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The View From 40,000 Feet Up

July 23, 2009
by Mark Hagland
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Hospital and health system CIOs are rightly concentrating on the very full plate of issues before them in the current operating environment, including the economic recession, a shifting vendor landscape, and preparations for applying for ARRA-HITECH economic stimulus funding, not to mention all the competitive elements involved in their local healthcare markets, and other developments.

But before you say, “I have so much on my plate, I can’t possibly pay attention to the healthcare reform legislative process” unfolding right now in Washington, D.C., let me remind you that the passage of the legislation that created Medicare and Medicaid (which was originally intended to be comprehensive healthcare reform back in the early 1960s) completely revolutionized the health care industry at that time.

And legislative and regulatory changes all along the way since then—prospective payment under Medicare, HIPAA, and a host of other developments—have had enormous impacts on hospitals, health systems, medical groups, and their CIOs and IT leaders, all along.

Thus, the potential for certain elements of federal healthcare reform legislation to upend not only the healthcare industry in general, but the operating environment in which CIOs and other IT leaders work, is tremendous. Even relatively small elements of federal healthcare reform could quickly and drastically the landscape in which we work.

Take for example the potential for value-based purchasing to be enshrined as part of federal healthcare reform legislation. The chances of value-based purchasing becoming a core part of Medicare reimbursement, whether or not comprehensive health insurance reform passes Congress this year, are extremely good, all the experts I’ve consulted believe. And value-based purchasing—a concept that encompasses pay for performance and related concepts—if enacted permanently at the federal level, could have transformative consequences for healthcare reimbursement and for hospital organizations nationwide. What’s more, the implications for CIOs are tremendous. If reimbursement reform including value-based purchasing were to pass Congress this year or next (again, whatever the outcome of health insurance reform), no hospital could stay in business that didn’t have a strong data warehouse and very good clinical reporting capabilities, founded on strong, comprehensive clinical information systems.

Another, related concept that has a good chance of passage is that of accountable care organizations (ACOs), a concept that is being looked at very seriously by some proponents of healthcare system reform (another piece of overall healthcare reform, along with healthcare reimbursement reform and health insurance reform). The implementation of a system of ACOs would overlap reimbursement reform and system reform, bringing together hospitals, physician groups and other organizations that would agree to be paid group payments to oversee and deliver coordinated care for patients (presumably especially those with chronic illnesses). That concept also overlaps somewhat with the idea of bundled payments, which might be applied to the care continuum, with hospitals and other organizations responsible for the clinical outcomes of patients undergoing certain types of surgeries, for example, under a payment program that would strive to optimize quality, accountability and transparency. And either ACO- or bundled payment-based reimbursement would add tremendously to the need for hospitals and health systems to create far more sophisticated, interoperable information systems, ones that bring together crucial clinical and financial data from various sources and can be applied to a host of new and developing data needs.

Obviously, with Capitol Hill buzzing with competing healthcare reform proposals, ideas, and maneuvers, it can become nearly impossible to keep up with healthcare reform and reimbursement reform developments on a daily basis. But CIOs need to keep one eye on the potential future even as they plan around the elements they already know about, including the economic recession and the developments taking place around ARRA-HITECH stimulus funding. Because before anyone can say “ACO,” new reimbursement and regulatory realities could reshape our industry in a flash, leaving some CIOs and other executives totally blindsided by new incoming public policy missiles.




Excellent post and I completely agree with you. It's true that health care reform proposals change daily if not hourly, and no one is quite sure what will finally emerge. However I believe we can be relatively sure of two things: First, there is going to be an increased focus on measuring and paying for value. Second, there is going to be an increasing need to coordinate care across the continuum.

It is a pretty good bet that a value based purchasing component will be present whatever final proposal emerges. But even if this turns out not to be the case, the increasing public scrutiny on clinical outcomes, harm and patient satisfaction is going to make the need for documenting and demonstrating value a high priority.

In addition to the Acountable Care Organization model, another model which will be equally important is the Medical Home Model. Imagine the information systems required to coordinate care from the inpatient setting and throughout the ambulatory setting to, if nothing else, at least make sure the patient does not return with what migh have been an avoidable readmission. Even if there is nothing in the proposal about "medical homes" (unlikely since everyone likes to site the Geisinger model as a model of success - and this is the medical home model on steriods) you can be sure readmissions will be in the cross hairs

No matter what comes out of Washington DC this year, CIOs would be wise to focus on these two things at least: 1) What technologies and systems will need to be implace to facilitate not only the collection and reporting of quality outcomes data, but also to help systematically improve these outcomes? 2) What technologies and systems will need to be in place to allow for better coordination of care both inside and outside of the hospital.

Dr. Bankowitz and Pam Arlotto, thank you both for your excellent comments and observations!

Dr. Bankowitz, I completely agree with what you wrote. And thank you for also mentioning the medical home model, which I agree will become important over time. And, I agree with your two main points high up in your comment, that healthcare organizations are going to have to focus on information systems that measure outcomes, and that help facilitate care coordination, absolutely.

Pam Arlotto, I totally agree that CIOs have a great opportunity right now, and in fact, in certain ways, they're better-positioned now than ever to become real leaders in their organizations. The flip side of this is that they'll be under pressure as never before to execute as well, of course!

Thank you both for your valuable insights and comments!

Great post and comment! At a practical, day in and day out level, we see many organizations bury their head in the sand - focusing on the systems that must be implemented and forgoing the greater strategy discussion - how do we engage physicians in quality measurement, care coordination and clinical decision support/processes/measures needed to support these. CIOs have a great opportunity to lead the charge and their medical centers/communities.