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Obama's Tech Stimulus Plan: Health IT, Broadband, and Smart Grid

Daniel J. Weitzner

Steve Lohr has a nice piece in the New York Times ('Technology Gets a Piece of Stimulus,' 26 Jan 2009, p. C1) this morning about the role that technology and innovation will play in the economic recovery (aka stimulus) bill supported by the Obama Administration.

In the past, health IT deployment has been approached as an engineering problem: what computers have to be part of which networks exchanging which types of data? This loses sight of the purpose of electronic medical records: helping doctors to provide better care to their patients and transforming the system at a macro scale so that it enables data-driven, evidence-based research on how to provide effective, cost-efficient care. Today, because most doctors are paid based on how many procedures they perform, as opposed to how good they are at keeping patients healthy, will actually lose money if new information systems help them to deliver care more efficiently and keep people healthier. So, the key challenge for electronic medical record deployment is to marry up overall changes in healthcare policy with the right innovation environment to produce the health information infrastructure we need to support safer, more efficient health care.

A quick infusion of stimulus spending, combined with a long term commitment to spend much of this money in a way that rewards doctors for delivering better care and data needed to measure effectiveness and efficiency (as opposed to just subsidizing them to put expensive hardware and software on their desks), can help lay the groundwork for the systems needed for health care reform. As Lohr explains:

The time-tested way for governments to create jobs in a hurry is to pour money into old-fashioned public works projects like roads and bridges. President Obama's economic recovery plan will do that, but it also has some ambitious 21st century twists.

The $825 billion stimulus plan presented this month by House Democrats called for $37 billion in spending in three high-tech areas: $20 billion to computerize medical records, $11 billion to create smarter electrical grids and $6 billion to expand high-speed Internet access in rural and underserved communities.
The technology industry is not typically viewed as a prolific job producer. Much of its manufacturing is highly automated. But bringing technology to services fields like health care, telecommunications and energy can be labor intensive and thus generate jobs.

The issues surrounding electronic health records illustrate the policy challenges of targeted programs. Mr. Obama has advocated spending $50 billion over five years to accelerate the use of such records and the sharing of health information across a national network.
The computerized records, when used properly, are an indispensable tool for measuring, tracking and improving patient care - yet only about 17 percent of the nation's doctors are using them. They are commonplace at large medical groups, but 75 percent of doctors practice in small offices of 10 physicians or fewer.

Doctors often benefit from inefficiency, because the dominant fee-for-service payment system means they are paid for doing more - more doctor visits, tests, surgical procedures, pills.

"Paying to put computer hardware and software in physicians' offices isn't going to do anything unless you change the incentives in the system," said Dr. David J. Brailer, former national health information technology coordinator in the Bush administration.
"You want to pay for achievement - better health quality and efficiency," said Dr. David Blumenthal, director of the Institute for Health Policy at the Harvard Medical School, who advised the Obama campaign. "But in the transition period, before financial incentives are reformed, you need to provide incentives or grants to use electronic health records because this technology is sort of the opening wedge to reform."

And summarizes the current contents of HealthIT stimulus proposals developed by the transition team and currently being considered by Congress:

Those eligible for grants to buy technology, a member of the Obama transition team said, will include inner-city and rural hospitals and small doctor practices. But most money, he said, will go to incentive payments to improve quality and safety of care.

The big leverage that that the Federal Government has is over $700 Billion dollars that it spends on Medicare and Medicaid each year. All together the Federal government pays for over 40% of all healthcare in the US so directing that spending in a way that encourages a more data-driven health care system is the key to success. The stimulus spending will be the first step toward creating a system in which that money can be used to encourage smart, data-driven health care.

By Daniel J. Weitzner, Technology and Society Policy Director
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