Cheshire Cat Healthcare Reform

by Dave Schuler on January 15, 2013

The editors of the Washington Post note the disappointing results of the move to electronic medical recordkeeping mandated by the PPACA, also known as “ObamaCare”:

It’s easier to identify factors that did not contribute to the downward bending of the cost curve. Health information technology is a case in point. At one time, its cost-cutting promise seemed immense. A 2005 Rand Corp. analysis estimated that the nation could save up to $81 billion a year by digitizing patient records and other data; best of all, it was said, more accurate, accessible information would also help improve patient care. All that stood in the way was the fact that doctors and hospitals had no incentive to invest in equipment that would save other people money. So President Obama’s 2009 economic stimulus bill allotted $27 billion in incentives to health-care providers who adopted electronic health records and showed they’re being used to improve patient care.

But as an article released Monday by Rand researchers argues, the subsequent investment has bought very little in the way of either improved care or lower costs. It’s possible that computerization may actually have increased spending. Between 2006 and 2010, Medicare payment to hospitals receiving federal dollars for electronic records grew faster than payments to hospitals that did not take advantage of the incentives, according to a Sept. 21 New York Times report cited in the new Rand article.

The editorial goes on to consider the problem of “interoperability”, making the cacophony of recordkeeping systems talk with one another. I can think of a half dozen different ways that could have been accommodated. Among them are standards, a centralized database along with an application programming interface for interacting with it in a secure manner, or a full-blown (and mandatory) practice management application provided at no charge. $27 billion is a lot of money.

Anybody who had real life experience might have mentioned to those planning the PPACA something that is very well known: the problem in electronic medical recordkeeping is not capital investment. It’s compliance. Look at it this way. Assume an average wage of $200,000 for a physician, 2,000 billable hours per physician, and five minutes per billable hour spent by the physician in additional recordkeeping to fulfill a system of electronic medical records. That means that $100 per hour would need to be billed just to pay the physician. Using the rule of thumb to relate wage rate to billing rate that means a billing rate of about $300 per hour. Five minutes then costs roughly $25 or $50,000 per year. For a half million physicians that comes to about $25 billion per year. So, we’re going to increase costs by $25 billion to save a maximum of $81 billion. Not a great bet. You might lose money on it and almost certainly will in the short run.

And it’s a bet that isn’t panning out. As I predicted and pretty much anyone reasonably well-informed on the subject might have.

ObamaCare’s promise of universal healthcare coverage has evaporated (see also here). The savings expected from electronic recordkeeping are vanishing.

Piece by piece the benefits of the plan are disappearing, like the Cheshire Cat, until nothing is left but the smile.

{ 20 comments… read them below or add one }

jan January 15, 2013 at 2:19 pm

“If something sounds too good to be true, it usually is…..”

Also, words, describing how wonderful something is, are often guilty of overstatement or exaggeration when they are implemented and reality emerges from the blur of what was projected to be the case.

Steve Verdon January 15, 2013 at 2:45 pm

Assume an average wage of $200,000 for a physician, 2,000 billable hours per physician, and five minutes per billable hour spent by the physician in additional recordkeeping to fulfill a system of electronic medical records. That means that $100 per hour would need to be billed just to pay the physician. Using the rule of thumb to relate wage rate to billing rate that means a billing rate of about $300 per hour.

Whut? What rule of thumb?

Steve Verdon January 15, 2013 at 2:51 pm

Piece by piece the benefits of the plan are disappearing, like the Cheshire Cat, until nothing is left but the smile.

steve….paging steve….steve please pick up the white courtesy phone….paging steve….

:p

So much for your prediction about Obamacare.

TastyBits January 15, 2013 at 3:30 pm

The VA uses electronic records exclusively. It is seems to work well, but the VA is a closed system. After Katrina, a lot of vets found out the regions kept the data locally, and it was not easy to share data between them. I am not sure if they have fixed this.

I am not sure that it has increased efficiency. All records are available, and I can access some of them online. Even after many years, a lot of the staff struggle with the complexity.

Dave Schuler January 15, 2013 at 3:51 pm

Whut? What rule of thumb?

There’s a standard rule of thumb, used by several of the large consulting firms, that the billing rate should be three times the wage of the consultant. It’s not perfect; it’s a rule of thumb. But I’ve found it to be pretty good for estimating what an employee will need to produce to make it worthwhile hiring another employee.l

steve January 15, 2013 at 5:14 pm

Electronic records all suck. We are going through plans to buy our third version. None of them seem to be designed for practicing physicians. They are slow and awkward to use. Absent good systems, we will not use them or they will continue to increase costs. The only part that works, is the billing part.

Steve

Dave Schuler January 15, 2013 at 5:56 pm

None of them seem to be designed for practicing physicians.

No, and it will stay that way. Software developers design things the way they do for several reasons: it’s what they’re used to, it’s the easiest, it’s the line of least resistance, and, importantly, it’s what’s expected. Think of it as the software equivalent of “standard of care”.

For more than 40 years I’ve been looking at how businesses function and thinking about how the software they use relates to what they actually do. In nearly all cases the answer is “not very well”. In order to make things better designers would need to look at real life businesses with clear eyes and the intention of making the user interface easy, intuitive, and effective. Software just doesn’t get designed that way. It’s more the reverse. Something gets written to satisfy the designers, it gets sold, and the software is back-engineered to make it usable.

The reason that the billing part works is a) it’s the most horizontal component, the component that can borrow the most from things developed for other industries and b) that was the selling point when the package was originally developed ten, fifteen or twenty years ago.

Andy January 15, 2013 at 7:46 pm

Dave,

Your description is very accurate concerning military software systems.

jan January 15, 2013 at 7:52 pm

Electronic records all suck.

Wow, I thought you used to be a proponent of them, Steve!

steve January 15, 2013 at 8:37 pm

jan- I want records that work. If someone has an important test at a competing hospital and then shows up in my OR, I often cannot get access to that test, especially if it is an emergency. In that sense I am a strong proponent. If they could get them to work I would order fewer unnecessary tests and could take better care of patients. We recently nearly let a guy die based upon the information the family gave to us and lack of access to real information.

The thing I cannot figure out is that anyone who finally makes a good product will make a bundle. It would sell like hotcakes. What more motivation do software makers need?

Steve

Janis Gore January 16, 2013 at 8:00 am

Mr. Dave, why did programming develop that way?

Back when I was at the telco, I went to a seminar given by Arthur Anderson, I think it was, on programming f0r the end user. It focused on programming modules designed for specific functions sought by users, that came about through a dialog between users and programmers. Whatever happened to that? That was 1984-86.

Of course, now, we had programmers on hand at the co. who spent hours integrating and slimming down language so their programs would run a nanosecond faster.

Janis Gore January 16, 2013 at 8:07 am

I’ve had exposure to electronic records within the Sonny Montgomery VA hospital. They worked pretty well there, I think.

Dave Schuler January 16, 2013 at 9:16 am

Mr. Dave, why did programming develop that way?

There are lots of reasons. Software development went from something that smart people did to something that people who’d gotten certified by Microsoft did. Windows is a very constraining environment. In Windows you do things the Windows way. Too many people confuse design with programming, i.e. programmers are actually doing too much designing. Graphics designers design to look nice, not for use. It’s expensive to design software, develop it, and bring it to market and those are three different skill-sets not one.

Steve Verdon January 16, 2013 at 11:55 am

Mr. Dave, why did programming develop that way?

There are lots of reasons. Software development went from something that smart people did to something that people who’d gotten certified by Microsoft did. Windows is a very constraining environment. In Windows you do things the Windows way. Too many people confuse design with programming, i.e. programmers are actually doing too much designing. Graphics designers design to look nice, not for use. It’s expensive to design software, develop it, and bring it to market and those are three different skill-sets not one.

Pretty much.

The ubiquity of Excel has been a constant source of displeasure for me. A well structured data set for retrieving information is not a pretty thing to look at. In fact, at first glance it would make little sense to most people and many would say, “Hey if we did this it would be easier to look at and understand.” But that is not what a data base is for. A data base is to store information in a way that can be easily queried and also is adaptable so that things like new variables/categories can be added without destroying the integrity of the data set.

So people often want me to send them data in a way that looks nice. But then they’ll ask for a new variable to be added and then it takes days vs. minutes to give them the updated data set. Because the new variable and the way they wanted this “data” is structured in such a way that such an addition makes the old structure not work anymore.

Ideally, I’d supply data with a few columns, but many rows. One column or several columns would be “key” variables. Variables you could search on so that if you wanted to subset something out of the data set you’d limit the search to a specific key value(s). If a new element is requested, then I’d merely append it to the end of the dataset and they’d have a new key value.

This also allows the person using the data to put it into any format they like. Existing presentation spread sheets would always work because they’d be based on look up functions in Excel. Additional categories of data to the “data base” would not impact what already exists. New spread sheets could be built using the same approach and their integrity would be maintained as well. If they were smart they could include key value cells that are used throughout a given sheet. So if they wanted to update the sheet (for example shift from 2011 to 2012) they’d change the value in a single cell vs. dozens of cells.

But people never, ever want this. Why? Well, they’d have to think. Of course a little bit of thinking would also save them lots of effort on what is basically busy work.

Dave Schuler January 16, 2013 at 2:50 pm

The ubiquity of Excel has been a constant source of displeasure for me.

That’s a case of when the only tool you have is a hammer every problem starting to look like a nail to you. Excel is a spreadsheet program. It’s good for columnar reports. Can it be used for maintaining a database? Sure. And a hammer can be used to pound in a screw.

It’s not a word processor or a database program. But here’s the critical point: Excel, Word, and Access, when used together for some task, each performing the functions it does best, are just too darned slow for a production environment. Office is for productivity use—word processing, straightforward columnar reports without a lot of data storage, and simple database administration. Completely unsuitable for production applications.

Janis Gore January 16, 2013 at 7:04 pm

What do you mean by your terms “production environment” and “productivity use” in this paragraph, Mr. Dave?

I’m imagining “floor” vs. “front office.”

Janis Gore January 16, 2013 at 10:29 pm

I was in a hot mess of FORTRAN and COBOL and WANG and IBM and everything else running at the time.

Janis Gore January 16, 2013 at 10:30 pm

And what was yours?

Janis Gore January 17, 2013 at 12:42 am

Nobody could ever get theyselves up in the middle of somethin’ like me.

Dave Schuler January 17, 2013 at 7:57 am

What do you mean by your terms “production environment” and “productivity use” in this paragraph, Mr. Dave?

Productivity means writing letters (Word), simple tabular reports (Excel), or simple database management (Access). Ordinary business stuff that can be done cheaper and better with those tools than if they’re done by hand. Production means daily, multiple transaction use. That’s as opposed to demonstration use, one-time use, or occasional use. I’ve seen whole applications put together using Office. They’re excruciatingly slow.

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