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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.

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