The ABCs of systemic healthcare reform - Cerner Corporation

Key provisions of the ARRA designate an investment of approximately $35 billion 2 to advance the adoption of HIT. The investment
is predominantly directed toward Medicare and Medicaid to provide incentive payments for hospitals and physicians to adopt
qualified electronic health record (EHR) technology. It is estimated that approximately half of the incentive dollars will go to
hospitals and half to eligible professionals (primarily physician practices).
To qualify for incentive payments, healthcare providers, physician practices and hospitals must meet eligibility requirements and
demonstrate “meaningful use” of a certified electronic health record system. The legislation provides flexibility for the Secretary of
the Department of Health and Human Services (HHS) to further define meaningful use of an EHR, but it initially has been defined
to include the use of e-prescribing, the reporting of clinical quality measures and the use of EHR technology to improve quality
of care through care coordination. Additionally, the legislation clarifies that a qualifying EHR system must have the capacity to
capture demographic information about the patient, record a medical history, provide clinical decision support, allow for physician
order entry, facilitate quality reporting and be interoperable.
Approach Virtually Assures a Digitized U.S. Health System by Mid-Decade
Hospitals and eligible professionals can qualify for incentive payments beginning in 2011. Eligible professionals must qualify
by 2012 and hospitals by 2013 to receive the maximum incentive payments over a four-year period. The incentive payments
are designed to fund a meaningful portion of the upfront investment by hospitals and physician practices. These payments are
estimated at $4 million per hospital and $44,000 per eligible professional. The amount of the incentive declines if they do not
qualify by 2013. While the “carrot” associated with qualifying for incentives is attractive, the “stick” begins to be used in 2015,
at which time hospitals and eligible professionals begin to be penalized with lower Medicare reimbursements if they are not yet
meaningful users of a certified EHR system.
We believe few healthcare organizations will ignore these powerful incentives. They virtually guarantee that the core U.S. healthcare
system will be largely digitized by 2014-2016. Analysts currently estimate that less than 10% of hospitals and physicians currently
meet the standards necessary to receive incentives and avoid penalties. The opportunity is substantial. It is difficult to estimate
the exact timing and amount of the impact on our business, but we believe it will be a positive contribution to our core business,
probably beginning in the last half of 2009.
More importantly, we also believe this magnitude of investment could create the level of systemic change in the U.S. healthcare
system needed to address a number of serious issues, creating a more efficient, safer and higher quality system for our families,
communities and nation.
Risks of Derailing the Impact
It is important to highlight the ways this course of action by the U.S. government could get off path. I believe one of the largest
ones has been averted already: If the ARRA only funded healthcare organizations that had not yet invested in technology, it would
have been a mistake. Instead, it rewards organizations that have been first down this path as early adopters. In reality, these early
adopters are the part of the healthcare system that will make the biggest difference and be the source of the greatest innovations
using their IT investment. The HITECH funds under the ARRA will be used to complete their journey.
As mentioned, the HITECH legislation creates the concept of “meaningful use.” There could be pressure to dumb down this definition
and make it easy for any healthcare organization that has a computer to qualify for the funds. Capitulating to this pressure would
be a mistake. This is too large of an investment by the U.S. taxpayer to create a low bar. The transformational elements of IT
in healthcare come from achieving a high bar. The high bar is what eliminates avoidable medical errors, unnecessary waste of
resources, inappropriate variance in medical decisions and outcomes, needless delays in detection and treatment of disease, and
costly friction that squanders available funds.
There are other ways this investment could be weakened. But we prefer to address these by describing what is possible if the
investment is made wisely.
2 The $35 billion designated for incentives is before estimated penalties for those that do not comply and before expected savings from a more efficient healthcare
system and higher corporate tax receipts from businesses that will spend less on healthcare in a more efficient system. The net amount of the incentives is
approximately $17 billion.
10