Market-oriented or Government-dominated U.S. Healthcare Reform?

Bush Sets Focus For 2006 Healthcare Agenda By JOHN D. MCKINNON and SARAH LUECK Staff Reporters of THE WALL STREET JOURNAL January 12, 2006; Page A3 WASHINGTON -- President Bush, searching for a way to ease Americans' anxiety about the economy and to respond to business and consumer alarm over health costs, is gearing up to focus on health care as a centerpiece of his 2006 domestic agenda. The White House is unlikely to propose major new federal spending. Instead, it is considering expansions of several earlier proposals aimed at using market forces to improve the quality and restrain the rapidly rising cost of health care. The White House has been frustrated that the president isn't getting more credit for an economy marked by steady growth, low inflation and falling unemployment. Talking more about health care is part of its response. "Health care is obviously a big challenge, and ... creates angst on the part of the American people," Mr. Bush's economic adviser, Allan Hubbard, said in an interview this week. "Employers are spending more money on health care, and that's robbing people of wage increases," he said. The president is likely to sound similar themes in the State of the Union address later this month. In Louisville, Ky., yesterday, Mr. Bush called health care "an unmanageable cost" for businesses. Rejecting government-directed care as a solution, he said the ideal health system "is one in which there is a direct connect between provider and customer, [and] where there's transparency in the pricing system." In a likely signal of what is to come, the president urged Congress to expand health savings accounts, or HSAs. Created in 2003, HSAs allow Americans to set aside money tax-free to pay health costs if they choose high-deductible health insurance. Among the proposals Mr. Bush is considering are: Providing bigger tax breaks for Americans who buy their own health insurance to balance tax breaks available to workers who get health insurance through employers. Encouraging broader use of HSAs in the hope that giving consumers more control over their health-care spending will make them more cost-conscious. Helping consumers get more information about health-care providers' prices and performance to make them better shoppers. Building on past Bush proposals, the new White House focus on health -- beyond the government's Medicare program -- is intended to give Republicans an election-year answer to many of the worries that voters have about the fast-changing economy. In many voters' minds, those worries appear to be overshadowing the good economic news about the pace of growth and falling unemployment. Opinion polls show health care near the top of Americans' concerns. Last month's Wall Street Journal/NBC News survey, for example, showed health care ranking behind only the war in Iraq on the list of issues the public wants the federal government to address. While 41% identified the war as a top priority for Washington, 33% identified health care, exceeding the 28% who pointed to job creation and economic growth. While many experts and a growing number of business executives see reason to restructure the health-care system, politicians have shied away from wholesale changes since the failure of the Clintons' initiative in the 1990s. The Bush White House is unlikely to repeat what is widely seen as the Clintons' overreaching, but the outlines of the health-care system it envisions are becoming clear. It would rely less on generous insurance provided by employers that insulate individuals from the cost of their choices. Instead, it would rely much more on; (1) market forces, (2) provider competition, (3) using the Internet to provide consumers with more, better data about the care quality and prices charged by doctors and hospitals, and (4) individual (as opposed to employer-provided) insurance, (5) tax credits to help the uninsured. Improved information about the quality of doctors and hospitals would be valuable to people with HSAs, who according to some surveys, "don't feel like they've got enough useful information to make the best decisions about their care," said Mark McClellan, a former White House adviser who now oversees Medicare. He has been pushing the giant program for the aged and disabled to link government payments to the quality of care, instead of the volume of care. Medicare, for instance, is experimenting with paying hospitals a bonus if they perform well on preset quality standards. A slim new book, "Healthy, Wealthy & Wise," by former Bush advisers R. Glenn Hubbard and John F. Cogan, along with Daniel Kessler of the Hoover Institution, outlines the case for moving in the direction that the Bush administration is heading. It argues that "the unintended consequences of a handful of public policies" -- including tax and health-insurance rules -- "are in large part responsible for the problems of the health-care system" because they hinder "the proper functioning of markets." (See excerpts and more information1.) Mr. Bush's proposals are likely to draw fire from conservatives for not going far enough. And they will draw fire from Democrats and unions, who fear the administration would undermine the employer-based system and, by making individuals pay for more of their own health, discourage people from getting preventive health care. "I think this is a classic risk shift onto individuals that is both unpalatable to people and bad policy," said Jared Bernstein of the Economic Policy Institute, a liberal Washington think tank. Analysts on both sides express skepticism that Mr. Bush, unable to persuade Congress to embrace his Social Security proposals, can make much headway this year. Write to John D. McKinnon at john.mckinnon@wsj.com4 and Sarah Lueck at sarah.lueck@wsj.com5

Citizens Healthcare Working Group Consumer Survey

Reforming Our Health Care System Is a Huge Challenge That Requires New Thinking and Creative Solutions:

Many of you may know from first-hand experience what we have been talking about — a health care system troubled by sharply rising costs, unreliable quality, and, for some people, poor access to care. Many people either have no health insurance, or they do not have enough insurance coverage. These problems are complicated and they affect each other.

Lots of new ideas are being explored by governments, businesses, and others. Examples include:

• Creating new state and local programs that expand insurance coverage and at the same time control costs and improve quality and access to care.
• Having employers and employees work together to expand access by holding costs down and getting the right care at a good price.
• Using new health information technology. The goal is to provide more information to providers and patients, improve quality, reduce medical errors, and reduce waste.
• Encouraging people to use less expensive, yet equally effective health care options. For example, people can often use generic drugs instead of more expensive brand-name medications.
• Providing more information to doctors, nurses, hospitals, insurance companies, employers, and consumers about higher quality, more efficient care. One way is to use a type of “report card” to rate the care provided by different types of health plans, hospitals, nursing homes, etc.
• Adjusting payments to doctors, hospitals, or other health care providers based on the quality of care they provide.
• Improving people’s access to care and insurance coverage through a more effective use of current public programs, such as Medicaid, or new programs that will allow more employers to offer coverage.

While some of these ideas may appear promising, not all are being used widely. Some need careful evaluation. Few of them have been easy to do. Some will prove themselves, but others just won’t pan out in our complex health care system. We need lots of ideas. We still have some hard work cut out for ourselves.

Now it’s time to hear from you. You can help shape our health care system in the future — and, hopefully, allow us to create one that works for all Americans.

We need to know about your concerns. We also need your ideas about where we go from here. Let us know what you think.

• What concerns you most about the health care system in America today?
• Our current way of paying for health care includes payments by individuals, employers, and government. Are there any changes you think should be made to this system?
• What trade-offs should the American public be willing to make in either benefits or financing to ensure access to affordable, high-quality health care coverage and services?
• What is your single most important recommendation to make to improve health care for all Americans?
• What health care benefits and services should be provided?
• How should health care be delivered? How should it be paid for?
• What have you seen in America’s health care system that works well?

These are just some of the questions that we need to answer. We’ll be formulating others as we grapple with problems and solutions.

So here’s what to do next:

• Find out more about health care. Keep this booklet handy, so you can refer back to the key facts and issues. Learn more from the free information – a detailed report and slideshow – available online at http://www.citizenshealthcare.gov/.
• Tell us what you think about what works and what does not.

RESPONSES OF BOB COLI, MD TO THE ONLINE CONSUMER SURVEY BY CITIZENSHEALTHCARE.ORG: 1/14/06

What concerns you most about health care in America today?

The government’s long-standing failure to ensure the creation and maintenance of a truly competitive (i.e. “free”)* healthcare marketplace in each state and nationwide.

A slim new book, "Healthy, Wealthy & Wise," by former Bush advisers R. Glenn Hubbard and John F. Cogan, along with Daniel Kessler of the Hoover Institution, argues that "the unintended consequences of a handful of public policies" -- including tax and health-insurance rules -- "are in large part responsible for the problems of the health-care system" because they hinder "the proper functioning of markets." (see next post above)

*A truly competitive or free market is a business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. It is a market in which supply and demand is unregulated except by the country's competition policy, and rights in physical and intellectual property are upheld.

A free market economy is one where scarcities are resolved through changes in relative prices rather than through regulation. If a commodity is in short supply relative to the number of people who want to buy it, its price will rise, producers and sellers will make higher profits and production will tend to rise to meet the excess demand.

If the available supply of a commodity is in a glut situation, the price will tend to fall, thereby attracting additional buyers and discouraging producers and sellers from entering the market. In a free market, buyers and sellers come together voluntarily to decide on what products to produce and sell and buy, and how resources such as labor and capital should be used.

A free market can be contrasted with a controlled market, where prices are determined by a regulatory or administrative authority and do not respond flexibly in the face of varying demand and supply conditions. Controlled markets are characterized by rationing, if production falls short of demand, or a buildup of unsold stocks if production exceeds demand.

Our current way of paying for health care includes payments by individuals, employers, and government. Are there any changes you think should be made to this system?

The solution for the escalating cost and quality dilemma for all 297 million Americans, including the approximately 46 million currently without any health insurance coverage, is clearly NOT replacing the current “employment-based and insurance-funded,” health coverage system in the U.S. with universal health coverage based on “single-payer reimbursement and tax-based funding.”

Until someone can convince me that the coercive power of government has or can ever allocate resources better than well-informed individuals with multiple choices using reliable information in a competitive market, I will continue to believe that our intractable uncontrolled costs and variable quality of care are based on a combination of flawed incentives and monopolies ⁽¹⁾, oligopolies ⁽²⁾ and monopsonies ⁽³⁾ doing what they do best---wielding their anti-consumer economic power.

This conclusion is not just based on economic theory. It is solidly based on my personal experiences as a provider of professional healthcare services. Over the last four decades, the evolution of the healthcare industry in Rhode Island has irrefutably demonstrated the substantial value, in terms of cost, quality and access of well-informed consumer choices and lively competition between vendors of both products and services and the adverse effects of their absence.

(1) Exclusive control by one group of the means of producing or selling a commodity or service: “Monopoly frequently … arises from government support or from collusive agreements among individuals” (Milton Friedman).

(2) A market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors.

(3) A market situation in which the product or service of several sellers is sought by only one buyer.

What trade-offs do you think the American public is willing to make in either benefits or financing to ensure access to affordable, high quality health care?

If the problem was clearly framed in the mass media as market failure that is based primarily on government's chronic (and bi-partisan) failure to create and maintain a competitive market for all healthcare goods and services, the American public would embrace market-oriented, consumer-driven healthcare reform as much as the do sub-$500 PCs and competing online bids for their auto insurance and mortgage business.

What is your single most important recommendation to make to improve health care for all Americans?

From my perspective as a former physician in private, office-based practice since 1967, the root cause of the escalating prices and quality problems in the $2 trillion United States healthcare industry is the government’s implicit (not readily apparent) failure to create a truly competitive marketplace for healthcare services and products.

A truly competitive market can be hard to achieve in the real world and is non-existent to date in the $2 trillion American healthcare industry because such a market must be based on three specific characteristics:

(1) Consumers of its services and products must have immediate access to perfect information on prices and quality,

(2) No provider of services or products should have enough market share to be able to dictate prices, and

(3) There must be no barriers to market entry or exit.

The core problem with actually achieving this economic textbook definition is that only the federal and state governments can ensure that these characteristics exist and are maintained. And until now, government has failed to do its job, locally, regionally and nationally.

In spite of our extremely dysfunctional healthcare market nationally and in Rhode Island, recent market-oriented reforms at the national level that are being adopted in all of the states could start disrupting the intransigent status quo.

Despite skepticism about “consumer-directed” health benefit plans in some quarters, I believe the infrastructure or “scaffolding” on which a much more competitive healthcare market can be built and maintained is feasible if three important new trends that began in 2003 take hold and achieve widespread long-term success. These are:

(1) Health Savings Account (HSA) consumer-driven health plans (Enacted by Congress in December, 2004. See: http://www.hsainsider.com)

(2) Widespread creation, diffusion and use of Integrated EMRs/PMSs, EHRs/PHRs, interoperable HIEs and ultimately the NHIN (A transferable electronic medical record for every American was first established as a national goal by President Bush’s Director of HHS in July, 2003).

(3) Leveraging physician office and hospital-equipped EMRs/EHRs to transform reimbursement now based primarily on volume with enlightened P4P (Pay-For-Performance) methods.

Fortunately for Rhode Island’s one million citizens, as evidenced by his healthcare reform plans recently published in the Providence Journal and on his Web site, I believe our Governor Don Carcieri supports this market-oriented approach and not the “heavy foot of government solution” to this chronic economic problem that affects all of us sooner or later.

President to Push Medical Record Computerization

BY MEGHAN CLYNE - Staff Reporter of the NY Sun
January 6, 2006

URL: http://www.nysun.com/article/25457

WASHINGTON - President Bush is readying a major push to computerize the nation's medical records, including what is expected to be between $100 million and $200 million in funding for the program in the federal budget he will propose next month.

Two likely 2008 presidential contenders and leaders of their respective political parties, Senator Frist, a Republican of Tennessee, and Senator Clinton, a Democrat of New York, teamed up last year on legislation to try to encourage doctors to replace pen-and-ink scribbles with a sophisticated network of electronic medical records. Yet despite the high-profile bipartisan backing, Congress has failed to agree on standards for the technology or how to fund it.

Advocates say electronic medical records could save $140 billion a year in health care expenses on things like file clerks and space for file cabinets, while also saving tens of thousands of lives each year by reducing medical errors.

"We're really ready to step up in 2006 for a pretty aggressive agenda," the Bush administration's national coordinator for health information technology, David Brailer, told The New York Sun on Wednesday.

"The president loves this topic," added Dr. Brailer, who was appointed to his post at the Department of Health and Human Services in 2004 under an executive order to achieve "widespread deployment" of electronic medical records within 10 years.

Dr. Brailer told the Sun that later this month the administration will start by unveiling "breakthrough" health information technology initiatives that may be completed by year's end, increasing the issue's visibility among the American public. The initiatives include nationwide computerized personal medication histories, so that a doctor anywhere in the country can know what medications a patient is taking before treating him; providing "secure messaging" to allow for private e-mail and other electronic correspondence directly between doctors and patients, and "bio surveillance," which uses computerized records to monitor disease outbreaks and provide earlier detection and better treatment of pandemics or bioterrorism attacks.

A Washington-based health care administrator who advises the White House on health information technology, Barth Doroshuk, said the administration is expected to seek between $100 million and $200 million for the technology initiative in this year's budget, to be announced in February.

At least some doctors' offices, however, are moving ahead on their own.

One example is a practice founded and partly owned by Mr. Doroshuk, Washington ENT, one of a variety of "paperless" practices around the country. The downtown office of the six-year-old ear, nose, and throat practice has no filing cabinets. There are no rooms full of shelves lined with manila folders stuffed with charts. Instead, patients' insurance, medication, examination, and treatment records are maintained on eight Dell servers stacked in a large closet.

Washington ENT's doctors use software provided by A4 Health Systems of Cary, N.C. - one of around 1,200 companies nationwide currently specializing in electronic health records - that organizes and updates their schedules, patients' medical histories, patient correspondence, examination notes, and lab results. Washington ENT's records are backed up at a separate location, protecting the data. The system also allows doctors to view the information from home, and when their pagers buzz in the middle of the night with a medical emergency, each physician has the patient's entire medical record instantly accessible.

"I would never go back to the old system," one of Washington ENT's head and neck surgeons, Dr. Catherine Picken, said.

Doctors' computers are also connected to Washington ENT's laboratory, and every half hour the computers check automatically for updates and alert the doctors when new test results are in. Mr. Doroshuk said the technology dramatically reduces the time between a patient's initial consultation with a physician and his receiving treatment, allowing each of Washington ENT's four physicians to see between 30 to 35 patients a day.

The practice's technology also improves the quality of doctors' service, Mr. Doroshuk said. When a patient's symptoms are entered into the computer, for example, the practice's software maps out all the possible ailments those symptoms might indicate. When a patient comes in with a runny nose and headache during allergy season, Mr. Doroshuk said, many doctors might automatically identify as an allergy what may in fact be a sinus infection. The software, Mr. Doroshuk said, helps doctors "think outside the box," increasing the likelihood that a patient will get an accurate diagnosis sooner.

Analysts say the use of electronic records significantly reduces redundant and improper treatments, and cuts back on potentially fatal medical errors resulting from incomplete or erroneous information in a patient's medical file. According to the Institute of Medicine, between 44,000 and 98,000 Americans die each year from medical errors.

Another significant motivation for going "paperless," Mr. Doroshuk said, is money. The federal government estimates that nationwide electronic health records would save the health care industry $140 billion a year.

At a forum in Cleveland early last year, President Bush put the estimated savings at around 20% of the health care industry's total expenses (an estimated $2 trillion U.S. healthcare spending in 2005 X 20% = $40 billion in savings a year).

Because of Washington ENT's sophisticated computer system, Mr. Doroshuk said, "there are functions that don't exist in this office" that represent significant costs for traditional medical practices.

"There are some offices that have chart rooms with chart staff, and that's all they do is assemble charts. We don't have anything like that," Mr. Doroshuk said. "When you're talking about 1,000 square feet on K Street that you wouldn't have to rent a year, and $50,000 a year on transcription that you wouldn't have to spend, and you start adding those chunks of money up, you're literally coming up with millions of dollars in savings."

One of the most significant savings, Mr. Doroshuk said, is in staff salaries. According to the Medical Group Management Association, the average support staff to physician ratio for a multispecialty physician practice is almost 5 to 1. At Washington ENT, Mr. Doroshuk said, the ratio is less than 2 to 1.

According to the MGMA, support staff salaries represent the largest operating cost for multispecialty physician practices, at a median level of about $176,000 annually a physician, followed by building and occupancy costs, at about $40,000 a physician. Both expenses, Mr. Doroshuk said, are significantly reduced by going "paperless." According to government estimates, these savings could translate into around $700 shaved off every American family's annual health insurance bill.

Despite the benefits, physicians represent one of the largest obstacles to full implementation of electronic records, analysts said. The up-front costs of purchasing and implementing the technology dissuade many doctors from computerizing their records. According to an HHS-funded MGMA survey published in September, medical practices that implemented electronic records last year spent about $33,000 for each physician on the technology, with maintenance costs of about $1,500 a month for each physician. The initial costs for the computer system at Washington ENT, Mr. Doroshuk said, were around $300,000. Starting up the practice cost about $750,000, he said, compared to the $500,000 price tag he estimated for a paper-based office.

On a national scale, "We're more than $100 billion from here to where we need to end up," Dr. Brailer said. Another likely 2008 presidential contender and a former speaker of the House, Newt Gingrich, has advocated spending $7 billion a year on computerized medical records.

Physician behavior and pay incentives, too, are halting the further spread of health information technology. One observer noted that since most physicians are paid based on the number of procedures they perform, computerized records' reduction of unnecessary procedures could slash doctors' revenue. Doctors could also lose some revenue by spending time learning the new technology instead of seeing patients. Analysts expect that larger health care providers, which have greater access to capital and can guarantee doctors' salaries during transition phases, will lead nationwide private sector conversion to electronic records. One government official cited as an example one of America's largest health care providers, Kaiser Permanente, which will complete the switch to electronic records for its 8 million patients later this year.

In Washington, the biggest dispute over the health care industry's switch to electronic records is whether the government should finance or merely regulate it. If Washington bankrolls the upgrade, further disagreement arises over what form financial assistance to doctors should take.

There is bipartisan agreement that the federal government needs to set standards for the technology. When it comes to funding, however, Democrats typically advocate the use of direct grants and Republicans an incentive based approach, said a spokesman for the Senate Health Committee, Craig Orfield. Among the senators most active on the issue, Senators Frist and Clinton have advocated direct government grants. The two leading members of the Senate's Health Committee, Senator Enzi, a Republican of Wyoming, and Senator Kennedy, a Democrat of Massachusetts, have pushed for loans, according to Senate staff. Senator Grassley, a Republican of Iowa, and Senator Baucus, a Democrat of Montana, joined Messrs. Enzi and Kennedy to press for incentives for computerized medical records as part of Medicare payments.

Dr. Brailer cautioned that ultimately the American public would be paying for the technology, either as taxpayers or consumers. The main question, Dr. Brailer said, was through whose hands the money would be funneled - the government's, doctors', employers', or health insurance plans'. "Therein lie all the political questions," he said.

Congressional staff said two other key political questions must be answered before Congress officially embraces electronic health records. One is vocal concern from "privacy advocates," including the American Civil Liberties Union and the AARP, about the security of the electronic records and the rules governing access to them. While most state laws prohibit the health care industry from sharing patient information for commercial purposes, it is less clear whether the technology companies managing the electronic records would be covered by the same laws.

Federalism, too, is a nettlesome issue, staff said. The privacy and other regulations that govern health records are set state by state, and the creation of a national electronic health records network might require the federal government to override states' own regulations, spurring concerns among some representatives that the computerized records initiative may spur Congress to exceed its authority over the states.

After Senate passage of health information technology legislation in November, these "political questions" now belong to the House of Representatives. Late last year, the approach backed by Messrs. Grassley, Baucus, Enzi, and Kennedy was rejected by the House. Meanwhile, a House version of the Frist-Clinton-Kennedy-Enzi bill - the Wired for Health Care Quality Act, which directs the Department of Health and Human Services to spend $125 million on electronic medical records - rests with the House Energy and Commerce Committee after introduction in December by Rep. Darrell Issa, a Republican of California.

Another House bill pushing electronic medical records is being sponsored by Rep. Nancy Johnson, a Republican of Connecticut, who is chairwoman of the Health Subcommittee of the House Ways and Means Committee, which has oversight of Medicare. Ms. Johnson, one of the House members most active on electronic health records, told the Sun Wednesday that she was optimistic the House will soon finalize the push for electronic records, before recessing for the congressional elections later this year. She cautioned that the House was less inclined to finance the initiative with taxpayer dollars than the Senate, but said implementing health information technology enjoys enthusiastic support from the Speaker of the House, Dennis Hastert, a Republican of Illinois, who she said is "very determined" to pass computerized-records legislation.

"For those of us who understand the need for the health sector to adopt modern technology, we certainly feel an urgency," Ms. Johnson said. "This is a time where we can all have a little window of opportunity, in early 2006.

2005 Brought Healthcare IT into Sharper Focus

Beyond the Headlines >>

Written by Andis Robeznieks / HITS staff writer

Story originally published January 3, 2006

The use of "robust" to describe the adoption of health information technology in 2005 was very robust, and a tipping point seems to have been reached in the use of the term "tipping point," and -- if your focus was on the federal government and industry advocacy groups -- it appeared that widespread adoption of HIT was inevitable.

On the other hand, concerns over cost, implementation downtime, technical support, interoperability and mixed research results kept popping up, offering a cold dose of reality.

Tracking the significant HIT stories of 2005 meant analyzing trends and taking note of individual events.

While federal legislation and initiatives from the Bush administration helped introduce the public to the concept of electronic medical records, the devastation caused by hurricanes in the Southern states helped illustrate how EMRs can make a positive difference.

In the aftermath of Hurricane Katrina, thousands of patients lost their medical histories and often had to rely on memory to get prescription drug regimens started again. However, thanks to its extensive history of using EMRs, patients within the Veterans Affairs Department health system survived the storm with their medical records intact. Word about other healthcare institutions whose use of EMRs kept their patients records accessible helped add to the good press HIT received.

"Hurricane Katrina created concerns about data backup and galvanized the notion that electronic medical records are important," said Girish Kumar, founder and vice president of sales and marketing for eClinicalWorks in Westborough, Mass. "From a vendor's perspective, it was validating what we already knew: that we are on a journey and we're traveling in the right direction."

Edward L. Fisher, the new vice president and chief information officer for Norman (Okla.) Regional Hospital, said Katrina showed the necessity of using EMRs. "I'm in a university town with 20,000 covered lives from all over the place," Fisher said. "It would be nice to know something about them if something happens."

Another major story of the year, Kumar said, was the Bush administration's push for EMR interoperability and certification standards, which he believes will mature and come to fruition in 2006. He added that the efforts show how government and market forces can work together and indicate that there was a demand and a need to move forward in this area.

Dan Michelson, chief marketing officer for the Chicago-based IT vendor Allscripts, noted the "bipartisan star power" behind federal legislation, which included senators Bill Frist (R-Tenn.) and Hillary Clinton (D-N.Y.), Rep. Patrick Kennedy (D-R.I.), and GOP heavyweight and former Speaker of the House Newt Gingrich.

Not all was positive on the government front. The CMS again extended the delay in releasing an EMR system developed by the VA until the end of 2006 because the software is not ready for mass distribution. Release of the system for physician offices -- known as Vista Office Electronic Health Record (VOEHR)-- originally was scheduled for July 2005 before being delayed until August. Instead of a full public release, the software was originally shipped to about 10 trial sites for beta testing under the CMS' control.

Kumar said there were also rumors circulating that the CMS might mandate the use of the VOEHR system and those rumors helped momentarily slow HIT adoption progress. "There was a time of about two to four weeks where deals went into a freezer and some of them never came back," Kumar said. "I hope we don't have anything on those lines next year."

Another major story was how insurers and employers put major weight behind HIT as part of pay-for-performance programs and other quality-improvement initiatives. "It's very clear that the biggest driver for change in healthcare is reimbursement," Michelson said. He said that HIT is factoring into proposed reimbursement changes in two ways:

(1) the use of EMRs to document that clinical measures mandated by pay-for-performance programs were utilized, and

(2) "pay for use" in which physicians are offered financial incentives to use EMRs.

Kumar said that payers are not just pushing for individual HIT applications such as electronic prescribing, but instead are pushing for "full-blown EMRs," and that he thinks this will be an important catalyst to spur adoption.

"Large corporations are like self-insurers and they are pushing EMRs because they think it's going to reduce their price," he said. "Some are actually providing funding because it will help them with workforce productivity and lower healthcare costs for retirees."

Fisher, Kumar and Michelson all agreed that a somewhat unhyped news story of the year was the evolution of the HIT market and changes within physician thinking about using technology.

"We don't have to sell the concept of electronic health records anymore," Michelson said. "We have to sell our product over somebody else's product."

He added that physicians are not looking at IT "in a substitutive way" anymore, meaning they are changing the whole way they practice medicine, instead of just continuing to do what they did on paper in an electronic format.

Kumar said that physicians are no longer just buying individual components and are instead looking to implement an entire suite of applications and adopt fully inter-operative systems.

Fisher agreed. "The day of buying 'best of breed' and trying to stitch them all together is going by the wayside," he said. "It used be 'This is the best prescribing system and it ran on this platform and this is the best lab system and it ran on that platform,'" Fisher explained. "These applications now have to be on the same platform."

What do you think? Write us with your comments at hitsdaily@crain.com.