Why has Information Technology not led to efficiency in the health care sector?

We expect information technology (IT) to make our lives easier by improving the efficiency of creating products and delivering services. New technologies often dramatically improve the process of completing a task; before Microsoft Excel a simple budgetary analysis, for instance, could take days to finish. However, such efficiency has yet to be realized in the health care sector. After waiting more than a decade and spending more than $28 billion dollars, health care-focused IT is an annoying problem rather than a long-awaited solution for the medical providers.

More than half of the total spending in the U.S. health care sector is considered wasteful. From a business perspective, that is an untapped market of more than a billion dollars. Thankfully, we have no shortage of IT talent and entrepreneurial spirit in the US either. So if the market and necessary technology are in place, then why can’t IT have the same revolutionary impact on healthcare that is has had on other sectors?

IT is a means to achieve a more important goal, and the success of any IT product is measured based on how well it has helped to solve a problem. For example no one pays for Excel to enter in a few random numbers. Customers buy it to do a specific kind of analysis with ease and speed. If it was very difficult to work with Excel or it did not have much functionality, then many potential customers would have stuck with their paper spreadsheets or would have purchased better alternative software. To keep its customers and remain in business, Microsoft has to constantly increase the functionalities of Excel and make it more user-friendly in each release. There is no pre-defined set of specific features for IT products. They are born naturally to address an immediate need and as technology advances, they become more refined to address other specific demands. Since the consumers have to pay for such products, they carefully evaluate all the alternatives and purchase the one that best addresses their specific needs. This will create a competitive ecosystem in which only the fittest can survive.

By introducing a poorly designed source of revenue, the government has interrupted the natural way in which the business ecosystem should have functioned in the healthcare sector. HITECH incentives have led medical providers to adopt IT products as a final goal rather than a means to address a specific problem. To qualify for these incentives and avoid future fines, health care providers adopted IT solutions that focus on tedious and currently inoperable data entry procedures. Instead of physicians, the government has defined a set of features to measure the quality of such IT products. As long as these products meet a minimum level of requirements, the government pays for them. There is enough revenue from the HITECH incentives for the IT vendors. They can all survive regardless of the quality of their products. It is not hard to imagine what would have happened if government had defined a set of features for certifying spreadsheet software and had a policy that mandated every student to buy a certified copy of such software to qualify for federal loans. IT vendors would have a secured source of revenue from spreadsheet software; there would be no need to compete and no need to improve.

In his recent paper, Darrell West provides an insightful example of how IT could have improved efficiency in the health care sector. He examines how mobile technologies have improved maternal health care and helped deal with Ebola outbreak in Nigeria, Liberia, and Sierra Leone. While many parts of these countries do not even have access to the Internet, innovative IT solutions that were focused on fixing a problem could overcome extremely difficult challenges and radically improve patient health outcomes. We should learn from such similar success stories.

The government should let the new value-based payment method drive health care providers to become more efficient. The health care providers would be capable of understanding their own needs and choosing the best IT solution that would help them to address such needs. Without HITECH incentives and regulations, the IT products would not be limited to janky EMRs, and there would be sufficient competition to drive IT vendors to come up with improved and innovative products. Those who cannot innovate will go out of business, and those who survive will create tangible improvements in the health care sector.