar site. Patients in Kentucky will control access to their information but can make it available to physicians and medical facilities. “The goal is to get a quick win so we can start the e-health ball rolling and to reuse as much existing information as we can access to create the records,” he says.

The state also has pursued other e-health applications. It has developed an extensive telehealth network that enables physicians to treat patients remotely via videoconferencing. The state’s Cabinet for Health and Family Services (CHFS) developed an online database that tracks prescriptions dispensed within the state. The Web site allows pharmacists, doctors and law enforcement agents to check patients’ prescription histories to prevent abuse of prescription drugs.

The state’s e-health efforts also include a centralized online repository, called the Kentucky Electronic Public Health Record System (KY-EPHRS), for health services, such as disease and lead-poisoning surveillance, says Lorna Jones, the CHFS CIO. The disease-surveillance module replaced a cumbersome paper-based process and allows hospitals and health departments to electronically report communicable diseases, she says. KY-EPHRS also operates the state’s Health Alert Network, which contacts public health personnel about emergencies, via phone, e-mail or pager. Later this year, the site will include an immunization registry and a module for managing a public health outbreak.

A new component called vital statistics is in the testing stages and will provide electronic registration of all new births, which forms the basis of public health records on newborns. “Beginning with newborns, Kentucky is implementing a master client index to electronically organize its public health data, giving it the capability for a statewide health record system,” says Trudi Matthews, division director for the Division of Health Policy Development in the Office of Health Policy at CHFS.


State leaders have to make many decisions regarding funding, privacy and security if e-health is to become a reality. Some states have received grants from private foundations or the federal government for projects, while other states are issuing grants themselves. The state of Florida, for example, recently awarded $1.5 million in grants for the development of RHIOs.

Wyoming CIO Larry Biggio believes states can create incentives to help spread adoption of health IT, such as paying additional fees to Medicaid providers who invest in EMRs. “Doctors who have implemented electronic health records generally see more patients more quickly,” he says. “From that perspective, we need to look at how we best provide incentives.”

NASCIO’s Dixon believes states must work with their RHIOs and stakeholders to integrate the systems. That will make the federal government’s task of coordinating each of the 50 states more manageable.

For e-health to succeed, each state’s private and public stakeholders must work together, says George Boersma, Michigan’s director of the Office of Technology Partnerships. “This is about determining everyone’s needs and, through a workgroup process, getting things resolved,” he says.

Wisconsin’s Miszewski is optimistic a national health information network will be created. “It is a daunting task, but it is not as daunting if you [think] back 100-plus years, when the country didn’t have a federal highway system or universal telecommunications service,” he says. “In the past, we came together and built solutions in a common way, and we can do it again to take advantage of the incredible benefits that can come from a truly digitized health-care system.”


THE FEDERAL GOVERNMENT plans to announce its first set of health IT standards this September. The Healthcare Information Technology Standards Panel (HITSP) — with more than 100 public and private organizations participating — is identifying national IT standards for the country’s health-care system. HITSP’s role is to determine which existing standards will serve as national standards, says John Loonsk, director of the Office of Interoperability and Standards, which is in the U.S. Department of Health & Human Services’ Office of the National Coordinator for Health Information Technology.

“Their role is to harmonize the standards that are necessary for health care,” he explains. “There are places where there are health data standards that are at times overlapping, and other places where there are gaps. HITSP will identify the standards necessary to accomplish the national IT agenda.”

The federal government contracted the standards process to the American National Standards Institute in Washington, D.C., which, in turn, created HITSP. Besides choosing standards, HITSP will develop a detailed implementation guide to ensure that interoperable systems are in place across the country, Loonsk says.

HITSP will announce its first health IT standards in September, which will focus on personal health records, the electronic delivery of health records and lab results, secure messaging between patients and providers, and biosurveillance and health monitoring in case of disease outbreaks, Loonsk says. Eventually, it will deliver a roadmap and timetable for the remaining health IT standards.

Some states are already exchanging health data. The Utah Health Information Network — a nonprofit organization of health-care providers, insurance carriers and the state department of health, among others — has created a network for exchanging claims and other related transactions. UHIN has settled on 34 standards for data exchange.

The Utah health community, which meets through UHIN, has no qualms about deciding on standards and taking advantage of a network before national standards are in place, says Jan Root, UHIN’s assistant executive director. UHIN supports the HL7 international standard for data exchange. If the UHIN community needs to tweak its standards to be compatible with national standards, it won’t be a problem, she adds.

While the federal government sorts out the standards, Utah is saving money. The network handles 50 to 60 million transactions a year. It used to cost a provider $1 to $5 to submit a paper-based claim. Today, UHIN charges providers less than 1 cent to send a claim, Root says.

In contrast, Kentucky will probably wait for national standards to be announced before having health-care providers electronically exchange information, says Kentucky Commissioner of Technology Mike Inman. “We don’t want to get out in front and do something that causes us [to have] to redo it,” he says.

Loonsk understands both viewpoints. Some existing standards, such as HL7, will play an important role in the national standards, he says, so local communities can start working now and refine their technology later.


While the country scrambles to modernize its health-care system, hospitals in Michigan’s Upper Peninsula have already done it.

Michigan’s Upper Peninsula Health Care Network, a nonprofit organization that consists of 14 independent hospitals, one Native American tribal health center and one state mental health agency, came together 12 years ago to build a health network that takes advantage of the latest technologies.

Today, each health-care provider has access to 37 IT services, including electronic patient registration and billing systems, telehealth services, e-mail and clinical knowledge databases, to help physicians make more-informed decisions, says Jim Sundberg, director of information technology at Marquette General Health System in Marquette, Mich., who architected the network.

The hospitals paid for the initial technology investment and pay a monthly subscription fee to help offset costs. The organization also offers the IT services to private doctors and nursing homes through subscription.

The network has saved health-care providers money, Sundberg says. When billing was paper-based, some transactions at hospital labs were lost or never filed. Now that the accounting process is electronic, the labs are charging for every test performed, boosting revenue, he says.

The organization is piloting electronic medical records (EMRs) in two hospitals and plans to have electronic data exchange in all of its hospitals within three years. Sundberg explains that EMRs give doctors faster and easier access to information on patients and reduce the number of duplicate medical tests performed.


Become an Insider

Unlock white papers, personalized recommendations and other premium content for an in-depth look at evolving IT