HFMA VIEWS

President Obama took another step forward in his healthcare reform agenda this week, formally establishing the White House Office of Health Reform by executive order. Nancy-Ann DeParle was nominated early last month to direct this office, which is to coordinate efforts closely with the Department of Health and Human Services. Kansas Gov. Kathleen Sebelius, the secretary-nominee for HHS, testified before the Senate last week, but a vote has yet to be scheduled on her confirmation.

While the offices of the administration’s healthcare team slowly fill, others are examining the implications of some of the reform proposals currently on the table. A major emphasis in health care in recent years has been improving the quality of patient outcomes, and “pay for performance” is one of the ways in which the president’s proposed budget for FY2010 hopes to contain healthcare costs. But in an op-ed in this week’s Wall Street Journal titled “Why Quality Care Is Dangerous,” two physicians on the staff of Beth Israel Deaconess Medical Center in Boston caution against the hasty adoption of quality measures. Pointing to the example of quality measures for blood sugar levels in ICU patients, which have recently been called into question by major research studies, the authors call for “a national time-out in the rush to mandate what policy makers term quality care to prevent doing more harm than good.” 

Also under the microscope this week were plans to develop a public health insurance plan that would compete against private plans. An analysis of the public plan proposal by the Lewin Group held both good and bad news for hospitals, depending on how the plan sets eligibility levels and reimbursement rates. For example, if all individuals and employers were eligible for the plan and it reimbursed at Medicare rates, the Lewin Group estimates that net hospital revenues would fall by 4.6 percent, even after accounting for reduced uncompensated care and increased utilization by the newly insured. But if eligibility were restricted to individuals and small employers only, hospitals could see an increase in net revenues.

These discussions suggest the complexities of the tasks facing policymakers and legislators as they work on healthcare reform. They also recommend a degree of caution and flexibility in navigating the thickets of reform.

Now that the first flush of excitement over the $19 billion in federal economic stimulus funding for healthcare IT has faded, healthcare finance professionals are beginning to ask questions about how and to what effect these stimulus funds will be put to use.

In his column in the March 2009 issue of hfm, HFMA president and CEO Dick Clarke questioned whether acceptance of stimulus funds might ultimately put healthcare executives in the same place that bank executives are in today: Facing the outrage of Congress and the public for a failure to “show the return” on healthcare IT stimulus monies. He cautioned that IT investment alone is unlikely to provide significant cost savings or ROI. Instead, IT investments must be part of an overall strategy to increase value by reducing costs and improving quality. “This strategy needs effective technological support to be successful,” Clarke noted. “But the technology alone will not ensure success.”

An op-ed in this week’s New York Times suggested the sort of contradictory logic healthcare executives might face down the road. Citing an article in the New England Journal of Medicine by David Blumenthal, President Obama’s new national coordinator of health information technology, the op-ed chided hospitals for being “appallingly slow to adopt electronic records.” Only later in the piece was it acknowledged that the “main impediment [to adoption of healthcare IT] is money.” Many hospitals, the article recognizes, do not have the capital for a $20 million to $200 million investment. And even if they do, they face high maintenance costs, an uncertain ROI, a lack of adequately trained staff, and resistance from physicians. Suddenly, the pace of healthcare IT adoption seems less appallingly slow.

A news story from HIMMS Analytics this week also suggests that the pace of healthcare IT adoption has not been so slow after all. Although few hospitals have all the desired functions of a healthcare IT system in place, HIMSS Analytics estimates that almost 70 percent are within two (or fewer) steps of what would be necessary to achieve “meaningful use” as defined by the economic stimulus legislation.

Healthcare IT is not going away, and hospitals will need to develop strategies to ensure its implementation. But before accepting healthcare IT funds, hospitals will be well advised to make sure they know how those funds will be put to use.