Meaningful Use – The Math behind Health I.T.

The healthcare industry is in a mad rush to get up to digital speeds and to become relevant in the new world of ObamaCare.  The impetuousness came with ARRA (American Recovery and Reinvestment Act of 2009), when the federal government offered to pay medical practices and hospitals the money to upgrade their Health information technology (health IT) if they qualify under Meaningful Use (MU).  It is an investment our government is making that should also provide a healthy return.

The United States spent more on health care per capita ($7,146), and more on health care as percentage of its GDP (15.2%), than any other nation in 2008 and in December 2011, the outgoing Administrator of the Centers for Medicare & Medicaid Services, Dr. Donald Berwick, asserted that 20% to 30% of health care spending is waste.  This waste comes in the form of over-treatment, failure to coordinate care, administrative complexity, burdensome rules and fraud.  So with the government making such an admission, it means they are desperate to see a more efficient system, where tax dollars are no longer lost in the shuffle.

The waste they hope to dispel comes in the form of proactive efficiencies that will help providers reap benefits beyond getting money for an upgrade; reducing errors, increasing the availability of records and data, providing reminders and alerts (making healthcare more proactive), providing clinical decision support, and by automating the process for prescription medication. As redundancies are reduced, costly errors decrease.

What is great about this is that while the Federal government is bankrolling this process, they are not micro managing.  This allows the free market inventors to solve the problems in a way that streamlines the process and really works for medical professionals who will be shopping around for the best solution.

To give you some idea of the math involved: ARRA authorizes a net $27 billion in spending to support EHR (electronic health records) adoption through 2017.  In perspective, it’s a shadow of what is spent annually on healthcare by the US Government.  Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) – together accounted for 21 percent of the budget in 2011, or $769 billion. Nearly two-thirds of this amount, or $486 billion, went to Medicare, which provides health coverage to around 48 million people who are over the age of 65 or have disabilities. The remainder of this category funds Medicaid and CHIP, which in a typical month in 2011 provided health care or long-term care to about 60 million low-income children, parents, elderly people, and people with disabilities. Both Medicaid and CHIP require matching payments from the states that will also benefit from the stimulus.

If the $27 billion spent on EHR eliminates only 5% of the waste, a conservative amount for the sake of argument, the US Government will save $38.45 billion annually.

Is there a downside?  As this data becomes more digitized, privacy advocates are rightly paying attention.  But MU requires that the facility “conduct or review a security risk analysis per 45 CFR 164.308(a)(1) and implement updates as necessary and correct identified security deficiencies as part of this analysis.”  In other words – they must be compliant with HIPPAA, a topic for another future post

There are always risks with such an overhaul – but the math involved makes an extremely compelling argument in favor of Meaningful Use dollars.

Whiteboard-IT creates custom software for many industries, including the healthcare industry.