By DAVE MICHAELS and JASON ROBERSON The Dallas Morning News

Dave Michaels reported from Washington, and Jason Roberson from Dallas.

An unprecedented effort to computerize the nation’s hospitals and physician offices could be the key to reducing crippling health care costs – or a giveaway to technology vendors whose sales will be subsidized by taxpayers.

Computerizing the paper-based world of medicine was a significant component of this year’s $787 billion stimulus package, which reserved $45 billion for hospitals and physicians to adopt electronic health records.

The Obama administration argues that electronic records will allow doctors to coordinate care for the sickest patients, eliminate errors such as adverse drug reactions and avoid duplicate lab and imaging tests. Medical errors alone cost the country $37.6 billion each year, according to the Institute of Medicine.

Despite years of technology development, most hospitals and physician offices, including those in North Texas, can’t electronically share information or even record patient data.

Data sharing confronts age-old assumptions that providers, not patients, own health records, which are valuable assets that can be used to obtain grants and market hospitals. It requires the government to decide what kinds of systems will improve care and how providers should use the systems to achieve that.

‘Meaningful use’

Congress dubbed that exercise “meaningful use,” and the government is taking most of this year to set the standards. The exercise is being closely watched by North Texas hospitals, vendors and consultants such as Plano-based Perot Systems and Addison-based MedHost Inc.

Some observers are concerned that the stimulus investment could be a bonanza for software vendors if the rules for “meaningful use” are too rigid and simply tied to buying software.

“Meaningful use is the whole shooting match,” said Richard Kneipper, a lawyer who co-founded Dallas health care information technology firm PHNS Inc. “The guts of the discussion will be how fast do you go?”

The first draft of “meaningful use,” produced by a federal advisory panel, resembled an approach advocated by the Healthcare Information and Management Systems Society. The government’s draft, however, was more aggressive.

Hospitals, physician groups and technology vendors have said the draft would require them to do too much too soon. Only 1.5 percent of U.S. hospitals have the comprehensive electronic records envisioned by the Obama administration, according to the New England Journal of Medicine.

The American Hospital Association, for instance, wants to put off one of the most important functions of electronic health records – having physicians enter all their orders electronically – until after 2015. “We don’t want to rush to do something just to chase money – and endanger patients’ lives,” said Rod Piechowski, senior associate director of policy for the hospital association.

The stimulus established a carrot-and-stick approach to lure providers into the electronic age. Physician practices could be paid up to $44,000 over five years, and hospitals could get a maximum of $15.9 million to install systems that comply with meaningful use rules.

The government would penalize providers that don’t participate, reducing their Medicare and Medicaid payments by 1 percent, beginning in 2015. In later years, the penalty grows to 3 percent.

“The penalties … are far more significant than the incentives,” said H. Stephen Lieber, president and CEO of the Healthcare Information and Management Systems Society.

But if hospitals think the schedule is too aggressive, they may sit out – and the government would have failed to achieve its goal, said Pamela McNutt, chief information officer for Methodist Health System in Dallas.

Dallas efforts

Many hospitals, including several in Dallas, have made big investments in electronic records, which they say can help prevent errors and reduce some costs. Methodist’s $25 million system allows physicians to order medicine from patients’ rooms. Nurses can scan a bar code to make sure patients have been given the right medication.

“Why would you want to set up a system and spend millions of dollars now, with all the questions surrounding it?” McNutt said.

Kneipper is urging a more expansive approach. He advocates not just a timeline that applies to everyone, but also extra incentives for providers that have shown they can use technology to improve care.

“The purpose isn’t just some idle technology,” he said. “It’s technology that is going to save people’s lives.”

The Obama administration is keenly aware of the high stakes of meaningful use. The goal isn’t just spreading technology – it’s using the technology to improve care and reduce costs.

“Not everyone may want to, not everyone will execute on the task,” said David Blumenthal, a Boston physician appointed by Obama as national coordinator for health information technology. “There is no guarantee in the law that people will be paid, even if they work hard.”

To qualify for incentives, providers must purchase “certified” systems.

So far, certification has been a voluntary, industry-led effort that identified the features and functions of a good system. But the stimulus law set a new standard, requiring providers to purchase certified systems to be eligible for the incentives.

Under the Bush administration, certification duties were outsourced to a commission founded by the Healthcare Information and Management Systems Society.

Kneipper and other critics argue that the commission has too many ties to industry groups to be the lone gatekeeper. The commission’s leaders contend that they are independent from the industry. But after three years of certification, most systems still don’t – and can’t – communicate easily with one another, according to health care technology experts.

“I don’t think the certification process has been particularly relevant so far,” Kneipper said. “It’s going to be very relevant for the purpose of having a toll gate for who gets into the stimulus money or not.”

The commission’s leaders acknowledge that certification has failed to achieve widespread interoperability. But they say the commission is now focused on making sure systems are compatible and is certifying systems that are homegrown, not just made by big software vendors.

“The missing piece is the government also envisioned what they called health information exchanges, which are sort of the switchboards to route data between doctors and hospitals,” said Mark Leavitt, the commission chairman. “They came up with a concept, but there wasn’t any money behind it.”

Progress in Texas

Texas has only a few small health information exchanges – in Austin, San Antonio and Fort Worth. Dallas and Houston, the two biggest health care markets in the state, don’t have exchanges up and running.

One exchange has popped up in North Texas, where Fort Worth-area doctors pay $150 to $200 per month to access SandlotMD.com, which supplies patient demographic data, lab results and patient history. Sandlot CEO Telly Shackelford says it serves 1.2 million patients.

In June, Arlington-based Texas Health Resources Inc. contracted with Epic Systems, a global supplier of electronic health records, to sync its records with those of UT Southwestern, Children’s Medical Center Dallas and Parkland Health & Hospital System. The Dallas-Fort Worth Hospital Council has begun a study of an exchange and is hoping to get stimulus funds to support it.

Shackelford expects the region will have several independent exchanges that can share data.

But in Texas, hospitals and providers have struggled to justify the money they would invest in such efforts. Competition among hospitals for patients has also stifled attempts to exchange data across numerous providers.

Two years ago, the Texas Legislature created an entity that was supposed to oversee the development of the exchanges – but lawmakers didn’t fund it. “For large institutions, many of them regard the aggregated data on their patients as a resource for grants – it’s worth something,” said Joseph M. Heyman, immediate past board chairman of the American Medical Association.

Three years ago, Kneipper, a former Parkland board member, tried to persuade three Dallas hospitals to share information about indigent patients. The homeless often bounced between emergency rooms, but each time physicians confronted their problems as if the patient were being seen for the first time.

The effort ultimately failed because the hospitals weren’t willing to devote money to it.

“If the stimulus monies were around [then], I believe that would have been the stimulus to make it happen,” he said.

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