Medical Device Daily Washington Editor

Electronic health records (EHRs) do not yet seem as ubiquitous as discussions about them, so yesterday's discussion sponsored by the National Library of Medicine was geared somewhat toward reversing that dynamic. One of the speakers who took to the dais told the audience the same thing everyone has heard about EHRs and healthcare information technology repeatedly for the past couple of years, namely that it will not single-handedly transform healthcare in the U.S.

However, the famed economist offered implicit hope for cost containment by remarking that American healthcare delivery systems are about as inefficient as they can possibly be.

David Cutler, PhD, an economist at Harvard University (Cambridge, Massachusetts) poked fun at his background as an economist, quipping that a professor of his once said to him, "if you took all the economists in the world and lined them up end to end . . . that would be a good thing."

After the audience finished chuckling, Cutler said he sees "two challenges facing the U.S. One is that we're in a recession – and we're hoping we're near the bottom" of that recession. He said that in a recessionary environment during which private spending is off, government spending can be used to take up the slack and sustain the economy. As an example of this, he cited the $19 billion designated to go into healthcare information technology (HIT) as part of the American Recovery and Reinvestment Act of 2009.

"There's a big challenge," Cutler said, stating that "the infrastructure in the U.S. is lagging" in terms of both roads and in terms of HIT equipment and software. He said that in the years to come, "the biggest impediment to [infrastructure development] is debt," especially debt held by the federal government.

Cutler also reminded attendees that healthcare "is projected to blow up the federal budget. As a country we spend about 16%-17% of GDP on healthcare," which he pointed out has been projected to double within a couple of decades. Expanding coverage to all Americans, he said, "will add to spending in the short term," but added that "over time, we hope there are efficiencies that will make up for that" expansion.

The required offsets will have to be made up in part "by making care more efficient," Cutler observed, a principal which has to be extended to preventive care and chronic care management as well as to imaging services. Regarding the last of the three, Cutler said "most of the uses of those technologies are in settings where we're not sure whether its valuable or not," so policymakers and payers need HIT to establish how and why imaging is conducted, and what sort of benefits it yields in all the scenarios in which it is employed.

Last week's healthcare industry meeting at the White House projected that voluntary reforms would trim cost growth by 1.5%, which Cutler said, "goes an enormous way toward" expanding coverage, and he also said he "saw it as a reasonable forecast," assuming the reforms are pursued as projected. Getting to that point, however, requires a productivity boost for healthcare, and Cutler noted that computers offer an inexpensive way to boost productivity.

To boost production, the producers must have information, Cutler stated, and that information must disclose what is done, who is doing it and how they're doing it. "What's most striking about healthcare is how little we know" about all these aspects of healthcare, Cutler remarked, adding that while "healthcare is inherently more complicated than other industries," it can nonetheless be streamlined and made less balky and clumsy.

"This is more than just having an electronic medical record, it's also using it," Cutler said. He said that compensation differentials must also play a role. In most industries, "workers are paid top to bottom based on performance," a feature he described as a hallmark of successful organizations. This could be carried out by paying for outcomes rather than for services, a common theme in care delivery reform of late.

"There is absolutely no way we're going to solve healthcare problems without an effective EHR system," Cutler reiterated, but "if that's all we do, we're not going to be successful."

The history of productivity growth in the U.S. is instructive, Cutler hinted. He noted that productivity growth averaged between 2.5% and 3% right after World War II and again in the late 1990s up until last year, but productivity gains lagged in Sixties, leading to a moribund economy.

Comparisons are said to be odious, but Cutler indulged himself anyway. "The industry that is closest to healthcare is retail" he said, which sold "much more with fewer workers" once the industry went electronic. EMRs can "eliminate billing people," Cutler stated, describing this as "a non-trivial thing. The single biggest source of employment in healthcare is office support, the people involved in billing and pulling charts." He did not cite the source of his figures, but Cutler asserted that Americans "spend probably $100 billion to $200 billion a year" on such functions. As matters currently stand, he noted, "healthcare is about as completely inefficient in doing stuff as any industry has ever been" according to workflow studies.

Cutler acknowledged that while HIT and EHRs are necessary for pay-for-performance programs, they cannot prevent physicians from cherry-picking the most readily cured patients in order to artificially boost incentive payments. "I would go nowhere near performance assessment without risk adjustment," he said, a calibration paradigm the development of which will "have to involve the professional societies as well as the individual doctors."