A Digital Health-Care Revolution

Twenty billion dollars might finally turn the U.S. health-care system digital.

The more wired the hospital, the better off its patients: there are fewer deaths and complications, and lower bills. That's the conclusion of a large study of Texas hospitals released earlier this week. Unfortunately, only a small percentage of hospitals and doctors' offices in the United States are wired, and the country lags far behind other developed nations in implementing such systems. However, legislators and health-technology specialists hope to change that with a $20 billion cash influx, part of the U.S. government's proposed stimulus bill.

Credit: Technology Review

Dubbed the Health Information Technology for Economic and Clinical Health Act (HITECH), the plan would encourage doctors and hospitals to use electronic record-keeping and ordering systems by providing $18 million in incentives through Medicare and Medicaid reimbursements. Starting in 2011, physicians who show that they are "meaningfully" using health IT would be eligible for $40,000 to $65,000, and hospitals would be eligible for several million dollars. The incentives would be phased out over time, with penalties in place by 2016.

The bill allocates $2 billion over the next two years for planning and training, including ensuring that new programs adhere to specific interoperability standards. That will be crucial in making certain that data can be transferred between different medical centers and physicians, and that doctors are schooled in how to incorporate electronic record keeping and other technologies into their practices. It would also strengthen privacy and security laws to protect the growing amount of personal medical information that will become electronic.

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Currently, less than a quarter of physicians in the United States are using electronic health records (EHRs). The stimulus spending should help overcome two of the major barriers to adoption: lack of funding and misaligned incentives, says John Halamka, chief information officer and dean for technology at Harvard Medical School. Currently, doctors must invest time and money to implement EHR systems, but it's the insurers and payers who ultimately benefit, thanks to a reduction in unnecessary tests and medications.

The $20 billion boost will be a huge leap for an industry that has seen little government spending. According to a 2006 study, the United States spends 43 cents per capita on health-care IT, compared with the $193 per capita spent in the United Kingdom. The entire health-care IT industry had an estimated budget of $26 billion in 2008, says Halamka. He reckons that the bill could create 50,000 new IT jobs. "We're not talking about MDs or PhDs," says Halamka. "I think we can take tech professionals and train them in health care within the next two years."