[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
                   HEALTH CARE INFORMATION TECHNOLOGY

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 17, 2004

                               __________

                           Serial No. 108-55

                               __________

         Printed for the use of the Committee on Ways and Means





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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana               JIM MCDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         SUBCOMMITTEE ON HEALTH

                NANCY L. JOHNSON, Connecticut, Chairman

JIM MCCRERY, Louisiana               FORTNEY PETE STARK, California
PHILIP M. CRANE, Illinois            GERALD D. KLECZKA, Wisconsin
SAM JOHNSON, Texas                   JOHN LEWIS, Georgia
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               LLOYD DOGGETT, Texas
PHIL ENGLISH, Pennsylvania
JENNIFER DUNN, Washington

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.



                            C O N T E N T S

                               __________

                                                                   Page

Advisory of June 10, 2004, announcing the hearing................     2

                               WITNESSES

U.S. Department of Health and Human Services, Office of the 
  National Coordinator for Health Information Technology, David 
  Brailer National Coordinator for Health Information Technology.     6
U.S. Department of Veterans Affairs, Veterans Health 
  Administration, Dr. Robert M. Kolodner, M.D., Acting Chief 
  Information Officer............................................    12

                                 ______

American Medical Informatics Association, Charles Safran.........    27
eHealth Initiative, Janet Marchibroda............................    31
Indiana University School of Medicine, Regenstreif Institute, J. 
  Marc Overhage..................................................    41
Permanente Federation, Andrew M. Wiesenthal......................    50

                       SUBMISSIONS FOR THE RECORD

American Academy of Family Physicians, statement.................    63
American Clinical Laboratory Association, statement..............    66
American College of Physicians, statement........................    66
American Health Quality Association, David G. Schulke, statement.    72
Broadlane, Inc., San Francisco, CA, F. Lee Marston, statement....    74
Guidant Corp., statement.........................................    76
Healthcare Information and Management Systems Society Advocacy 
  and Public Policy Steering Committee, Chicago, IL, Mary 
  Griskewicz, statement..........................................    78
Kryptiq Corp., Beaverton, OR, Luis Machuca, letter and attachment    79
Kun, Luis G., Washington, DC, statement and attachment...........    81
MediStore, Houston, TX, Glenn R. Breed, letter...................    84
MedMined, Burlington, AL, statement..............................    87
National Association of Chain Drug Stores, Alexandria, VA, 
  statement......................................................    96
National Electronic Attachment, Inc., Atlanta, GA, Thomas W. 
  Hughes, statement..............................................    98
National Initiative for Children's Healthcare Quality, Boston, 
  MA, Charles Homer, statement...................................    99
National Quality Forum, Kenneth W. Kizer, statement..............   101
Patient's Healthcare Card, statement.............................   103
Weed, Lawrence L., Burlington, VT, statement.....................   107
Wu, Hon. David, a Representative in Congress from the State of 
  Oregon, statement..............................................   110

 
                   HEALTH CARE INFORMATION TECHNOLOGY

                              ----------                              


                        THURSDAY, JUNE 17, 2004

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2:45 p.m., in 
room 1100, Longworth House Office Building, Hon. Nancy L. 
Johnson (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

 FROM 
THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

       SUBCOMMITTEE ON HEALTHFOR IMMEDIATE RELEASE June 10, 2004

                                                CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
June 10, 2004

    Johnson Announces Hearing on Health Care Information Technology

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Health of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on health care information technology 
(IT). The hearing will take place on Thursday, June 17, 2004, in the 
main Committee hearing room, 1100 Longworth House Office Building, 
beginning at 2:00 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include representatives from the public and private 
sectors to discuss the use of IT in the health care sector to reduce 
costs and improve patient outcomes. However, any individual or 
organization not scheduled for an oral appearance may submit a written 
statement for consideration by the Committee and for inclusion in the 
printed record of the hearing.
      

BACKGROUND:

      
    Greater use of IT in the health care field has the potential to 
reduce medical errors and improve patient care. Many innovative IT 
projects are underway in both the public and private sectors. Yet 
widespread adoption of IT in the health care sector has been anemic.
      
    The Medicare Modernization Act (P.L. 108-173) made some important 
advances in the use of IT for health through provisions on e-
prescribing and the establishment of the Commission on Systemic 
Interoperability to implement health IT standards. On April 27, 2004, 
President Bush issued an Executive Order establishing the Office of the 
National Health Information Technology Coordinator and announced the 
goal of providing most Americans with an Electronic Health Record (EHR) 
within the next 10 years. The Health IT Coordinator is charged with 
developing a nationwide interoperable health information technology 
infrastructure that improves health care quality, reduces medical 
errors, and advances the delivery of appropriate, cost-effective, 
evidence-based medical care.
      
    In announcing the hearing, Chairman Johnson stated, ``Greater use 
of information technology has the proven ability to dramatically 
improve the safety and quality of our health care system while reducing 
costs. I am encouraged HHS is moving forward quickly on adopting the IT 
provisions included in MMA. I applaud the creation of the Office of the 
National Coordinator for Health IT as a critical step in furthering the 
public-private partnership that is required to bring our health care 
system into the 21st Century.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on the projects currently underway in both 
the public and private sectors and will explore what further 
initiatives are needed to increase the use of information technology 
throughout the health care sector.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
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technical problems, please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
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    1. All submissions and supplementary materials must be provided in 
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Committee relies on electronic submissions for printing the official 
hearing record.
      
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supplemental sheet must accompany each submission listing the name, 
company, address, telephone and fax numbers of each witness.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
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materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman JOHNSON. Good afternoon. My apologies for the 
hearing having to start belatedly, but I believed it was better 
to allow us all to focus continuously on what I consider to be 
a very important issue. I am pleased to chair this hearing on 
the use of information technology (IT) in the health care 
sector. Greater use of IT has the proven ability to 
dramatically improve the safety and quality of health care for 
Americans while at the same time lowering costs, reductions in 
clinical errors, and elimination of redundant procedures.
    Yet despite these clear benefits, widespread adoption of IT 
in the health field has been disappointingly slow. Our goal 
today is to understand the current state of the health IT 
industry in both the public and private sectors and to promote 
discussion as to how we can encourage greater use of technology 
throughout this industry. I have long supported efforts to 
increase the use of IT in health, which is why I introduced 
H.R. 2915, the National Health Information Infrastructure Act 
of 2003, last year. In addition, the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (MMA) (P.L. 
108-173) made some important advances in the use of IT for 
health through provisions on electronic-prescribing (e-
prescribing) and the establishment of the Commission on 
Systemic Interoperability to implement health IT standards.
    I am encouraged that U.S. Department of Health and Human 
Services (HHS), under the leadership of Secretary Tommy 
Thompson and Administrator McClellan, is moving forward quickly 
to implement the IT provisions included in the MMA. Another 
important step was taken on April 27 of this year when 
President Bush, by Executive order, established the Office of 
the National Coordinator for Health Information Technology 
(ONCHIT) and announced the goal of providing most Americans 
with an electronic health record (EHR) within the next 10 
years. I applaud the President's leadership and foresight in 
issuing an Executive order that will further the public-private 
partnership required to bring our health care system into the 
21st century.
    Today, I welcome leaders from both the public and private 
sectors to further our efforts to promote greater use of health 
IT. First, I am happy to welcome Dr. David Brailer who has been 
appointed as the National Health Information Technology 
Coordinator under the President's Executive order. In his 
capacity, Dr. Brailer is charged with developing a nationwide 
health IT infrastructure that improves health care quality, 
reduces medical errors, and advances the delivery of 
appropriate cost-effective, evidence-based medical care.
    I look forward to hearing from Dr. Brailer about his vision 
for making a national health infrastructure a reality. We will 
then hear from Dr. Robert Kolodner, Acting Chief Information 
Officer (CIO) for the Veterans Health Administration (VHA), 
about the work that the U.S. Department of Veterans Affairs 
(VA) has done over the years in implementing IT in its health 
care system. The VA has long been recognized as a leader in the 
use of IT. I understand that Dr. Kolodner will provide us with 
a demonstration of the VA system.
    Our second panel of witnesses consists of leaders in the 
private sector who are working to increase adoption of health 
IT. First, we will hear from Dr. Charles Safran, President of 
the American Medical Informatics Association. He is an 
Associate Professor of Clinical Medicine at Harvard Medical 
School and chief executive officer (CEO) of Clinician Support 
Technology, a health IT application provider. These very roles 
provide Dr. Safran with a unique view of the opportunities and 
challenges of health IT implementation.
    We will also hear from Janet Marchibroda, CEO of the 
eHealth Initiative, an organization which brings together key 
stakeholders with a common goal of improving health care 
through implementation of IT systems. We will then turn to two 
witnesses who can provide us with specific examples of how they 
are using IT to improve health care delivery and outcomes, Dr. 
Mark Overhage, Associate Professor of Medicine at the Indiana 
University School of Medicine will discuss the Indiana Network 
for Patient Care which has electronically linked all 5 major 
Indianapolis hospital systems operating a total of 11 
geographically separated hospitals, thus creating a community-
wide electronic medical record system.
    Finally, Dr. Andrew Wiesenthal, Associate Executive 
Director of Kaiser Permanente Clinical Information Systems will 
discuss the $3 billion health IT initiative that Kaiser is 
currently implementing to bring electronic medical records to 
its members. I believe we have a very distinguished set of 
witnesses before us today. I look forward to hearing all of 
their testimony. These are exciting times for those of us 
interested in health IT. I look forward to working with all of 
you as we move forward to improve the safety and quality of our 
health care system and as we seek to press ever forward the day 
in which Americans across the age spectrum can benefit from e-
prescribed and electronic-health records throughout the health 
care delivery system in our country. I thank you all for being 
here. Mr. Stark.
    Mr. STARK. Madam Chair, I want to thank you for bringing us 
here today to talk about the use of IT in our medical delivery 
system. The appropriate and wide-spread use of IT, I think, 
offers just enormous potential, whether it is in patient care, 
reducing cost, safety, you name it. The congressional debate, 
it seems to me, has moved off questioning the role of IT and 
patient care and medical care delivery. I think that is perhaps 
accepted broadly. So, the current debate has shifted to the 
fact that we have a bunch of operating or operable systems, and 
how can we make them interoperable and therefore, I suspect, 
much more valuable to everyone?
    I suppose we get right to the crux of why we are here, and 
it is, is there anything that government can do to facilitate a 
universal seamless system? Or should we just stay out of it? My 
experience, I hate to date myself, but I was there at the 
beginning of Visa and MasterCard and Bank of America went their 
own way for a while. Those cards didn't talk to each other for 
a lot of the same reasons that I suspect that medical systems 
don't talk to each other. They find out secrets about other's 
customers.
    Well, lo and behold, or for whatever reason, maybe the Fed 
saying, ``We won't clear these items unless you all agree to a 
uniform protocol and so forth,'' it is a system now whereby I 
guess I could go to Germany or Baghdad and stick my Visa card 
in an automated teller machine, and it would quickly decide 
that I am worthless and spit the cards back at me and probably 
call the police and/or certainly they would call my wife and 
say, ``What is he doing here?``
    I see no reason why we can't, therefore, do that here. I 
guess it is this we have before us. We have all the players, 
every instrument in the orchestra is out there and they are all 
first chair. The question is, does the government wave our arms 
and make it sound like Shazala or Spike Jones? This is what I 
hope the witnesses can tell us through the day. Thank you very 
much. I look forward to hearing their testimony.
    Chairman JOHNSON. Thank you, Mr. Stark. Dr. Brailer.

   STATEMENT OF DAVID BRAILER, M.D., PH.D., NATIONAL HEALTH 
 INFORMATION TECHNOLOGY COORDINATOR, U.S. DEPARTMENT OF HEALTH 
                       AND HUMAN SERVICES

    Dr. BRAILER. Chairman Johnson, Representative Stark, thank 
you. Other Members of the Committee, thank you for having me 
here today on my first formal testimony on Capitol Hill to 
discuss the Administration's efforts to increase the use of IT 
and to address the issues that you have raised. As you know, 
this is a high priority for the President and for Secretary 
Thompson. The President has called for an EHR infrastructure to 
be available to most Americans in the next 10 years and created 
my position as one way to help achieve that goal. Your 
leadership and that of the Subcommittee on this issue, through 
e-prescribing and other health IT-related provisions in the MMA 
of 2003, are also greatly important and appreciated.
    This spring, as you know, the President reiterated his 
strong commitment to this issue by creating the ONCHIT. This 
was done by Executive order. I was appointed on May. In this 
roll, I am working to bring together the resources and talent 
in both the private and public sectors to drive adoption of IT. 
There is unprecedented enthusiasm and commitment for changing 
the day-to-day world for health care, and my goal is to focus 
this into a well-developed plan in a set of coordinated actions 
to accelerate the widespread adoption of EHRs.
    The Administration has historically made significant 
progress in this area. Last year, we licensed Systematized 
Nomenclature of Medicine (SNOMED), a comprehensive set of 
clinical terminologies, to make it available without charge for 
care anywhere in the United States. We also adopted 20 sets of 
clinical terminology standards across Federal agencies through 
the Consolidated Health Informatics Initiative. These standards 
will make it easier for information to be shared across 
agencies and could serve as a model for the private sector.
    The Executive order of April 27 not only created the new 
office, but it also required the departments and agencies of 
the executive branch of the Federal government to work together 
to achieve our common goal of using health IT to improve 
safety, quality, and efficiency of health care in every area of 
the United States.
    Specifically, we will work with every other executive 
branch department and agency, including the VA, who are here 
today, the U.S. Department of Defense (DOD), and the Office of 
Personnel Management (OPM) as well as the private sector to 
develop and implement the strategic plan to accelerate IT 
adoption in both the public and private sectors.
    This plan will be guided in key guiding principles that 
include personalization of care, market-based solutions, shared 
public and private investment, and individually controlled 
information as a common good for public health and research. 
Given the importance of this topic, we must work with both the 
internal and external stakeholders so that we can move forward 
quickly.
    The President envisions a nationwide health IT 
infrastructure that ensures that appropriate information will 
be available at the time and place of care, resulting in 
improved quality, fewer errors, and perhaps even lower health 
care costs. This new infrastructure will help connect 
physicians, hospitals, and consumers. This would give consumers 
and clinicians secure and controlled access to important 
information that is needed to make informed decisions about 
health care and their health while ensuring individual 
information--individually identifiable information--is both 
confidential and protected. If designed and implemented 
correctly, health information-exchange networks could promote a 
more efficient delivery system.
    It will also help to improve coordination of care among 
hospitals, labs, physician offices, and other health care 
providers. For example, the national availability of patient 
health information could allow a Medicare beneficiary with 
multiple chronic diseases to receive the same high-quality care 
at home or while traveling without needing to carry their 
information. Many patients take multiple drugs or have 
histories of drug reactions, but decentralized and paper-based 
records often don't reveal this fully when needed. Regardless 
of where a beneficiary is receiving care, health information-
exchange networks would allow for their information, medical 
history, potentially serious drug interactions and other things 
to be available in real time along with out-of-pocket costs and 
therapeutic alternatives all before the physician transmits a 
prescription to a pharmacy.
    The national availability of de-identified patient health 
information will also enable research on health outcomes that 
can more rapidly identify the most effective diagnostic and 
treatment options for clinicians and patients and will 
accelerate the translation of new research findings into 
clinical practice. I will highlight, today, HHS initiatives 
that are critical in meeting our goal of making EHRs available 
for all Americans. These initiatives relate to, first, 
automating clinical practice; two, interconnecting care; and 
three, improving population health.
    Our efforts to automate practice have been focused on 
identifying and implementing tools to accelerate the adoption 
and use of EHRs and e-prescribing. At President Bush's 
direction in the Executive order, HHS is preparing a report on 
options to create incentives in Medicare for other HHS programs 
that encourage the adoption of interoperable EHRs and e-
prescribe. Also the OPM is identifying similar options through 
the Federal Employees Health Benefit Program. The VA and DOD 
are also identifying ways to transfer technology into the 
private sector, particularly for rural and underserved care 
delivery areas.
    The HHS is also working to implement the provisions of the 
recently enacted MMA, including those to encourage e-
prescribing by physicians participating in Medicare through the 
use of standards and incentives. This year, the Agency For 
Health Care Research and Quality (AHRQ) will spend $50 million 
on health IT research and demonstration projects that are aimed 
at improving safety, quality, and efficiency. The AHRQ is also 
taking significant steps to facilitate interconnecting care 
through the support of five State-level health information-
exchange networks which will be announced in a few months.
    Beyond improving health care delivery, improved health 
information-exchange will allow new bio-surveillance 
initiatives to tap ITs to improve the Nation's capabilities of 
detecting and quantifying public health outbreaks in 
bioterrorism. BioSense is one example of a new IT-enabled 
program which will allow the Centers for Disease Control and 
Prevention to collect and analyze existing health care data 
quickly to identify potential outbreaks or health hazards and 
to respond accordingly. The Secretary and the President are 
committed to improving the safety and efficiency of health care 
by increasing the use of IT. The Administration has made 
significant progress in this area, and we will continue to work 
diligently to meet the President's goal of EHRs within 10 
years.
    On July 21st of this year, we will hold the Secretary's 
second Health IT Summit where we will report on the progress of 
the Health IT Strategic Plan ordered by the President and will 
obtain input from those in the private sector who will actually 
develop and use these systems. Leaders from the government and 
from the health care and IT industries will convene and work 
together to identify specific actions that will lead to rapid 
progress. We have an unprecedented opportunity to improve both 
the delivery of health care and population health through the 
effective use of IT.
    Members of the Committee, I am committed to helping you and 
others make and maintain our health care industry as a national 
treasure. I thank you again for the opportunity to address you, 
and I would be happy to answer any questions you have. Thank 
you.
    [The prepared statement of Dr. Brailer follows:]
 Statement of David Brailer, M.D., Ph.D., National Health Information 
  Technology Coordinator, U.S. Department of Health and Human Services
    Chairwoman Johnson, Representative Stark, distinguished members of 
the Committee: I thank you for inviting me here today to discuss the 
Administration's efforts to increase the use of information technology 
throughout the health care industry. As you know this is a highpriority 
for the President and Secretary Thompson. The priority has been further 
accelerated by the President's call to make electronic health records 
(EHR) available to most Americans in the next 10 years and by the 
creation of my position to achieve this goal. Your thoughtful 
leadership and that of your subcommittee toward achieving this goal has 
been widely recognized and demonstrated through the e-prescribing and 
other health information technology (HIT) related provisions in 
Medicare Prescription Drug, Improvement and Modernization Act of 2003.
    As a result of the President and the Secretary's strong commitment 
to this issue, the Office of the National Coordinator for Health 
Information Technology has been established to meet the goals of the 
Executive Order announced earlier this spring. In my new role as 
National Coordinator for Health Information Technology, I will be 
working with the Administration, Congress and the private sector to 
bring together the resources and talent to drive the adoption of HIT in 
the health care system. There is unprecedented enthusiasm and 
commitment for changing the day-to-day world of health care with HIT 
from leadership across sectors, and my goal in the next year is to 
focus this into a well-developed plan and a set of coordinated actions 
to accelerate the widespread adoption of electronic health records and 
e-prescribing.
    The Administration has already made significant progress in this 
area. Specifically,

      Last year, we licensed SNOMED (Systematized Nomenclature 
of Medicine, a comprehensive set of clinical terminologies) to make it 
available without charge to everyone in the United States.
      As part of the Federal Health Architecture, we adopted 
clinical terminology standards across federal agencies through the 
Consolidated Health Informatics (CHI) initiative. The Department of 
Health and Human Services (HHS), Department of Defense (DoD), 
Department of Veterans Affairs (VA), and other Executive Branch 
agencies have endorsed 20 sets of standards, such as standards for 
medications, labs, and immunizations. These standards will make it 
easier for information to be shared across agencies and could serve as 
a model for the private sector.
      The Secretary created the Council on the Application of 
Health Information Technology (CAHIT), which has been the coordinating 
and internal advisory body for HHS. CAHIT has served as the primary 
forum for identifying and evaluating activities and investments that 
promote and/or complement evolving private sector initiatives and 
strategies.

    The Executive Order of April 27th not only created my position 
within the new Office, but it also required the Departments and 
agencies of the Executive Branch of the federal government to work 
together to develop and align policies and programs that will achieve 
our common goal of using HIT to improve the safety, quality and 
efficiency of health care in every area of this country. I have also 
been given the responsibility to direct the HHS HIT programs, and to 
coordinate these with those of other Executive Branch Departments and 
agencies. Specifically, HHS will coordinate with other Executive Branch 
Departments and agencies to develop and implement a strategic plan for 
and to use resources to accelerate HIT adoption in the private sector. 
Both the DoD and VA have surpassed the private sector in successfully 
incorporating HIT into the delivery of health care, and will play a 
central role in adoption efforts. The Office of Personnel Management 
(OPM), as the purchaser of healthcare for federal employees, has a 
unique role and the ability to encourage the use of electronic health 
records through the Federal Employee Health Benefits Program. It can 
join other purchasers who are developing programs that support adoption 
of HIT by physicians and hospitals, and its use in improving and 
rewarding quality. In addition to collaboration with federal agencies 
and Departments, I will also coordinate outreach and consultation by 
the federal government with interested public and private 
organizations, groups, and companies. We will coordinate with the 
National Committee on Vital and Health Statistics and other advisory 
committees to do this, and will enhance relationships with public-
private collaboratives that are advancing HIT adoption.
    The President's vision is to develop a nationwide HIT 
infrastructure that ensures appropriate information is available at the 
time and place of care, resulting in improved health care quality, 
fewer medical errors and may even reduce health care costs. This new 
infrastructure will help to connect physicians, hospitals and consumers 
in every location of our country. This would give consumers and 
clinicians secure and controlled access to all the important 
information they need to make informed decisions about their health and 
health care, while ensuring individually identifiable information is 
confidential and protected. Designed and implemented correctly, health 
information exchange organizations could promote a more efficient 
health care delivery system. They will also help to improve 
coordination of care through the secure exchange of information among 
hospitals, labs, physician offices, and other health care providers.
    Health information exchange networks could be privately operated 
and governed by many State, regional or community level health 
information exchange authorities. These authorities would have 
responsibility for protecting information and ensuring that data is 
used to advance the public interest, and used in compliance with 
applicable State and federal laws. Regional health information exchange 
networks could keep indexes of where patients were treated and could 
intercommunicate, but not create a national database. A set of 
standards and secure networks would allow information--such as lab 
results, x-rays and medical history as well as clinical guidelines, 
drug labeling and current research findings--to move to where needed, 
immediately and securely. Information would only be accessible to 
authorized users and aggregated at the individual patient level for the 
time that it is needed, without being stored in a database. The purpose 
of this information exchange would be to personalize care in such a way 
that each patient could be diagnosed and treated as an individual 
rather than a disease type. For example, the national availability of 
patient health information could allow a Medicare beneficiary with 
multiple chronic conditions to receive the same high quality care at 
home or while traveling, without needing to carry their information or 
fear that new findings or treatments may not be known to all possible 
health care providers. Many patients take multiple drugs or have 
histories of drug reactions, but decentralized paper records often do 
not reveal this fully. Regardless of where a beneficiary is receiving 
care, health information exchange networks would allow for information 
about medication history and potentially serious drug interactions to 
be available in real-time, along with out of pocket costs and 
therapeutic alternatives, before the physician transmits a prescription 
to a pharmacy.
    The national availability of de-identified patient health 
information will also enable research on health outcomes that could 
more rapidly identify the most effective diagnostic and treatment 
options for clinicians and patients and will accelerate the translation 
of new research into clinical practice. Across HHS, there are several 
inter-related HIT programs that are aimed at improving the delivery of 
health care and enhancing public health surveillance. I will highlight 
the key initiatives that are critical to meeting our goal of making 
electronic health records available for all Americans. These 
initiatives fall into three categories: 1) automating clinical 
practice, 2) interconnecting care, and 3) improving population health.
Clinical Practice
    Our efforts to automate practice have been focused on identifying 
and implementing tools to accelerate the adoption and use of electronic 
health records and e-prescribing. At President Bush's direction, in the 
Executive Order, HHS is preparing a report on options to create 
incentives in Medicare or other HHS programs to encourage the adoption 
of interoperable electronic health records and e-prescribing, and OPM 
will report on similar options for encouraging the adoption of such 
technology through the Federal Employee Health Benefit Program. As you 
know, HHS isalso implementing the provisions in the recently enacted 
Medicare Modernization Act to encourage electronic prescribing by 
physicians participating in Medicare through the use of standards and 
incentives. The National Committee on Vital and Health Statistics has 
already conducted two hearings and is expected to provide 
recommendations on standards to the Secretary before September 2005, 
the date specified in the new law. The Food and Drug Administration's 
recently promulgated requirement for bar coding will also enable e-
prescribing in hospitals and will reduce the incidence of some forms of 
medication delivery errors. Additional provisions of the Medicare 
Modernization Act support demonstrations providing incentives for 
physician practices to improve the quality and safety of care for 
Medicare beneficiaries through effective implementation of selected HIT 
systems, in up to four States.
    In addition, HHS' Indian Health Service (IHS), with the help of 
other HHS agencies, is developing an enhanced EHR system, a version of 
the VA's VistA product, which can be used in IHS and tribal health care 
facilities. The enhanced system will improve care for patients by 
allowing appropriate information to be available whenever and wherever 
they seek care within the IHS system.
    This year, the Agency for Healthcare Research and Quality (AHRQ) 
will spend $50 million on health information technology research and 
demonstration projects aimed at improving the safety, quality, 
efficiency and effectiveness of care. Using a portion of these 
resources, AHRQ will establish a Health Information Technology Resource 
Center, a much-needed resource that will provide technical assistance, 
expert health information technology support, educational services and 
other services to HHS grantees to support the implementation of HIT 
into clinical practice. President Bush's fiscal year 2005 budget 
request includes an additional $50 million to expand health information 
technology demonstration projects, particularly targeted to health data 
exchange by providers. This request would double federal investments in 
this area.
    We are also examining how to address regulatory barriers to HIT 
adoption. HHS recently created a new regulatory exception to the 
physician self-referral (``Stark'') prohibition, Section 1877 of the 
Social Security Act, which will allow provider organizations to furnish 
health information technology items or services to physicians if 
certain criteria are satisfied. This new exception will facilitate 
adoption of HIT and participation in local health information exchange 
networks by assuring hospitals and doctors that they can work together 
to finance the acquisition of community-wide health information systems
Interconnecting Care
    Beyond fostering the adoption of electronic health records, it is 
critical for HHS to support the appropriate exchange of health 
information across settings of care as needed. Fundamental to 
information sharing in nearly every form is the use of standards to 
allow caregivers to easily share and use patient information. At HHS' 
request, the international standards-setting organization known as 
Health Level 7 (HL-7) has established a draft standard defining the set 
of functions of an electronic medical record. HHS will continue to work 
with HL-7 and others to define standards for transmitting complete 
electronic health records.
    HHS has already adopted strong national privacy and security 
standards for health plans, health care providers and others covered by 
the Health Insurance Portability and Accountability Act of 1996 
(HIPAA). These standards, which are carefully balanced to ensure 
individuals' access to quality care, will guide the development of a 
national health information infrastructure and form the basis of the 
safeguards to protect the privacy and confidentiality of personal 
health information. As both the President and Secretary Thompson have 
made clear, maintaining privacy and security protections for 
individually identifiable health information is a primary concern as 
health information exchange organizations are developed across the 
country.
    In addition to the important work and progress we have made in the 
development and adoption of clinical and technical standards, we have 
also taken significant steps recently to facilitate interconnecting 
care through the support of health information exchange networks. Over 
the next few months, AHRQ will fund five State-level HIT projects. This 
project will build on nascent health information exchange networks and 
current State-level planning activities by providing crucial funding, 
technical assistance and coordination. In fiscal year 2005, HHS and 
AHRQ will continue to complement and expand these initiatives with up 
to $50 million to support the development of health information 
exchange networks.
Improving Population Health
    HHS has new HIT programs underway to advance the use of electronic 
medical records nationally. This effort should also benefit population 
health activities and improve preparedness. President Bush's fiscal 
year 2005 budget proposes $130 million at CDC for a new biosurveillance 
initiative to tap information technology to improve the nation's 
capabilities to detect and quantify public health outbreaks and 
bioterrorism, as part of a coordinated multi-departmental effort. Key 
to this effort is BioSense, which will allow CDC to collect and analyze 
existing health-care data quickly to identify potential outbreaks or 
health hazards and respond accordingly. Information then could be 
shared quickly with other federal agencies and State and local health 
officials to promote more effective coordination. CDC also supports the 
National Electronic Disease Surveillance System, which promotes the use 
of standards to advance development of efficient, integrated and 
interoperable surveillance systems at federal, State, and local levels.
    In addition to these activities, HHS is taking a leadership role in 
promoting and supporting the widespread adoption of HIT through: (a) 
providing a national vision; (b) leading by example; (c) developing a 
framework for strategic action; and (d) planning initiatives to promote 
competition and innovation. The strategic plan that HHS will develop in 
collaboration with DoD, VA, and OPM, to accelerate HIT adoption in the 
private sector, will be grounded in key guiding principles including: 
1) personalization of care, 2) market-based solutions, 3) shared public 
and private investment, and 4) individually controlled information as a 
common good for public health and research.
    We will coordinate with the private sector to develop market 
institutions that will enable the widespread use of EHRs and 
sustainable health information exchange networks to improve delivery of 
care and health outcomes. For example, we are exploring how to support 
physicians and other purchasers of HIT so that they can choose 
technology that meets their needs and assess costs and benefits. Also, 
we are looking at how the private sector can measure and report the 
conformance of specific products to a defined set of benchmarks. These 
and other market institutions will make our national investment in HIT 
effective and sustainable and will ensure ongoing investment in product 
research and development.
    We are aware that every day, Americans are dying of medical errors 
and are not always getting the best treatments. We need results that 
will change care delivery and that will last. The Secretary and the 
President are firmly committed to improving the safety and efficacy of 
health care by increasing the use of information technology throughout 
the health care industry. The Administration has already made 
significant progress in this area, and we will continue to work 
diligently to meet the President's goal for most Americans to have 
electronic health records within 10 years.
    On July 21, 2004, we will hold the Secretary's Second HIT Summit, 
where we will report on the progress of the HIT Strategic Plan ordered 
by the President and obtain input from those in the private sector who 
will actually develop and use the HIT systems. Leaders from the 
government and the health care and information technology industries 
will convene and work together to identify specific actions that will 
lead to rapid progress. Overwhelming support from leaders in the public 
and the private sector presents an unprecedented opportunity to improve 
both the delivery of health care and population health through 
effective use of HIT.
    Members of the Committee, I am firmly committed to contributing 
what I can to helping you and others make our health care industry a 
national treasure. I thank you again for the opportunity to address you 
on this important health care matter. I look forward to your continued 
support and leadership that will further enable the Executive Branch 
and private sector leadership to transform our paper based health care 
system into an electronic, quality-based system that we all can count 
on.

                                 
    Chairman JOHNSON. Thank you very much, Dr. Brailer. Dr. 
Kolodner.

  STATEMENT OF ROBERT M. KOLODNER, M.D., ACTING CHIEF HEALTH 
 INFORMATICS OFFICER AND DEPUTY CHIEF INFORMATION OFFICER FOR 
          HEALTH, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Dr. KOLODNER. Thank you very much, Madam Chair and Members 
of the Subcommittee. Good afternoon. I am pleased to be here to 
share VA's experience with the development, implementation, and 
clinical acceptance of our EHR, VistA. The VHA encompasses 
about 1,300 sites of care, including 158 hospitals and over 850 
community-based outpatient clinics as well as long-term care 
facilities. The VA treats almost 5 million veterans each year 
among our 7.5 million veteran enrollees. Our veterans tend to 
be older, sicker, and poorer than age-matched individuals.
    VistA supports all of this. The VA is a leader in the world 
of EHRs. The very prestigious Institute of Medicine recognized 
that leadership by stating that VHA's integrated health 
information system, including its framework for using 
performance measures to improve quality, is considered one of 
the best in the Nation.
    The VA has implemented health IT extensively to improve the 
quality and safety of its medical care while protecting the 
privacy of our veterans. VistA began as the decentralized 
hospital computer program and became today's VistA in the mid-
nineties. Our next generation VistA will be HealtheVet-VistA. 
Our publicly available version of VistA is HealthePeople-VistA.
    The VA's VistA is a comprehensive EHRs system installed 
nationwide and supporting patient-centered care. Let me 
describe a few key components. First, the Computerized Patient 
Records System (CPRS) is recognized as one of the most 
sophisticated clinical applications in the world, providing 
immediate access to shared information and eliminating 
duplicate orders. The CPRS has been implemented in all VA 
medical centers, nursing homes, and clinics, giving providers 
access to patient information across multiple sites and 
clinical disciplines.
    The CPRS virtually eliminates errors caused by ineligible 
handwriting and misinterpretation of dosages and strengths or 
medication needs because 93 percent of all VA medication orders 
are entered directly by the ordering provider in all care 
settings. Moreover, physicians are immediately alerted to 
potentially dangerous drug combinations or to a patient's 
allergy to a drug before they can key the order because of 
built-in automated drug checks.
    Second, the Bar Code Medication Administration system 
ensures that each patient receive the correct medication in the 
correct dose at the correct time. Third, CPRS is further 
enhanced by VistA imaging, which is also in use at all VA 
medical centers and provides the means to capture and display a 
wide variety of images to the physician. Fourth, VA has 
developed My HealtheVet, a secure web-based personal health 
records system designed to provide veterans key parts of their 
medical record and access to medical information.
    What benefit has the EHR helped bring? Decision support 
tools have facilitated the treatment of chronic disease and 
delivery of preventative care. Comparing VA patient care 
quality data from 2003 with Medicare data from 2003 and with 
the best reported performance of any other health care system 
in the United States, VA care sets the benchmark for every 1 of 
18 clinical performance indicators.
    VistA has helped to make this happen and provide the 
confirming data. At VA, we know that the support and input of 
clinicians is essential to the successful deployment of EHRs 
systems. This involvement increases user acceptance and enables 
us to meet the needs of the providers, teams, clinics, wards, 
and medical facilities.
    Over the past 20 years, VA has developed an effective, 
repeatable process for successful use of clinical applications. 
The VA is now working with the Centers for Medicare and 
Medicaid Services (CMS) to stimulate the broader adoption and 
effective use of EHRs in the United States. We both strongly 
encourage the use of high-quality private vendor EHRs.
    Further, CMS and VHA are collaborating on making available 
a VistA-Lite version of VA's VistA system. VistA, that is owned 
by the American taxpayer and has been freely available via the 
Freedom of Information Act (P.L. 104-231)--the Indian Health 
Service is using it. For anyone who wants to use it, VA will 
continue to make available its public version, HealthePeople 
VistA.
    Secretary Principi has clearly stated that will continue to 
be VA's position. This position is strongly supported by 
congressional Members on both sides of the aisle and by the 
President and Secretary Thompson. In VA, the EHR is essential 
to effectively caring for our veterans. Today, we are working 
hard on improving data quality and standardization. In 2001, to 
ensure our future, we began building our next generation 
system, HealtheVet-VistA.
    [The prepared statement of Dr. Kolodner follows:]
Statement of Robert M. Kolodner, M.D., Acting Chief Health Informatics 
     Officer and Deputy Chief Information Officer for Health, U.S. 
                     Department of Veterans Affairs
Madam Chairman and Members of the Subcommittee:

    I am pleased to be here today to discuss the importance of 
electronic health records and the role of the Department of Veterans 
Affairs (VA) in the development, use, and sharing of this valuable 
technology.
    Recently, President Bush outlined an ambitious plan to ensure that 
most Americans have electronic health records within 10 years. The 
President noted a range of benefits possible with the expanded use of 
information technology, including improved health care quality; reduced 
frequency of medical errors; advancements in the delivery of 
appropriate, evidence-based medical care; greater coordination of care 
among different providers; and increased privacy and security 
protections for personal health information.
    In addition to these benefits, the transition from a paper-based 
medical record to an electronic health record (EHR) brings with it 
cost-saving efficiencies in how information is managed. In a paper-
based environment, a lot of time is spent simply handling paper. Entire 
jobs are devoted to filing, retrieving, copying, distributing, and 
tracking paper records and radiology films. The implementation of an 
EHR does not eliminate these activities altogether, but it does 
drastically reduce clinicians' dependence on hard-copy information. 
Clinicians are able to access the information they need without 
requesting it from the file room or searching through stacks of files 
in their offices. Medical records and radiology films can be accessed 
on-line, so that there is no need to repeat studies when test results 
or films cannot be located. With an EHR, most VA sites have been able 
to decrease the space devoted to file rooms, retrain staff members to 
perform data management tasks, and reduce the costs associated with 
printing, duplicating, and maintaining hard-copy records and films.
    For decades, VA has developed innovative IT solutions to support 
health care for veterans. Over the past several years, VA has worked 
with federal, state, and industry partners to broaden the use of 
information technology in health care. VA strives to continue the 
development of the EHR while protecting the privacy of our veteran 
population and maintaining the integrity of our systems. These efforts 
have laid the groundwork for the President's health IT initiative.
    With one of the most comprehensive electronic health record (EHR) 
systems in use today, VA is a recognized leader in the development and 
use of EHRs and other information technology tools. Beginning in the 
late 1970's--before such tools were commercially available--Veterans 
Health Administration (VHA) developed software applications for a 
variety of care settings, including inpatient, outpatient, and long-
term care. These applications form the foundation of VistA--the 
Veterans Health Information Systems and Technology Architecture, the 
automated health information system used throughout VHA.
    In the mid-1990's, VHA embarked on an ambitious effort to improve 
the coordination of care by providing integrated access to these 
applications through implementation of an electronic health record, 
known as the Computerized Patient Record System or CPRS.
    With CPRS, providers can access patient information at the point of 
care--across multiple sites and clinical disciplines. CPRS provides a 
single interface through which providers can update a patient's medical 
history, submit orders, and review test results and drug prescriptions. 
The system has been implemented at all VA medical centers nationwide 
and at VA outpatient clinics, nursing homes, and other sites of care.

The Benefits of Electronic Health Records

    Electronic health records are appealing for a number of reasons. 
The most compelling reason to use information technology in health care 
is that it helps us provide better, safer, more consistent care to all 
patients. The President referred to a 1999 report in which the 
Institute of Medicine (IOM) estimated that between 44,000 and 98,000 
Americans die each year due to medical errors. Many more die or suffer 
permanent disabilities because of inappropriate or missed treatments in 
ambulatory care settings. IOM cited the development of an electronic 
health record as essential for reducing these numbers and improving the 
safety of health care. In its 2002 publication Leadership by Example, 
IOM noted that ``[c]omputerized order entry and electronic medical 
records have been found to result in measurably improved health care 
and better outcomes for patients.''
    How can EHRs improve patient safety and quality of care? First, 
with an EHR, all relevant information is available--and legible. A 
provider can quickly review information from previous visits, have 
ready access to clinical guidelines, and survey research results to 
find the latest treatments and medications. All of this information is 
available wherever patients are seen--in acute settings, clinics, 
examining rooms, nursing stations, and offices. With CPRS, providers 
can quickly flip through electronic ``pages'' of a patient's record to 
review or add information. All components of a patient's medical 
record--including progress notes, referrals, orders, test results, 
images, medications, advance directives, future appointments, and 
demographic data--are readily accessible at the point of care.
    Many of us see different doctors for different medical conditions. 
How many of these physicians have access to all of the information that 
has been collected over the course of these visits? In VHA, patient 
records from multiple sites and different providers can be viewed at 
the same time at the point of care. This is simply not possible with 
paper records. Additionally, most clinicians find EHRs more convenient 
to use than traditional paper records. They are less cluttered, easier 
to read, and faster and more reliable for finding items of information 
providers are seeking, such as the results of a specific type of 
laboratory test over a period of time.
    In addition to making medical records more accessible, EHRs can 
help clinicians better document the reasons a patient sought care and 
the treatment that was provided. Given the time constraints they face, 
many physicians resort to writing brief, sometimes cryptic notes in a 
patient's chart, and then write more complete documentation when they 
have time. EHRs enable clinicians to document care quickly and 
thoroughly, and provide reminders to complete any documentation that is 
overdue.
    CPRS, for example, allows clinicians to enter progress notes, 
diagnoses, and treatments for each encounter, as well as discharge 
summaries for hospitalizations. Clinicians can order lab tests, 
medications, diets, radiology tests, and procedures electronically; 
record a patient's allergies or adverse reactions to medications; or 
request and track consults with other providers.
    More information isn't always better if we can't use it. Even if we 
could transfer paper records quickly and reliably from one provider to 
another, and make sure that the information in records was complete, 
many hard-copy patient records simply contain too much information for 
a clinician to sift through effectively. There is always the 
possibility that something crucial could be missed. When health 
information is stored electronically, however, we can make use of 
software tools to analyze that information in real-time. We can target 
relevant information quickly, compare results, and use built-in order 
checks and reminders to support clinical decision-making. These 
capabilities promote safer, more complete, more systematic care.
    Consider the benefits we have seen in VHA in the area of medication 
ordering. When orders for medications are handwritten or given 
verbally, errors and mistakes inevitably occur. However, when 
physicians use computerized order-entry systems to enter medication 
orders electronically, errors caused by illegible handwriting or 
misinterpretation of dosages, strengths, or medication names are 
virtually eliminated. CPRS includes automated checks for drug-drug or 
drug-allergy interactions, alerting the prescribing physician when 
potentially dangerous combinations occur. Currently, 93% of all VHA 
medication orders are entered directly by the ordering provider.
    Information technology can also serve to reduce the number of 
errors that occur when medications are given to a patient. VHA's Bar 
Code Medication Administration system (BCMA) is designed to ensure that 
each patient receives the correct medication, in the correct dose, at 
the correct time. In addition, the system reduces reliance on human 
short-term memory by providing real-time access to medication order 
information at the patient's bedside.
    BCMA provides visual alerts--prior to administration of a 
medication--when the correct conditions are not met. For example, 
alerts signal the nurse when the software detects a wrong patient, 
wrong time, wrong medication, wrong dose, or no active medication 
order. These alerts require the nurse to review and correct the reason 
for the alert before actually administering the drug to the patient. 
Order changes are communicated instantaneously to the nurse 
administering medications eliminating the dependence on verbal or 
handwritten communication of order changes. Time delays are avoided and 
administration accuracy is improved.
    BCMA also provides a system of reports to remind clinical staff 
when medications need to be administered or have been overlooked, or 
when the effectiveness of administered doses should be assessed. The 
system also alerts staff to potential allergies, adverse reactions, and 
special instructions concerning a medication order, and order changes 
that require action.

The Importance of Standards

    The use of electronic health records and other information 
technology tools in a single medical office can improve health care 
quality, reduce medical errors, improve efficiency, and reduce costs 
for the patients treated there. However, as the President noted, the 
full benefits of IT will be realized when we have a coordinated, 
national infrastructure to accelerate the broader adoption of health 
information technology.
    The National Health Information Infrastructure (NHII) initiative 
recognizes the importance of data and communications standards in 
developing a comprehensive network of interoperable health information 
systems across the public and private sectors. Interoperability is 
dependent, in large part, upon the adoption of common standards. 
Without data standards, we might be able to exchange health 
information, as we do now when we copy and send paper records, but we 
won't be able to use it as effectively to deliver safer, higher quality 
care using clinical alerts and reminders.
    VA was instrumental in the formation of the interagency 
Consolidated Health Informatics (CHI) initiative, and works closely 
with the Department of Defense (DoD) and the Department of Health and 
Human Services (DHHS) on CHI and related projects. CHI, which is part 
of the President's eGov initiative, was established to foster the 
adoption of federal interoperability standards related to health care 
as part of a joint strategy for developing an electronic health record. 
To date, CHI has endorsed 20 communications and data standards, in 
areas such as laboratory, radiology, pharmacy, encounters, diagnoses, 
and nursing information.
    We have seen the value of standards within VHA. Like other EHRs, 
CPRS allows users to search for specific medical terms, dates of care, 
diagnoses, and other information quickly, without having to review 
multiple documents. Although this search feature is a handy tool, 
information retrieval can be hampered by a lack of standard naming 
conventions. Virtually all clinical documents throughout VHA are stored 
in CPRS; as a result, patient records containing hundreds, or even 
thousands, of notes are becoming common. As the volume of online 
information increases, the task of finding a specific note or report 
among them can be difficult, particularly when different clinicians and 
sites assign different names to similar documents.
    A 2001 article in the Journal of the American Medical Informatics 
Association described VHA's efforts to speed retrieval of clinical 
information, by creating a controlled terminology for indexing the 
information stored in CPRS.\1\ This collaborative effort among 
clinicians, informaticists, and health information management 
professionals will improve document selection, and support the ability 
to transfer and incorporate documents from other facilities.
---------------------------------------------------------------------------
    \1\ Brown, Steven H., MS, MD, et. al. ``Derivation and Evaluation 
of a Document-naming Nomenclature.'' Journal of the American Medical 
Informatics Association 8, no. 4 (2001): 379-389.
---------------------------------------------------------------------------
    The ability to aggregate and compare information from multiple care 
sites has reinforced the importance of standardization for computable 
data as well. VHA is developing a Health Data Repository to store 
clinical information transmitted from VHA sites across the country. The 
repository will provide a central source of data for analysis, 
management reporting, performance monitoring, and research. Yet, the 
ability to aggregate these data from different sites will depend on the 
degree to which data fields are standardized.

Data Standards and Interoperability

    Our data standardization efforts have also improved our ability to 
share information with other agencies. In accordance with the various 
confidentiality statutes and regulations governing these records, 
including the Privacy Act, the HIPAA Privacy Rule, and several agency-
specific authorities, safeguards have been implemented to ensure that 
the privacy of individuals is protected throughout these collaborative 
projects.
    I'd like to highlight our work with the Department of Defense. To 
support the transition of individuals from active-duty to veteran 
status, the optimal use of health resources through sharing agreements, 
and VA-DoD collaborations on deployment health issues and health 
conditions, we need to exchange clinically relevant health data between 
the departments--and we need to exchange it electronically.
    To this end, VA and DoD have developed a joint strategy to ensure 
the development of an interoperable electronic health record by 2005. 
The approach is described in the Joint VA/DoD Electronic Health Records 
(EHR) Plan--HealthePeople (Federal) strategy and includes three 
components: 1) joint adoption of global information standards, 2) 
collaborative software application development/acquisition, and 3) 
development of interoperable data repositories. The EHR Plan provides 
for the exchange of health data by the departments and for the 
development of a health information infrastructure and architecture 
supported by common data, communications, security, and software 
standards and high-performance health information systems.
    The EHR Plan will guide VA and DoD in the joint development of a 
``virtual'' health record accessible by authorized users throughout DoD 
and VA. This virtual health record will be achieved through the 
transparent interaction of health systems or applications between DoD 
and VA. Providers of care in both departments will be able to access 
relevant medical information to aid them in patient care.
    In support of the President's Management Agenda, the President's 
Task Force (PTF) to Improve Health Care Delivery For Our Nation's 
Veterans provided recommendations for the departments' goals to provide 
a seamless transition from military to veteran status, including the 
virtual health record. Primary governance of these joint efforts is the 
responsibility of the Congressionally-mandated VA/DoD Health Executive 
Council (HEC) and Joint Executive Council (JEC).
    The first phase of the plan, the Federal Health Information 
Exchange (FHIE), was deployed July 2002. FHIE provides historical data 
on separated and retired military personnel and beneficiaries from 
DoD's Composite Health Care System (CHCS) to the FHIE framework; the 
information is then accessible in VA through CPRS. These data include 
DoD admission/discharge/transfer (ADT) information, laboratory 
information, radiology, discharge summary and cytology reports, allergy 
information, consultation reports, prescription data from government 
and retail pharmacies from the DoD Pharmacy Data Transaction Service 
(PDTS), and outpatient associated medical codes extracted from the DoD 
Standard Ambulatory Data Record (SADR). Currently, there are over two 
million unique DoD electronic records available for retrieval from the 
FHIE repository, and the volume of information available through FHIE 
continues to grow as individuals are discharged to veteran status.
    The next phase of the EHR Plan is the joint development and 
acquisition of interoperable data repositories by the departments. The 
departments have formed an active working integrated project team to 
implement the exchange of clinical data between the VA Health Data 
Repository (HDR) and the DoD Clinical Data Repository (CDR). By linking 
these two systems, the departments will achieve interoperability of 
health information between DoD's CHCS II and VA's HealtheVet-VistA. 
This project, known as ``CHDR'', will demonstrate the bi-directional 
capability to exchange pharmacy and demographic data in a prototype in 
2004, and will achieve interoperability by 2005. Using clinical 
decision support applications, providers in both departments will be 
able to access and use relevant health information to aid them in 
making medication decisions for their patients, regardless of whether 
that information resides in VA's or DoD's information systems.
    Other examples of VA-DoD work include the DoD/VA Interagency 
Virtual Private Network (VPN), which allows for the secure exchange of 
clinical data between the two departments, and the Laboratory Data 
Sharing and Interoperability Project (LDSI), which allows DoD to act as 
a reference lab for chemistry tests performed for the VA. VA orders are 
entered electronically in CPRS and are transferred to CHCS via a secure 
VPN connection; results are returned electronically to VA. Turnaround 
times are much quicker and patient safety is enhanced because manual 
entry of the results into CPRS is eliminated. The LDSI application is 
currently uni-directional and is being enhanced to support the bi-
directional exchange of orders and results between VA and DoD, so that 
each agency can serve as a reference lab for the other.
    Another collaborative project is the DoD/VA Consolidated Mail-out 
Pharmacy (CMOP) Interface. In this project, military beneficiaries 
treated at Naval Base Coronado, Naval Air Station, San Diego, 
California, and Kirtland Air Force Base, Albuquerque, New Mexico, can 
choose to have their outpatient prescriptions filled by the CMOP at 
Fort Leavenworth, Kansas, and mailed to them rather than having to wait 
and pick up prescriptions at the pharmacies in the military treatment 
facility. The VA fills an average of 8,000 orders and 10,000 
prescriptions per week for the two military treatment facilities.
    VA and DoD are currently developing a final architecture for the 
electronic interface between the agencies' health information systems. 
We also have implemented a joint project management structure that 
includes a single Program Manager from VA and a single Deputy Program 
Manager from DoD. This structure ensures joint accountability and day-
to-day responsibility for project implementation. Developing the 
technology to support the exchange patient health care data and the 
creation of an electronic medical record for both veterans and active 
duty personnel is a priority for VA. We believe that the plan being 
pursued, although challenging and complex, will provide the necessary 
flexibility while achieving the desired interface between VA and DOD.
    VA and DoD are optimistic that as a result of the improved 
collaboration between the two departments in these joint IT 
initiatives, both will be better positioned to evaluate health problems 
among service members after they leave military service, veterans, and 
shared beneficiary patients; to address short--and long-term post-
deployment health questions; and to document any changes in health 
status that may be relevant for determining disability.

VistA-Lite
    As a physician, I have seen first-hand the benefits of electronic 
health records in VHA: immediate access to information, elimination of 
duplicate orders, increased patient safety, improved information-
sharing, more advanced tracking and reporting tools, and reduced costs. 
CPRS has been enhanced and refined continuously since its initial 
implementation, and has been recognized by IOM and in the mainstream 
press as one of the most sophisticated EHR systems in the world. 
Although VistA and CPRS were developed specifically to support the VA 
model of care, they were designed with flexibility and adaptability in 
mind. As VA has shifted its focus from inpatient, institutional care to 
an ambulatory, primary care model in recent years, we have updated and 
enhanced our information systems to support different care settings, 
adding new ``smart'' software features, incorporating new technologies, 
and developing better methods of coordinating data from multiple sites. 
In fact, VA's EHR was altered for use in both DoD and Indian Health 
Service. By the mid 1990's the three largest federal systems providing 
direct health care were using derivatives of VA's EHR, although only VA 
was using the current and more robust version including CPRS.
    VistA and CPRS are in the public domain. They have been adopted for 
use in the District of Columbia's Department of Health, American Samoa, 
and several state health departments and state veterans homes. A number 
of countries, including Germany, Finland, Great Britain, Mexico, and 
Ireland, have either implemented VistA or expressed an interest in 
acquiring the technology.
    VHA is now working with the Centers for Medicare and Medicaid 
Services (CMS) to make the benefits of electronic health records 
available to other providers. VA and CMS are collaborating on the 
development of a ``VistA-Lite'' version of VA's VistA system. VistA-
Lite will be designed specifically for use in clinics and physician 
offices. In developing VistA-Lite, VHA and CMS hope to stimulate the 
broader adoption and effective use of electronic health records by 
making a robust, flexible EHR product available in the public domain.
    VistA-Lite will be based on VistA, but will be streamlined and 
enhanced to make it appropriate and affordable for use outside VA. For 
example, patient registration features of VistA will be modified to 
reflect the requirements of smaller medical practices. Specialty 
components, such as OB/GYN and Pediatrics, will be enhanced. The VistA 
operating environment will be streamlined so that installation and 
maintenance are simplified. Vista-Lite can be adopted directly by 
physician offices, used by vendors who provide administrative support 
services to physician offices, or used by commercial software 
developers to make competitively-priced products with similar 
functionality. Private developers, physician organizations, and health 
care purchasers have been made aware of the VistA-Lite project and the 
response has been favorable.
    The VistA-Lite project is co-managed by CMS and VHA, and is 
coordinated with other federal agencies, including the Indian Health 
Service, Health Resources and Services Administration, the Centers for 
Disease Control (CDC), and the Food and Drug Administration (FDA). The 
project is funded by CMS. The first version of the VistA-Lite system is 
expected to be available in November. Subsequent releases will reflect 
changes and improvements made to the core VistA system and will be 
developed in conjunction with participating agencies.
    Many providers and communities are eager to use EHR technology, but 
don't know where to start. For providers who have not used an EHR 
before, it is difficult to determine which capabilities are needed in a 
particular setting. To assist health organizations in the comparison 
and selection of EHRs, Health Level Seven (HL7a.3), an 
international standards development organization, has established an 
industry-wide initiative to define a set of standard functions for 
electronic health records, and to recommend the high-level, care-
related functions appropriate for different care settings. VHA worked 
with HHS to commission the development of the standard, and a VHA nurse 
informaticist co-chairs the HL7a.3 EHR Special Interest 
Group, which manages this initiative.
    The HL7a.3 EHR standard is intended to set the benchmark 
for electronic health records, through broad public--and private-sector 
participation and consensus on required EHR functionality. This 
approach promotes a common industry EHR focus, but allows sufficient 
latitude for commercial product differentiation, fostering competition 
and innovation among developers of EHR systems. The HL7a.3 
EHR model will enable HHS and others to qualify EHR systems in terms of 
completeness and readiness for adoption.

Personal Health Records and My HealtheVet

    The development of personal health records is another area of focus 
in health information technology. Personal health records are an 
adjunct to the electronic health records used in a clinical setting, 
providing patients a secure means of maintaining copies of their 
medical records and other personal health information they deem 
important. Information in a personal health record is the property of 
the patient; it is the patient who controls what information is stored 
and what information is accessible by others. Personal health records 
enable patients to consolidate information from multiple providers 
without having to track down, compile, and carry around copies of paper 
records. By simplifying the collection and maintenance of health 
information, personal health records encourage patients to become more 
involved in the health care decisions that affect them.
    Last year, VHA responded to more than 1 million requests from 
veterans for paper copies of their health information. Such requests 
are processed through Release of Information offices at VA Medical 
Centers. As the use of personal computers among veterans has increased, 
so has the interest in electronic access to medical information.
    The VHA My HealtheVet project was conceived as a way to help 
veterans manage their personal health data. My HealtheVet is a secure, 
web-based personal health record system designed to provide veterans 
key parts of their VHA health record and to let them enter, view, and 
update their own health information. Patients who take over-the-counter 
medications or herbs, or who monitor their own blood pressure, blood 
glucose, or weight, for example, can enter this information in their 
personal health records.
    The implications of My HealtheVet are far-reaching. Clinicians will 
be able to communicate and collaborate with veterans much more easily. 
With My HealtheVet, veterans are able to consolidate and monitor their 
own health records and share this information with non-VA clinicians 
and others involved in their care. Patients who take a more active role 
in their health care have been found to have improved clinical outcomes 
and treatment adherence, as well as increased satisfaction with their 
care.
    The first version of My HealtheVet, released last fall, includes a 
library of information on medical conditions, medications, health news, 
and preventive health. Veterans will be able to use the system to 
explore health topics, research diseases and conditions, learn about 
veteran-specific conditions, understand medication and treatment 
options, assess and improve their wellness, view seasonal health 
reminders, and more. Subsequent releases will provide additional 
capabilities, enabling veterans to request prescription refills on-
line, view upcoming appointments, and see co-payment balances.
    In the future, veterans will be able to request and maintain a copy 
of key portions of their health records from VistA and to grant 
authority to view that information to family members, veterans' service 
officers, and VA and non-VA clinicians involved in their care. VA is 
also working with DoD and other partner organizations to develop a 
longitudinal health record that will incorporate information from DoD, 
VA, and private-sector health providers from whom the veteran has 
sought care.

Summary

    In announcing his plan to transform health care through the use of 
information technology, the President noted our country's long and 
distinguished history of innovation--as well as our failure to use 
health information technology consistently as an integral part of 
medical care in America. Health care is often compared unfavorably to 
other professions and industries in its use of information technology. 
Grocery stores, for example, are frequently mentioned as being ``more 
automated'' than hospitals. At first, this seems outrageous, yet it is 
not really surprising--treating patients is far more complex than 
grocery shopping.
    We clearly have a long way to go in optimizing our use of 
information technology in health care; yet, we are not starting from 
scratch. Electronic health records, personal health records, data and 
communication standards, and sophisticated analytical tools--the 
building blocks of a comprehensive, national health information 
infrastructure--have already been implemented in some communities and 
settings and are maturing quickly. Our challenge is to create a 
technology infrastructure that will revolutionize health care without 
interfering with the human interaction between physicians and patients 
that is at the core of the art of medicine.
    The President recognized America's medical professionals and the 
skill they have shown in providing high-quality health care despite our 
reliance on an outdated, paper-based system. At VHA, we know that the 
support of clinicians is essential to the successful implementation of 
electronic health records and new IT tools. Clinicians, while often the 
greatest proponents of health information technology, can also be the 
greatest critics. At VHA, physicians, nurses, and other providers are 
actively involved in defining requirements and business rules for 
systems, prioritizing enhancements, and conducting end-user testing. 
This involvement increases user acceptance, minimizes disruption during 
upgrades, and most importantly, enables us to tailor systems to the 
needs of the health care community.
    In VHA, the electronic health record is no longer a novelty--it is 
accepted as a standard tool in the provision of health care. Our focus 
is now moving from technical implementation issues to those involving 
data quality, content, standardization, and greater interaction with 
other providers and systems. As VHA refines and expands its use of 
information technology, we look forward to sharing our systems and 
expertise with our partners throughout the health care community to 
support the President's plan for transforming health care--and the 
health of our veterans.
    Mr. Chairman, this completes my statement. I will now be happy to 
answer any questions that you or other members of the Subcommittee 
might have.

                                 

    Madam Chair, this completes my statement at this time. I 
would like to give a brief demonstration of the VA EHR. On the 
lap top next to me, I actually have a copy of the complete 
VistA system running on the laptop.
    [Demonstration.]
    It is not only the operating system and the complete 
medical record but also the imaging record, as you will see 
very shortly. We would log on to the system. In a normal 
system, we would have password protection. We then have, on the 
front sheet, any alerts that are specific for patients that I 
am responsible for. I can choose a patient, and then a cover 
sheet is opened which provides me a quick summary of a patient 
with lots of information where I can drilldown, for example, 
for information on their medications or allergies or other 
items.
    I can also look at vital signs and very quickly can go 
ahead and see a graph of their blood pressure over time, and 
very often, we go ahead and turn the terminal to the patient 
and talk with them about either changes in their blood pressure 
or in their weight. Now, the information that I have here is 
actually real patient data. We have scrambled the identifying 
information to protect privacy, but the data that you will see 
here is real clinical data.
    Mr. Madliff is a patient who came to see us. One other 
thing that I want to show is that we use this chart so you have 
tabs across the bottom of the screen, so it looks like the 
chart doctors are used to using within the medical center. Many 
of our medical centers already are essentially paperless 
because they don't need to pull the paper chart because all the 
information is at the finger tips of the providers.
    In this case, I am going to look at the laboratory results 
from Mr. Madliff. In looking at a complete blood count, we will 
open that up, get all the results, and then go ahead and grab 
his results. What I want to look at in particular is Mr. 
Madliff's hematocrit or his red blood count. What you see here 
are some dramatic drops in a very short period of time. What 
these represent are severe bleeding episodes. If we look very 
carefully, we can go ahead and expand this area and see that, 
in fact, there are a lot of results in a short time that 
probably occurred with an inpatient hospitalization. We see a 
gradual drop followed by a rapid rise. Those represent 
transfusions of blood cells because of the anemia that Mr. 
Madliff had.
    In order to find out what was going on and how we could 
help him, we took Mr. Madliff to have a colonoscopy because, 
very often, a gastro-intestinal (GI) bleed is a very common 
cause, and in fact, we can capture the picture that shows that 
Mr. Madliff had diverticulitis. On another particular image 
that was captured during the colonoscopy, we actually see there 
is actual bleeding in the colon. So, this gentleman did, in 
fact, have a GI bleed. In order to diagnosis where that bleed 
was, we often do bleeding studies or bleeding scans. So, this 
is an example where the patient was injected with some dye, and 
then we looked to see where bleeding is.
    This was done several years ago, and this was a film that 
was taken. Our providers put it up to the light box, couldn't 
find where the bleeding was, so an industrious physicians 
assistant took it over and scanned it to what was then a new 
imaging system. Brought it up. Once they had it up, they were 
able to go ahead and zoom in on it and change some of the 
backgrounds so they could look at different parts of the x-ray. 
Out here in the periphery, they saw something that looked a 
little bit suspicious. By reversing it, they were able to see 
an area out here that was a fuzzy area and that represented the 
area of the bleed. So, they were able to locate very quickly, 
using this automated system, where the bleed was.
    Let me go ahead and show you one other patient so I will 
change to a different patient, in this case Mr. Green. Mr. 
Green has a different problem, which is to be expected. If we 
look at the progress notes, we see that there is a cardiology 
note that was made. We can open up that cardiology note, and 
there is the text note but, along with that, a number of images 
are open. In this case, it represents cardiac catheterizations, 
and we can in fact see the cardiac catheterization of Mr. 
Green. We can show him here is an area that represents why you 
are having chest pain, this narrowing of the coronary artery.
    Following that, we can actually continue with the procedure 
and, using a coronary angiography, can actually show the 
balloon in his coronary artery, but more importantly, when it 
is all done, we can go ahead and look at what was the result of 
the procedure, including that the area that was once 
constricted is wide open. Obviously, showing this to the 
patient, being able to turn and say, ``Here it is, you did have 
this problem, here is how we treated it, now we have taken care 
of the acute problem, now we need you to take your medicine and 
to follow a better diet and we will be working closely with 
you.''
    This then, as you can see, is an alternative to what we 
normally have which is a set of charts. In this case, we have 
five charts. The average in VA is 2.5 charts. Some of the 
patients with chronic conditions can actually have a ton of 
charts. Trying to find a particular blood count in this is 
almost impossible. Trying to see a pattern so you can see the 
two or three episodes of bleeds is obviously impossible, except 
for the way we usually do it in medicine which is we get a 
medical student to go through the chart and by hand manually 
graph the results. So, that ends my demonstration. I will be 
available now for any questions that you might have.
    Chairman JOHNSON. Certainly is dramatic to see how you can 
track information from year to year and visit to visit in a way 
that you simply couldn't if you had to go back and pull that 
all out of a paper record. When you are able to show a patient 
such a change in their status, do they take their medicine more 
regularly thereafter? Do you have any research that shows 
greater compliance because they understand the problem better 
and what was done?
    Dr. KOLODNER. We have a number of things that we are doing. 
In particular, rather than being able to isolate whether the 
patient is more compliant by showing them their data, we have 
the decision support and the reminders that are part of helping 
us to practice better care. The table that I showed a little 
bit earlier, has that result on these various indicators having 
to do with beta blockers after heart attacks, the rate of 
pneumo vacs, or vaccine. In fact, for the pneumo vacs vaccine, 
our rate now is 90 percent. That sounds pretty good until you 
then also add we have about a 9-percent refusal rate. So, we 
have essentially either immunized or gotten a refusal from all 
the patients who should be receiving pneumo vacs in the VA. By 
using the reminders and getting them even more engaged with 
personal health records, we think that that will make it an 
even more beneficial factor for our veterans.
    Chairman JOHNSON. Thank you. That was very interesting. Dr. 
Brailer, I wanted to pursue this issue of the national 
perspective on this issue, what is meant by a national health 
information infrastructure, just kind of as a starting point. 
The witnesses on our second panel, they will attest to the fact 
that, currently, there are a number of very innovative projects 
going on in the private sector that expand the use of IT, in 
one case in Indianapolis, in another case in a system, Kaiser. 
As entities are developing such systems independently and 
demonstrating the power of them, what is your role and what is 
the relationship between these independent actions and the 
development of a national health information infrastructure?
    Dr. BRAILER. Thanks for the question. I think we have 
multiple roles to play. First, you are seeing the early 
adopters, communities, States, regions, who, for reasons of 
their own leadership, the market that they have, various other 
factors are moving ahead of many other regions. I think our 
role with them is to be supportive and, honestly, to learn from 
them so we can take the lessons that they have, incorporate 
them into policy and do research and advice for other regions.
    As we think about the mainstream of America, I think we 
can't rely on this early adopter effect to take us where we 
need to go. Therefore, I see really three types of roles that 
we need to play: first, to provide the Federal actions that can 
support these local communities, and that could include looking 
at our rules, our regulations, our other policies to ensure 
that they are able to do what they are doing. An example is the 
change that was released in the MMA that created the waiver to 
the Stark amendment that allowed community organizations to 
support investment. There are many other things like that.
    Two, these regions need to have seed money, startup funds 
to be able to work through very complicated business technical 
privacy issues and to derive many of the factors of support 
that are needed locally. The grants and other things, money 
that will be available in the 2005 budget and beyond that, 
clearly are supportive of that.
    Thirdly, there are technologies, there are pieces that are 
necessary to support regions. Some are local, and some are 
national. Some of the technologies are available now; some are 
not. Some are available, but they are not very cost-effective. 
I see a national role in helping bring together some of the key 
technologies that are needed to allow a State or a regional 
area to be able to develop their own infrastructure.
    So, in the end, we may not have as clean of a model as 
Britain, where it is a very hierarchical regionalized system, 
but I think we will have a Federal role that consists of laws 
and rules, technology support, and if you would, some of the 
financial underpinnings and then regions that could vary how 
they deploy this within some boundaries that have governance in 
oversight in what they are doing, have technology deployment, 
and the real human components of helping physicians and other 
components of the industry, consumers being able to actually 
make use of these technologies to deliver the results that we 
want.
    Chairman JOHNSON. In some of the areas of the country, the 
private sector initiatives are very dramatic. They are big. 
They are comprehensive. Do you have any concern that they will 
develop solutions that then are not interoperable?
    Dr. BRAILER. Oh, I am very concerned about solutions being 
developed that are not interoperable. I think, in many ways, 
today a regional enterprise or a hospital system faces a choice 
between, do we move forward without complete interoperability, 
or do we wait on all the ingredients? One of the key factors we 
have to do is complete the efforts the Secretary started around 
the Consolidated Healthcare Informatics Initiative efforts to 
promulgate standards. The effect of any movers waiting on us to 
promulgate standards is a very negative factor in adoption. 
Beyond that, these regions have many other barriers that we 
face, some of which are out of our control to be able to move 
that forward.
    Chairman JOHNSON. Let me just pursue one other question, 
and we will go back and forth here. To what extent are the 
pieces out there, like SNOMED and things like that, beginning 
to build a national structure? What is the timeframe for you 
and whoever else to come to a conclusion about standards so 
that we can guarantee that what happens will be interoperable?
    Dr. BRAILER. I think we have three stages of standards. We 
are very late in the first phase. That is to agree on what the 
standards are. This is standards that exist in paper that we 
agree on. There is still a large variation in the 
implementation of those standards. The second phase is to have 
common references for actual implementations. The companies 
that build these products actually incorporate software into 
their product that reference these. Third, is to create the 
work flow and the actual human factor changes. We have SNOMED 
as a standard, but if we are not able to incorporate that into 
the daily work of a physician, we won't capture data that is 
SNOMED compatible.
    I think we are crossing over the last phase with a few more 
standards and very much approaching the phase of reference 
implementation and then the phase of adoption into standard 
practices. I think this can be done, the next phase, in the 
next year or two at the outside and then overlapping another 
year or two into the other. So, I would think, in a short 
number of years, we should be able to be through this standards 
phase into a very mature, very fully deployed and highly 
referenced standards effort.
    Chairman JOHNSON. Thank you very much. Mr. Stark.
    Mr. STARK. I thank the witnesses very much. Let my just 
start out, this will sound more negative than I hope where we'd 
end up. In 30 years, I have seen and heard suggested a variety 
of standardized ideas in terms of either prescribing drugs or 
hospitals having standardized accounting systems or physicians 
having standardized patient records. Guess what? We have no 
agreement 30 years later in how these things should be done.
    My guess is that, if I was going to be around here 30 years 
from now, if we let people just fuss around with that--it seems 
to me, the last time CMS and the Health Care Financing 
Administration decided to redesign so we would have a uniform 
reporting for all the intermediaries, because we had 70 or 80 
different computer systems, and guess what, they went out and 
left contracts with 8 different contractors and none of the new 
systems could interface with the others. So, what, we went from 
70 systems that couldn't talk to each other to 8 that couldn't 
talk to each other. That is where my sense is that we are 
today. I can't quote that, quarrel with that. In many cases, 
there is a sense of professional pride, I suppose, among 
individual providers, physicians. There is a sense of 
entrepreneurial intellectual property, in terms of people who 
may have certain procedures or ways of operating their 
businesses or developing their drugs that they don't want 
anybody else to find out. Many of those things would be 
reasonable excuses.
    I don't think there is any disagreement that, if we don't 
get some kind of reasonable database outcomes research, we 
aren't going to make much progress in the ever more technical 
field of delivering medical care. So, with that, as a 
background and because we are dealing now in a governmental 
forum and recognizing that this may prejudice the free market, 
free enterprise, we did it in physician reimbursement, for 
better or for worse. The government pays about a third, 
probably a little more of all the medical care that is 
delivered in this country. Pretty much directly. I am not 
including what the States do, but Federal government pays about 
a third.
    When this Committee determined how we would reimburse 
physicians under Medicare, again, guess what, most of the major 
insurance companies in the private sector followed suit, 
applied their own index to it, and it has become, for better or 
for worse, a standard among major payers. I don't know how 
much. So, my instinct is to say, this isn't ever going to get 
any better unless we give Dr. Brailer some legislative 
authority, which I don't think he has at all, and say, ``Doc, 
in 6 months, you have got to come up with a standardized 
patient records form.''
    Then I would follow the question--I would ask my colleague, 
Dr. Gingrey, if he would get in on this as well--``Is there any 
reason that any of you physicians couldn't practice medicine 
based on Dr. Kolodner's system? Maybe you would like it a 
different way, but is there anything there that would effect 
the practice of medicine as we know it?``
    If we just said that is what it is going to be, there may 
be better systems but in an effort to get there, to get moving 
on it, and it may be somebody else's system--we will hear from 
Kaiser and others today who are trying to do it. If we pick the 
system and said, now the only way we enforce it is say, ``This 
is how the Federal government intends to pay for Medicaid and 
Medicare,'' we can't tell Blue Cross and we can't tell Aetna 
what to do, but my guess is we would move people toward a 
standard version. Please, we have some people who are 
professionals at this. I would ask the two witnesses. Could we 
do that?
    Mr. GINGREY. Representative Stark, you asked me to respond. 
I appreciate that. I think the answer is, I can't think of any 
reason why we shouldn't, couldn't do that. I think it would 
make the practice of medicine much safer, much more efficient. 
You have already discussed the reasons why and what Dr. 
Kolodner presented to us here, what they are doing in the VA 
and, as you pointed out, at the very outset, the MasterCard and 
Visa card, why you couldn't actually take that information and 
put it on a little wallet-size card like that so that, not only 
would it be on a hard drive somewhere or from State to State, 
but the patient actually could carry it with them. Clearly, I 
think Representative Stark is correct, that we not only could 
do it, but we should do it. I hope it doesn't take 10 years to 
get there.
    Chairman JOHNSON. We opened it up. Mr. Camp.
    Mr. STARK. I was going to ask Dr. Brailer how long it has 
been since you may have practiced, but could you practice with 
that kind of a gizmo or whatever it is?
    Dr. BRAILER. Well, first, it has been 2 years since my last 
patient contact, but as the father of a 3-year-old, I have 
patient care for my son frequently.
    Mr. STARK. I know the problem.
    Dr. BRAILER. I actually used my first electronic medical 
record when I was a resident and rotated through the VA. It was 
not a system quite this elegant. I want to say, thanks for 
improving it, Rob, because the one I used was great but not 
this good. I think we need to recognize, Congressmen, that the 
market exists on a broad spectrum. Today, there are physicians 
who are adopting these tools and using them. There are some who 
are sitting at the press of this, others who are being more 
studied and, in the end, others who will go to their deaths 
without knowing this.
    They are doing that for a variety of reasons, many of the 
ones you described. They are cultural factors. There is fear of 
technology, although I find that to be really remarkably less 
than constantly stated. There is something that I think is true 
with all of this, and that is that one solution that works for 
those that are sitting on the edge--they really need a little 
bit of a nudge and some help--is not the solution for those 
that are sitting with some recalcitrants.
    My concern with having kind of a big program that pushes 
this is we could be quite inefficient with resources for those 
that don't need a lot of help, and it could be ineffective for 
the others. That is kind of the core of this. Many physicians 
who have tried to do this have failed. The failure rate of 
implementation is quite high. I would be concerned if we pushed 
or reimbursed our way to physicians doing this that we might 
increase the failure rate. It is not because of bad technology. 
It is because this is so intrusive to the workload. My 
particular concerns are one-man and two-man practices----
    Mr. STARK. Take old geezers like me, who come to technology 
slow, but my kids, who may be doing fourth grade work on the 
computer, you will get to that point, can learn. It seems to me 
that, if the system is there, in a way, I guess you could make 
exceptions for those who choose not to participate at all, but 
for those who do want to learn, if we allow a multiplicity of 
systems without any common language and coordination, we won't 
ever make the change. So, in medical schools, if they all 
started using the system, and those like you youngsters who 
like this stuff, and understand it, the nerds of the medical 
profession, as it were, you guys could pick up on it. Your 
parents would just have to miss the fun of practicing medicine 
on the Internet. I don't know. I will give up.
    Chairman JOHNSON. Dr. Brailer, I will give you a yes-or-no 
answer. We have one more person to question. There is the next 
panel. There is another Subcommittee that starts meeting at 
4:00. So, I want everyone to at least hear the testimony. You 
want to respond briefly.
    Dr. BRAILER. I don't know if I can say yes or no to such a 
detailed and thoughtful question. I would argue this: that 
there are factors of readiness in practices and in the market 
that need to be put in place as investment flows. Those factors 
that might include helping reduce the failure rate of 
implementation by helping physicians purchase systems that meet 
their needs, being able to evaluate and certify that products 
meet the claims that are made so we will be able to know what 
kinds of products they are, being able to help physicians with 
implementation, actually changing the way their practice 
operates so that those tools which tip off these changes don't 
tip off calamities in terms of negative results. I think these 
readiness factors need to exist in the milieu where investment 
from private sector and others is made--that is where we are 
concentrating on this--that make sure we have multiple 
pathways.
    Mr. CAMP. Thank you Madam Chairman. Dr. Brailer, I 
appreciate both of your testimony, but my question is, 
expanding technology for technology's sake is fine, but I am 
very interested in, obviously, the increase in quality and 
attempt with that increase in quality to also keep costs down. 
Obviously, I have seen a lot of the advantages of the new 
technologies in the medical field because, obviously, with 
three children, I probably am a three-time user of the health 
services. It just seems to me that simply technology for 
technology's sake is not the goal. The goal really ought to be, 
how does technology increase quality of care and, at the same 
time, keep costs down. If you could just briefly comment, I 
would appreciate it.
    Dr. BRAILER. Thanks for the question. I think that is one 
of the core issues. We are leaving a phase where there has been 
an enlightenment with technology but forgetfulness about why it 
is important. Just to summarize a few key points. There is very 
good evidence that IT, when used in hospitals and physicians 
offices can deliver the kinds of results that Dr. Kolodner 
described consistently. Those results include reducing errors, 
being able to comply with evidence that is stated and accepted 
as the normal practice, being able to improve preventative 
care. That evidence, I think, is overwhelming to the point 
where I would take the view that we usually think of IT as a 
form of therapy, that it is not different than perhaps giving 
drugs or doing other things because it does consistently lead 
to that result when used correctly. The issue is how to make 
sure that it is used correctly.
    Its ability to save money comes from the evidence that it 
can reduce inappropriate care or non-value-added care or change 
the overall environment of chronic care management in the 
industry where each physician in their practice or each 
hospital is not able to render longitudinal services. So, I am 
quite optimistic about that and think the record is relatively 
strong in both academic science and in field experience, which 
is why I think we are here at the fore, being able to push this 
forward.
    Chairman JOHNSON. Thank you. Thank you both. This 
discussion was very useful because I think, as you say, Dr. 
Brailer, this completely changes the way an office works and 
also the way it thinks about its work. So, it is very important 
that we provide assistance, and as the two of you leave, 
because we really want to get on to the other panel--and thank 
you, Dr. Kolodner, for that excellent--I had no idea actually 
that it could integrate the information from so many years of 
charting and allow to you go deeper into x-rays like that. That 
is excellent.
    I think this so profoundly changes the way an office looks 
at health information and its relationship to the patient. It 
is very important that, not only we look at this issue, what is 
it costing, where do we get the money, because so far, some of 
the change is being funded by either health plans who could 
afford to invest or the government. I think we have to take 
seriously, what does it cost?
    The thing that hasn't been discussed that I think is just 
as serious is what kind of support do you give two--or three-
man practices or two--or three-women practices to help them 
learn how to use this and be there periodically when they are 
having trouble. Because we see, over and over again, those 
difficulties in our own offices as we have to make systems 
change.
    Thank you very much for being with us. I will move on to 
the other panel so that all Members will be able to hear all 
the testimony. Then we will move on to questions in the second 
panel. Dr. Safran; Janet Marchibroda of eHealth Initiative; 
Marc Overhage; and Andrew Weisenthal, Dr. Weisenthal of Kaiser 
Permanente. We will start with Dr. Safran, the President of 
American Medical Informatics Association of Bethesda, Maryland. 
Dr. Safran.

STATEMENT OF CHARLES SAFRAN, M.D., PRESIDENT, AMERICAN MEDICAL 
          INFORMATICS ASSOCIATION, BETHESDA, MARYLAND

    Dr. SAFRAN. Chairman Johnson, Ranking Member Stark, Members 
of the Subcommittee on Health, thank you for your leadership 
and for the opportunity to appear before you today. These are 
very promising times for the widespread application of IT to 
improve the quality of health care while also reducing costs. 
In my comments, I especially want to note the importance of the 
resource that is most often underutilized in our approach to 
information systems: our patients.
    My name is Charles Safran, I address you today as the 
President of the American Medical Informatics Association, the 
association of physicians and nurses and health professionals 
that has long been the primary force in the innovative use of 
IT in health care. We are focused on linking the fields of 
health IT with its users, health care professionals and its 
ultimate beneficiaries, our patients. I am a primary care 
physician on the faculty of Harvard Medical School. I am also 
CEO of Clinician Support Technology (CST), a small business 
developing Internet-based collaborative health care to empower 
consumers to be more effective participants in their own care.
    Health care is information-intensive, and billions of 
dollars have already been spent on health information systems. 
All too often, the result has been digital islands of data that 
have not provided real benefit for clinicians and their 
patients. By contrast to the usual fragmented department-by-
department approach to information management, a few 
integrated, highly functional clinical computing systems have 
emerged.
    In 1993, the American Medical Informatics Association 
termed these systems patient-centered. What distinguishes these 
systems was that patient care, not cost accounting or billing, 
was the mission. The systems were designed for clinicians by 
clinicians. These systems, in Boston, Indianapolis, Salt Lake 
City, New York City, Nashville, and elsewhere, are national 
models for patient safety, e-prescribing, EHRs and community 
information systems.
    There is no question that EHRs improve patient care. There 
are many studies to prove this, but why has adoption been slow? 
Why do we rely too much on sneaker wear, asking patients and 
their families to carry medical records and reports across the 
boundaries of our fragmented health system? The answers to 
these questions are complex and include significant constraints 
of managed care and misaligned physician incentives, but in 
large measure, it is people and policies that have created the 
barriers, not technology. I would argue, informed people, 
especially informed patients, and enlightened policies can 
overcome these barriers.
    CST Baby Care Link, which I helped to develop, is an 
Internet technology that empowers parents to participate in the 
care of a sick child which, in turn, improves care and lowers 
costs. Baby Care Link is designed for parents who may never 
have used the Internet. It delivers just-in-time information to 
help patients navigate complex health care systems.
    In a recent report to the State of Colorado, which funds 
Baby Care Link through a public-private partnership with the 
generous support of Johnson & Johnson, parents who frequently 
use Baby Care Link took their infants home from the neonatal 
intensive care units 2 weeks sooner than families who were less 
frequent users. The benefit from Medicaid's parents was even 
greater. At Stroger Cook County Hospital, Baby Care Link has 
literally stepped over the digital divide, providing new tools 
for clinicians and their parents to communicate, collaborate, 
and coordinate the care of fragile newborns.
    I want to bring up four areas of focus where I think this 
Committee and our government can have some impact. First, we 
need to train a new generation of physicians, nurses, and 
health professionals to lead the development, selection, and 
implementation of patient-centered health information-systems. 
We should require accreditation of informatics training 
programs just as we required the accreditation of other 
clinical specialties. Second, government can help foster a more 
open and efficient marketplace by funding an independent 
national resource containing research evaluations and business 
outcomes related to health IT. Simply, it is a database of what 
works and what doesn't work. Third, we need to make the 
availability of IT a priority for underserved populations to 
improve communication and coordination of their care needs. We 
should not use the digital divide as an excuse for avoiding the 
hardest health care problems.
    Last, we should turn our focus from the hospital and the 
physicians office toward the home. While good hospital 
information systems and EHRs are a necessity, I believe that 
the personal health record, a lifelong electronic repository of 
health information controlled by the patient, will make a key 
evolutionary step toward a new health paradigm that is truly 
patient-centered.
    In our country, patients are the most underutilized 
resource, and they have the most at stake. They want to be 
involved, and they can be involved. Their participation will 
lead to better medical outcomes at lower cost with dramatically 
higher patient and customer satisfaction. We should remember 
that the real goal of improved health information systems is 
not better hospitals or better physician practices but better 
quality of care and healthier citizens. Thank you for allowing 
me to speak today. I will be happy to answer questions.
    [The prepared statement of Dr. Safran follows:]
    Statement of Charles Safran, M.D., President, American Medical 
              Informatics Association, Bethesda, Maryland
    Chairman Johnson, Ranking Member Stark, members of the Health 
subcommittee: thank you for the opportunity to appear before you today. 
These are exciting and very promising times for the widespread 
application of information technology to improve the quality of 
healthcare delivery, while also reducing costs, but there is much yet 
to do, and in my comments I want to note especially the importance of 
the resource that is most often under-utilized in our information 
systems--our patients.
    My name is Charles Safran. I address you today as President of the 
American Medical Informatics Association--AMIA--the association of 
physicians, nurses and health professionals that has long been a 
primary force in the innovative use of information technology in 
healthcare. We are especially focused on linking the field of health 
information technology with its users--health care professionals--and 
its ultimate beneficiaries, our patients. I am a primary care physician 
on the faculty of Harvard Medical School and on the staff of the Beth 
Israel Deaconess Medical Center. I am also CEO of Clinician Support 
Technology, a small business developing Internet-based Collaborative 
Healthware to empower consumers to be more effective participants in 
their own care.
    Healthcare is information intensive, and hospitals in the United 
States have spent billions of dollars to computerize everything from 
the billing office to the laboratory, pharmacy and radiology 
departments. But too often the result has been hospitals with digital 
islands of data. Today when a health system announces a $100 million 5-
year information technology implementation plan all too often it is 
talking about replacing data systems that can't talk to each other--and 
that have not provided real benefits to clinicians or their patients.
    Let me mention one example of the impact of information systems 
that keep clinical data in separate silos. A well-known hospital 
implemented a physician order-entry system with considerable fanfare--
which within weeks resulted in a physician revolt and the firing of the 
CIO. The order-entry system was state-of-the-art, but it failed at one 
high volume, clinically critical moment--when a patient was admitted 
from the emergency room. It turns out that the ER departmental system 
did not talk to the hospital admitting system. Patients needed to be 
re-registered in the hospital system, a process that could take 30 
minutes to one hour. To a clinician, an hour delay in writing a 
critical care order was simply unacceptable.
    By contrast to the usually fragmented department by department 
approach to information management, some hospitals, like the Beth 
Israel Deaconess Medical Center in Boston, LDS Hospital in Salt Lake 
City, Columbia Presbyterian Hospital in NYC, and Vanderbilt Hospital in 
Nashville, have had highly integrated and functional clinical computing 
systems for decades. In 1993, the American Medical Informatics 
Association termed these systems Patient-Centered. What distinguished 
these information systems was that patient care--not cost accounting or 
billing--was the primary mission, and the systems were designed by 
clinicians for clinicians. In a Patient-Centered system, data is 
entered once and shared many times. When a patient is admitted to the 
hospital from the ER in one of these health systems, a single keystroke 
moves his or her clinical information to the caregivers who need to 
have it, when they need to have it. The National Library of Medicine 
supported the specialized training of the physicians, nurses, and 
health professionals who run these systems, and the Agency for 
Healthcare Research and Quality (and its predecessors) have supported 
their evolution and unbiased evaluation. Today these systems provide 
replicable models for the effective use of information technologies for 
patient safety, e-prescribing, electronic health records, and community 
information networks.
    There is no question that electronic health records improve patient 
care. There are numerous scientific studies that prove it. But most 
physicians do not have electronic health records (EHR) in their private 
offices--Why? Even in a city like Boston where most of the hospitals 
have Patient-Centered information systems and many physicians do have 
EHRs, citywide connectivity and interoperability are the exception 
rather than the rule. These hospitals and physician offices could 
securely exchange patient data across the street or across town (or 
across the world for that matter), but they don't--Why? Why do we still 
rely far too much on ``sneakerware'', asking patients and their 
families to carry medical records and reports across the boundaries of 
our fragmented health system? The answers to these questions are 
complex--and are influenced by factors ranging from the significant 
time constraints of managed care to misaligned financial incentives 
that reward episodic care rather than the quality of care delivered--
but in large measure it is people and policies that have created the 
barriers, not technology. And, I would argue, informed people--
especially, informed patients--and enlightened policies can overcome 
the barriers.
    For each of us, healthcare is a local experience. Healthcare well 
delivered is not about procedures or sophisticated technologies; it is 
about communication, coordination and collaboration between a patient, 
their family, and their care team. This circle of care revolves around 
the home and community, not the hospital. Most physicians practice 
outside the hospital and most of your constituents spend very little 
time in the hospital. The decision to seek medical care is made in the 
home and hence we need to provide healthcare in the home. Telemedicine, 
literally ``care at a distance'', is not a futuristic idea, but is 
routinely practiced by Dr. Michael Kienzle and his team in Iowa as they 
care for elderly throughout their state with the ``Clinic in Every 
Home.'' In Wisconsin, Dr. Patricia Brennan and her team routinely link 
with post hospitalization patient with the Internet-based HeartCare 
program. Similar programs of eHealth or ``cybermedicine'' as Professor 
Warner Slack at Harvard likes to call it are underway in many states.
    CST' Baby CareLink, which I helped develop, is Internet 
technology that empowers parents to participate the care of the sick 
child--which in turn improves care and lowers costs. Baby CareLink, now 
running in eight states in 13 different health systems, is specifically 
designed for a parent who may never have used a computer or the 
Internet before. Written at a 6th grade reading level in English and 
Spanish, Baby CareLink delivers just-in-time information to help a 
parent navigate our complex healthcare system. In a recent report to 
the State of Colorado, which funds Baby CareLink through a public-
private partnership with the very generous support of Johnson & 
Johnson, parents who frequently used the Baby CareLink took their 
infants home from neonatal intensive care units two weeks sooner than 
families who were less frequent users. The benefit for Medicaid parents 
was even greater, with even earlier discharges and greater potential 
costs savings. At Stroger Cook County Hospital, Baby CareLink has 
literally stepped over the digital divide, providing new tools for 
clinicians and their patients to communicate, collaborate and 
coordinate the care of fragile newborns. We had been told repeatedly 
that poor people will not use the Internet, but what we discovered is 
that motivated parents, regardless of economic status, eagerly use 
interactive tools that are appropriately written and presented. In 
fact, interactive tools written with low reading and health literacy in 
mind are clearly better educational investments than printed materials. 
Wouldn't the millions of dollars a year we spend on printing brochures 
that we know are ineffective be better spent on innovative children's 
health related information technology?
    Consumerism is coming to healthcare, as it has to almost every 
other industry. A huge sea-change is beginning in healthcare. The 
Internet has unleashed information and health-related online 
communities are flourishing. But, Americans and their physicians and 
nurses remain largely disconnected. Over 40% of families that we 
surveyed at the Jimmy Fund clinic in Boston found the phone method of 
communicating with their care team inadequate; over 40% of your 
constituents say they want to email their physicians. Yet, only 5 to 
10% of American physicians agree to respond to email from their 
patients. Why hasn't consumer demand forced change in the healthcare 
market? Part of the problem is that at the ATM machine the transaction 
is easy to quantify and understand, but in the physician's office the 
outcomes of good (and bad) communications are intensely personal.
    Let me conclude with four areas that I think government can focus 
on and support to help promote innovative uses of information 
technologies, and the long-term health of our citizens.
    First, we need to train a new generation of physicians, nurses, and 
health professionals to lead the development, selection and 
implementation of patient-centered health information systems. These 
professionals, trained at the university level in applied clinical 
informatics, will transform the clinical IT landscape. In Boston, the 
CIO's of the two largest health systems, John Glaser, PhD at Partners 
Healthcare and John Halamka, MD at CareGroup, as well as Daniel Nigrin, 
MD at the Children's Hospital, are all products of NLM funded post 
doctoral training programs in informatics. We should require the 
accreditation of informatics training programs, just as we require the 
accreditation of any other clinical specialty.
    Second, we need an unbiased and up-to-date clearinghouse of 
products and implementation strategies to inform health systems and 
physicians about health IT options. Even as Dr. Brailer, in his role as 
National Health Information Technology Coordinator, and the Commission 
on Systemic Interoperability chartered under the Medicare Modernization 
Act are facilitating the absolutely critical development and 
dissemination of agreed-upon standards for health IT systems, 
government--through the AHRQ, the NLM or another mechanism--can help 
foster a more open and efficient marketplace by funding an independent 
national resource containing research, evaluations and business 
outcomes relating to the wide range of health IT choices available 
today. Simply, a database of what `works' and doesn't work would be 
invaluable in helping direct future health care IT investments by 
hospitals and physicians, and someday even consumers.
    Third, we need to make the availability of information technology a 
priority for underserved populations to improve communication and 
coordination of their health care needs. We should not use the digital 
divide as an excuse for avoiding the hardest health care problems. Our 
experience with Baby CareLink suggests that even modest support of 
appropriately designed Internet-based information systems that can 
provide the information that patients and their families really need 
can result in significant improvements in health care quality, even as 
it reduces costs.
    Lastly, we should turn our focus from the hospital and physician 
office into the home. While good hospital information systems and 
electronic health records are a necessity, I believe that the personal 
health record, a lifelong electronic repository of health information 
controlled by the patient, will be the key evolutionary step towards a 
new health paradigm that is truly Patient Centered.
    In our country, patients are the most under-utilized resource, and 
they have the most at stake. They want to be involved and they can be 
involved. Their participation will lead to better medical outcomes at 
lower costs with dramatically higher patient/customer satisfaction. We 
should remember that the real goal of improved health information 
systems is not better hospitals or better physician practices, but 
better quality of health care and healthier consumers.
    Thank you for allowing me to speak with you today. I will be happy 
to answer any questions.

                                 

    Chairman JOHNSON. Thank you very much. Ms. Marchibroda.

   STATEMENT OF JANET MARCHIBRODA, CHIEF EXECUTIVE OFFICER, 
                       EHEALTH INITIATIVE

    Ms. MARCHIBRODA. Madam Chairman Johnson, Congressman Stark, 
distinguished Members of the Subcommittee, I am honored to be 
here today to testify before you on the role of IT in improving 
quality, safety, and efficiency in health care. My name is 
Janet Marchibroda. I am testifying today on behalf of the 
eHealth Initiative and serve as its CEO. I am also Executive 
Director of the Foundation for eHealth Initiative. Both are 
Washington, D.C.-based, national nonprofit organizations whose 
missions are the same: to improve the quality, safety, and 
efficiency of health care through information and IT. I also 
serve as the Executive Director of Connecting for Health, a 
public-private sector collaborative funded and led by the 
Markle and Robert Wood Johnson Foundations that is designed to 
address the barriers to the development of an interconnected 
electronic health information infrastructure.
    There is a looming health care crisis in our country. As 
Americans, we are faced with, as we know, an aging population, 
health care cost increases, dissatisfied clinicians abandoning 
the practice of medicine, a shortage of nurses, rising numbers 
of uninsured, and baby boomers demanding greater 
accountability. We are at a place where there is a crisis 
requiring a new kind of thinking about how we should manage and 
deliver health care. The evidence is clear and compelling that 
the way we delivered care before will not fit the world as it 
is now, and we have to become more efficient and effective, and 
IT can play a critical role in addressing these challenges.
    Right now, as we have heard from the other folks that have 
testified, the health care system is highly fragmented, with 
information stored in a variety of formats which in most cases 
are not connected. In an electronic information age when vital 
data can be transferred electronically at the speed of light, 
only a fraction of health care data is accessed and transferred 
digitally. More than 90 percent of our estimated 30 billion 
health care transactions in the United States each year are 
still conducted by phone, fax, or mail. As a result, the 
information that is needed to support the care of patients is 
not available when it is needed and where it is needed to 
support both clinical decisionmaking and patients as they 
navigate our health care system.
    There is now clear and compelling evidence that IT will 
indeed help to improve quality, safety, and efficiency, and 
those statistics are outlined in detail in my written 
testimony. Despite evidence of the quality, safety, and 
efficiency improvements that can be achieved through the use of 
IT, adoption rates continue to be low. In our discussions with 
many hospitals, clinicians, plans, employers in the health care 
system, the following have emerged as the key barriers to 
adoption.
    First of all, the lack of standards and interoperable 
systems. While some gains could be achieved by putting EHRs in 
every clinician's office, we won't truly recognize the value 
unless they are interoperable and interconnected. Number two. 
The need for up front funding for those who really need help, 
and a misalignment of incentives. That was number two. Number 
three. Organizational change within the clinician's office. 
Four, the need for leadership both within government and in the 
private sector.
    There is a great deal of work that is going on across both 
the public and private sectors to tackle each of these 
barriers. Many groups have made great strides including in the 
Federal government, the Consolidated Health Informatics 
Initiative, and the National Committee on Vital and Health 
Statistics in the standards arena. In the MMA in particular, 
the standards requirements in the electronic prescription 
program, and also the standards requirements in the Medicare 
management performance demonstrations will help to spur 
adoption of data standards.
    In addition, in order to buildupon the current momentum, 
activities should continue on the current trajectory, and the 
Federal Government should continue to play its strong role in 
data standards. In addition, demonstration projects should be 
constructed ideally through public-private sector partnerships 
to test and evaluate standards related to data, technical 
architecture, and security so that lessons learned and various 
tools and resources can be shared with other communities across 
the country who are adopting IT and emerging health information 
exchange.
    Second, with regard to misalignment of incentives and 
funding, our 50 million health IT grant program received an 
unprecedented amount of interest from hundreds and hundreds of 
health care stakeholders interested in technology-related 
projects. The eHealth Initiatives Connecting Communities for 
Better Health program conducted in cooperation with Health 
Resources and Services Administration (HRSA), which is 
providing seed funding to multi-stakeholder collaboratives 
within communities revealed that 134 communities across America 
in 42 States and the District of Columbia had pulled together 
stakeholders from at least 3 stakeholder groups, and they have 
matched funding already and they were seeking additional 
funding. I think there is a real opportunity for the public and 
private sectors to work together to facilitate this change 
across our country.
    Finally, as it relates to alignment of incentives, I think 
that the MMA and the chronic care provisions related thereto 
offer an excellent opportunity to support movement toward an 
electronic health care system by leveraging and rewarding those 
applications that, at the same time, build a health information 
infrastructure.
    In conclusion, health care IT holds great promise for 
helping our Nation address its health care challenges, but 
there are many barriers to adoption, including those related to 
leadership, financing, standards, and organizational change. We 
at the eHealth Initiative are committed to working with the 
public and private sectors to tackle these barriers.
    Madam Chairman Johnson, Congressman Stark, distinguished 
Members of the Subcommittee, thank you for inviting me to 
discuss our perspectives on the role of IT. We commend you and 
your Committee for the work that you have done to improve the 
quality, safety, and efficiency of health care for patients 
through IT for all Americans. Thank you.
    [The prepared statement of Ms. Marchibroda follows:]
   Statement of Janet Marchibroda, Chief Executive Officer, eHealth 
                               Initiative
    Madame Chairwoman Johnson, Congressman Stark, distinguished members 
of the Subcommittee, I am honored to be here today to testify before 
you on the role of information technology in improving quality, safety 
and efficiency in healthcare. My name is Janet Marchibroda. I am 
testifying today on behalf of the eHealth Initiative and serve as its 
Chief Executive Officer. I am also Executive Director of the Foundation 
for eHealth Initiative. Both are Washington, D.C.-based national non-
profit organizations whose missions are the same: to improve the 
quality, safety and efficiency of health and healthcare through 
information and information technology. The eHealth Initiative's 
membership includes clinicians, employers, health plans, healthcare IT 
suppliers, hospitals and other healthcare providers, consumer groups, 
pharmaceutical and medical device manufacturers, public health 
organizations, standards bodies, and academic institutions that have 
interests in improving healthcare through information technology. I 
also serve as the Executive Director of Connecting for Health, a 
public-private sector collaborative established by the Markle 
Foundation which receives additional funding and support from the 
Robert Wood Johnson Foundation that is designed to address the barriers 
to development of an interconnected health information infrastructure.
    In my remarks today, I will share some information and observations 
about what we believe are the key challenges to improving healthcare in 
America, information technology's role in addressing those challenges, 
the current state of the healthcare system as it relates to information 
technology adoption, the key barriers the system is facing in achieving 
progress, and strategies that both the public and private sectors can 
employ to promote the usage of information technology to support better 
health and healthcare.

Challenges Within the U.S. Healthcare System

    There is a looming healthcare crisis in our country. As Americans 
we are faced with an aging population, healthcare cost increases, 
dissatisfied clinicians abandoning the practice of medicine, a shortage 
of nurses, access problems created by lack of health insurance 
coverage, and baby boomers demanding greater accountability.
    By 2030, one in five Americans will be over 65 years of age, 
consuming a larger portion of our healthcare resources. And with rising 
healthcare costs continuing to drive up health insurance premiums (2002 
premium increases averaged 12.7 percent), healthcare purchasers are 
finding themselves choosing between wage increases or higher subsidies 
for health insurance. The rate of healthcare inflation is at an all-
time 12-year high, at eight times the general inflation rate.
    Clinicians also are facing rising insurance premiums, but of 
another sort: malpractice rates. Many are leaving medical practice due 
to escalating premiums and the increasing challenges of an overly 
complicated healthcare system. And clinicians are not the only ones in 
the healthcare sector facing challenges. Nurses are becoming scarcer, 
with a current shortfall of approximately 400,000 nurses nationwide. 
Thirty states had a shortage of registered nurses in 2000, and 44 
states and the District of Columbia are expected to have a shortage in 
2020.
    Access problems are further complicated by those lacking 
appropriate healthcare coverage. Today, 15.8 percent of the U.S. 
population is not covered by health insurance. This leaves close to 44 
million Americans without financial coverage for major medical 
emergencies and access to needed medical care on an ongoing basis.
    The Institute of Medicine (IOM) and other highly regarded 
organizations have published a great deal of information regarding the 
patient safety challenges currently experienced in our healthcare 
system. According to the IOM, medical errors in hospitals kill an 
estimated 44,000 to 98,000 people per year--more than those that die in 
motor vehicle accidents (43,458), or from breast cancer (42,297). 
Adverse events occur in up to 3.7 percent of hospitalizations, with up 
to 13.6 percent of them leading to death.\1\ Studies show that adverse 
drug events occur in 5 to 18 percent of ambulatory patients.\2\ In a 
2001 Robert Wood Johnson survey, 95 percent of doctors, 89 percent of 
nurses and 82 percent of healthcare executives said that they have 
witnessed serious medical errors. Forty-seven percent of patients 
surveyed in 2000 by AHRQ and the Kaiser Family Foundation say they are 
concerned about experiencing a medical error. In many cases, physicians 
do not know what drugs a patient is currently taking because of the 
lack of information technology and connectivity.
---------------------------------------------------------------------------
    \1\ To Err Is Human: Building a Safer Health System, Institute of 
Medicine, 2000.
    \2\ Leape LL, Bates DW, Cullen DJ, Cooper J, Demonaco HJ, Gallivan 
T, et al. Systems analysis of adverse drug events. ADE Prevention Study 
Group. JAMA. 1995;274: 35-43.
---------------------------------------------------------------------------
    There are also opportunities for improvement in the quality of care 
that is delivered. A June 26, 2003 report in the New England Journal of 
Medicine documents the appropriateness of treatment for 7,528 adults. 
Their research revealed that American adults, on average, receive only 
a little more than half (54.9 percent) of the healthcare measures 
recommended for their conditions--and the lead author pointed to the 
need for ``a major overhaul of our current health information systems'' 
as a key step to fix the problem.\3\
---------------------------------------------------------------------------
    \3\ From a June 26, 2003 report in USA Today, ``50/50 chance of 
proper health care,'' by Rita Rubin.
---------------------------------------------------------------------------
    Finally, in addition to challenges in the healthcare delivery 
system, the U.S. is experiencing challenges in the public health 
system. Recent threats including those related to SARS and West Nile 
Virus, as well as the terrorist acts of September 11, 2001 underscore 
the vital significance of disease surveillance in protecting the public 
from natural and unnatural outbreaks.
    As Americans we are at a place where there is a real social, 
political and economic crisis requiring a new kind of thinking about 
how we should manage and deliver healthcare. The evidence is clear and 
compelling that the way we delivered care before will not fit the way 
the world is now. We have to become more efficient and effective, and 
information technology can play a critical role in addressing these 
challenges.

The Role of Information Technology in Addressing Healthcare Challenges

    According to the IOM's report--Crossing the Quality Chasm, ``If we 
want safer, higher quality care, we will need to have redesigned 
systems of care, including the use of information technology to support 
clinical and administrative processes--the current care systems cannot 
do the job. Trying harder will not work. Changing systems of care 
will.''
    The U.S. healthcare system, representing approximately $1.4 
trillion or 14 percent of the nation's gross domestic product, is 
highly fragmented, with information stored in a variety of formats 
(often paper-based) which in most cases are not connected. Each 
healthcare entity, public and private--clinicians, hospitals, insurers, 
researchers--gathers and holds its own information, most often in paper 
form. In an electronic information age when vital data can be 
transferred electronically at the speed of light, only a fraction of 
healthcare data is accessed and transferred digitally. More than 90 
percent of the estimated 30 billion healthcare transactions in the 
United States each year are still conducted by phone, fax or mail.\4\
---------------------------------------------------------------------------
    \4\ Michael Menduno, ``apothecary.now,'' Hospitals and Health 
Networks, July 1999, 35-36.
---------------------------------------------------------------------------
    As a result, the information that is needed to support the care of 
patients is not available when it is needed and where it is needed to 
support both clinical decision-making and patients as they navigate our 
complicated healthcare system. The absence of readily available, 
comprehensive, patient-centric health information and ready access to 
clinical knowledge negatively affects healthcare at every level.
    Clinicians sometimes are forced to approach patient care with 
incomplete information about a patient and without point-of-care access 
to the multitude of clinical decision support guidelines that are 
available to guide them. The volume and complexity of these guidelines 
is growing so fast that they cannot be accessed effectively without the 
use of information technology. As a result, clinicians may 
unnecessarily repeat tests, call for unnecessary hospital stays, or 
advise ineffective (or sometimes dangerous) treatments. Research shows 
that physicians spend and estimated 20% to 30% of their time searching 
and organizing information. And in fact, today, 10 to 81 percent of the 
time, physicians do not find patient information they need in a paper-
based medical record.\5\ This can lead to duplication of lab tests and 
other medical services, delays in treatment, and the increased risk of 
medication errors.
---------------------------------------------------------------------------
    \5\ Clinical Information: Achieving the Vision, 2002; Kaiser 
Permanente.
---------------------------------------------------------------------------
    In addition, researchers and public health officials do not have 
ready access to aggregate data to track diseases or measure the 
effectiveness of treatments. Patients cannot easily view their own 
health records or transfer their own health information from clinician 
to clinician. Businesses cannot measure the effectiveness of clinicians 
or health systems in delivering safe, quality care.
    There is now clear and compelling evidence that information 
technology will indeed help to improve the quality, safety and 
efficiency of our Nation's healthcare system.
    A recent study from the Center for Information Technology 
Leadership indicates that we can achieve $44 billion in savings 
annually in reduced medication, radiology, laboratory, and 
hospitalization expenditures from 100 percent adoption of Computerized 
Provider Order Entry (CPOE) in the ambulatory care environment. A more 
recent study indicates that standardized healthcare information 
exchange among healthcare IT systems would deliver national savings of 
$86.8 billion annually after full implementation and would result in 
significant direct financial benefits for providers and other 
stakeholders.
    According to the CITL CPOE data, more than two million adverse drug 
events and 190,000 hospitalizations per year could be prevented using 
IT.\6\ Further, evidence from Brigham & Women's Hospital concluded that 
through use of CPOE, error rates were reduced by 55 percent, from 10.7 
to 4.9 per 1,000 patient days.\7\ A recent study of intensive care 
patients by Kaiser Permanente found that when physicians used a CPOE 
system, incidents of allergic drug reactions and excessive drug dosages 
dropped by 75 percent, and the average time spent in the intensive care 
unit dropped from 4.9 days to 2.7 days, reducing costs by 25 
percent.\8\
---------------------------------------------------------------------------
    \6\ The Value of Computerized Provider Order Entry in Ambulatory 
Settings, Center for Information Technology Leadership, 2003.
    \7\ Bates et al., JAMA, October 1998.
    \8\ Clinical Information: Achieving the Vision, 2002; Kaiser 
Permanente.

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Current Levels of Information Technology Adoption

    Despite evidence of the quality, safety and efficiency improvements 
that can be achieved through the use of information technology, 
adoption rates continue to be low. More than 90 percent of the 
estimated 30 billion health transactions each year are conducted by 
phone, fax or mail.\9\ Forty percent of surveyed healthcare 
organizations planned to spend 1.5 percent or less of their total 
operating budgets last year on IT, and 36 percent set spending at 2 to 
4 percent.\10\ This compares to an average IT investment of 8.5 percent 
in other industries.\11\
---------------------------------------------------------------------------
    \9\  Michael Menduno, ``apothecary.now,'' Hospitals and Health 
Networks, July 1999, 35-36.
    \10\ An info-tech disconnect, Modern Healthcare, February 10, 2003.
    \11\ InformationWeek Research's Evolving IT Priorities 2002 and 
2003.
---------------------------------------------------------------------------
    It appears that the organizations and individuals who are taking 
the lead in the adoption of information technology are the ones who 
truly believe that healthcare information technology can save money and 
improve healthcare quality, safety and efficiency as well as those who 
have been able to offset those investments through grant programs. 
Those who have been the slowest adopters are those who have had limited 
access to capital, and those who have not had ongoing financial 
incentives to support their adoption.
    On the individual practitioner level, only 5 to 10 percent of 
physicians use electronic medical records in their practices. And in 
the electronic prescribing area--some research shows that less than 5 
percent of U.S. physicians currently ``write'' prescriptions 
electronically.\12\
---------------------------------------------------------------------------
    \12\ ``A call to Action: Eliminate Handwritten Prescriptions Within 
3 Years!'' Institute for Safe Medical Practices. http://www.ismp.org/
msaarticles/whitepaper.html.
---------------------------------------------------------------------------
    At the facility level, while 13 to 15 percent of hospitals have 
implemented some form of computerized medication order entry, 
physicians in these organizations enter less than 25 percent of their 
orders using the system.\13\
---------------------------------------------------------------------------
    \13\ American Society of Health-System Pharmacists Study.

---------------------------------------------------------------------------
Demand is Emerging from Clinicians and Consumers

    It is clear that demand for information technology adoption is now 
emerging from clinicians and consumers. Recent activities related to 
information technology by groups such as the American Academy of Family 
Physicians, the American College of Physicians, and the American 
Medical Association serve as a signal of this increased interest. In 
fact, a recent Medical Group Management Association (MGMA) study 
indicates that 22.8 percent of respondents thought that use of the 
electronic medical record (EMR) would result in decreased costs, and 31 
percent believed it would increase patient satisfaction.
    There is also increasing consumer demand for electronic tools that 
will support navigation of the healthcare system. A study by Jupiter 
Media Metrix showed that 54 percent of consumers were willing to 
``switch'' to a physician who would use e-mail to schedule 
appointments, renew prescriptions, answer treatment questions and check 
lab reports. A 2003 Foundation for Accountability (FACCT) survey 
conducted as part of Connecting for Health found that over 70 percent 
of consumers surveyed believed a personal health record would improve 
quality of care. When respondents were asked about having health 
information online, 71 percent said it would clarify doctor 
instructions, 65 percent said it would prevent medical mistakes, 60 
percent said it would change the way they manage their health and 54 
percent said it would improve quality of care.\14\
---------------------------------------------------------------------------
    \14\ Connecting for Health. The Personal Health Working Group Final 
Report: July 2003, p. 5.

---------------------------------------------------------------------------
Barriers to Information Technology Adoption

    In discussions with stakeholders across the healthcare system, 
including clinicians, hospitals, health plans, employers and healthcare 
information technology suppliers--the following have emerged as the key 
barriers to adoption:

      Lack of Standards and Interoperable Systems. The lack of 
interoperable systems and data standards has often been cited as a key 
barrier to adoption. According to a 2002 survey conducted by the 
Medical Records Institute, clinicians across a variety of settings 
identified ``difficulty in finding an electronic medical record 
solution that is not fragmented over several vendors or IT platforms'' 
as a top barrier.\15\ While some gains could be achieved through the 
adoption of electronic health records across the healthcare system, the 
real value--particularly within clinician offices--expressed in terms 
of quality, safety, and efficiency will only be achieved if such 
systems are interoperable and electronic connectivity is achieved, so 
that clinicians have key information--such as that related to 
laboratory tests and prescriptions--when and where it is needed--at the 
point of care.
---------------------------------------------------------------------------
    \15\ The Medical Records Institute and SNOMED. Fourth Annual MRI 
Survey of Electronic Health Record Trends and Usage. 2002.
---------------------------------------------------------------------------
      Lack of Upfront Funding and Misalignment of Incentives. 
Practicing clinicians, hospitals and other healthcare providers often 
cite the lack of upfront funding and business models to support ongoing 
usage as key barriers to adoption. In addition, emerging research 
indicates that there is a misalignment between those who pay for the 
implementation and ongoing usage of information technology and those 
who benefit from its usage. Under the current healthcare system, 
benefits related to the gains in quality, safety, and efficiency are 
spread across all stakeholders while the real costs are borne by only a 
few. Incentives must be realigned to facilitate the exchange and 
sharing of data and information across and between organization, 
institutions, providers, and payers. In a survey of provider CEOs, 25 
percent cited lack of financial support as a barrier, while 17 percent 
cited the need to provide quantifiable benefits or return on investment 
as the greatest barrier.\16\ A recent survey of 5,000 family physicians 
conducted by the American Academy of Family Physicians found that 60.5 
percent cited affordability as a barrier to adopting electronic medical 
records.
---------------------------------------------------------------------------
    \16\ Healthcare Information and Management Systems Society and 
Superior Consultant Company, 14th Annual HIMSS Leadership Survey. 2003.
---------------------------------------------------------------------------
      Organizational Change Issues. A recent survey of 5,000 
family physicians conducted by the American Academy of Family 
Physicians found that 54.2 percent cited worries about slower workflow 
or lower productivity.\17\ This has been confirmed through several 
meetings and discussions with practicing clinicians across the country.
---------------------------------------------------------------------------
    \17\ Ibid.
---------------------------------------------------------------------------
      Need for Leadership. In order to drive transformational 
change, leadership is needed from both the public sector--both at the 
federal and state level--and every segment of the private sector--
including clinicians, hospitals, laboratories, payers, employers and 
other healthcare purchasers, manufacturers of pharmaceutical and 
medical devices, public health agencies, and those who build and 
implement information technology.

Public and Private Sector Strategies for Addressing Barriers

    There is a great deal of work going on in both the public and 
private sectors to overcome the barriers identified above to drive 
improvements in the quality, safety and efficiency through the use of 
information technology but clearly more work still needs to be done.
    The eHealth Initiative and its Foundation and key initiatives such 
as Connecting for Health, have taken an active role in advancing the 
development and implementation of policies and practical strategies by 
key stakeholders across the healthcare system to promote a healthcare 
system that mobilizes information to support patients through 
electronic connectivity and the use of standards-based, interoperable 
information systems. The following summarizes key steps taken by our 
organization, the public sector and several other private sector 
organizations that are moving us towards an interoperable, electronic 
healthcare system.

Standards and Interoperable Systems

    Many influential groups have made great strides in both the 
development and adoption of standards to support a higher quality, 
safer and more efficient healthcare system enabled by information 
technology. Within government, the Consolidated Health Informatics 
Initiative has played an integral role in gaining consensus on the data 
standards that the Federal government will use in its own operations. 
The National Committee on Vital and Health Statistics has played a 
critical role by providing ongoing advice and counsel to the Secretary 
of the Department of Health and Human Services regarding the standards 
that should be adopted to promote an interoperable, electronic 
healthcare system.
    Through Connecting for Health, a public-private sector 
collaborative in which the Foundation for eHealth Initiative is 
involved, leaders across every sector of healthcare achieved consensus 
on a first set of data standards that should be adopted by our 
healthcare system, which played a considerable role in moving this work 
forward. Connecting for Health is extending this work further in its 
second phase, through the development of recommendations which address 
technical architecture, applications and standards to support 
electronic connectivity and IT adoption.
    The eHealth Initiative and its Foundation have played an integral 
role in promoting standards adoption. Through our Public-Private Sector 
Collaborative for Public Health, we developed strategies and practices 
for transmitting data electronically--using standards--to support 
public health surveillance processes. Our Connecting Communities for 
Better Health Program, conducted in cooperation with with the U.S. 
Health Resources and Services Administration (HRSA) is providing seed 
funding to nine multi-stakeholder collaboratives within communities 
across the country who are using IT and mobilizing information across 
institutions to support quality, safety, efficiency and public health 
goals within their regions. One of the key criteria for selection was 
the usage of standards in electronic data transmission conducted as 
part of the project. These projects will be announced to the public 
over the next month.
    The Medicare Prescription Drug, Improvement and Modernization Act 
of 2003 (MMA) provides critical provisions that will promote the 
adoption of data standards, including the standards requirements 
included in both the electronic prescription program and the ``Medicare 
Care Management Performance Demonstration'' as well as the creation of 
the Commission on System Interoperability which will develop a 
comprehensive strategy, timelines and priorities for the adoption and 
implementation of healthcare information technology standards. In 
addition to the MMA, H.R. 2915, the National Health Information 
Infrastructure Act of 2003 also provides critical provisions that will 
facilitate the adoption of standards to promote interoperability. The 
eHealth Initiative supports this bill and commends Chairwoman Johnson 
for her leadership.
    In order to build upon the current momentum for standards 
development and more importantly--adoption of existing standards, 
activity should continue on the current trajectory. The Federal 
Government should continue to play a strong role in the development and 
adoption of standards within its own programs. It should provide 
incentives to the private sector to promote the usage of such 
standards, and it should work closely with the private sector in 
establishing consensus on the standards that should be adopted.
    To accelerate the adoption of information technology adoption and 
an interoperable healthcare system, demonstration projects should be 
conducted--ideally through public-private sector partnerships--to test 
and evaluate standards and specifications related to data, technical 
architecture, applications and security--so that lessons learned and 
various tools and resources can be shared with other communities across 
the country who are adopting information technology and engaging in 
health information exchange activities.

Lack of Upfront Funding and Misalignment of Incentives

    Progress on addressing the second key barrier--financing--has 
lagged behind the significant work around data standards and 
interoperable systems, despite the demand from both healthcare 
communities and stakeholders across the country.
    The Agency for Healthcare Research and Quality's $50 million Health 
Information Technology grant program received an unprecedented amount 
of interest from hundreds and hundreds of providers and other 
healthcare stakeholders interested in grant funding to support both 
planning and implementation of information technology-related projects. 
In response to a request for proposal sent out by the Foundation for 
eHealth Initiative as part of its Connecting Communities for Better 
Health program conducted in cooperation with HRSA, proposals came in 
from 134 communities representing 42 states plus the District of 
Columbia, who were interested in implementing information technology 
and sharing clinical data electronically across at least three 
stakeholder groups, and who had secured matched funding to support this 
work. The response from both of these programs indicates that 
communities across America, and the healthcare leaders who reside 
within them, are ready to move towards an interoperable, electronic 
healthcare system, but will need help in getting there. Our dialogue 
with several of these communities indicates that, while the creation of 
these programs has stimulated a great deal of interest and in many 
cases, has created the impetus for a multi-stakeholder consortium of 
leaders to take this work forward--that efforts will be hampered by the 
lack of capital required to get this work off the ground.
    A small number of pilot projects are emerging that are driven by 
both employer-purchasers and health plans that provide incentives to 
clinicians, hospitals and other healthcare providers who are using 
information technology to deliver higher quality healthcare. The 
Bridges to Excellence Program is one example of an initiative that is 
developing and evaluating reimbursement models that encourage the 
recognition of healthcare providers who demonstrate that they have 
implemented comprehensive solutions in the management of patients and 
deliver safe, timely, effective, efficient, equitable and patient-
centered care which is based on adherence to quality guidelines and 
outcomes achievement. Adoption of health information technology, with 
special emphasis on fully functional electronic medical record systems, 
equipped with electronic prescribing modules and robust clinical 
decision support, is being targeted for rewards. Physician practices 
will be able to earn up to $20,000 per physician per practice for 
adopting these systems.
    In addition, the MMA provisions related to a ``Medicare Care 
Management Performance Demonstration'' in Section 649, offer a valuable 
set of learning laboratories for testing and evaluating the impact of 
providing information technology to physicians on quality, safety and 
efficiency. It is imperative that these demonstrations be closely 
coordinated with private sector initiatives such as Bridges to 
Excellence, where possible, to coordinate market experiments.
    Finally, the chronic care provisions included in the MMA offer an 
excellent opportunity to support movement towards an electronic 
healthcare system by rewarding those applications that leverage 
integrative information infrastructures, new applications of 
information and communication technologies, expert clinical systems 
that incorporate evidence-based guidelines for multiple conditions, and 
predictive modeling capabilities to support their operations.
    In order to continue to move towards an electronic health 
information infrastructure and the adoption of health information 
technology, it is critical that policy options that both align 
incentives and provide federal investment be developed and implemented. 
These activities will not only accelerate movement, they will also 
serve to stimulate private sector innovation and investment in these 
activities. Current and emerging Federal programs should be leveraged 
to test and evaluate these policy options.

Organizational Change

    A number of initiatives have emerged--primarily in the private 
sector--to address organizational change issues and facilitate the 
migration towards an interoperable, electronic healthcare system. 
Successful adoption of electronic application depends upon the ease and 
speed with which the clinician can use it, as much as the value that it 
provides for quality, safety, and cost. It is affected by a number of 
factors including how well the system supports the specific workflows 
present within a clinician's office, and the specific features that the 
system provides to improve speed and efficiency. While the effective 
implementation of information technology ultimately improves outcomes 
and results in efficiency gains, migrating to a new system takes time 
and resources, and achieving full return on investment takes time. 
Because of the changes in care delivery and clinical care processes 
that are necessary in order to migrate towards the use of electronic 
systems, the provision of financial and other incentives designed to 
promote their usage are critical.
    To provide support to providers who are undergoing this transition, 
organizations such as AMIA and HIMSS are developing resources and 
educational materials that will help clinicians, hospitals and other 
healthcare providers effectively implement information systems. In 
addition, the eHealth Initiative and its Foundation have contributed to 
the field in two key areas. Through our Electronic Prescribing 
Initiative, the eHealth Initiative engaged more than 70 national 
experts and key stakeholders across every sector of healthcare and the 
prescribing chain to develop design, implementation and incentives 
recommendations that will facilitate the effective and rapid adoption 
of electronic prescribing in the ambulatory environment. 
Representatives from hospitals, clinician groups, healthcare IT 
suppliers, patient and consumer organizations, federal and state 
agencies, pharmaceutical manufacturing organizations, pharmacy benefits 
management organizations, health plans, pharmacies, and connectivity 
providers reached consensus on a set of recommendations related to the 
levels of electronic prescribing and the benefits that accrue at each 
level as well as detailed recommendations related usability, clinical 
decision support, communication, standards and vocabularies, 
implementation, and incentives.
    Through the Connecting Communities for Better Health Program the 
Foundation for eHealth Initiative is obtaining critical input from 
experts, ``on-the-ground'' implementers, and other key stakeholders to 
develop resources and tools related to technical, financial, 
organizational, and clinical challenge areas related to health 
information technology adoption and the mobilization of information 
across organizations. These resources and tools are being disseminated 
through our Community Learning Network and Resource Center and meetings 
such as the June 2004 Connecting Communities Learning Forum and 
Resource Exhibition, both of which provide both a learning network and 
a resource to enable communities and healthcare stakeholders to learn 
from national experts and each other, strategies for addressing the 
challenges related to implementation of IT and a health information 
infrastructure.
    Private sector organizations will and should continue to emerge to 
assist healthcare stakeholders as they migrate towards an electronic 
healthcare system. The Federal government can play a critical role by 
leveraging the work being conducted by private sector organizations and 
collaborations in this area. This is also an area that would benefit 
from public-private sector collaboration.

Leadership

    A number of key actions taken by both the public and private 
sectors have signaled a significant increase in the level of leadership 
around healthcare information technology issues.
    President Bush's recent executive order, which establishes the 
National Health Information Technology Coordinator position and calls 
on Federal leaders--within ninety days--to provide options to provide 
incentives to promote adoption of interoperable health information 
technology will play a critical role in helping to spur adoption of 
information technology within the healthcare system. The work of Dr. 
David Brailer--the new National Health Information Technology 
Coordinator--including that which is related to developing and 
implementing a strategic plan; advancing standards through 
collaboration with the private sector and evaluating benefits and costs 
of IT--will also be very important to stimulate cooperation within the 
public sector and collaboration related to these issues across both the 
public and private sectors.
    Connecting for Health, a public-private sector collaborative has 
also taken several steps to move us towards an interoperable healthcare 
system, including gaining consensus among diverse stakeholders across 
both the public and private sectors on an initial set of ``adoption-
ready'' data standards; developing a high-level value proposition for 
interoperability and a framework for migration; and identifying the 
high-level characteristics of the personal health record and survey on 
consumer attitudes. Over the next month, an incremental Roadmap for 
achieving electronic connectivity will be released by Connecting for 
Health which is designed to articulate the near-term actions that 
should be undertaken by both the public and private sectors to get to 
an electronic health information infrastructure. In addition, over the 
next few months, several recommendations which have been vetted by both 
the public and private sectors, which address a wide range of issues 
related to adoption of interoperable information systems will be 
released.

Conclusion

    In conclusion, healthcare information technology holds great 
promise for helping our Nation address its healthcare challenges. 
Evidence has shown that the effective implementation of information 
technology and the mobilization of information across organizations can 
result in significant improvements in healthcare quality, safety and 
efficiency and can also serve to protect and improve public health.
    But there are many barriers to the adoption of information 
technology and electronic connectivity, including those related to 
leadership, financing, standards and organizational change. It is 
imperative that we build upon the work being conducted by both the 
public and private sectors and the public-private sector partnerships 
that have emerged--to continue to drive the change that it necessary to 
help us achieve our vision of an electronic healthcare system that will 
lead to better health and healthcare for all Americans.
    Madame Chairwoman Johnson, Congressman Stark, distinguished members 
of the Subcommittee, thank you again for inviting me to discuss our 
perspectives on the role of information technology in addressing our 
healthcare challenges, the barriers that impede its adoption, and the 
strategies that can be employed to overcome these barriers. We at the 
eHealth Initiative are committed to working with both the public and 
private sectors to make our vision of an improved healthcare system 
enabled by information technology and electronic connectivity a 
reality. We commend you and your Committee for the work that you have 
done to improve the quality, safety and efficiency of healthcare for 
patients through information technology. Your introduction of H.R. 
2915, to accelerate the creation of a National Health Information 
Infrastructure, along with the inclusion of several important 
information technology provisions in the Medicare Prescription Drug, 
Improvement and Modernization Act of 2003 (MMA), and of course this 
hearing today all serve to improve our nation's healthcare system 
through information technology. Again, thank you for this opportunity 
and I look forward to answering any questions you may have.

                                 

    Chairman JOHNSON. Thank you very much. Dr. Overhage.

STATEMENT OF J. MARC OVERHAGE, M.D., PH.D., ASSOCIATE PROFESSOR 
OF MEDICINE, REGENSTREIF INSTITUTE, INDIANA UNIVERSITY, SCHOOL 
               OF MEDICINE, INDIANAPOLIS, INDIANA

    Dr. OVERHAGE. Good afternoon. My name is J. Marc Overhage, 
and I am an Associate Professor of Medicine at the Indiana 
University School of Medicine, and a Senior Investigator at the 
Regenstrief Institute. I also serve on the Board of Directors 
of the American Medical Informatics Association and the 
leadership governance of the eHealth Initiative. Primarily, I 
am a practicing general internist, a doctor for adults.
    I am here today to testify regarding our experience in 
developing a regional health information exchange in order to 
help the Committee understand how we created our exchange, and 
then to suggest ways in which the government may be able to 
help other communities do the same. The region where we have 
developed our health information exchange is central Indiana 
which, with a population of 1.6 million, is representative of 
other urban centers, and the health care delivery system there 
faces all of the challenges of which you are all acutely aware.
    The Regenstrief Institute is a not-for-profit medical 
research organization created in 1969, and is dedicated to the 
improvement of health through research that enhances the 
quality and cost effectiveness of health care. Thirty years 
ago, Clem McDonald began creating the Regenstrief Medical 
Records System, with three simple goals: first, to eliminate 
the logistical problems associated with the paper record; 
second, to standardize the care process to deliver information 
in a more organized and useful way; and, third, to analyze and 
understand the data to improve the health of populations.
    Beginning a decade ago with grant funding from the National 
Library of Medicine and the AHRQ, Dr. McDonald and I began to 
create and evaluate a regional health information exchange. We 
extended the functionality of the Regenstrief medical records 
system to include methods for matching patients without 
requiring a common identifying number, for standardizing how 
the systems represent the clinical information regardless of 
which organization generated the data, for combining the 
standardized clinical data into useful and acceptable fashions 
for care delivery, along with appropriate access controls and 
auditing to protect the privacy of the patients' data. In a 
pilot study, we showed very promising results, and on the 
strength of those results we were able to convince a larger 
number of organizations to participate in the collaboration 
that emerged and we now call the Indiana Network for Patient 
Care (INPC).
    This system allows providers, in compliance with the Health 
Insurance Portability and Accountability Act 1996 (P.L. 104-
191) privacy and security regulations, to obtain essential 
clinical data almost instantly from participating 
organizations. We have built a technology that supports the 
INPC on established clinical information standards, including 
the HL7 messages that define the format for exchanging data and 
Logical Observation Identifiers Names and Codes (LOINC) that 
identify laboratory tests. While standards continue to evolve, 
the INPC is proof that current standards are sufficient to move 
forward.
    We use a common web-based interface and single sign-on to 
simplify access for physicians. However, as you are well aware, 
today, only a small proportion of physician practices use any 
type of electronic health information systems in their 
practice. In order to address this problem, we have created an 
innovative tool called DOCS4DOCS to introduce a basic level of 
clinical information system utilization into physician 
practices.
    Perhaps most importantly, the DOCS4DOCS system provides 
services built around the health information and exchange that 
are sufficiently valuable that participants are willing to pay 
for them. The clinical messaging service which delivers results 
from hospitals, radiology centers, and other providers to 
physicians' offices in Indianapolis provides operating 
efficiencies to those organizations and allows the providers to 
receive the results in a reliable and efficient and uniform 
fashion.
    The ultimate measure of our success will be the creation of 
a sustainable funding model for the health information 
exchange. We have made substantial progress by creating the 
Indiana Health Information Exchange, which is a not-for-profit 
509(A)3 corporation that supports the first commercial services 
built on the health information exchange. Hospitals and other 
data providers who utilize the clinical messaging service pay 
for this service, receive a good return on their investment, 
and help underwrite and support the costs of the infrastructure 
for the other services.
    We have recently completed a multi-year study in which all 
of these hospitals sharing data with each other, and will be 
able to share the results of that study soon. When we asked 
care providers, though, how the health information exchange has 
helped them, they readily recall anecdotes. For example, one 
woman who was waiting to be seen in her provider's office 
suddenly collapsed. Her provider was able to identify her and 
retrieve her medical records within a few moments, and this 
allowed them to view her past medical history, medications, and 
allergies, providing them with information when the patient 
could not. It changed the decisions they were planning to make, 
and helped to take better care of this patient. In this case, 
the INPC acted as the patient's voice, speaking for her when 
she could not.
    As another example, a patient came to the emergency 
department with chest pain, and his providers thought that he 
was probably having a heart attack. As they were preparing to 
administer blood thinning medications that would help relieve 
his symptoms, they discovered through the INPC that the patient 
had had a head injury within the last 2 weeks, a 
contraindication of that medication, and perhaps prevented the 
patient from dying. There are a number of things I think that 
the government can do to help advance this cause that are 
detailed in my written testimony. Thank you very much.
    [The prepared statement of Dr. Overhage follows:]
    Statement of Marc Overhage, M.D., Ph.D., Associate Professor of 
  Medicine, Regenstreif Institute, Indiana University, Indianapolis, 
                                Indiana
    Good afternoon Mr. Chairman and Members of the Committee. My name 
is J. Marc Overhage and I am an Associate Professor of medicine at the 
Indiana University School of Medicine and a Senior Investigator at the 
Regenstrief Institute but I am also a practicing general internist, a 
doctor for adults. I am testifying today to share our experience 
developing a regional health information exchange in order to help the 
Committee understand how we created our health information exchange and 
then to suggest some ways in which the government can help other 
communities create their own health information exchanges.
    The Indianapolis MSA which includes 9 counties in central Indiana 
with a population of 1,607,486 is the 29th largest in the US. Afro-
Americans or blacks account for 13.9% of the population, Asians 1.2% 
and Hispanics (any race) 2.7%.
    There is a long history of successful public--private 
collaborations in central Indiana. The most recent example is 
Biocrossroads (www.biocrossroads.com) which is an economic development 
activity focused on growing Indiana's already formidable life sciences 
industrial base. We believe that a sustainable health information 
exchange will be such a public-private collaborative and that the 
communities familiarity and success with this model will facilitate the 
process.
    Five major hospital systems--Community Hospitals Indianapolis, St. 
Vincent Hospitals and Health Services, St. Francis Hospital and Health 
Centers, Clarian Health and Wishard Health Services serve Indianapolis. 
These five hospital systems operate a total of 11 different hospital 
facilities and more than 100 geographically distributed clinics and day 
surgery facilities. Collectively, these systems admit 165,878 patients, 
and serve more than 390,000 emergency room visits and 2.7 million 
clinic visits per years.

Regenstrief Medical Record System

    The Regenstrief Institute, Inc., (www.regenstrief.org) an 
internationally recognized informatics and healthcare research 
organization, is dedicated to the improvement of health through 
research that enhances the quality and cost-effectiveness of health 
care. Established in Indianapolis by philanthropist Sam Regenstrief in 
1969 on the campus of the Indiana University School of Medicine, the 
Institute is supported by the Regenstrief Foundation and closely 
affiliated with the I.U. School of Medicine and the Health and Hospital 
Corporation of Marion County, Indiana.
    Regenstrief Institute investigators have more than 30 years of 
experience with the capture, maintenance, and retrieval of electronic 
medical record information. The long-term Regenstrief Medical Record 
System (RMRS) i captures patient information from three 
hospitals on the Indiana University Medical Center campus and from 30 
clinics scattered around the inner city of Indianapolis. At Wishard, 
where it has been in operation since 1972, the RMRS captures all 
diagnostic studies (labs, EKGs, cardiac echoes, cytology, surgical 
pathology, bone marrow biopsies, obstetric ultrasounds, EMG, EEG, 
radiology studies, etc.) and all orders (including prescriptions) in a 
coded form. It also captures encounter information and the full text of 
all dictated reports (operative notes, discharge summaries, visit 
notes, radiology). The RMRS carries every EKG tracing produced at 
Wishard for the last 13 years, and every digital radiology image 
produced at IU/Riley and Wishard since August of 1999, and from 
Methodist hospital since January 2002. As JPEG compressed (10:1) files, 
the radiology images from these institutions consume 80 gigabytes per 
month.
---------------------------------------------------------------------------
    \i\ McDonald CJ, Overhage JM, Tierney WM, et. al. The Regenstrief 
Medical Record System: a quarter century experience. International 
Journal of Medical Informatics 1999;54:225-253.
---------------------------------------------------------------------------
    The RMRS also captures clinical data from 8 primary care 
neighborhood health centers and 27 public health clinics supported by 
the Marion County Health Department and all four homeless clinics in 
Indianapolis. In addition, the community and public health clinics can 
use the RMRS to schedule patients and capture all drugs prescribed and 
diagnostic tests performed. In each setting, the RMRS augments patient 
care and facilitates clinical research.
    Additional information is added to the RMRS from other sources. 
From the hospital case abstract tapes the system stores admission and 
discharge diagnoses, dates, and lengths of stay, and death date for 
patients who die in the hospital. Death information for all registered 
patients is obtained from hospital death summaries, autopsy reports, 
and the Indiana State Department of Health death certificate tapes.
    The long-term RMRS at Clarian Health Partnerscontains more than 3 
million patients and 420 million computer understandable clinical 
observations. This information is instantly available for patient 
management from over 2000 terminals and workstations around the medical 
center campus. The RMRS is one of the few systems that have captured 
large amounts of coded patient information from all patient care 
locations (inpatient, hospital and emergency room). It is also one of 
the oldest continuously maintained computer medical record systems in 
the country. Though we have changed programming and file structures 
three times over 30 years, we have always translated and carried 
forward the patient data from the old version of the system into the 
new system. So, we have all clinical data we collected since 1972 in 
one consistent electronic medical record format. No other EMR system 
can make that claim.
    These data are used heavily for research and management purpose. 
The Regenstrief Institute employs eight full-time data analysts to 
answer research and management requests related to this data for a 
large number of research projects. A recent example of the research 
value of the database is the report by Marc Rosenman, M.D. who found 
that IV erythromycin given to newborns was associated with a 10-fold 
increased risk of pyloric stenosis.ii
---------------------------------------------------------------------------
    \ii\ Mahon BE, Rosenman MB, Kleiman MB. Maternal and infant use of 
erythromycin and other macrolide antibiotics as risk factors for 
infantile hypertrophic pyloric stenosis. J Pediatr. 2001 
Sep;139(3):380-4.

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How we got started

    The first across hospital data sharing for clinical care began in 
Indianapolis in 1993. In that project Wishard Memorial Hospital 
provided access to its electronic medical record data to emergency 
department physicians caring for patients in the Community Hospital 
East and Methodist Hospital emergency rooms in Indianapolis. Building 
on this experience, all five of the major Indianapolis hospital systems 
and two large primary care groups joined in the Indiana (previously 
Indianapolis) Network for Patient Care (``INPC'' or ``Network'') in 
1997. All five hospital systems agreed to allow the exchange of patient 
data for access and use by various Indianapolis health care providers 
to render emergency and primary care. The primary goals of the INPC 
are: (1) reduction of the costs of care inefficiencies such as 
unnecessary repeat testing; (2) increased accuracy of medical diagnoses 
through common and rapid access to patient information through 
electronic means; and (3) utilization of the broad-based and ever-
growing collection of information on the Network for research purposes 
related to, among other things, studying the efficacy and cost-reducing 
effects of broad-based access to patient information and reviewing the 
information to learn about specific diseases and their treatment.
    The National Library of Medicine and the Agency for Healthcare 
Research and Quality supported the initial development of the INPC 
through their intramural grant program. The system currently includes 
data from 13 hospitals in five different hospital systems, the Marion 
County Health Department (MCHD) and a growing number of physician 
practices. These hospitals account for over 95% of all beds and ED 
visits in the Indianapolis MSA. The data collected include 
demographics, laboratory results, ED, inpatient and outpatient 
encounter data including free-text chief complaint, coded diagnoses and 
procedures, vital signs and other data, but not all these data elements 
are available for every participant. The core set of data currently 
received from all participants includes demographics, laboratory data, 
ED and inpatient encounter data including chief complaint, coded 
diagnoses and coded procedures. The system currently utilizes the real-
time laboratory result data for active surveillance of reportable 
conditions.
    The network provides e-mail services, Web access, electronic 
medical record access, medical library services and numerous special 
purpose functions (variously) at each institution. It also delivers 
clinical data to the central RMRS medical record system from a host of 
different departmental and administrative systems and provides care 
providers and researchers access to the data. The network provides 
pathways for interfaces to seven laboratory systems, seven hospital 
registration systems, four dictation transcription systems, four 
radiology systems, three pharmacy systems, three different EKG cart 
systems, two surgery scheduling system, and more than 20 other systems.
    Most of the larger interface use standard based HL7 messages. We 
have standardized the terminology at six organizations so that 
laboratory tests, radiology results and other patient information are 
described using the same terms no matter where the data comes from. We 
use a common interface and one sign-on to link users to independent 
clinical files at multiple institutions and to other services (such as 
library knowledge bases). We have developed mechanisms for linking 
patients registered independently in different institutions and for 
linking physicians' master files to the state physician identifying 
databases. Providers can enter clinical orders and visit notes or 
upload transcribed notes from any device on the network and the system 
will store them in the appropriate medical record file system.
    All INPC participants now deliver registration records, all 
laboratory tests, and all UB92 records (diagnosis, length of stay, and 
procedures codes) for hospital admissions and emergency room visits to 
separate electronic medical record vaults maintained on their behalf. 
The computer system standardizes all clinical data as it arrives at the 
INPC vault, laboratory test results are mapped to a set of common test 
codes with standard units of measure, and patients with multiple 
medical record numbers are linked.iii, iv Each institution 
has the same file structure and shares the same term dictionary which 
contain the codes, names (and other attributes) for tests, drugs, coded 
answers, etc. When a patient is seen in any of the 13 emergency rooms 
operated by participating hospitals, and the patient consents, the 
information from all of these institutions about one patient can be 
presented as one virtual medical record.
---------------------------------------------------------------------------
    \iii\ Overhage JM, Tierney WM, McDonald CJ. Design and 
implementation of the Indianapolis Network for Patient Care and 
Research. Bull Med Libr Assoc. January 1995;83(1):48-56.
    iv Overhage JM, Dexter PR, Perkins SM, Cordell WH, 
McGoff J, McGrath R, McDonald CJ. A randomized controlled trial of 
clinical information shared from another institution. Ann Emerg Med 
39(1);14-23, 2002.

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Patient ID merging

    There is no gold standard against which we can compare our patient 
matching algorithm. We have carried out formal comparisons of matching 
strategies that suggest our current algorithm has a 90-92% sensitivity 
and 100% specificity using combinations of social security number, 
gender, name, and birth date fields.v A less scientific but 
very important measure of how well the matching algorithm works is that 
we have never had a provider report an erroneous match providing 
additional evidence that specificity is near 100%.
---------------------------------------------------------------------------
    \v\ Grannis SJ, Overhage JM, McDonald CJ. Analysis of Identifier 
Performance using a Deterministic Linkage Algorithm. Proc AMIA Symp. 
2002; Submitted.
---------------------------------------------------------------------------
    We certainly miss some matches (sensitivity is less than 100%) and 
when we do we don't allow the clinician to see the data for the missed 
match. An error in entering the social security number at one 
participant, for example, will prevent that registration record from 
matching with other registration records from the same or different 
participants for that patient. If the patient is registered in an ED 
with the correct social security number, the global patient registry 
will not match the registration record with the erroneous social 
security number even though all the other data match. The provider 
caring for the patient has no way to see the ``close'' matches and 
cannot access the data for that patient.

Shared Pathology Information Network (SPIN)

    With funding from the National Cancer Institute, all of the INPC 
participants, as well as two new participants (the Indiana State 
Department of Public Health and their Indiana State Cancer Registry) 
participate in the Shared Pathology Information Network (SPIN). The 
hospital participants are adding surgical pathology reports, inpatient 
pharmacy data, discharge summaries and radiology reports to the data 
they already provide to INPC. The public health department will 
contribute de-identified cancer registry data. Many of the hospitals 
are willing to make this data available for treatment purposes, as long 
as SPIN protects it well
    This NCI project will provide a link from clinical data and 
outcomes (pheno-
type) to tissue specimens (genotype), as paraffin blocks in pathology 
departments.
This evolving regional, population-based medical record database 
provides extraordinary opportunities for epidemiology i.e. clinical and 
public health research. This project raises many interesting challenges 
regarding the linking of de-identified records.vi, vii
---------------------------------------------------------------------------
    \vi\ Grannis SJ, Overhage JM, McDonald CJ. Analysis of Identifier 
Performance using a Deterministic Linkage Algorithm. 2002 AMIA Fall 
Symposium (submitted).
    vii Schadow G, McDonald CJ. Maintaining Patient Privacy 
in a Large Scale Multi-Institutional Clinical Case Research Network. 
2002 AMIA Fall Symposium (submitted).

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Reports

    The INPC system can generate a variety of patient specific and 
population based reports that facilitate clinical care. There are a 
variety of triggers for creating these reports including patient 
encounters and the passage of time. One of the key patient specific 
reports is the Clinical Abstract. The clinical abstract provides a 
``one page'' summary of specialty appropriate clinical information. The 
content is specialty specific: a pediatric oriented clinical abstract 
would summarize growth data and immunization records, an obstetrical 
abstract would contain data that reflects fetal well being and key 
dates such as the last menstrual period (LMP) and estimated date of 
confinement (EDC) and an HIV abstract would feature trends in key 
laboratory results and details of treatment history.

DOCS4DOCS '

    DOCS4DOCS is an innovative tool we have created to introduce a 
basic level of clinical information system utilization in physician 
practices. It provides clinical messaging functions--in its simplest 
form, practices receive various kinds of clinical data and messages 
from multiple sources; the system aggregates and sorts the data in 
useful ways and provide printed versions of this data that a physician 
can review and act on much as they do today. DOCS4DOCS can be used to 
record when results have been reviewed, for inter and intra office 
communications and for short to intermediate term storage of these 
results.
    We have deployed DOCS4DOCS to over 800 physicians today with 
rollout to approximately 600 more planned for this year and 1,600 the 
following year. The system uses a novel distributed approach to 
provider identity maintenance. Providers link themselves to the various 
identifiers used in various source systems (providers may have 
different and even multiple identifiers in a single hospitals 
laboratory, transcription and ADT systems for example). Not only does 
this approach simplify maintenance but puts it in the hands of those 
who stand to benefit by good maintenance and who know the mappings 
best.
    Perhaps most importantly, DOCS4DOCS provides services built around 
the health information exchange, that are so valuable that participants 
are willing to pay for them. The DOCS4DOCS clinical messaging service 
is replacing, printing, faxing and other delivery methods for the 
majority of hospitals in Indianapolis providing operating efficiencies 
to the hospitals and improved functionality to the providers since they 
receive all of their results in a reliable, timely and uniform manner. 
Uniformity is very important to the providers because they often 
receive reports from multiple laboratories and find it difficult to 
quickly and appropriately interpret them since every hospitals' reports 
look different. With a consistent format, they are more easily able to 
identify abnormal results, normal ranges and even which patient the 
report applies to.

Use of Accepted Medical Informatics Standards

    Not only have we used the standards for clinical data exchange and 
representation that have been endorsed by the federal government's 
Consolidated Health Informatics Initiative and the Connecting for 
Health project but we have been major forces in their development. In 
1984, the Clem McDonald led an effort that culminated in 1988 with the 
first clinical message standard. That work was carried into HL7 and 
today, virtually all clinical system vendors support HL7, and most 
North American, European, and Pacific Rim health care institutions use 
the HL7 standard to exchange clinical results. The PI of this proposal 
wrote most of the HL7 Order Entry and Observation Reporting chapters 
since its inception in 1987. Gunther Schadow, another RI researcher, 
has been the major force behind the HL7 Version 3 Reference Information 
Model (RIM) and the Version 3 Data Types and is a co-chair of the 
Orders and Observations Subcommittee and Marc Overhage is an HL7 editor 
and author of several HL7 implementation guides for the CDC.
    Regenstrief /IU investigators initiated the development of the 
Logical Observation Identifier Names and Codes (LOINCTM) 
database that now contains 31,000 standardized codes and names for 
clinical observations ranging from diastolic blood pressure to serum 
levels of Hepatitis B surface antigen. Large health care institutions 
and HMOs (e.g. Partners of Boston, the Veterans Administration, Kaiser 
Permanente, Aetna Insurance, and large commercial laboratories e.g. 
Quest and Lab Corp) use LOINC widely. Several countries including 
Australia, Canada, New Zealand, Switzerland, Germany, Korea, and Hong 
Kong also use LOINC. The FDA is considering a proposal to require LOINC 
codes as part of all new drug submissions. The Regenstrief Institute 
now distributes the LOINC database and RELMA mapping program via a web 
site at no cost for all commercial and research purposes (http://
www.regenstrief.org/loinc).

The Structure of the INPC Agreement

    The flow and management of data in INPC is designed to ensure that 
the use and disclosure of patient information by and among the member 
providers complies with federal and state law. The participants' 
agreement on the use and disclosure of patient data is codified in a 
contract that I will call the INPC Agreement, which is a roadmap for 
identifying the policy and practical issues that must addressed when 
sharing health data in a context as large as the INPC. The INPC 
AGreeement was drafted, reviewed, and approved by clinicians, 
compliance officers, lawyers, risk managers, and information systems 
personnel in a cooperative consensus-building process.

How Can the Network and Its Participants Share Health Data to Treat 
        Patients?

    Both federal and state laws address the sharing of protected health 
information (``PHI'') between health care providers to treat patients. 
The Privacy Rule issued pursuant to the Health Insurance Portability 
and Accountability Act and most state laws generally allow covered 
entities (health care providers such as hospitals, practice groups, and 
other organizations) to use and disclose PHI without a patient's 
consent for ``treatment'' purposes.
    The INPC Agreement is consistent with the permissible uses of PHI 
for treatment set forth in the Privacy Rule.
    The Network is simply a way for the participants to more easily 
provide PHI to one another, through electronic means, for the treatment 
of common patients. The INPC allows participants to access Network 
information submitted by other participants for any treatment purpose 
(in the HIPAA sense) of the accessing participant, regardless of the 
care setting (e.g., emergency room, inpatient, outpatient surgery, 
etc.). However, the Network will not release information unless there 
is verification that a patient is actually in the care setting (such as 
the exchange of registration information).
    The Privacy Rule allows covered entities to engage business 
associates to perform functions on their behalf that requires the use 
or disclosure of PHI.
    The Regenstrief Institute acts as a common business associate of 
all of the participants for the purpose of storing and disclosing the 
participants' PHI to other participants for treatment purposes. The 
INPC Agreement contains appropriate Privacy Rule business associate 
provisions.
    The INPC Agreement does not require participating hospitals to 
obtain a patient's consent prior to disclosing the patient's PHI 
another participant or to Regenstrief for treatment purposes because 
neither the Privacy Rule nor Indiana state law requires such consent.

Who May Have Access to PHI for Treatment Purposes?

    The institutional provider participants must identify the 
individuals in their organization who may access PHI on the Network. 
Each institutional participant must certify and warrant that it has 
taken certain steps to ensure that such individuals will protect the 
confidentiality of the Network information. Each participant must also 
ensure that Regenstrief receives regular updates to the institution's 
authorized personnel list. Participants are also encouraged to identify 
affiliated physician practice groups who might benefit from access to 
the Network for patient treatment purposes. However, the institutional 
participant with whom the physician group is affiliated is responsible 
for ensuring that the physicians abide by the confidentiality 
restrictions described in the prior paragraph.

What Information Is To Be Stored on the Network?

    The INPC Agreement identifies the information that participants 
agree to submit to the Network. Without a common agreement that the 
participants will store minimum categories of information, the Network 
will not become populated and will not be useful.
    The participants agree to make good faith efforts to store, at a 
minimum, the following kinds of data:
    (1) hospitalizations and the emergency room encounter information; 
and (2) patient demographic information, reason for visit, treating 
health care provider(s), date of visit, place of visit, diagnoses, 
procedures, vital signs, all laboratory reports, pathology reports, 
radiology studies and reports, discharge summaries, operative notes, 
inpatient medications, cardiology studies, and other diagnostic tests 
to the extent that participants have the capability to submit such 
information electronically. Participants are encouraged to make any 
other clinical information they wish available to the Network.
    Consideration must be given to whether a network will accept PHI 
that is provided extra protection under the law.
    Specifically, alcohol and drug abuse treatment records are afforded 
stringent protection under federal law, and the Privacy Rule gives 
psychotherapy notes enhanced protection. Accepting such information on 
a common network will increase the administrative burdens and security 
measures required to protect such information. The INPC Agreement 
discourages the submission of drug and alcohol abuse treatment 
information and prohibits the submission of psychotherapy notes.

How May the PHI Be Used and Disclosed for Research Purposes?

    The Regenstrief Insittute and the participants recognize the 
important opportunities for scientific research provided by the large 
repository of patient information housed on the Network. Therefore, the 
Agreement provides for methods of using and disclosing the Network 
information for research purposes. In all cases, the research 
provisions of the Privacy Rule are followed. The Agreement sets forth a 
hierarchy of research uses and disclosures. Use of deidentified health 
data for research purposes requires minimal approval from the 
participants whose data will be used. Research that requires the use of 
identifiable PHI is subject to several approvals, including 
institutional review board approvals. Given the Privacy Rule's detailed 
provisions governing the use of PHI for research, the research sections 
of a network's governing agreement must be carefully drafted so that 
all parties are comfortable that their data will be used properly. This 
is a sensitive and complicated area for discussion. In no event does 
Regenstrief allow information to be disclosed for research projects 
that has the effect of comparing the participants with one another 
(such as individual participant outcomes or participant financial 
information) without the affected participant's approval. This was a 
particular concern of participants in the highly competitive 
Indianapolis health care market.

What Are Other Considerations?

  Consistency of Data.

    Consideration must be given to the format of the information 
submitted to the Network so that the information is accessible to all 
participants in a common form. Will the network require the submission 
of data in a common form, or will the network translate the information 
into a common form after submission? Under the INPC Agreement, 
Regenstrief assists participants with the mapping of test results and 
physicians codes into standard forms that are accessible and 
understandable by all participants.

  Other Uses of Information.

    Will other uses of information be allowed. For example, under the 
INPC, the institutional participants use Regenstrief as their business 
associate for purposes of screening their health data for communicable 
disease information that must be reported to the Indiana State 
Department of Health. Future uses of the information may include 
screening the information for indicators of bioterrorism activity.

  Indemnification.

    Given the availability of PHI through the Network that is beyond 
the physical control of individual participants, the participants 
required an indemnification provision that protects them in the event 
that Regenstrief or another participant wrongfully uses or discloses 
PHI.

  Governance.

    The Network is governed by a Management Committee. While the INPC 
Agreement sets forth the structure of the Network, the Management 
Committee is empowered to make day-to-day operational and policy 
decisions that are consistent with the structure set forth in the 
Agreement. Issues addressed include technical issues, confidentiality, 
the scope of information stored and accessed by participants, and the 
use of the information. The Management Committee is comprised of 
representatives of the institutional participants and Regenstrief.

  Disposition of Information Upon Termination.

    Consideration must be given to the disposition of PHI upon 
termination of the Agreement or if a participant withdraws. For 
example, research that relies on the continued availability of the 
information could be impeded if a participant withdrew and removed its 
information from the Network. In addition, if information is removed 
from the Network, the ability of a participant to have access to 
information to defend itself in malpractice suits could be compromised. 
Thus, the INPC Agreement makes provision for the extended storage of 
the information after the termination of the Agreement and after the 
withdrawal of a participant.
    Models of the potential savings from HIE between organizations 
provide some estimates. One study estimated that uniform data-sharing 
application nationwide providing easy access to view patients' clinical 
information would save more than $39 billion--or $11.57 per patient per 
month. The California Health Care Foundation didn't calculate savings 
at a national level but estimated net benefits of over $5M annually for 
large communities with high penetration of HIE. In a study I 
participated in the Center for Information Technology Leadership at 
Partner's Healthcare used a rigorous analytical approach to assess 
clinical information technologies and disseminates its findings to help 
provider organizations maximize the value of their IT investments, help 
technology firms understand how to improve the value proposition of 
their healthcare products, and inform national healthcare IT policy 
discussions. They created a financial model that examined the direct 
value of four levels of interoperability, but the conclusions focused 
on the financial value of moving to non-standardized, machine-
organizable data and standardized, machine-interpretable data (http://
www.citl.org/news/HIEI--Findings.pdf). The model did not include any 
benefits from improved quality or safety of care. CITL found that the 
value of standardized HIE far exceeds the value of non-standardized 
HIE. CITL based its model on literature reviews, expert assessments, 
and market research. To supplement published studies, CITL relies on 
the informed judgment of its Expert Panel and interviews with IT users, 
developers, and vendors. The provider centric model included 1,238 
nodes. HIEI produces two principal types of benefits: administrative 
savings and reduced utilization. Administrative savings included the 
financial value of time saved by transitioning from manual to 
electronic data exchange Reduced utilization (elimination of 
redundancy) resulted in economic benefit by eliminating unnecessary lab 
and radiology tests and improved interoperability between providers and 
labs, and providers and radiology centers. On a national basis, the 
model projects $87 billion annual savings with $34 billion value to 
providers.
    In order to explore the implications of the model locally, we reran 
the model with parameters chosen to represent the Indianapolis MSA. 
With these parameters, the model predicts net benefits of $3.6 billion 
over 10 years and an annual net benefit of $500 million in year 10 with 
providers' net benefits of $1.4 billion over 10 years and an annual net 
benefit of almost $250 million. These are preliminary findings and 
require careful review and verification but suggest the order of 
magnitude of the value of HIE in the Indianapolis MSA. Provider to 
provider exchange accounted for the largest proportion of the benefit 
with payor, laboratory and radiology being the next largest.
    The ultimate measure of our success will be creation of a 
sustainable funding model for HIE in central Indiana. We have made 
substantial progress by creating the Indiana Health Information 
Exchange (IHIE), a not for profit 509(A)3 not for profit support 
organization that supports the first commercial service built on the 
HIE. Hospitals and other data providers in the region are paying fees 
to deliver clinical results (e.g. laboratory test results, transcribed 
reports and admission notices) to providers. The IHIE can provide these 
services at a savings through economies of scale, by eliminating 
duplicative efforts and by moving results delivery to an electronic 
platform. If we successfully demonstrate savings from HIE in the 
ambulatory setting we would create a service through IHIE supported by 
fees from those who benefit from the exchange.

Benefits to the community

    We are still formally evaluating the benefits of health information 
exchange. We have demonstrated a $26 reduction in charges for each 
emergency department visit even when only one hospital is sharing data 
with others. We have completed a much larger study in which all of the 
hospitals shared data with each other but we have not finished 
analyzing the results. When we ask care providers how the health 
information exchange has helped them, they readily recall anecdotes. In 
one case an ambulance brought a young women to the emergency department 
unresponsive and data from the INPC allowed her providers to avoid 
extensive neurological testing and deliver appropriate psychiatric 
treatment. In another recent episode, a woman was checking into a 
hospital outpatient clinics when she collapsed. Her providers were able 
to identify her and bring up her medical record within minutes of her 
arrival to the department. This allowed them to view her past medical 
history, medications, allergies--providing us with information when the 
patient could not. It changed the decisions we were planning to make 
and helped us take better care of this patient. In this case, the INPC 
acted as the patient's voice--speaking for her when she could not. A 
few weeks ago, a colleague of mine, was taking care of a patient with 
an upper respiratory infection. He had a fever, and cough--but denied 
any medications or health problems. When the doctor reviewed the 
patients records, she recognized the patient had HIV and required a 
different course of treatment. In this case a condition that could 
normally be treated as an outpatient, required hospitalization and more 
aggressive treatment. As a final example, a patient came to the ED with 
chest pain. He was very ill, and not able to tell the doctors his 
medical history. The physicians were concerned that he was having 
trouble with his heart, and possibly having a heart attack. A standard 
treatment for this condition is give medicine that will thin the blood 
and allow blood flow back to the injured area of the heart. When the 
physicians reviewed the data from the INPC they found that a CT scan 
done at another hospital three weeks previously indicated the patient 
was recovering from a recent head injury, where giving a blood thinner 
would have caused increased bleeding and would have injured the 
patient--possibly resulting in death. These examples illustrate the 
types of direct patient benefits that health information exchange can 
provide.

What should the government do

      Development will require a simultaneous top down and 
bottom up approach. The top down part defines the common approaches; 
the bottom up builds the collaboration, trust and value proposition.
      Government can facilitate definition of a ``path'' or 
``stake in the ground'' so that vendors can develop with confidence and 
providers can purchase with confidence. This ``stake in the ground'' 
includes profiles or collections of standards like those endorsed by 
the government's Consolidated Health Informatics Initiative and the 
Markle Foundation's Connecting For Health program, definitions of 
``good enough'' security measures and a common approach to 
authentication.
      Government can encourage use of standard at all levels 
through, for example, the FDA establishing LOINC ' codes for 
laboratory tests when they are approved and requiring these codes to be 
included with all printed materials related to the test. Finally, 
government should participate with other payors in creating mechanisms 
that use savings generated by health information exchange to offset the 
costs of infrastructure and the losses that providers suffer as a 
consequence of improved information flows

I sincerely thank the Committee for this opportunity and would welcome 
any or all of them to come to Indianapolis and see what we have 
accomplished first hand.

                                 

    Chairman JOHNSON. Thank you very much, Dr. Overhage. Dr. 
Wiesenthal.

 STATEMENT OF ANDREW M. WIESENTHAL, M.D., ASSOCIATE EXECUTIVE 
                  DIRECTOR, KAISER PERMANENTE

    Dr. WIESENTHAL. Madam Chairman, Representative Stark, 
Members of the Subcommittee, I am honored to be here today to 
testify before you on health care IT. My name is Dr. Andy 
Wiesenthal, and I am speaking today on behalf of Kaiser 
Permanente. I am a pediatric infectious disease specialist by 
training, and the Associate Executive Director of the 
Permanente Federation, the National Organization of the 
Permanente Medical Groups. In this capacity, I co-lead the 10-
year, $3 billion effort to implement the comprehensive health 
care information system throughout Kaiser Permanente.
    Seventeen years ago, I was asked to lead the quality 
improvement program in Kaiser Permanente's Colorado region. I 
believe then and I believe now that, in order to improve the 
care that physicians and nurses deliver, they need better and 
more accessible information. Patients need more ways to relate 
to the health care system so their needs are effectively 
addressed.
    Finally, if we are to truly assess the quality of care, it 
is essential to have detailed, automated information about the 
interactions between practitioners and their patients. All of 
this requires new ways of collecting, storing, and retrieving 
health care information. Seventeen years ago, there was really 
nothing off the shelf that could meet those needs. After trying 
in my basement to write the software for an electronic medical 
record myself, I quickly recognized that the scale and 
complexity of this work required a more organized, sustained 
effort. Kaiser Permanente in Colorado eventually invested $55 
million in this effort, and implemented its clinical 
information system in 1998. Fortunately, the state of the art 
has progressed considerably since I began my effort in 1987.
    Five years ago, Kaiser Permanente decided to implement a 
comprehensive electronic medical record nationally. The term 
electronic medical record, however, does not capture the broad 
range of capabilities that Permanente physicians and other 
Permanente clinicians will have once the system is fully 
implemented. Kaiser Permanente HealthConnect, as we refer to 
it, will include a unified electronic medical record for each 
patient that crosses the spectrum of care from the clinic 
through the emergency department to the inpatient setting and 
ultimately the home; inpatient and outpatient clinical decision 
support, including built-in guidelines and care pathways; a 
patient billing function, scheduling for patients, physicians, 
and equipment; broad web-based access, and many other 
capabilities.
    Why did we decide to implement a comprehensive electronic 
medical record at this time? It was a strategic imperative. To 
make a major leap forward in terms of quality improvement, 
service, patient safety, care coordination, efficiency, 
effectiveness, and job satisfaction, we needed to take the 
risk. The overriding goal of Kaiser Permanente HealthConnect is 
quality improvement. Once fully implemented, patient medical 
information and clinical decision support will be available on 
a 24 hours-a-day, 7 days-a-week, 365 days-a-year basis, and 
more than one clinician will be able to use a single patient's 
information simultaneously. Having the complete medical record 
available makes it possible for physicians to be aware 
immediately of all patient issues, test results, history, and 
concerns, as well as recommendations the patient has received 
from other clinicians. Clinicians will always be able to work 
with the most current information and provide the best care and 
service possible.
    Here is a real life example from a Kaiser Permanente 
Northwest physician: a surgical colleague called me about a 
patient referred to him with a large mass that he noted on 
imaging studies. I was able to pull up and look at the Computed 
Axial Tomography (CAT) scan on my desktop within a minute, and 
agreed with him that the mass was thyroid-related. I was able 
to review the patient's symptoms, medical history, and 
laboratory test results within a minute, and concluded that I 
should see her to do a thyroid biopsy.
    I was able to check my schedule, and because of a recent 
cancelation, I was able to invite the patient straight over. I 
saw her within half an hour of being contacted. All of the 
information I needed was on hand, and a definitive diagnostic 
test, a fine needle biopsy of the thyroid, was done there and 
then. In the old days, it would have taken 6 to 24 hours or 
longer for me to receive the x-ray jacket to look at the hard 
copy of the CAT scan. I would have needed to gather copies of 
all labs, prior clinicians' notes, and so forth, from the paper 
chart. Many times, with urgent consult requests, we did not get 
the chart in time to review before seeing the patient. This 
would lead to duplication of testing or, worse, potential 
failure to recognize important clinical elements that are easy 
to see with our electronic medical records system.
    Now, when a colleague calls with a question, just about the 
only information they need to provide is the patient name or 
number, and I can pull up his or her data just about faster 
than they can tell it to me over the phone. Receiving care for 
patients should be more convenient. Patients will be able to 
make the most of care or advice or information via telephone, 
web, and e-mail, whatever means they choose to fit their needs. 
Web-based access to results and e-mail messaging will allow 
each patient to attain greater autonomy in accessing 
information, and can make it easier for them to send a question 
or request to their care giver. In the end, benefits to 
patients in terms of quality, convenience, service, 
personalized care, costs, and better science are considerable.
    While it is still unclear whether in the long run overall 
spending will decline as a result of implementing Kaiser 
Permanente HealthConnect, if it just breaks even, the new 
benefits for patients by any measure are quite considerable. We 
are pleased that Congress has begun to think about the ways it 
can enable health plans and health care providers across the 
spectrum to bring the benefits of health care IT to all 
patients. The two most prominent ideas being developed relate 
to standards setting and financial incentives. In my written 
testimony I discuss in more detail what Congress could do in 
this area. In closing, I want to congratulate the Subcommittee 
Chair and the Ranking Member for this timely and important 
hearing. I would be pleased to answer any questions.
    [The prepared statement of Dr. Wiesenthal follows:]
Statement of Andrew M. Wiesenthal, M.D., Associate Executive Director, 
                           Kaiser Permanente
    Madame Chairwoman, Representative Stark, members of the 
Subcommittee, I am honored to be here today to testify before you on 
health care information technology and the promise it has for improving 
health care quality and patient safety, lowering health care costs, and 
expanding important research opportunities. My name is Dr. Andrew M. 
Wiesenthal. I am the Associate Executive Director of the Permanente 
Federation, the national organization of the Permanente Medical Groups. 
In this capacity, I co-lead the 10-year, $3 billion effort to put in 
place, operate and maintain a comprehensive health care information 
system throughout Kaiser Permanente, one of the nation's leading health 
plans and its largest private-sector health care delivery system. 
Kaiser Permanente provides health care coverage and medical care to 
more than 8.3 million members in nine states and the District of 
Columbia. The Permanente Medical Groups include more than 12,000 
physicians, who are supported by approximately 130,000 professional, 
clinical, and administrative employees.
    In my remarks today, I want to share with you what Kaiser 
Permanente is doing in the area of health care information technology. 
I also want to explain why we are doing this--what value we hope this 
will bring to our members. I will conclude with some suggested actions 
the Subcommittee may want to consider to speed the adoption of 
electronic medical records throughout the health care system.

Why Kaiser Permanente is Investing Significantly in an Electronic 
        Medical Record

    Seventeen years ago, I was asked to lead the Quality Improvement 
Program in Kaiser Permanente's Colorado Region. I believed then and I 
believe now that in order to improve the care that physicians and other 
clinicians provide, they need better and more accessible information. 
They need better information on the patients they see, at the time they 
see them. They need up-to-date information about clinical issues when 
they make medical decisions. They need better, faster ways to get more 
reliable feedback on the care they deliver. And patients need more ways 
to relate to the health care system so that their needs are effectively 
addressed. Finally, if we are to truly assess the quality of care, it 
is essential to have detailed, automated information about the 
interactions between the health care team and the people for whom they 
are responsible. All of this requires new ways of collecting, storing 
and retrieving information.
    Seventeen years ago, there was no widely available comprehensive 
electronic medical record, one containing all the clinical information 
about a patient recorded over several years by many different 
physicians, pharmacists, clinical laboratory technicians and others and 
that can be retrieved instantaneously by any attending clinician with 
the proper authority to do so. There were crude, general database 
programs and some rudimentary programs specifically designed for the 
purpose. But there really was nothing at the time that could meet these 
straightforward needs.
    After trying to write the software for an electronic medical record 
myself, I quickly recognized that the scale and complexity of this kind 
of work required a more organized, sustained effort. Kaiser Permanente 
in Colorado eventually invested $55 million in this effort and 
implemented its Clinical Information System in 1998. Fortunately, the 
state of the art has progressed considerably since I began my effort in 
1987.
    Working to deliver better health care through information 
technology is a Kaiser Permanente tradition. More than 40 years ago, 
Dr. Morrie Collen, director of Kaiser Permanente's first research 
center returned from a national congress on medical electronics 
convinced that there were ways to use computers to improve health care. 
Dr. Collen's work eventually led to a 1961 grant from the Public Health 
Service to study the automation of multiphasic health testing. As a 
result of this project, KP patients were among the first to see 
internists armed with computer printouts of pertinent medical data.
    Since then, several generations of systems connecting physicians 
electronically with their patients' medical information have been 
tested and implemented in different Kaiser Permanente regions. Each 
regional effort has had its merits. But a more powerful system that 
would allow seamless communication between physicians regardless of 
location was needed.
    Five years ago, Kaiser Permanente decided to implement a 
comprehensive electronic medical record throughout its entire system. 
After several stages of internal development work, we decided one year 
ago that software developed by Epic Systems of Madison, Wisconsin had 
evolved to the point that it could handle our size and complexity. Why 
did we make these decisions? Frankly, we saw them as a strategic 
imperative. We believed that if we were going to make a major leap in 
terms of quality improvement, service, patient safety, care 
coordination, efficiency, effectiveness, and job satisfaction, we 
needed to take the risk. While we have developed some components of the 
system ourselves, and others come from an array of vendors, the core of 
the system we are implementing is from Epic Systems. Similar Epic 
software has been implemented in many of the nation's largest health 
care systems. It's my job to direct the implementation at Kaiser 
Permanente.

Kaiser Permanente's Electronic Medical Record

    The term ``electronic medical record'' does not really capture the 
broad range of capabilities that Permanente physicians and other Kaiser 
Permanente clinicians will have available once the system is fully 
implemented. That's why we have created a more encompassing name to 
refer to the system--KP HealthConnect. The full range of functions 
includes:

      A unified electronic medical record for each patient 
crossing the spectrum of care from the outpatient arena, through the 
emergency department, to the inpatient setting and ultimately the home.
      Inpatient and outpatient clinical decision support
      Patient billing function
      Patient, physician, and equipment scheduling
      Web-based access for patients and providers (both KP and 
non-KP)
      Inpatient pharmacy support and reporting
      Clinical laboratory support and reporting
      Emergency department management
      Interfaces to a wide variety of other systems like PACS 
(picture archiving systems) and population care management systems

The Benefits Kaiser Permanente Expects from KP HealthConnect

    The overriding goal of KP HealthConnect is quality improvement. 
Once fully implemented, patient medical information and clinical 
decision support will be available on a 24/7/365 basis and more than 
one clinician will be able to use a single patient's information 
simultaneously. Internal research from our Colorado Region, where 
Kaiser Permanente has 420,000 members, shows that electronic medical 
records are being accessed on average about 1 million times each month. 
This compares quite remarkably with 90,000 monthly paper chart 
deliveries before the system was implemented. Having the complete 
medical record available makes it possible for physicians to be aware 
immediately of co-morbidities, past visits and patient concerns, as 
well as recommendations the patient has received from other clinicians. 
In addition, test results will be immediately available electronically. 
This means clinicians will always be able to work with the most current 
information and provide the best service possible.
    Nothing illustrates the kind of quality improvement made possible 
by the implementation of KP HealthConnect than a real-life example. As 
one physician in Kaiser Permanente's Northwest Region explained:

         A surgical colleague called me about a patient referred to him 
        with a large mass that was noted on imaging studies. I was able 
        to pull up and look at the CT scan on my desktop within a 
        minute and agreed with him that the mass was thyroid related. I 
        was able to review the patient's symptoms, medical history and 
        laboratory test results within a minute, and concluded that I 
        should see her to do a thyroid biopsy. I was able to check my 
        schedule and, because of a recent cancellation, I was able to 
        invite the patient straight over. I saw her within half an hour 
        of being contacted. All of the information I needed was on 
        hand, and the definitive diagnostic test (fine needle biopsy) 
        was done there and then. In the ``old days,'' it would have 
        taken 6-24 hours or longer for me to receive the X-ray jacket 
        to look at the hard copy of the CT scan. I would have needed to 
        gather copies of old labs, prior clinicians' notes, etc. from a 
        paper chart. Many times, with urgent consult requests, we did 
        not get the chart in time to review before seeing the patient. 
        This would lead to duplication of testing, or worse, potential 
        failure to recognize important clinical elements that are easy 
        to see with our electronic medical record system. Now, when a 
        colleague calls with a question, just about the only 
        information they need to provide is the patient name or number, 
        and I can pull up his or her data just about faster than they 
        can tell it to me over the phone.

    Other benefits that have been noted by clinicians include the 
increased likelihood of resolving patient concerns in the first visit, 
the ability to deliver more services in a single visit, and addressing 
prevention and other ancillary needs when patients make visits to 
address health problems. Respondents to an internal survey also 
indicated that use of an electronic medical record reduced unnecessary 
clinical laboratory, radiology, and emergency department utilization 
and increased the effectiveness of scheduled and unscheduled telephone 
contacts.
    Much of the appeal of electronic medical records is the opportunity 
to improve quality by having patient information immediately available. 
Equally important and often as prominent when discussing electronic 
medical records is the availability of on-line, real-time decision 
support information. With KP HealthConnect, the latest clinical 
information will be available to physicians in the examining room to 
provide point-of-care recommendations for a wide variety of clinical 
conditions. We are building our practice guidelines and treatment 
pathways into the system. Permanente physicians already have access to 
the complete range of on-line medical journals from their desktops and 
in the examining room.
    We also expect that KP HealthConnect, by allowing more personalized 
care, will significantly increase patient satisfaction. For example, 
staff will be able to use up-to-date clinical, social and patient 
preference information when caring for patients. Patients will have 
greater access to their own information and be full partners in 
decision-making. An after-visit summary will be printed for patients at 
the end of each appointment and will be available permanently online. 
Team care will be more patient centered. Since all information about a 
patient will be available, even a physician who has never seen a 
patient will immediately know his/her history and preferences. This 
should make each patient encounter more personal, individualized, and 
ultimately responsive.
    Receiving care should be more convenient as well. Patients will be 
able to make the most of care/advice/information via telephone, web, 
and e-mail. Telephone wait times will be reduced and the need for 
callbacks to find medical records eliminated, allowing office personnel 
to rapidly retrieve essential information when the patient needs it. 
Web-based access to test results and e-mail messaging will allow each 
patient to attain greater autonomy in accessing information and can 
make it easier for them to send a question or request to their 
caregiver. Web-based availability of one's medical record on a 24/7/365 
basis will allow patients to make decisions when it is convenient for 
them. Making personal and technical information available to patients 
over the Internet should make it possible for patients to conduct a 
variety of transactions with their doctor without having to interrupt 
their own lives to go to the office or spend time on the phone.
    We expect that KP HealthConnect will create efficiencies for Kaiser 
Permanente and our members. There is already strong evidence from the 
regions where we have had an electronic medical record for some years 
that, as each appointment meets more of a patient's needs, the demand 
for appointments declines. Two years after our Colorado Region 
implemented an electronic medical record, we saw a 9 percent decline in 
age-adjusted annual office visits per member. Primary care visits 
declined by 11 percent; specialty care visits declined by 5 percent. 
Our Northwest Region experienced a similar 9 percent overall decline in 
the demand for office visits, and the breakdown for primary care and 
specialty visits was almost identical. It is worth noting that these 
two regions had implemented different electronic medical records 
systems, although their capabilities were very similar. Neither region 
intended to reduce outpatient visit rates--it appears to have resulted 
from more efficient use of appointments overall.
    As we noted above, we expected visits to become more efficient. 
More than one issue will be able to be handled in a single visit. Since 
prescriptions and lab requests are immediately placed in the system, 
wait times will be reduced as will overall time spent at the doctor's 
office. There will also be lower pharmacy and laboratory costs than 
there would be with paper medical records. Copying costs are reduced. 
Resources and time dedicated to maintaining and transporting paper 
records will be reduced or eliminated. Administration of benefits and 
new products will be more efficient and accurate. Benefits information 
and information related to new products will be continuously available 
online, allowing for more accurate administration of services.
    Finally, clinical research to support evidence-based care will be 
greatly enhanced. Comprehensive patient data will be available for 
larger populations and more accessible than ever before, allowing for 
significantly more robust research than previously possible, for a 
fraction of the cost, and taking relatively much less time. Some 
research that would benefit from very large populations may be possible 
for the first time. For example, the recently reported RAND Corporation 
ACOVE studies examined the extent to which physicians complied with an 
agreed upon set of standards in caring for an aged population. It 
included a sample of 400 patients and required thousands of hours of 
medical records extraction. The study cost hundreds of thousands of 
dollars. With systems like KP HealthConnect, the information would be 
available almost instantaneously, ultimately on an aged population of 
about 1.5 million people with considerably greater reliability given 
that abstraction can be eliminated. The research potential is almost 
beyond imagination.
    In sum, the benefits to patients in terms of quality, convenience, 
service, personalized care, costs, and better science are considerable. 
While it is still unclear whether, in the long run, overall spending 
will decline as a result of implementing KP HealthConnect, if it breaks 
even, the new benefits for patients by any measure are quite 
considerable.

Making Electronic Medical Records Broadly Available

    Kaiser Permanente has been working to implement an electronic 
medical record for many years. The promises of a single-system, user-
friendly, comprehensive, electronic medical record for all of Kaiser 
Permanente are still a few years away. While we have begun broad 
implementation of our system, the federal government has begun to think 
about the ways it can enable health plans and health care providers 
across the spectrum to bring the benefits of health care information 
technology to all patients. The two most prominent ideas being 
developed relate to standard setting and financial incentives.

Standard Setting

    The lack of widely accepted standards for health care information 
technology has had profound consequences for the development and 
dispersion of electronic medical records. First, it has increased the 
risk any company would face if it chooses to develop health care 
information technology products. Very few developers could afford to 
build a product using proprietary technology only to find that it is 
made obsolete by the subsequent adoption of standards with which it is 
incompatible. Similarly, few providers or health plans will make an 
investment in a costly system if they run the risk of having a suddenly 
outmoded system, unable to communicate with other systems. This 
explains why we have worked so hard to help the industry develop the 
tools that are the foundation of many systems now in use or in 
development. We worked closely with the College of American 
Pathologists in the development of SNOMED-CT, the recently adopted 
standard for medical terminology that the government is making 
available to everyone. We also actively participate in HL7 and other 
broad-based standard setting organizations. This allows us to 
contribute our expertise to these groups and has helped us to 
anticipate emerging developments.
As the government moves to adopt an increasingly complete set of 
        standards for health care information technology,

      The federal government should move quickly to adopt 
standards for interoperability. Priority should be given to:

        -- identification of data standards appropriate for national 
        adoption and gaps in existing standards,
        -- provision of targeted financial support for public-private 
        partnerships to develop and/or endorse such standards, and
        -- leading public-private efforts to promulgate and maintain 
        standards

         The Consolidated Health Informatics Initiative is an effective 
        model--where the government, in collaboration with the private 
        sector, identifies standards for the federal health care sector 
        that will serve as a model for the private sector. This is an 
        example of both federal leadership and the power of public-
        private partnerships. For this kind of effort to succeed, 
        sufficient federal resources are essential.

      Efforts should be made to ensure that pioneers in the 
deployment of electronic medical records can easily comply with newly 
adopted standards.

Financial Incentives

    We are convinced that widespread adoption of health care 
information technology like KP HealthConnect is essential for sustained 
quality improvement. We also believe that this technology is essential 
to the development and application of quality measures. However, as 
MedPAC noted in its ``Report to Congress: New Approaches in Medicare'' 
released on Tuesday,

         ``many barriers slow physician adoption of information 
        technology. The costs of investing in information technology 
        can be significant, the financial return is not certain, and 
        any financial benefits will not necessarily accrue to the 
        physician practice bearing the costs.''

    If we are correct that adoption of health care information 
technology is essential for sustained quality improvement, then support 
for health care information technology is needed.
    Both public and private purchasers of health care are introducing 
quality-related financial incentives into the payment for health care. 
The Leapfrog Group has been a leader in the introduction of payment-
related quality standards, especially for hospitals. Several large 
employers, including General Electric, Ford, and Proctor and Gamble, 
are supporting the development and implementation of approaches to 
linking payment to quality for physician care. And, some States have 
developed Medicaid payment methods that depend in part on quality. 
Discussions are now beginning about how payment incentives can improve 
care and outcomes for Medicare beneficiaries. Ultimately, for payment 
incentives to have real influence on quality, they should be directly 
tied to the care delivered during a specific time period. The kind of 
information needed to do this can only be made available through 
sophisticated electronic medical record systems.

      We urge the Congress to ensure that the federal 
government participates in the investment needed to implement 
electronic medical records. The Medicare and Medicaid programs are far 
and away the largest third-party purchasers of health care. As a 
general rule, providers and health plans care for beneficiaries of 
these programs on an administered pricing basis. They have no 
independent ability to set payment rates at a level that includes 
sufficient resources for investment in health care information 
technology. Moreover, there are few existing financial incentives for 
providers to pay up front for these systems. Even small increases in 
Medicare and Medicaid provider and health plan payments would help 
create momentum toward broad adoption. At the same time, providers and 
private health plans should be expected to work with other purchasers 
to ensure adequate private-sector investment in a health care 
information technology that helps everyone.

    In closing, I want to congratulate the Subcommittee Chair and 
Ranking Member for this timely and important hearing. I would be 
pleased to answer any of the Committee members' questions.

                                 

    Chairman JOHNSON. Thank you very much, all of you, for 
being here and for your thoughtful testimony, and for the 
extraordinary work you are doing and have done over many years. 
It is sort of startling to hear how much money has been 
invested, how far you have come, how deep you are into systems 
that are quite encompassing of both lives and institutions.
    You heard Dr. Brailer's testimony. Now, you are doing it. 
How hard is this standard setting? Remember, we put in our 
original bill that came out of this Committee e-prescribing at 
the same year that we are going to bring all the seniors into 
the prescription drug access. It makes absolute sense, and you 
can hear it through your testimony, that these things should be 
coordinated from the point of view of quality health care and 
eliminating problems; but in the process of the Conference 
Committee, that 2 years became 8. So, there is a lot of 
resistance out there.
    Now, what is the standards issue? How hard is it going to 
be for Dr. Brailer to set standards? You already know a lot 
about how different are your standards. Could you figure out 
interoperability if you needed to between your systems? How far 
do we have to go before we can at least complete this first 
step of what are the standards so then we can begin to address 
the other issues of money, of absorption, of integration, of 
implantation, of training? Yes, Dr. Wiesenthal.
    Dr. WIESENTHAL. Well, I think certainly Dr. Overhage will 
also speak to this. Both of our organizations and others have 
actually invested very heavily in helping to contribute to the 
national standards. I don't think at this point that the 
standard setting is the hard part. It is the use of the 
standards and the software. We have gone to great lengths to 
incorporate, to actually develop many hundreds of thousands of 
terms for SNOMED Clinical Terms (CT) and to incorporate that 
into the work that we are doing. We use the LOINC laboratory 
standards that the Regenstrief Institute has developed and many 
others that are national. I don't think it is the standard 
setting that is the issue; I think it is encouraging 
institutions like ours and vendors to incorporate those 
standards in a rigorous, reproducible way so that the 
information can move back and forth.
    Dr. OVERHAGE. If I may go just a step further. I think 
that, in order to do that implementation as was referenced, 
some of the important steps are certification, creating a 
capability to ensure that a plug and play capability--that may 
be a bad word with the computers they serve, are not quite that 
good. To ensure that standards truly are able to interoperate, 
and that we do not need to develop a mass of new standards but 
rather to utilize properly the ones that are there. We may need 
a reference implementation. I think Dr. Brailer mentioned that, 
a vehicle for testing against to make sure that those standards 
are implemented in a consistent fashion.
    Ms. MARCHIBRODA. The government can rapidly accelerate 
adoption using carrots, not sticks, by just building it into 
their Federal government programs, whether it is--ultimately 
when electronic data is transmitted, to support currently 
required accountability measures for quality that CMS uses, or 
whether it is the public health surveillance that is conducted 
by local, State, and public health agencies, when transmitted 
electronically, asking that it be transmitted using standards. 
There are a number of ways through its programs that standards 
adoption could be accelerated.
    Chairman JOHNSON. Dr. Safran?
    Dr. SAFRAN. Well, I think at the local level, the problem 
isn't standards, it is incentive for anybody to use them. So, 
when I am practicing in my own office, I keep my own chart. I 
may have it completely electronic, but there is nothing broken 
from my perspective. The thing that is broken is that when you 
are a patient and you have to go from my office to a 
specialist's office, and you have to retell the story, you have 
to send the medical records, you have got to request them, and 
you have got to retell the medications. There is no incentive 
for me to purchase a system or to--me, as a physician in my own 
office, to have--I may have a completely good electronic record 
that solves my problem. The problem is really a patient's 
problem, our citizen's problems, and so there is no--it is the 
incentives.
    So, in Kaiser, we have sort of an interesting unified 
incentive of the physicians and the hospitals where--and the 
health system. For most of us, the practice outside of any sort 
of unified system, we need better incentives for this kind of 
collaboration and health care. My belief is that we need to 
empower our citizens, the consumers, to demand that their 
physicians use e-mail and electronically transfer their 
records.
    Chairman JOHNSON. Mr. Stark.
    Mr. STARK. Well, I had in mind a modest incentive, Madam 
Chair, like we wouldn't pay you until you did it. I know that 
would not be a popular solution, but at some level, I am afraid 
that--it might be only for part of your practice, but it seems 
to me that convenience--and as you point out, why should you go 
through the inconvenience. I appreciate that.
    I think you are quite right there, because somebody is 
going to go off to a radiologist or somebody else who needs 
information from you and that is, your office probably says, 
look, we give out that information from 3:30 to 4:00, and you 
call in on this number, because we don't have time to be 
answering the phone off and on all day. Possibly that would be 
eliminated, and then one of the underlying things, that you all 
would be more efficient in, as you described, Dr. Wiesenthal, 
you could get the answer more quickly because you wouldn't have 
to spend 24 hours or 36 hours waiting for hard copies to get 
transmitted by United Parcel Service of America or something.
    That is hard to sell somebody when you are looking at them 
and say, look, you have got to spend $100,000 to train, new 
software, input people, and buy a new system for your office. 
To some extent, Madam Chair, I think our witnesses make the 
case for us to move more quickly rather than later, because the 
more this gets ingrained and the longer it goes without--even 
if it isn't enforced, as long as you know what is out there--I 
still use--nobody knows what MYM is, and I should use whatever 
this new system is to keep my checking account. The MYM, you 
can't buy it anymore. I know it is going to crash. As sure as I 
sit here, I know it. Then I am going to spend a month typing 
into one of these new ones. The new one, you know what? I can 
get my bank account downloaded automatically; I can't in my old 
one.
    If I took the time--but I know what it is going to be when 
the system crashes. There is no doubt in my mind what I am 
going to have to do. I hope we can--I leave it up to the 
Chairman; she is going to have to take the flack as to who is 
going to be mad at her. You are not going to make everybody 
happy, but I think you are going to have to do it.
    Chairman JOHNSON. One of the reasons we are having these 
hearings is that we lost in conference because we hadn't laid 
the base of understanding.
    Mr. STARK. I think you are going to have to pick a system, 
Madam Chair, and are just going to have to say, that will be 
it, we agree with you, let us go.
    Chairman JOHNSON. Well, we do want your input under those 
kinds of issues.
    Mr. STARK. Good luck.
    Chairman JOHNSON. Mr. McCrery.
    Mr. MCCRERY. Ms. Marchibroda, you seem to disagree about 
the necessity of setting standards. You seem to indicate in 
your testimony that you thought that was one of the barriers to 
getting more people or more entities to adopt IT, but there is 
not a set of uniformed standards out there. Did I misinterpret 
your----
    Ms. MARCHIBRODA. Absolutely. We are very enthusiastically 
supportive of national standards.
    Mr. MCCRERY. I know, but you said in your testimony that 
you thought the lack of adoption of national standards was an 
impediment to hospitals and doctors and others implementing IT.
    Ms. MARCHIBRODA. To correct----
    Mr. MCCRERY. Dr. Wiesenthal seemed to say that is not a 
problem.
    Ms. MARCHIBRODA. To correct my statements, what I was 
saying was in the past or even now, given the low level of 
adoption of standards, the lack of standards and interoperable 
systems creates a barrier to widespread adoption. Because of 
the fragmented nature of our health care system where we need 
to mobilize lab data, prescription data, data about the 
patient, without standards we are not able to do that. So, we 
need to adopt the codes and the HL7 messages, we need standards 
to be adopted, and that will remove a barrier.
    Mr. MCCRERY. That is what I thought you said. Do you agree 
with that, Dr. Wiesenthal?
    Dr. WIESENTHAL. I do. What I meant when I made my statement 
earlier was that I think that the target standards are pretty 
clear now. Ten years ago, when we started, it was more of a 
risk to say SNOMED CT is going to be it, and we might have made 
an investment that would have been very, very expensive and 
very, very wrong. I don't think that that is a risk anymore. 
The targets, people know what the big targets are, and that 
isn't slowing them down now.
    Mr. MCCRERY. Okay. I believe in both of your testimonies, 
Ms. Marchibroda and Dr. Wiesenthal, you allude to the fact that 
some physicians are reluctant to adopt IT, and they are a 
barrier to doing this. Is that right?
    Dr. WIESENTHAL. I don't believe that that is the case 
anymore. I think there may be a few. The fact is, as 
Congressman Gingrey said, I think most physicians feel as he 
does, it is time to get on with it. They know that this is 
going to be difficult and painful, they know that it is going 
to be very disruptive in their practices. They know that at the 
end of the day they can't be modern without doing it. Doctors 
are not technophobes; they adopt new technology when it is 
going to make their quality of care better or their practices 
more efficient. What they are really afraid of--and the same 
thing is true of nurses--is that we might introduce something 
that will actually make them less efficient and less effective, 
and that would be bad.
    Ms. MARCHIBRODA. To clarify what I said in my testimony. I 
think adopting IT by clinicians, it is really hard. It is like 
playing tennis with the left hand when you are right-handed and 
you have to change processes within your office. It is a 
barrier, but I think it is one that can be overcome. I think a 
comprehensive set of policy changes and practical strategies to 
support clinicians as they make this migration is very 
important, and it has to do with getting systems out there that 
use standards, number one, having leadership at the highest 
levels of each organization, providing some support and 
incentives for those who need it, and aligning those incentives 
between those who bear the cost of those tools and those who 
reap the benefits. Then helping to support them along the way. 
Dr. Brailer talked about a resource center that AHRQ is 
funding, and there are a wide range of initiatives that are 
sprouting up across the country to help clinicians with this 
migration.
    Mr. MCCRERY. Okay. Thank you.
    Chairman JOHNSON. Thanks. I wanted to pursue this issue of 
incentives. A number of you mentioned that the incentives are 
misaligned. We are aware of that, but I would like to hear from 
your point of view what is misaligned and what you think we can 
do about it. The standards issues will move along, we will be 
hearing back from Dr. Brailer, he has a report due in just a 
couple of months, and at each step we will work together. We 
certainly have to do something about money. Any comments you 
want to make about what you think it costs, how we could help 
incentivize people to make the investment would be welcome.
    On the larger issue, there are laws and regulations and 
structures and old ways of doing business that discourage the 
integration of care, and we are going to this year and next 
year have to find a way of reforming the way we pay physicians. 
So, if we can think through this change in the way we manage 
care and the way that the physician participates in care at the 
same time we are thinking through how do we pay physicians, 
since clearly the current system isn't working, that would be 
very helpful. You are far more in a position to do that than I 
am, and I invite you over the next months to take back to your 
organizations that challenge to think, how does this change in 
the system through which we deliver care? What are its 
implications for the way we pay people for care? That is one 
item. Then if you will just talk about misaligned incentives, 
barriers a little bit more, I would appreciate that. Dr. 
Safran.
    Dr. SAFRAN. I think one of the ways that we have organized 
care in this country is around the episode of care. Our 
incentives for payment then are based on this episode of care. 
For the patient, being well is really a health trajectory, it 
is a journey, and there is no incentive for the clinician to 
necessarily make the patient well. The health care expenditures 
are obligated by a patient's decision whether or not to seek 
care. So, we need to be interacting with patients before they 
come to the physical encounter, the physician's office or the 
hospital. We need a vision of a virtual encounter whereby we 
are providing care and we are incenting clinicians to provide 
care virtually.
    Right now, 40 percent of your constituents would say that 
they would like to e-mail their physicians. Probably no more 
than 5 to 10 percent of American physicians right now want 
another channel of communication with their patients. They are 
not reimbursed for that. That is not considered part of the 
care process. Yet that communication, before care worsens, 
might prevent a hospitalization. It might prevent intravenous 
therapy where a simple oral medication prescribed early via 
telephone, Internet, telemedicine, whatever you want to call 
care at a distance, we could enable that kind of care. We 
prevent physicians inside of hospitals for reimbursing them for 
care once their patients go home. This is particularly true of 
care of infants where the hospital-based pediatricians, 
neonatologists, can't bill for the continued care once a child 
goes home.
    So, we have created all these barriers. The technology, 
while we talk about it as computers, it is really a 
communication device that allows us to coordinate, communicate, 
and collaborate with our patients in a way. We need to 
recognize that and then reimburse around the entire process of 
care rather than just the episode.
    Chairman JOHNSON. Dr. Overhage.
    Dr. OVERHAGE. Thank you. It is a very important and central 
question that you ask, obviously. I think that there are two 
components that we have to think about. One is the 
inefficiencies, the excesses that are available to squeeze out 
of the process, which can be captured more quickly and easily. 
I have used the example in my testimony of sending a laboratory 
result from a laboratory to a physician's office costs 80 cents 
today. That type of cost can be addressed very directly and has 
a rapid turnaround and a rapid payoff and may support the 
infrastructure, at least partially support the infrastructure 
that is needed.
    The other is this larger issue that Dr. Safran was 
referencing which is, as we can use tools to improve the 
quality and safety of care, there are huge potential savings. 
Capitalizing on those will require very dramatic changes in how 
we reimburse our clinicians. That is going to be a longer road. 
So, I think we have to take advantages of those shorter term 
efficiency issues in order to get started and to demonstrate 
the value early so that we don't have to wait.
    Chairman JOHNSON. Dr. Wiesenthal.
    Dr. WIESENTHAL. I agree with our colleagues. I would point 
out that Kaiser Permanente is an example of what happens when 
incentives are aligned, because we are an integrated system, so 
it is our pharmacy, our laboratory, our hospitals. If I do 
something as a clinician that turns out to create an efficiency 
for the pharmacy, it acts powerfully in the right direction; 
whereas, if Dr. Safran decides to transmit prescriptions 
electronically, it doesn't save him any money. He isn't any 
better off. The pharmacy down the road, or wherever that goes, 
will be able to reduce their costs, but he doesn't see any of 
the benefit of that. That is a fundamental issue in a 
nonintegrated system that somehow has to be addressed. Somehow 
the physicians in the fee-for-service community, which is two-
thirds of the doctors in the United States today, have to 
somehow see the benefit of the up front expense that is 
enormous they must make in order to put these systems in that 
creates efficiencies for everybody else but not for them.
    Chairman JOHNSON. I think it is very important that you try 
to think about these things with your folks. How do we--do we 
put it in with a no interest loan, and then through your 
savings you can pay it back? How do we front the cost? We can 
incentivize the costs. We have done that before: we won't pay 
you unless you do it electronically. There are lots of things 
that you can do, but you need to be able to say here is the 
various choices of equipment, here is the training that comes 
with it, and then here is how you can afford it. I am perturbed 
about, why the medical community as a whole. I see individual 
physicians very excited about this, and they will show you but 
it doesn't spread. Sometimes they can't get their own 
colleagues to--so it is a problem.
    Dr. WIESENTHAL. This is the hardest thing I ever did. When 
I changed 7 years ago from paper records, and I led the 
development of the system, I understood exactly how it worked, 
I knew all the functions. It literally changed every step I 
took during the day. It was that that was hard. Not learning 
how the software works or putting the computers in or making 
the connections go okay. It is--I would ask you to try to 
imagine how--if somebody came to your office tomorrow and 
changed the way you did everything. That is what is difficult. 
Actually, in terms of our cost of implementation, those costs, 
the change of management costs and training costs related to 
them, the change in the way work is done are more than 50 
percent of the costs of implementing the system. Trying to 
figure out a way to pay for that in a nonintegrated system, 
unlike ours, I think is extremely difficult.
    Chairman JOHNSON. It is interesting you say it is 50 
percent of the cost. Okay. Thank you very much. I appreciate 
it. Your testimony was excellent. I enjoyed reading it. We will 
continue to learn a lot from it. If you have information you 
think we should be aware of as we move through this process, 
our goal is to increase the general level of knowledge of the 
Congress in these areas, and then to work closely with the 
Administration to push forward on this initiative, and 
eventually to be positioned when we legislate next year, if 
necessary, to change rules and regulations and payment 
structures so that they are more appropriate to an electronic 
era. Thank you very much for your help today and for your 
participation.
    [Whereupon, at 4:28 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
           Statement of American Academy of Family Physicians
Introduction

    This statement is submitted to the Ways and Means Health 
Subcommittee hearing entitled ``Health Care Information Technology,'' 
on behalf of the 93,700 members of the American Academy of Family 
Physicians. Family physicians practice office-based primary care, 
predominantly in medical practices consisting of one to five physicians 
and often in underserved areas. In fact, slightly more than a quarter 
of family physicians work in single or two-person practices that 
provide health care to some 38 million patients every year. These small 
practices survive on extremely tight operating margins and usually are 
unable to capitalize new technology equipment, provide necessary 
training and support serious disruption of their practice. The primary 
care physicians who provide most of the health care in this nation do 
not have access to the finances and capital available to hospitals, 
academic health centers and other large institutions. Despite a strong 
interest in electronic health record (EHR) technology, the large up-
front costs like the initial fees and licensing agreements are 
prohibitively expensive for these physicians.
    Nonetheless, Academy members are convinced that patient safety, 
effective evidence-based care coordination and the reduction of 
duplicative and unnecessary care require EHRs. Therefore, the AAFP's 
goal is to have at least half of its members using EHRs by 2006. As a 
result, the Academy has created a Center for Health Information 
Technology to improve the availability of health information technology 
products aimed at this segment of the physician market.
    The Center's mission is to promote the adoption and optimal use of 
health information technology by AAFP members, office-based physicians 
and allied health professionals, for the purposes of improving the 
quality and safety of medical care, as well as to increase the 
efficiency of medical practice. The Center is using a multi-faceted 
approach to realize this mission through advocacy, education, 
cooperation, and standardization. At the heart of these efforts is the 
EHR. The EHR enables family physicians to deliver the highest quality, 
most efficient, and safest care for their patients.
    The following programs, currently ongoing through the AAFP Center 
for Health Information Technology, illustrate the facets of our 
efforts.

Partners for Patients

    In October 2003, the Academy's Center for Health Information 
Technology announced that it had negotiated purchasing agreements with 
a core group of software and hardware vendors around four principles. 
These joint purchasing agreements between the Academy and twelve 
information technology vendors is called, ``Partners for Patients.''
    The Partners for Patients initiative demonstrates our collaboration 
with the health information technology industry. It is also a forum to 
work with vendors on standards development. In addition, we are 
establishing best practices to address contracting, pricing, and 
technical support. Partners for Patients vendors have agreed to the 
following principles:

      Affordability: the costs for the acquisition and use of 
health information technology should be within the budget of small--to 
medium-sized medical practices.
      Compatibility: adoption of health information technology 
should not require that clinicians and practices completely and 
routinely replace current systems when new components are needed. 
Information systems and their components should increasingly be based 
on standards that result in ``plug and play'' compatibility, similar to 
that found in the video and audio industries. There should be no 
``vendor lock'' resulting from proprietary systems or interfaces.
      Interoperability: Data exchange schema and standards 
should permit data to be shared between clinician, lab, hospital, 
pharmacy, and patient regardless of application or application vendor.
      Data Stewardship: Clinicians who use health information 
technology should retain control of the data that are the product of 
their work, subject to the rights of patients to access their health 
information and control its release. Physicians should be entitled to 
choose an independent and unbiased third party to be a steward of the 
data on their behalf.

    These principles address significant technological and financial 
barriers to the widespread adoption of health information technology in 
the ambulatory physician office. With the commitment of our partners, 
coupled with the support of 40 additional vendors, we believe that 
progress toward achievement of the principles is accelerating.

Continuity of Care Record

    Until there is adoption of widespread interoperable data standards 
that are being used by every component of the health care system, the 
Academy will work to produce and promote the use of a patient summary 
content standard to allow patients access to an easily updated, 
portable copy of their pertinent medical history. This new standard is 
called the Continuity of Care Record (CCR).
    Unlike other health information technology standards, the 
Continuity of Care Record (CCR) is designed from the start to 
facilitate communication from clinician to clinician and clinician to 
patient. This commonly shared method of exchanging this critical 
clinical information among clinicians is particularly important.
    The CCR is a newly established patient summary content standard 
that can be accessed as a PDF, HTML or Word document with basic health 
information such as diagnoses, medication list, allergies, and recent 
procedures. Physicians can forward this document to subspecialists when 
a patient is referred and patients can carry it with them to promote 
continuity, quality, and safety of care. Having this information 
readily available at the time of care or in emergencies could 
significantly reduce duplication of lab tests or diagnostic procedures, 
as well as improve patient quality and reduce medical errors from 
faulty or incomplete information.
    The CCR is being sponsored and developed by the AAFP, the 
Massachusetts Medical Society, and Healthcare Information and 
Management Systems Society, with input from many other individuals and 
organizations, under auspices of the standards development organization 
American Society for Testing and Materials. Balloting was completed in 
early 2004 and pilot projects are likely to start later this year.
    The CCR is that digital file, produced by using readily available 
software like Microsoft Word, or generated from hospital and practice 
EHR systems when a patient leaves the ER, office, or is referred from a 
primary care physician to a subspecialist. Because the CCR is being 
designed to be a simple content standard, it will be possible for 
different EHR systems to both import and export the information 
contained in the CCR, and to update that information after each 
encounter or visit. Data in similar documents can be displayed in a 
variety of formats, such as HL7 messages, HTML (browser), PDF, and 
Word, and thus printed versions of the CCR will be available for 
patients who desire them. Adoption of the CCR by the medical community 
and information technology vendors will be a first step in achieving 
interoperability of medical records. To promote both the CCR and the 
dissemination of EHR technology, several medical specialty societies 
have formed a coalition of experts in health information technology. 
Because the CCR is a critical step toward interoperability right now, 
the federal government whole-hearted support of this standard is 
critical.

Physicians' Electronic Health Record Coalition

    The AAFP is one of the founding members of the Physicians' 
Electronic Health Record Coalition (PEHRC), which recently formed to 
collaborate on issues of health information technology. The medical 
specialty societies that form the membership of the PEHRC agree that 
promoting workable information technology solutions for the health care 
system is too big for just one organization. PEHRC will be a strong 
physician voice in the health information technology sphere. The 
coalition will influence industry, government, and physicians to 
provide better health information technology that will achieve better 
efficiency, quality and safety.

Doctor's Office Quality--Information Technology (DOQ-IT) and EHR Pilot 
        Project

    The following two projects in which the AAFP is involved, explore 
how to best implement EHR technology in physician offices. Both 
projects promise to reveal critical success factors for small--to 
medium-sized practices in preparing, choosing and implementing an EHR 
package.
    The Doctor's Office Quality Information Technology (DOQ-IT) 
project, funded by the Centers for Medicare & Medicaid Services, was 
awarded to California's quality improvement organization (QIO) in 
partnership with the AAFPCenter for Health Information Technology, in 
October of 2003.
    The DOQ-IT project endeavors to lead the way in assisting small--to 
medium-sized physician offices in migrating from paper-based health 
records to EHR systems, storing health information electronically and 
utilizing computer-generated decision support tools, including 
preventive service reminders and clinical guidelines. This project 
offers an integrated approach to improving care for Medicare 
beneficiaries in the areas of diabetes, heart failure, CAD, 
hypertension, osteoarthritis, depression, and preventive care.
    The DOQ-IT project will educate small--to medium-sized physician 
offices on EHR system solutions and alternatives as well as provide 
information on cost, risks, and benefits of IT adoption. Working 
closely with participating physician offices, the project will conduct 
a needs assessment, identifying an EHR system from multiple vendors 
that meets specific office needs. Technical and quality improvement 
assistance will be provided, including uploading data, acquiring 
reports, and reorganizing physician office workflow to integrate and 
optimize IT use, to ensure EHRs are used to their fullest capability to 
improve quality of care. Through comparative clinical quality measure 
reports, the project also will assist physician offices in identifying 
potential areas for quality improvement.
    In May of this year, the Academy was awarded $100,000 from the 
Centers for Medicare and Medicaid Services to evaluate the 
implementation of an EHR Pilot Project. This project implements EHR 
technology in small--and medium-sized ambulatory care practices. This 
project operationalizes our collaboration with the industry. The AAFP 
and Partners for Patient vendors are moving from policy and agreement 
to action. Education of the AAFP members on EHR implementation in 
small--and medium-sized practices is an expected outcome of this 
project.
    AAFP is leading this small-scale collaborative pilot project with 
Medplexus, Siemens Medical Solutions, and Hewlett-Packard to implement, 
study and promote the transition to use of EHR in small--and medium-
sized family practices. Six practices have implemented EHR technology 
and are currently utilizing it as part of their clinical workflow. 
Participating practices consist of solo physician offices in California 
and Pennsylvania; two physician practices in Utah and North Carolina; a 
four physician practice in Ohio and a five physician practice in 
Oregon.
    In June 2004 each office a six-month demonstration using the 
Medplexus XML--and Java-based EHR software application, at no cost to 
the practices. Siemens Medical Solutions, Hewlett-Packard, and 
Medplexus have generously committed to host the application, provide 
hardware and provide the software, training, and application management 
without charge to the participating practices. The Health Information 
Management Systems Society (HIMSS), the nation's largest health IT 
industry membership organization, is co-administering the pilot with 
AAFP and has lent valuable assistance to the Center for Health 
Information Technology staff.
    The pilot project's main objectives are to intensively study the 
barriers and keys to success during the implementation process, and to 
combine this goal with a proof-of-concept for the applications service 
provider model of delivery of scalable electronic health record 
systems. An additional goal is to identify those special needs for 
small and solo practices and help Medplexus, and subsequently other 
vendors, address those needs in their EHR.

Summary

    The Academy has made promoting the dissemination and utilization of 
health information technology a strategic priority for the 
organization. We are committed to helping physician offices begin the 
process of transforming the ambulatory setting. This transformation 
will require physician offices to rely upon health information 
technology to achieve advances in chronic care management, quality 
improvement and improved patient safety.
    However, so many individual factors can affect the choice of 
adopting technology in the small--to medium-sized practice that it 
would be counter-productive to mandate the immediate implementation of 
any EHR technology. The lessons learned through DOQ-IT and the AAFP's 
EHR Pilot Project are expected to yield vital information for small--to 
medium-sized ambulatory physician practices. For example, physicians 
currently lack adequate information about how to ready their practice 
for an EHR, how to choose an appropriate technology package and how to 
quickly implement an efficient clinical workflow utilizing an EHR. 
These barriers to technology adoption exist beside the significant 
financial hurdles that currently prevent many practices from purchasing 
EHRs.
    The Center for Health Information Technology has been pleased to 
work with Dr. David Brailer, National Health Information Technology 
Coordinator within the Department of Health and Human Services. Dr. 
Brailer is committed to the active promotion of the CCR and 
dissemination of EHR. The clear intersection of priorities between Dr. 
Brailer and the Center for Health Information Technology has lead to a 
close working relationship. No one entity can solve the problems that 
plague our health care system, yet collaboration to utilize health 
information technology among physicians, patients, technology vendors, 
insurers, and the federal government holds great promise. The AAFP has 
been leading collaborative efforts around health information 
technology, and we believe Dr. Bailer's work will break down barriers 
to collaboration and promote action.
    The Academy appreciates the opportunity to submit this statement 
outlining the experience that the ambulatory physician's office has had 
with EHR and looks forward to continue out work with the Ways and Means 
Committee on issues related to health information technology.

                                 
         Statement of American Clinical Laboratory Association
    The American Clinical Laboratory Association (ACLA) congratulates 
Chairwoman Johnson and the Subcommittee on Health for holding this 
hearing on health care information technology (IT). ACLA is an 
association representing independent clinical laboratories throughout 
the United States including local, regional and national laboratories.
    Increasingly, clinical laboratories are using IT innovations to 
improve patient care, as well as to promote the highest level of 
efficiency and affordability. Implemented properly, IT will provide 
ready access to timely, relevant, reliable and secure information 
through an interconnected infrastructure affording better health and 
health care.
    ACLA wants to make sure that the laboratory industry is an active 
participant as IT becomes a more important part of health care 
delivery. Specifically, we want to avoid the problems that the 
laboratory industry experienced with the implementation of the HIPAA 
standard transaction requirements in which requirements did always not 
match the operational realities of providing laboratory services and 
billing for these services. Accordingly, ACLA is taking a more active 
role in the IT issue by joining two private sector coalitions on health 
care IT, the E-Health Initiative (E-Hi) and the National Alliance for 
Health Information Technology (NAHIT).
    ACLA is also currently working in collaboration with the Centers 
for Medicare and Medicaid Services' (CMS) Office of Research, 
Development, and Information on the development of IT in the health 
care sector. This demonstration project seeks to investigate the 
potential benefit of linking existing data streams including 
laboratory, pharmaceutical, and radiological data through the Doctor's 
Office Quality--Information Technology (DOQ-IT) project. ACLA is 
committed to helping the Administration move from paper to electronic 
health records. ACLA is pleased CMS sought the clinical expertise of 
the association and its members since laboratories have been utilizing 
this means of information sharing for many years.
    Again, congratulations to Chairwoman Johnson and the entire 
Subcommittee on Health for holding this hearing. ACLA looks forward to 
working with the Committee to facilitate the adoption of IT throughout 
the health care sector.

                                 
              Statement of American College of Physicians
    The American College of Physicians (ACP), representing over 115,000 
internal medicine physicians and medical students, is pleased to 
provide written comments on the Federal role in providing incentives to 
promote health information technology (IT). These comments are provided 
for the June 17, 2004 hearing held by the United States (U.S.) House of 
Representatives Subcommittee on Health of the House Ways and Means 
Committee.

Introduction

    The United States healthcare system is highly fragmented in terms 
of the vast array of disparate, proprietary non-communicating 
healthcare information systems in use. Perhaps the largest barrier to 
adoption of health information technology besides cost is that the 
current Medicare and private sector insurance plans actually 
incentivize physicians and other healthcare providers not to use 
medical information technology. This results from most health IT 
systems not being designed to communicate with other health IT systems, 
which has resulted in the creation of thousands of health information 
silos all over the country. Another problem that has contributed to the 
creation of the information silos is that for virtually every component 
of care--drugs, lab results, digital imaging, disease classification, 
procedures performed, and electronic health records--there are multiple 
terminologies in use within each component. For drugs alone, there are 
at least 12 separate systems for naming medications, their ingredients, 
dosage, and route of administration.\1\ So, even if the U.S. developed 
a system that allowed physicians and other health care providers to 
easily transmit health care data and if these providers implemented the 
systems into their medical practice, they'd still not be using a single 
uniform language.
---------------------------------------------------------------------------
    \1\ ``Establishing an Electronic Infrastructure,'' Draft Report of 
the Electronic Medicine Committee of the Florida Medical Association, 
Glen Davis, MD, January 10, 2004.
---------------------------------------------------------------------------
    The Institute of Medicine's (IOM) 2001 report Crossing the Quality 
Chasm--A New Health System for the 21st Century, highlights the U.S. 
healthcare system's reticence in taking advantage of the information 
technology revolution ``that has been transforming every other aspect 
of society.'' The IOM report warns: ``In the absence of a national 
commitment and financial support to build a national health information 
infrastructure--the progress of quality improvement will be painfully 
slow.'' \2\ President Bush, in his January 20, 2004 State of the Union 
speech, agreed that the time to bring advanced information technology 
to healthcare is now: ``By computerizing health records, we can avoid 
dangerous medical mistakes, reduce costs, and improve care.'' \3\ The 
President has backed his support for expanding IT use in the healthcare 
sector by earmarking $152 million in his proposed Fiscal Year 2005 
budget for health IT initiatives.\4\ To underscore the federal 
commitment to these goals, in April 2004, the President announced 
creation of a new position to lead the federal effort, the National 
Health Information Technology Coordinator and tasked the coordinator 
with developing a national plan within ninety days.
---------------------------------------------------------------------------
    \2\ Crossing the Quality Chasm--A New Health System for the 21st 
Century, Institute of Medicine, March 2001.
    \3\ Bush, George W., State of the Union Speech, Washington, D.C., 
January 20, 2004.
    \4\ ``White House Budget Includes Healthcare IT Funds,'' 
www.ihealthbeat.org, February 4, 2004.
---------------------------------------------------------------------------
    The American College of Physicians (ACP) agrees with the IOM's and 
President's call to bring the latest advances of information technology 
to all sectors of the healthcare marketplace, underwritten with federal 
support and leadership. Health information technology and creating an 
interoperable healthcare data system, i.e., one that allows HIT systems 
throughout the country to communicate with each other, will 
revolutionize healthcare and will give individual patients greater 
knowledge and ability to improve their health status. An interoperable 
healthcare data system will facilitate the delivery of a higher 
standard of quality to the U.S. healthcare system by increasing the 
availability of healthcare data, making care safer and less costly. As 
such, ACP believes creating incentives to improve health IT adoption 
and creating interoperability are goals well worth the effort. 
Achieving these goals will not be easy. It will require overcoming 
steep barriers of resistance to system change, and a willingness to 
endure what will surely be a long and taxing process of converting old 
systems to new. Financial incentives for health IT adoption are needed 
and health IT standards should be developed cooperatively and 
voluntarily with active provider input, with the federal government 
sharing in the cost of achieving the interoperability of health care 
data that is sorely needed. In addition, new interoperable systems be 
carefully tested before widespread implementation.
    Even if the United States were able to overcome the enormous 
challenges which must be surmounted to attain a truly interoperable 
national healthcare information system, physicians likely would not 
elect to use the system and continue to use a paper-based or an 
unconnected legacy health IT system that is already in place in their 
medical practice. This is because the current Medicare and private 
sector insurance plans actually incentivize physicians not to invest in 
or use medical information technology. The balance of this testimony 
will focus on the benefits, barriers, and incentives for adopting 
health information technology in the physician practice and ACP 
recommendations for achieving this critical national goal.

Benefits of Health Information Technology Adoption in the Physician 
        Practice

    Recent reports 5,}6,}7 show that while only 5% to 9% of 
American physicians use electronic health records (EHRs) on a regular 
basis, there is a great deal of variability within geographic regions. 
For example, EHR adoption in Massachusetts is as high as 30.2%.\8\ A 
much smaller number of physicians, about 0.1% nationally according to 
one expert in the field,\9\ have taken the next big step to make their 
practices virtually ``paperless.'' The core of a paperless office is a 
system that integrates EHRs with physician practice management, patient 
scheduling, and clinical decision support software. Such software has 
the ability to facilitate many critical practice functions, including 
patient record keeping, scheduling and communications, issuance of 
bills and tracking of claims, ordering and receipt of diagnostic test 
information, generation and tracking of physician referrals, 
measurement of physician and staff productivity and performance, 
internal administrative workload and budget control, and real-time 
clinical decision support (CDS). CDS software, such as the Physicians' 
Information and Education Resource (PIER), ACP's highly regarded real-
time point-of-care system, delivers current medical research 
information and best clinical practice information to the physician at 
the point of care when the physician needs it. PIER aids physicians in 
the diagnosis and treatment of hundreds of conditions and also offers 
educational support to patients, with physician-selected print-outs 
available at the push of a button.
---------------------------------------------------------------------------
    \5\ Computer-based patient records: searching for the right 
solution. Healthcare Informatics. 2003.
    \6\ Renner K. A cost-benefit analysis of electronic medical 
records. Am J Med. 1 April 2003.
    \7\ U.S. trails other English speaking countries in use of 
electronic medical records. Harris Interactive News. 1 October 2001.
    \8\ Berman J. Survey reveals growing number of tech-savvy doctors. 
Health-IT World. 14 August 2003.
    \9\ Squires S. Doctors go digital. Washington Post. 15 May 
2001:HE10.
---------------------------------------------------------------------------
    In its fully realized form, a paperless office can enhance the 
quality of care that a physician practice delivers while also offering 
an array of other benefits. These can include the following:

A.

Instant access to patient health data from any location with a computer and 
Internet access;

B.

Real-time clinical decision support at the point of care;

C.

Updating of the EHR while the patient is being seen;

D.

Digital transmission and receipt of all patient lab requests and results, 
physician consult requests and reports, and patient prescriptions;

E.

Medication and formulary information and advice, aimed at avoiding errors 
and untoward drug interactions and keeping drug costs as low as possible;

F.

Coding advice to physicians to assure accurate documentation of a visit's 
level of complexity;

G.

Generation of patient bill and patient take-home medical summaries, 
condition-specific information, and treatment instructions for patients 
before leaving the office;

H.

Scheduling patient appointments and sending reminders to patients about 
important treatment items and upcoming tests and appointments;

I.

Digital transmission and tracking of claims sent to insurers; and

J.

Physician performance measurement and health care outcomes research.

    Technology and software already exist that would allow physicians 
to spend more time seeing patients and less time on paperwork; however, 
physicians in the United States have been slow to embrace this new 
technology. England has committed $17 billion to wire every hospital, 
clinic, and doctor's office. All of England's 50 million citizens are 
expected to get an electronic medical record by 2005, and, by the end 
of 2008, the system will handle an estimated 5 billion transactions a 
year, including electronic appointments, prescriptions, and access of 
patient records.\10\
---------------------------------------------------------------------------
    \10\ England's health system to get major technological upgrade. 
Wall St J. 4 December 2003.
---------------------------------------------------------------------------
    In paperless offices, all patient information is instantly 
available to the physician; not only in the exam room but anywhere an 
Internet-linked computer can be accessed. With the proper safeguards, 
this connectivity can be achieved over the Internet, thus allowing 
physicians to obtain the necessary patient information to render an 
appropriate clinical decision. Quality of care should be improved by 
eliminating the risk of having to rely only on the physician's and/or 
patient's memory or the patient's description of symptoms left in a 
telephone message.
    The quality of patient care may also be enhanced by automated 
system reminders, which alert both physicians and patients to the need 
for necessary treatments and tests, such as periodic physicals, flu 
shots, hemoglobin A1c tests for diabetics, colonoscopies, and 
mammograms.
    A study of small physician practices in California documented how 
using EHRs had had a visible impact on quality: ``Quality benefits were 
common . . . almost all users reported increased quality of patient 
care due to better data legibility, accessibility, and organization, as 
well as prescription ordering, and prevention and disease management 
decision support''.\11\
---------------------------------------------------------------------------
    \11\ Electronic Medical Records: Lesson from Small Physician 
Practices. Ihealth Reports. California HealthCare Foundation; October 
2003.
---------------------------------------------------------------------------
    Most EHR software includes physician prompts for key clinical 
questions that should be asked based on past history and diagnosis, 
avoiding critical oversights. Prescription errors caused by illegible 
handwriting are avoided when physicians can simply place a check mark 
next to correct medication(s). Such software also provides medication 
conflict warnings, thereby averting potentially dangerous drug--drug 
interactions.
    The benefits for patients and the health care system at large can 
be enormous. According to the Leapfrog Group for Patient Safety, 
computerized physician order entry for prescriptions alone can 
substantially reduce serious medication errors. One major Boston, 
Massachusetts, hospital had a 55% decrease in medication errors after 
its computerized physician order entry was installed, while a hospital 
in Salt Lake City, Utah, experienced a 70% decrease in antibiotic-
related adverse drug events.\12\
---------------------------------------------------------------------------
    \12\ Computerized Physician Order. Leapfrog Group for Patient 
Safety Fact Sheet. 18 April 2003.

---------------------------------------------------------------------------
Barriers to Health IT Adoption in the Physician Practice

    Three recent major studies that examined barriers to EHR adoption 
found that the largest barrier to health IT adoption cited in the 
studies is lack of adequate funding and resources. This finding held 
true in the physician and hospital sector and across the spectrum of 
physician practice size.13,}14,}15
---------------------------------------------------------------------------
    \13\ Medical Group Management Association (MGMA), Medical Group 
Management Association Survey, 2001.
    \14\ Healthcare Information and Management Systems Society (HIMSS), 
13th Annual HIMSS Leadership Survey, 2002.
    \15\ Medical Record Institute (MRI), 4th Annual Survey of 
Electronic Health Record Trends and Usage, 2002.
---------------------------------------------------------------------------
    Adopting major health IT components and converting to a paperless 
physician office has many costs and obstacles physicians must fully 
weigh before making such a major change in how they do business. The 
time, cost, and practice disruption involved in purchasing and learning 
how to use a new system has to be balanced against its potential 
benefits and ability to recover the initial investment. Important 
start-up costs and obstacles that the physician must carefully consider 
include the following:

A.

The cost of purchasing and/or upgrading hardware and new software.

B.

The time and cost of system testing and customization before implementing 
new EHR, practice management, clinical decision support, and other 
software.

C.

The cost of designing and building or redesigning and renovating the 
office's physical layout to accommodate a paperless operation.

D.

The cost and time of training staff to use new health IT software and 
related updated office protocols.

E.

The time and cost for existing practices to upload paper medical records 
into an electronic health record format.

F.

Short-term loss of productivity and practice revenue while the new system 
is being installed and debugged and staff is learning new software and 
office protocols.

G.

Lack of interoperability of healthcare data among health IT systems.

H.

Ongoing costs of system maintenance, upgrading, technical support, and 
staff training.

I.

Temporary loss of system access due to computer crashes or power failures.

J.

Use of digital data entry devices, such as an electronic stylus, electronic 
dictation, or a keyboard.

K.

Patient resistance to the new system's outputs, such as computer-generated 
bills, referrals, and prescriptions.

    Software/hardware start-up costs for adopting health IT solutions 
and creating a paperless office depend on a wide array of factors. 
These factors include the number of physicians comprising the practice 
and deciding whether to purchase EHR/practice management/clinical 
decisions support software and install new servers and workstations, or 
to lease software and/or servers from an application service provider. 
Cost is also driven by the number of links to the servers, e.g., links 
to reference labs and to area hospitals, which allow direct electronic 
transmission of patient medical data. Besides initial hardware and 
software costs, practices need to consider ongoing costs, such as 
Internet access and ongoing system maintenance costs. An October 2003 
report entitled ``Electronic Medical Records--Lessons from Small 
Physician Practices,'' which studied 20 small practices in California, 
showed that ``initial costs ranged from $15,000 to $50,000 per 
physician, with a median cost of $30,000 per physician'' \11\; this 
report focuses on EHRs, so creating a true paperless office would 
require an even greater capital investment.
---------------------------------------------------------------------------
    \11\ Electronic Medical Records: Lesson from Small Physician 
Practices. Ihealth Reports. California HealthCare Foundation; October 
2003.

Incentives to Health Information Technology Adoption in the Physician 
---------------------------------------------------------------------------
        Practice

    The vast majority of small physician groups and hospitals, as well 
as many large organizations, are not implementing EHRs and other health 
IT solutions despite the potential gains to patient safety and improved 
quality. The primary reason for not implementing these health IT 
solutions is that EHRs have an adverse financial effect on most 
physicians' practices and those of other healthcare providers, even if 
they believe the technology to be useful and efficacious. This lack of 
health IT adoption allows avoidable medical errors and deaths to occur 
while these beneficial technologies remain underused.
    Despite the long term benefits realized by patients, payers, 
purchasers and society as a whole, physician groups and hospitals are 
making rational economic decisions when they choose not to invest in 
EHRs and other health IT solutions. Hospital and physician investments 
in EHRs are costly, pose substantial economic risks and have few 
economic benefits to the purchasers. Despite being on the market for 
over a decade, demand for a robust EHR health IT solution is low 
because total cost of ownership (purchase price, implementation, 
maintenance, and impact on operations costs) is too high. EHRs are 
costly because of the large upfront investment needed for technology 
and infrastructure, but also because of the high costs of managing 
concomitant clinical and administrative changes. They are risky because 
the implementations may not succeed, and also because of the EHR-driven 
changes in the workflow, communication and decisionmaking processes for 
those who implement these systems.
    The current federal approach to reimbursement of health care 
services did not contemplate health IT. EHRs and health IT present a 
new and unique category of clinical technology financing. The current 
Medicare reimbursement system for physicians--the Medicare Resource-
Based Relative Value Scale (RBRVS)--does not recognize use of EHRs and 
health IT. The reason is that the use of these health care solutions 
are considered ``atypical'' and therefore not a reimbursable service 
under Medicare. There are no allowable billing codes for critical new 
health IT solutions such as e-visits/e-consults, which are structured 
e-mail communication between the patient and physician which allow for 
a cost-effective medical service to be delivered to patients beyond the 
face-to-face clinical setting. Thus, the Medicare payment system is a 
disincentive for physicians to invest in health IT solutions such as 
EHRs.
    At the same time that physicians are considering implementing 
health IT solutions into their medical practices physician payment cuts 
are expected in 2006 due to the fundamentally flawed Medicare 
Sustainable Growth Rate (SGR) formula. The SGR is formula is simply 
unworkable; it requires Medicare actuaries to predict the 
unpredictable, leads to constantly-changing government cost estimates 
and creates volatile payment swings that undermine medical practices' 
ability to make rational business decisions such as health IT 
investment and remain financially viable. The Congressionally-created 
Medicare Payment Advisory Committee (MedPAC), recommends replacing the 
SGR. Medicare reduces payments to physicians and other practitioners 
whenever program expenditures for their services exceed a set target, 
the SGR. At the same time, however, the government induces greater use 
of physician services through new coverage decisions, quality 
improvement initiatives and a host of other regulatory decisions that 
are good for patients but are not recognized in the SGR. Of particular 
note, the SGR does not properly account for investment in health IT. As 
a result, from 1991-2004, payment rates for physicians and health 
professionals fell 15% behind practice cost inflation as measured by 
Medicare's own conservative estimates. As such, ACP supports MedPAC's 
recommendation to replace the SGR with an annual update system which, 
like those of other Medicare providers, reflects actual increases in 
physicians' costs.
    The solution to properly incentivize healthcare providers to invest 
in health IT is multilayered. Physicians and other health care 
providers need access to capital to make the investment in health IT. 
One way to do this is to create a government-backed loan program. The 
interest in EHRs among hospitals and physicians and the frequently 
cited financial barriers suggest that strong latent demand for these 
systems would be stimulated by capital availability. Cost offsets may 
be particularly beneficial to physician practices, independent 
hospitals, and other small organizations such as public sector clinics 
and agencies, for which capital is particularly scarce and where cash 
flow inhibits investment in health IT and specifically EHRs. Loan funds 
should be made available for more than just the purchase of an EHR 
system, it must cover the cost of EHR purchase, implementation, 
training and concomitant workflow changes that are necessary to lower 
implementation risk and deliver results from EHR implementation. The 
program also should be structured so that health IT purchases support 
systems that promote national goals such as interoperability of 
healthcare data, not proprietary, unconnected health IT systems.
    Once the investment capital is made available, the purchasers of 
these health IT systems must have a means to pay these purchases off. 
Therefore, Medicare and private sector payment policy must be changed 
to encourage, rather than discourage the use of health IT. The Medicare 
SGR formula must be replaced with a more coherent payment update 
formula and the Medicare RBRVS must explicitly pay for the use of 
health IT.

Legislative Recommendations

    It's clear from the benefits discussed in this testimony that 
investment in health IT solutions are a sound investment for the future 
health and well-being of Americans. In order to stimulate investment in 
health IT, ACP recommends that Congress consider enacting legislation 
that will incentivize physicians to acquire HIT, including 
consideration of the following options:

    1.  Create a revolving health IT loan program--modeled on the 
current student loan program--for physicians and other health care 
providers interested in investing in health IT with clinical decision 
support tools designed to be interoperable and to enhance medical 
practice to improve the quality of care delivered.
    2.  Create a grant program to provide direct dollar subsidies to 
physicians who agree to acquire health information technology linked to 
clinical decision support tools and who agree to voluntarily 
participate in performance measurement/quality improvement programs 
and/or in studies to assess the impact of such HIT systems on improving 
health care quality while achieving system-wide savings.
    3.  Authorize the creation of tax credits, specifically targeted to 
physicians in small and solo practices, for the purchase of HIT with 
clinical decision support, conditioned on an agreement by the tax 
credit recipients to participate in performance measurement/quality 
improvement programs and/or in studies to assess the costs and benefits 
of HIT linked to quality improvement.
    4.  Replace the flawed Medicare SGR formula for physician payment 
with a new formula that provides for recognition of the acquisition and 
ongoing costs associated with HIT systems.
    5.  Build into the Medicare RBRVS system an add-on code for 
evaluation and management (E/M) services to identify that the E/M 
service was assisted by an EHR with clinical decision support tools 
designed to be interoperable. The add-on code would increase payment 
for the identified service by an amount that not only recognizes the 
investment of dollars and practice resources required to acquire and 
maintain such technologies but also the ongoing system-wide value to 
Medicare associated with use of such technologies.
    6.  Recognize and separately reimburse telephone and e-consults 
(structured email communication between patient and physician or other 
health care provider) that result in a distinctly identifiable medical 
service.
    7.  Authorize Medicare payment of a ``case management fee'', which 
would provide additional reimbursement per patient per month for 
physicians who agree to acquire and utilize HIT with clinical decision 
support to manage and improve care of patients with chronic illness.
    8.  Exempt such additional reimbursement incentives from Medicare 
budget neutrality requirements. Because Medicare is likely to 
experience system-wide savings associated with an investment in HIT, 
creating on financial incentives to support the acquisition of such 
cost-saving technologies should not be subject to budget neutrality 
cuts.

Conclusion

    Organizations that invest in health IT generate benefits for their 
patients and for health care purchasers, but often realize lower 
revenue (e.g., prevented hospitalizations and reduction of redundant 
medical services) and increased costs from supporting the health IT. 
Even if EHRs and other health IT products were free to purchase and 
use, and could be implemented in a risk-free manner, the financial 
consequences of the changes they induce in health care organizations 
slows adoption substantially because the current payment system incents 
providers not to adopt health IT solutions. The financial penalties of 
health IT and EHR use are a direct consequence of the obsolete 
reimbursement methods used by Medicare and private insurers. These 
methods of reimbursement are misaligned with society's needs and health 
care's mission, and require fundamental reform.

                                 
   Statement of David G. Schulke, American Health Quality Association
    I am David Schulke, Executive Vice President of The American Health 
Quality Association (AHQA) which represents the national infrastructure 
of Quality Improvement Organizations (QIOs).
    The QIOs are a national quality infrastructure whose primary 
mission is to monitor and measurably improve the quality of health care 
delivered to Medicare beneficiaries and the general public by taking 
evidence-based health practices from the bookshelf to the bedside. 
QIOs, under contract with the Centers for Medicare & Medicaid Services 
(CMS), concentrate on systems of care, rather than the care delivered 
to individual patients. This systems approach improves the quality of 
care for all Americans receiving services from providers at health 
facilities that work with QIOs.
    The QIOs have become systems change experts focusing on effective 
ways to bring about transformational change in our health care system. 
We believe that, when implemented effectively, one of the areas that 
holds great promise for truly transforming our health care system and 
improving the quality of care is health information technology (IT).
    We applaud the Subcommittee for your work over the past few years 
that has recognized the inherent potential of IT, and we support your 
efforts to promote its widespread adoption and use. As you know, 
however, while the promise of IT is great, its proliferation to date is 
not.
    To this end, I am pleased to say that beginning next year, the QIOs 
in all 50 states and the U.S. territories will begin to focus 
intensively on promoting the adoption, implementation and effective use 
of health information technology, starting with small to medium-sized 
physician offices. Thanks in large part to the Chairman Johnson, a 
promising effort led by the California QIO, Lumetra, is already 
underway to develop and implement a successful model for achieving 
these aims.
    The Medicare Modernization Act promotes and supports IT adoption 
and use in several ways. In particular, Section 649 advances a 
previously unavailable avenue for promoting adoption and effective 
use--payment incentives for providers and practitioners to adopt and 
use IT to achieve better quality care.
    Under the Doctor's Office Quality--Information Technology project, 
or DOQ-IT, which was codified and improved by Section 649, the QIOs in 
California, Utah, Massachusetts and Arkansas are working together to 
develop a model for improving office efficiency and patient outcomes by 
assisting small to medium-sized physician offices in their 
implementation of Electronic Health Record (EHR) systems. These QIOs 
are also working to ensure that practices use their EHR systems to the 
fullest capacity so that ultimately, physicians can use clinical data 
reports to monitor and improve their performance in several key areas 
of health care. In keeping with the Institute of Medicine's Crossing 
the Quality Chasm report, the primary aim of this model is to provide 
no-cost support and assistance to providers such that their IT systems 
help them improve patient safety and quality of care through the 
practice of evidence-based medicine. Those that do improve can be 
eligible for additional reimbursement from CMS.
    QIOs have found overwhelming support for this endeavor from key 
national organizations such as the American Medical Association, the 
American Academy of Family Physicians, the American College of 
Physicians, the eHealth Initiative and the National Council on Quality 
Assurance. High level consensus to support the success of the QIOs' 
work in this area is critical, and we have received not only support, 
but a high degree of teamwork and consensus building from these 
organizations.
    However, given the promise of positive outcomes, one of the 
questions we must consider today is why, when academic evidence exists 
that points to the ability of information technology to improve patient 
safety and health care quality, and to potentially hold down costs, is 
adoption so low? And how do we accelerate it?
    To be sure, several barriers play a key role in preventing health 
care providers and practitioners from adopting and using IT. Lack of 
standards, upfront capital investment, perceived high physician time 
costs and difficulty integrating a new system into a physician's 
workflow and care process are obvious sources of resistance.
    The focus of my testimony today will be in the area of what the 
QIOs can bring to bear in helping to overcome some of these key 
barriers.
    QIOs serve as a national infrastructure for quality improvement in 
health care. These private sector organizations have strong local 
relationships with the providers and practitioners in their states. It 
is these relationships, coupled with the unique mix of skill sets, 
expertise, adaptability and proven track record of success that will 
enable the QIO infrastructure to help overcome some of the barriers 
inherent to the widespread use of information technology in health 
care--particularly in the area of implementation.
    As Health Information Technology Coordinator Dr. David Brailer 
wrote in a research paper published by the California HealthCare 
Foundation last fall, ``Unless substantial support is given, physicians 
will not be able to configure their systems, train for their use, 
integrate them into their workflow, and support the transition of their 
staff. In other words, if left alone, most physicians will fail at CPR 
[computerized patient record] implementation.''
    In looking at those health care organizations that have not failed, 
but who have succeeded in implementing IT and in actually improving 
patient safety, patient outcomes and health care quality, we find that 
they share at least one thing in common--the resources and effort up 
front to assess problems and inefficiencies in their practices and to 
subsequently redesign the way they manage and deliver care in order to 
address those issues. In other words, these successful organizations 
have utilized IT as a catalyzing path to the solution, but not the 
solution in and of itself.
    Why is this process of systems redesign so important? Because 
simply buying an expensive IT system to integrate with an existing 
system that is inefficient and produces poor quality will only make for 
an expensive, inefficient and poor quality system. We must remember 
that the fundamental goal of IT is to achieve better quality outcomes 
for patients; its promise lies not in simply automating current 
practices, but in transforming them.
    To achieve this goal, providers and practitioners need support--
support that goes far beyond what IT vendors can and typically do 
provide. They need support from systems change experts who can help 
ensure that core processes are redesigned with the aim of quality and 
efficiency in mind. Providers also need support to ensure that they are 
utilizing their IT system to its fullest capacity, helping them engage 
in the type of care management that improves quality.
    A 2003 research study by Drs. Miller and Sims of the University of 
California, San Francisco regarding the implementation of Electronic 
Medical Records (EMRs) indicates that the more time physicians invest 
in learning the system, making practice changes to complement the EMR 
and reorganizing their exam rooms and office workflows, the more 
financial and quality benefits they receive from EMR implementation. 
But perhaps the largest barrier in this area is a lack of resources to 
invest such time and energy. In fact, studies indicate that one of the 
largest barriers to IT adoption, after financial resources, is high 
physician time costs and physician resistance (Brailer and Terasawa, 
2003. Miller and Sims, 2003).
    This is one of the primary areas in which QIOs can contribute. QIOs 
serve as a no-cost resource of systems change experts who, thanks to 
the DOQ-IT project, will have studied the most effective methods for IT 
implementation and will apply those methods in their work with 
providers. It is our hope that QIOs offering these supportive resources 
will help make significant headway toward overcoming some of the key 
barriers to adoption and implementation of IT--particularly by helping 
to decrease demands on physician time, improve workflow and care 
process redesign, and decrease productivity loss associated with such 
redesign. In other words, we believe that this additional assistance 
can ultimately result in more widespread adoption and effective use of 
IT.
    Finally, we must also be mindful of one potential adverse effect of 
promoting IT adoption and use. If left alone, without significant 
support or resources, it is likely that the locus of IT adoption will 
be limited to large physician group practices and health systems, 
creating a kind of digital divide where the promise of quality and 
efficiency offered by IT is realized only by those with the resources 
to support the level of effort required for effective implementation 
and use.
    Referring again to the research paper written by Dr. Brailer, the 
rate of adoption in large urban areas appears to be one and a half 
times greater than in smaller, non-urban areas. The size of the 
physician practice also plays a key role. As Dr. Brailer notes, ``--
there are separate concerns about the growing CPR adoption gap between 
large, urban organizations and their smaller, non-urban counterparts.''
    Importantly, QIOs can also play a mitigating role in this area by 
focusing initially on small to medium-sized physician offices. By 
utilizing their existing local relationships with these providers and 
practitioners, QIOs will work to encourage IT adoption and subsequently 
provide the kind of additional support these offices need in the area 
of planning, implementation and improvement. As QIOs achieve successes, 
we also hope to offer assistance to larger practices in the ambulatory 
setting and to providers of varying size and location in the inpatient 
setting.
    On behalf of the national network of QIOs, we fully support your 
work to promote the widespread use of IT to improve health care quality 
in America. We agree that health information technology holds great 
promise for improving patient safety and outcomes when implemented in a 
way that is integrated with care management and workflow changes. We 
urge the Subcommittee to support innovative and effective models for 
supplying the assistance that providers and practitioners need to 
ensure that IT delivers on its promise of transforming quality in our 
health care system.

                                 
Statement of F. Lee Marston, Broadlane, Inc., San Francisco, California
    I am pleased to be able to provide written testimony to this 
Committee on the topic of technology advances in healthcare. While most 
people think of clinical applications in this regard, Broadlane is 
introducing sophisticated technologies to the back offices of 
hospitals, physician offices and other clinical settings. These 
technologies will help advance the quality of care, while also bringing 
cost savings and efficiencies--already enjoyed in industries from 
computing to automobile manufacturing--to healthcare providers.
    My name is Lee Marston and, as chief information officer, I head 
Broadlane's health information technology efforts. Prior to joining 
Broadlane, I was chief information officer at Owens & Minor, the 
nation's largest distributor for name-brand medical/surgical supplies. 
I also held senior management consulting positions with Arthur Andersen 
& Co. and CSC Consulting and have been a frequent guest lecturer at 
Georgia Institute of Technology on the subject of information 
technology's role in the supply chain.

Broadlane's Healthcare Business Solutions

    Broadlane began in 1999 with the mission to provide group 
purchasing and supply chain management services to hospitals in an 
effort to increase efficiency and dramatically lower supply costs for 
our provider customers. Over four years, Broadlane's value proposition 
has evolved to pair innovative health information technology with best 
practice business process expertise in strategic sourcing, contracting 
and procurement that deliver powerful savings for our provider 
customers. By taking accountability for these services, leveraging 
economies of scale and working in close partnership with customer 
physicians, nurses and other professionals, we are proud to have 
delivered dramatic cost savings that lead the industry. Our services 
have resulted in millions in audited savings in areas accounting for 
over fifty percent of the operating costs faced by hospitals--supplies, 
capitol equipment, purchased services and temporary labor.
    Our business model and suite of services have been well received in 
the market, with more than 800 acute care hospitals and 3,400 sub-acute 
care facilities now counted among Broadlane's customers. Broadlane 
customers range from some of the largest not-for-profit and for-profit 
delivery systems in the country to stand-alone community hospitals, 
along with thousands of individual physician practices. Broadlane is 
headquartered in San Francisco with offices in Oakland, California; 
Cincinnati, Ohio; Dallas, Texas; and New York City, New York and has 
grown from 30 to more than 400 employees in about four years.

Broadlane's Unique Back Office Health Information Technology Solutions

    The hospital supply chain presents enormous opportunities for the 
application of modern technology to increase efficiencies and 
effectiveness around daily business processes. Many hospitals struggle 
with constantly changing medical product technology, non-standard 
product pricing from suppliers, and disparate purchasing systems across 
multiple facilities. Errors, waste and missed opportunities abound.
    Broadlane addresses these back-office supply chain challenges 
through innovative health information technology solutions that links 
e-procurement and automated data analysis in a real-time environment, 
allowing us to accurately capture hospital purchase history, ensure 
correct prices are being paid, and help identify new products that are 
candidates for group purchase contracts. Broadlane is one the first 
companies providing this type of service to healthcare providers. To 
enable this new service, Broadlane has integrated our highly successful 
and intelligent e-commerce exchange called BroadLinka with our Web-
based contract management system.

Contract Management System

    BroadLink is an e-commerce business to business exchange that 
electronically links hospitals to their suppliers to manage all 
transactions involved with supply procurement, including purchase 
orders, purchase order acknowledgements, advance ship notifications, 
invoices and product and price updates. Our automated solution 
virtually eliminates the need for hospitals to manually place orders 
via telephone or facsimile. In doing so, BroadLink speeds the 
purchasing process, reduces manual errors and serves as a support 
mechanism for the functionality resident in Broadlane's contract 
management system.
    Today more than 375 hospitals are connected to BroadLink, which 
currently processes more than $8.3 million in customer purchase orders 
daily and is projected to process approximately $2 billion in purchase 
orders this year.

Contract Management System

    Broadlane's contract management system is one of the most advanced 
systems available today for contract management in healthcare. It 
extends the capabilities of the BroadLink engine by taking the e-
commerce information and adding automatic data analysis and real-time, 
actionable reporting capabilities.
    The contract management system houses provider contract data in a 
central repository while continuously connecting to the BroadLink 
exchange to capture and store transaction data, ensuring that e-
commerce transactions are verified against the provider's contract data 
in a real-time environment. Our contract management system helps ensure 
purchase order pricing accuracy, which in turn helps hospitals 
eliminate overpayment of invoices, take advantage of all available 
discounts and rebates, ensure compliance with all contractual 
agreements, reduce administrative time, shorten the purchasing 
transaction cycle and access accurate historical purchasing 
information.
    Broadlane's contract management system does not require a hospital 
to purchase software, as it is a web-based solution that hospitals can 
access via an Internet browser. It is highly secure and customizable. 
The contract management system's application service provider (ASP or 
Web-based) approach accommodates a variety of different ERP and 
material management systems used by many healthcare providers. 
Broadlane guides hospitals through a comprehensive implementation and 
training process, coupled with ongoing customer support. We are proud 
of our unique, integrated approach.

Brief Description of Broadlane's Products and Services

    In addition to our health information technology, Broadlane 
provides additional complementary services to our customers in the 
areas of:
    Supply Chain Services: Broadlane uses a unique customer committee-
driven approach to product selection and contract management. We 
combine this approach with our clinical and operational expertise to 
help implement contract compliance and utilization strategies that 
achieve both measurable savings and physician satisfaction. For 
customers who want to take advantage of the greatest overall cost 
savings opportunity, Broadlane will take responsibility for the entire 
materials management function--our highest level of supply chain 
service.
    Purchased Services: Broadlane provides additional services to help 
customers solve particularly vexing cost management challenges in the 
purchase of non-medical services and supplies for areas such as energy, 
telecommunications, transcription, information technology and 
professional services.
    Labor Services: Broadlane has become the leading provider of 
temporary labor agency contracting and management services to the 
healthcare industry. Our contracting expertise and advanced health 
information technology can finally help attack the soaring fees 
associated with the burgeoning use of temporary staffing agencies, 
while ensuring the quality of contract labor staff. Broadlane's unique 
sourcing technology, ProSource, helps rationalize customer's temporary 
labor contracting process. This technology allows a nurse supervisor, 
sitting at his or her desk, to use a web-based tool for finding, 
ordering, tracking and paying for exactly the right highly trained and 
experienced nurse for the specific department needed, at a 
substantially lower hourly rate.

Conclusion

    Broadlane remains committed to helping advance health information 
technology, for our customers and all participants in the healthcare 
system. These advances are already increasing efficiencies, lowering 
costs and improving the quality of care. Our customers are seeing real 
results and cost savings. As this technology is adopted throughout the 
health care system, others can also enjoy these savings as well.
    Thank you for considering my written statement.

                                 
                    Statement of Guidant Corporation
    Guidant Corporation advocates public policies that foster timely 
patient access to care, promote the viability of healthcare systems 
founded on principles of competition and choice, and encourage private 
sector investment in innovation. It is our belief that healthcare 
information technology (IT) can play a significant role in achieving 
these goals.
    Headquartered in Indianapolis, Indiana, with manufacturing and/or 
research and development facilities in the states of Minnesota, 
California and Washington, as well as in Puerto Rico and Ireland, 
Guidant Corporation is a leading designer and manufacturer of medical 
technologies used to treat primarily cardiovascular and vascular 
illnesses. Guidant's products save and enhance lives around the world.
    Today, Guidant Corporation employee-owners play leadership roles in 
groups dedicated to increasing the role of IT in healthcare, including 
the Healthcare Leadership Council, National Alliance for Health 
Information Technology, eHealth Initiative and Healthcare Information 
and Management Systems Society. We also support the establishment of 
system interoperability for information management systems to allow for 
enhanced integration, data exchange and reporting capabilities. As 
such, we are committed to the development of standards and are an 
active participant in Health Level 7.
    Currently, companies including Guidant Corporation are working to 
seamlessly integrate data from an implantable cardiovascular device 
into a patient's electronic medical record so that clinicians can 
quickly determine a patient's condition and make timely therapeutic 
adjustments. Such technologies will enable patients to be monitored 
regularly with less inconvenience, and also allow physicians to detect 
problems at an earlier stage, thus reducing potentially expensive 
hospitalizations. The Congress recognized the promise of such 
innovations when it included chronic care improvement provisions in the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA) (P.L. 108-173). We look forward to working with the Congress and 
the Centers for Medicare & Medicaid Services (CMS) to ensure the 
successful implementation of these provisions.
    As the Congress and the Administration work to advance health 
information technology, Guidant Corporation urges that policies adhere 
to the following tenets:

      Be founded on principles of, and promote, market 
competition;
      Incorporate transparent processes and rules; Advance 
information sharing;
      Encourage adequate provider reimbursement by recognizing 
clinical and economic value along the continuum of care;
      Promote the adoption of industry standards and provide 
funds to support interconnectivity; and
      Minimize liability concerns and eliminate barriers to the 
exchange of data within the private sector.

    A brief explanation of each of the tenets cited follows.

Promote Market Competition

    Guidant Corporation believes that while health IT standards are 
clearly needed, a one-size fits all model will not work given the range 
of healthcare providers having vastly different needs and capabilities 
with regard to health IT. Competitive markets are best suited to keep 
up with rapid changes in health IT innovation. As consumers and private 
purchasers become more aware of the quality- and cost-related benefits 
of electronic medical records, they will migrate to those providers and 
facilities that make the most effective use of these technologies. 
Successful adoption of health IT that accounts for the particular needs 
of individual providers and health plans can be a significant source of 
market advantage and also spur competition.

Incorporate Transparent Processes and Rules

    Guidant Corporation and the medical technology industry generally 
have significant experience with both the FDA approval process and 
Medicare coverage process. We know that providers, patients and medical 
technology innovators are best able to contribute to the development of 
sound regulations and policies, when the rules--and the standards upon 
which they are based--are clear. In fact, transparent and predictable 
policy processes allow businesses, including providers and innovators, 
to consider government decisions in business planning, thereby 
incenting private investment. Given its complexity, it is imperative 
that transparency and predictability be the hallmarks of any federal 
government involvement in health IT policy.
    Public-private conferences such as the planned July 2004 National 
Health Infrastructure Summit--which is well publicized and invites the 
participation of a wide range of stakeholders--are a good start. HHS 
should publicize the findings of this conference and inform the public 
how they will be used.

Advance Information Sharing

    Guidant Corporation recognizes, as experts have testified before 
this subcommittee, that there exists in the U.S. healthcare system 
quality issues with could be ameliorated, at least in part, by better 
information at the point of care. Access to such information is often 
best achieved by the use of health IT including electronic medical 
records accessible to all care providers who need them. For example:

      The potential savings from reducing excessive spending on 
services of little or no value is estimated to be as much as 30% of 
current Medicare spending levels. [Source: E.S. Fisher et al ``The 
Implications of Regional Variations in Medicare Spending,'' Parts 1 and 
2, Annals of Internal Medicine, 138, no. 4 (2003)]. For instance, 
recent news reports indicate that a significant percentage of women who 
have had hysterectomies continue to get pap smears. A robust system of 
electronic medical records could flag such cases and reduce the use of 
such unnecessary treatment.
      The healthcare system is also hurt by underuse of known 
effective treatments, e.g. beta blockers for myocardial infarction, 
etc. A recent study found that adults receive only about half of 
recommended care leading to increased complications, morbidity, 
mortality and costs to the healthcare system. Electronic medical 
records could also serve to prompt the provision of medically necessary 
care, including preventive services. [Source: E. A. McGlynn, ``The 
Quality of Health Care Delivered to Adults in the United States,'' New 
England Journal of Medicine, Vol. 348, No. 26 (2635-2645), June 26, 
2003.]
      It takes approximately 17 years for new knowledge in 
clinical trials to be incorporated into every day medical practice 
because no information infrastructure now exists to help clinicians 
easily apply that research at the point of care. Electronic medical 
records could highlight the relevant findings of clinical trials in a 
given patient's record. [Source: Markle Foundation, Connecting for 
Health, The Steering Group, Key Themes and Guiding Principles, June 5, 
2003.]
      Physicians spend an estimated 20-30% of their time 
searching for and organizing information; robust electronic medical 
records could ensure that providers have the information they need at 
hand. [Source: eHealth Initiative]

Encourage Adequate Provider Reimbursement

    Guidant Corporation believes that physicians and other providers 
need to be incented to incorporate health IT into the practice of 
medicine. Currently, Medicare does not generally reimburse for services 
provided electronically. For example, while several new advanced 
patient cardiac remote monitoring technologies have been introduced in 
the last year, there is not yet standardized payment for the 
physician's time, effort, and investment in IT, and in many states the 
service is not covered at all. This provides a disincentive to adopt 
and integrate the technology for many practitioners. We support the 
creation of new CPT codes to facilitate appropriate payment for remote 
IT-based services.

Promote Industry Standards and Provide Funds

    Guidant Corporation applauds the Administration's efforts to 
promote the development of private-sector health IT standards. Given 
the federal government's existing purchasing power, Secretary 
Thompson's March 2003 announcement that all federal health programs 
will begin to use such standards is a significant development, as is 
the May appointment of the nation's first healthcare IT coordinator.
    We urge the Congress to fund the President's budget request for 
health IT. This will make available seed money to providers to promote 
the adoption of private sector standards.

Minimize Liability Concerns

    Guidant Corporation understands that liability concerns may curtail 
the adoption of health IT. Specifically, some physicians are believed 
to be concerned that the greater information exchange allowed by health 
IT could increase their liability exposure. Such concerns may disincent 
the adoption of remote monitoring and other systems that allow the more 
frequent monitoring and management of patient's care. We urge further 
study of this issue and suggest that provisions addressing health IT be 
specifically included as necessary in future medical malpractice reform 
proposals.
    We ask that this statement be included in the hearing record and 
would be pleased to address any questions.

                                 
  Statement of Mary Griskewicz, Healthcare Information and Management 
Systems Society Advocacy and Public Policy Steering Committee, Chicago, 
                                Illinois

BACKGROUND:

    Madame Chair, Congressman Stark, and distinguished members of the 
Subcommittee, I am honored to submit this statement for the record. My 
name is Mary Griskewicz and I have the pleasure of serving as the 2004-
2005 Chair of the Healthcare Information and Management Systems Society 
(HIMSS) Advocacy & Public Policy Steering Committee. I live in 
Connecticut and work professionally for IDX Systems Corporation as a 
Regulatory & Compliance Program Manager.
    HIMSS vision is to advance the best use of information and 
management systems for the betterment of healthcare.
    On behalf of the HIMSS and the thousands of professionals in the 
healthcare information technology community, we want to commend you and 
your Subcommittee for your leadership role in promoting initiatives 
that increase the use of information technology throughout the 
healthcare sector. In particular, Madame Chair, we know personally of 
your commitment to this cause as was reflected during your remarks at 
our congressional reception where you were presented with the 2003 
HIMSS Advocacy Award.
    HIMSS and our Healthcare IT community colleagues are thankful for 
your efforts to highlight our shared goal of utilizing a National 
Health Information Infrastructure (NHII) to seamlessly transmit 
electronic healthcare records (EHRs) to improve patient safety and 
healthcare quality.
    As you are well aware, in the past year alone, healthcare IT has 
taken a major leap forward. The federal government's support of the 
Institute of Medicine (IOM)/ Health Level Seven (HL-7) efforts on EHR 
functional model and standards, sponsorship of the November 2003, IOM 
report, Patient Safety, Achieving A New Standard of Care, establishment 
of the National Health Information Infrastructure (NHII) Office and the 
Council on the Application of Healthcare Information Technology 
(CAHIT), release of the AHRQ $41M Transforming Healthcare Quality 
Through Information Technology grants, and most recently the 
appointment of a National HIT Coordinator have underscored the 
importance of healthcare IT and the impact healthcare IT can have on 
both lives saved and costs avoided.
    Today's hearing is focused on what further initiatives are needed 
to increase the use of information technology and management systems 
throughout the healthcare sector. We have highlighted seven next steps 
that we believe could help us reach our ultimate goal.

NEXT STEPS:

    1.  President Bush has requested doubling to $100 million the money 
spent on projects that use promising health information technology in 
the FY 2005 President's Budget Request. This funding would encourage 
the replacement of handwritten charts and scattered medical files with 
a unified system of computerized records. To quote the President from 
his 1/24/04 radio address: ``And fifth, we can control healthcare costs 
and improve care by moving American medicine into the information 
age.'' We encourage the Congress to support this budget request for 
utilizing technology to improve healthcare.
    2.  Ensure that all funding appropriated for demonstrations is 
consistent with the overall vision for the NHII, as articulated by the 
National Committee for Vital & Health Statistics.
    3.  Last year, Madame Chair, you submitted HR 2915 to provide for a 
National Health Information Infrastructure (NHII) and data and 
communication standards for health Information system interoperability. 
This legislation has been co-sponsored by Reps. Burgess, Cooper, 
Greenwood, Kennedy, Nussle, Shaw, Weldon, Shays, Castle, English, 
Harris, Norwood, Ramstad, Nussle, Ryan and Walsh. We encourage the 
Congress to pass this legislation to permanently create an office 
reporting directly to the Secretary of Health and Human Services to 
coordinate national health information technologyto allow electronic 
health records to be seamlessly transmitted.
    4.  We must learn how to blend the health information technology 
(HIT) solutions already realized by the Departments of Defense and 
Veterans Affairs with those being developed under the umbrella of the 
Department of Health & Human Services. These solutions can serve as the 
tipping point for private sector initiatives.
    5.  We recommend that the federal government focus attention on 
funding the rapid completion of critical healthcare standards by key 
standards development organizations. Standards are a critical step 
towards the realization of portable and interoperable electronic health 
records in the United States. Without standards, we will not achieve 
our mutual goal of improving the quality, safety, and cost-
effectiveness of patient care.
    6.  We recommend that the federal government focus attention on the 
consistent implementation of standards. Such attention would take the 
form of endorsing and partially funding the development of 
implementation guides for the portability and interoperability of 
health information. While the acceleration of standards development is 
critical, standards alone are not sufficient. To ensure the consistent, 
industry-wide implementation of such standards, we ask you to endorse 
and support the industry-backed ``Integrating the Healthcare 
Enterprise'' (IHE) process for enabling the accessibility, 
interoperability and portability of secure patient information. IHE is 
a proven, standards-based, vendor-neutral process that publishes its 
solutions in the public domain.
    7.  Finally, we appreciate the federal government's dedication of 
proposing expanded resources to deploying healthcare information 
technology. We hope the Congress will encourage the Administration to 
use the current funds (in addition to the $50M proposed for healthcare 
IT demonstration projects being funded by AHRQ) for widely 
disseminating the lessons learned and encouraging care providers to 
implement EHR solutions. We believe the demonstration projects 
currently underway or in development will yield significant knowledge 
for implementing EHRs and know that the time is ripe to take action on 
the outcomes. The Office of the NHII can provide leadership in helping 
care providers across the health spectrum best understand how to: (1) 
evaluate their setting's need for healthcare ITsolutions; (2) select 
the best solution; (3) implement that solution and change the human 
processes to best utilize it; and, (4) evaluate the return on 
investment.

CONCLUSION:
    We believe that these seven steps will greatly help us reach our 
goal. We have noted that over the past 24 months, the interest and 
attention on health information has exploded. Those of us who have been 
in this industry for any period of time are both gratified by, and wary 
of, this attention. Health information--primarily in the form of both 
portable and interoperable health records--offers a key to improving 
the quality, safety, and cost-effectiveness of patient care. That being 
said, HIMSS also recognizes that technology is only as good as the 
human processes and systems adopted to utilize the technologies.
    As you proceed forward in the months and years ahead, the 14,000+ 
individual HIMSS members and over 240 corporate HIMSS members 
representing over 1,000,000 employees are committed to working with you 
and others to make our shared vision of the widespread adoption of 
information technology and management systems in the healthcare sector 
a reality. Please don't hesitate to contact us at anytime at 
[email protected].

                                 

                                            The Kryptiq Corporation
                                            Beaverton, Oregon 97006
                                                      June 30, 2004
The Honorable Nancy L. Johnson
United States House of Representatives
Washington, DC 20515

Dear Chairwoman Johnson:

    Thank you for the opportunity to provide written comments regarding 
the Hearing on Health Care Information Technology held June 17, 2004.
    At Kryptiq, we believe the adoption of technology is central to 
addressing the current healthcare cost crisis in our country. We have 
been developing technology for the private sector and recognize the 
difficulty of achieving industry-wide benefits without significant 
efforts on the part of the federal government. Your plan accurately 
recognizes the adoption of information technology in healthcare as 
critical to increasing both quality and efficiency in healthcare. Your 
committee has also heard testimony which identifies one of the greatest 
barriers to IT adoption, namely the lack of interoperability among 
existing systems already in use today. Driving use of standards is the 
best way to ensure data is made available where and when it is needed. 
Federal initiatives have the potential to produce dramatic and positive 
changes in the U.S. healthcare industry.
    Kryptiq provides solutions that enable standards-based information 
sharing across healthcare. Our solutions improve quality by enabling 
online patient care and increase efficiency by integrating solutions 
with existing clinical information systems (e.g. electronic medical 
record systems) to accommodate existing physician workflow.
    In order to deliver on the stated objectives of improved quality 
and efficiency, we encourage you to consider the following two 
suggestions:

    1.  The definition of Local Health Information Infrastructure 
(LHII) should focus on a community's ability to share information 
electronically among health care entities, irrespective of any formal 
independent organization. While LHIIs may be managed by independent 
organizations responsible for maintaining the communications 
infrastructure, this is not necessary and should not be legislated.
    2.  Payment systems need to be considered for emerging care 
practices that are enabled by adoption of IT with a particular emphasis 
on ambulatory care.

    Explanations of these suggestions are attached.
    We admire your efforts to advance the adoption of information 
technology in healthcare and look forward to the opportunity to 
participate in this process.
            Sincerely,
                                                       Luis Machuca
                                            Chief Executive Officer
                               __________
    Submission to Congressional Record regarding the Hearing on Health 
Care Information Technology held June 17, 2004.
    The definition of Local Health Information Infrastructure (LHII) 
should focus on a community's ability to share information 
electronically among health care entities, irrespective of any formal 
independent organization. While LHIIs may be managed by independent 
organizations responsible for maintaining the communications 
infrastructure, this is not necessary and should not be legislated.

         Currently, the definition of LHII is restricted to an 
        ``independent organization of health care entities established 
        for the purpose of linking health information systems to 
        electronically share information.'' Technologies exist today 
        that enable healthcare organizations to establish information 
        sharing networks without first establishing a central governing 
        or maintenance body. These technologies allow organizations to 
        become part of the network simply by adopting the technology. 
        For example, deploying integrated clinical messaging for EMRs 
        based on the emerging Continuity of Care Record (CCR) standard 
        enables direct electronic communication of patient information 
        among providers. Such technologies show great promise to 
        affordably connect healthcare patients, providers, and payers 
        in a manner that can be easily adopted by any size 
        organization.

    Payment systems need to be considered for emerging care practices 
that are enabled by adoption of IT with a particular emphasis on 
ambulatory care.

         To ensure quality and efficiency in healthcare, it is 
        important that payment systems reflect current best practices 
        within the industry. Payment systems should be considered for 
        emerging care practices that are enabled by adoption of IT, 
        such as virtual encounters that have the capability to displace 
        office visits and enable remote clinical monitoring. Ambulatory 
        care reaches the greatest number of people and has the largest 
        impact on rural and underserved markets. Ambulatory care is the 
        most underinvested segment of healthcare in the area of IT. 
        Meanwhile, it has the greatest potential for reducing costs and 
        improving care on a broad basis. By encouraging emerging care 
        practices in the ambulatory setting, these structures will have 
        a significant impact on adoption of IT and will reduce 
        healthcare costs for all involved parties.

         Significant attention in the industry has been paid to the 
        idea of ``pay for performance''. Until now, this notion has 
        gained little momentum due in large part to a lack of 
        supporting payment structures. It is important to consider 
        payment structures that would provide incentives to providers 
        for demonstrating quality performance based on electronic 
        tracking and reporting of standardized quality measures. 
        Analyzing and implementing these structures will provide a 
        foundation for ``pay for performance'' and will greatly 
        motivate providers to adopt technologies that will improve 
        quality and efficiency of care.

                                 
                Statement of Luis G. Kun, Washington, DC
    My name is Luis Kun, Ph.D. and am a Professor of Systems Management 
at the IRM College of the National Defense University. Last year I was 
asked by Susan Christensen (the Senior Health Policy Counsel for 
Representative Johnson) to send any comments I had with respect to HR 
2915 / the NHII.
    On February 24 I sent the attached letter, which reflected my 
views. When I noticed this hearing taking place, I decided to forward 
you this letter since I believe that my comments may be useful to you.
                               __________
Representative Nancy L. Johnson
2113 RHOB

Dear Representative (Nancy) Johnson

    I would like first of all to congratulate you and your staff on 
putting forward in the 108th Congress the Bill HR2915, to provide for a 
National Health Information Infrastructure (NHII) and data and 
communication standards for health information system interoperability. 
Your efforts should be applauded for addressing a need that will 
enhance the lives of all Americans now and in the future.
    This Bill addresses first leadership, i.e., National Health 
Information Officer. I concur that this is a crucial issue for success 
and needs to be high on the priorities list for a successful 
implementation of a NHII.
    I will describe three major issues, starting with a recommendation 
then providing a current and/or future environment, and finally posing 
some questions. The information that follows is my own opinion. It does 
not represent the Committees/Working Groups that I chair nor my 
employer (i.e., IRMC / NDU, DOD or the US Government).
    SUGGESTIONS for Issue #1 Goals and Objectives: HR-2915 addresses 
particularly the ``institutional'' environment and somewhat the 
provider environment, but not the patient/consumer one. The NHII should 
incorporate in its goals issues regarding the patient/consumer, the 
health care provider and the institutions involved in the process. The 
NHII should provide guidance in getting to a patient centered system.
Issue 1: Goals and Objectives

      The goals of this NHII vision seem to apply only a subset 
of health related applications where the focus is oriented towards the 
clinical environment (i.e., maximize outcomes, minimize medical errors 
especially in hospitals and in the administration of contraindicated 
drugs, reduce redundant paperwork such as the repeated taking of 
patient histories, decrease costs from repetitive testing, establish a 
compatible information technology architecture that increases health 
care quality and cost-savings, enhances security of information, and 
avoids the financing and development of health information technology 
systems that are not readily compatible.) Although these goals address 
some current needs, they seem to be more reflective of an environment 
we had in the eighties and early nineties where the focus was the 
hospital-centered environment and not the current one, i.e., patient/
consumer centered.
      Current environment-background:
          Consumers that not only are more educated and have 
        more information available to make (better) decisions, but an 
        environment that permits them do consultations before, during 
        and after a health related situation arises. This allows them 
        for example to be better prepared for an appointment which 
        possibly translates into better outcomes.
          Many other consumers (and their relatives) that lack 
        the access, or the understanding of content (i.e., their main 
        language of communication may not be English, their reading 
        ability/education level and/or understanding may be much lesser 
        than others) will be at a disadvantage (Digital Divide).
          Many consumers for example are managing their health 
        via the Internet. They may use the system [i.e., computer and/
        or TV] to/for:
                  Consult with their physician and/or nurse 
                regarding their health.
                  Plan their diets.
                  Have customized exercise routines planned and 
                managed via the network (through their TVs).
                  Purchase their drugs via the Internet (and 
                sometimes self administer them).
          Health care providers that:
                  Do consultations through mobile devices with 
                colleagues and/or libraries located anywhere in the 
                world.
                  Educate themselves through distance learning 
                curricula, and/or access important and most current 
                needed information (i.e., clinical guidelines, 
                prevention guidelines, etc.) from the US and/or abroad.
                  Perform Telehealth visits anywhere in the US 
                and/or abroad.
      May do homecare visits (real and/or virtual) for the 
elderly with chronic diseases.
          Institutions that need an Information Technology 
        Infrastructure to support (technologically) their staffers in 
        all the related activities mentioned above. This requires 
        resources, training, education and competency.

Some questions:

    1.  How will the NHII deal with consumers?
    2.  What are the consequences for consumers from using the NHII?
    3.  How many ``health/medical'' related errors are consumers 
committing with the self prescribing and self administration of drugs? 
i.e., If the issue is ``medical errors'' what about all the 
consequences from self-diagnosing/self-administering drugs/prescription 
coming from questionable sources.
    4.  Since the price of drugs is constantly escalating, many, 
particularly the elderly can not afford buying drugs the 
``conventional'' way. Many pursue cheaper alternatives via the 
Internet/World Wide Web (WWW). What is the number of people that are 
self prescribing, purchasing and administering drugs and what are the 
consequences?
    5.  How can we assure the quality of the information read on the 
Internet/WWW? i.e., How reliable is the information consumers get on 
the Internet and how can the NHII make it better?
    6.  How can we assure the quality of the drugs [bought outside] 
they may purchase for example through e-Commerce?
    7.  How reliable are the products (``quality assurance'') purchased 
through the Internet? i.e., where are these drugs manufactured?
    8.  How can reliability of (Internet/WWW) purchased drugs be 
assured?
    9.  How will the NHII address the population that is either 
undereducated (can not read), unemployed (can not access) or can not 
understand what they read (content-intellectually handicapped)?

SUGGESTIONS for Issue #2 Stakeholders / Partnerships:

    1.  Both DOD and the VA should be part of a team that builds the 
NHII.
    2.  The USDA, EPA, DOE, and DHS and perhaps other stakeholders need 
to be at the table to help define their requirements for the NHII.
    3.  The FDA, CMS, the CDC, HRSA, Indian Health Services, etc. need 
to be part of the team building the NHII.

Issue 2: Stakeholders / Partnerships: Under Section c) Collaboration 
        with Stakeholders; item (3) Parties Represented. 

    The Bill names: (A) The National Committee on Vital and Health 
Statistics, the National Institutes of Standards and Technology, the 
National Library of Medicine, and the Agency for Healthcare Research 
and Quality. (B) Individual and institutional health care clinical 
providers, including a teaching hospital and physicians. (C) Clinical 
and health services researchers. (D) Health care purchasers. (E) 
Private organizations with expertise in medical informatics. (F) 
Patient groups. (G) A State or local public health department. (H) The 
health care information technology industry and national alliances 
formed to achieve standards-based health care information systems.]

Current environment:

      The VA has a network of 165 + hospitals interconnected 
using electronic records (VISTA) of their patients (about 5.000.000) 
throughout the nation.
      The armed forces not only are in a similar predicament as 
the VA but they actually use throughout the world their resources, i.e. 
electronic health records, clinical decision support, telemedicine / 
Teleconsultation, etc.
      DOD has developed the Government computer-based patient 
record (GCPR).
      If a terrorist event (i.e. a biological, chemical, 
nuclear/radiological, cyber) or a natural disaster occurs then 
Department of Homeland Security needs to be involved (i.e. Emergency 
Management /FEMA).
      If the terrorist event involves the air/water, chemicals, 
food, nuclear radiological threats then the EPA, USDA, DOE would need 
to get involved.
      Users go to the FDA and CMS (HCFA) to get answers 
regarding regulatory matters, i.e. drugs, procedures, payments, etc.
      Users go currently the Centers for Disease Control and 
Prevention since it is the agency that addresses Public Health and 
disease prevention issues.
      Users go to HRSA and Indian Services for specific type of 
information.

Some questions:

     1.  Will this NHII be used only on ``peace'' times? Or also during 
times of crisis?
     2.  How can the NHII be used during major natural catastrophes / 
events, i.e., earthquakes, floods, tornados?
     3.  How can the NHII be used during times of war and/or major man 
made crisis, i.e., wars, terrorism threats, etc?
     4.  Shouldn't the VA be a partner in the NHII / ``national'' 
solution?
     5.  Shouldn't the DOD be a partner in the NHII / ``national'' 
solution?
     6.  Shouldn't the DHS be a stakeholder on the NHII?
     7.  What if the health issue is regarding the food, chemicals, 
nuclear/radiological, water/air?
     8.  Should the USDA, EPA, DOE also be involved in the development 
and maintenance of the NHII?
     9.  Should the owners of the government computer-based patient 
record (GCPR) be able to use the NHII?
    10.  Shouldn't the FDA, CMS, CDC, HRSA, Indian Health Services, 
etc. be partners in the NHII?

SUGGESTIONS for Issue #3 Globalization, Standards and National Security

    1.  International standards organizations need to be part of the 
NHII definition team.
    2.  The World Health Organization (WHO), the Pan American Health 
Organization (PAHO), the European Commission (and the likes for Asia, 
Africa and Oceania) need to be part of the proposed solution.
    3.  Following steps 1 and 2 will allow the US to do effective 
epidemiology and surveillance of all infectious diseases which can 
appear anywhere in the world and affect our own population.

Issue #3 Globalization, Standards and National Security:

    Current and future environment: The Bill ignores that we live in a 
global economy and many of the consequences of globalization. In 
particular it ignores the fact that both consumers, and health care 
practitioners in this Information Age, have a very different behavior 
than in prior times.

      The globalization effects of Internet and the WWW pose 
many unanswered question beyond ``quality of the information read''. 
Treatments and/or other alternatives can be sought outside the US 
borders.
      US citizens can do consultations with foreign 
practitioners from the comfort of their homes and/or offices.
      The US healthcare providers can consult, diagnose, treat, 
(i.e. generate business) ``electronically'' anywhere in the world from 
anywhere in the US.
      US citizens becoming sick while traveling abroad could 
benefit from using their personal health information in local (foreign) 
institutions. For these institutions to be able to read their records, 
will require for us (the US) to use identical standards (not just 
nationally but internationally).
      According to the census, the US population growth occurs 
from immigration. In many cases these individuals bring along medical 
histories and paper records. In some cases they bring them in 
electronic form. It would greatly enhance the lives of this very large 
population if their prior records could seamlessly be incorporated into 
new electronic records generated in this country.
      Infectious diseases are by far one of the worst threats 
to the world population. [For example every 30 seconds a child dies 
from malaria]. It is a matter not only of Public Health but one of 
National Security. Healthcare is part of the National Critical 
Infrastructure and therefore the NHII will become part of it.
      Surveillance and epidemiology of Public health threats 
can be better achieved when information can be shared at the global 
level. Examples: In 2003 alone SARS, West Nile Virus, Monkey Pox, Mad 
Cow Disease, etc. This requires for us and the rest of the world to use 
a common infrastructure and standards for the exchange of critical 
information. The NHII should be a subset of the Global Health 
Information Infrastructure.

    I appreciate the opportunity to offer you my opinion. If I can be 
of further help do not hesitate in contacting me.
            Sincerely yours,
                                                 Luis G. Kun, Ph.D.

                                 

                                                          Medistore
                                               Houston, Texas 77042
                                                      June 28, 2004
Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC 20515

Dear ladies and gentlemen:

    Our Nation's goal of every man, woman and child in the US having a 
life long electronic health record (EHR) by 2014 is achievable if the 
right approach is taken. The pages that follow address the issues and 
possible solutions associated with the take up and use of information 
technology in healthcare. Before I discuss the issues and possible 
solutions I would like to tell you of some of my experiences with 
information technology in another industry, which I think will help 
clarify some of the issues that our Nation's healthcare system faces 
today and in the future.
    My background includes working in the petroleum industry for 29 
years during which time I was involved in applying information 
technology to improve the profitability of the company's for which I 
worked. I worked in British Petroleum management for twelve years in 
operations, research, information technology and strategy and planning. 
After leaving BP I co-founded a software solutions company in the 
petroleum industry.
    For the past two years I have been involved in healthcare 
information technology. I am currently a member of the Great Houston 
Partnership Public Health Task Force, which is charged with working 
with the private and public sector to create public clinics and a Local 
Health Information Infrastructure in Houston.
    For a reference frame I would estimate the petroleum industry is at 
least 5 to 10 years ahead of the healthcare industry in the use 
information technology to run their business. Nearly every petroleum 
company large and small uses information technology to make decisions 
on a daily basis. There are many lessons we can take from the petroleum 
industry in healthcare.
    You may ask, what can the petroleum industry possibly have in 
common with healthcare. Here are just some of the similarities that I 
have found during the past two years of studying healthcare.

     1.  Both industries have a large number of highly specialized 
experts who need to access and share information to make timely and 
accurate decisions about a specific individual entity (patient, oil 
well).
     2.  Both are information businesses that have traditionally been 
paper based.
     3.  Both are very conservative and resist change.
     4.  Patients and oil wells have long lives and large amounts of 
diverse information is collected and used over many years to make 
decisions about them.
     5.  Patients and oil wells are dynamic and may change 
unexpectedly.
     6.  Preventive maintenance is necessary to increase longevity, 
lower cost and improve quality.
     7.  Patients and oil wells undergo diagnostics and treatment.
     8.  Interventions are required at various times.
     9.  Much of the information is collected in a digital form and 
then output to paper to be analyzed and shared. For example real time 
monitoring, laboratory measurements and imaging are three prime 
examples of similar types of information.
    10.  Studying an individual or groups of individuals can assist in 
developing new diagnostics and treatments.

    The one paramount difference between the two is that in the 
petroleum industry when a mistake is made due to lack of information in 
the decision process it can have a negative economic impact, whereas in 
healthcare, lack of information in the decision process can be the 
difference between life and death.

Petroleum Industry Lesson Learned.

    While at BP, I was instrumental in co-founding the Petrotechnical 
Open Software Corporation (POSC) in 1990. This company was founded to 
solve the problem of accessing and sharing information intra and inter-
organization on a global basis. Within two years this company had 134 
members from around the world from the private and public sector, 
including the US Department of Energy, US Department of Interior and US 
Department of Defense. The company and its members took a standards 
approach to solving the problem of accessing and sharing information. 
Within 3 years the company had defined and agreed a set of free 
published standards for hardware, operating systems, 
telecommunications, a common dictionary of terms, a set of grammatical 
rules to share information and a common way to share information 
between applications. The project was an information technology 
success, but has had limited economic success and use.

The four primary reasons for limited success were:

    1.  There was an existing large investment in vendor and 
proprietary information technology in the petroleum companies, 
government agencies and vendors. It was basically cost prohibitive to 
move to the POSC standards.
    2.  The majority of the petroleum companies, government agencies 
and vendors did not have the resources to migrate their data or rewrite 
their applications.
    3.  The software vendors did not have any financial incentive to 
rewrite their applications, to access the petroleum companies or 
government agencies data in a POSC format or to have common standards 
with their competitors.
    4.  The highly specialized experts had to change the way they were 
doing their jobs and did not want to go through the change process.

    The majority of the member organizations did not take up the POSC 
specified standards. The organizations that did move to the POSC 
standards were some of the nationally owned petroleum companies and 
government agencies. Those that did take up the standard was because 
they had the resources and could mandate the cultural change. Since 
healthcare involves both the private and public sectors and they work 
together I would suggest that STANDARDS are not a viable commercial 
solution to the problem of accessing and sharing information in a 
competitive industry like healthcare.
    During my tenure as Chairman of POSC I realized that the commercial 
solution to the problem of sharing information was to create technology 
that accessed information where it resides. In 1994 I co-founded The 
Information Store, which delivers secure information in context intra 
and inter-organization via intranet, extranet or Internet from a 
multitude of information sources anytime and anywhere to those so 
authorized.

Solution and Benefits for Healthcare
    From the lessons learned in the petroleum industry, the solution is 
accessing healthcare information where it resides and delivering it in 
the context of the caregiver.

Solution:

    1.  Access information where it resides.
    2.  Use Internet technology to make the information connections to 
existing information sources.
    3.  Deliver information in the context of the caregiver--familiar 
and useful form.
    4.  Since most patients interact with multiple providers in 
multiple locations during their life, it is necessary to have 
transparent access to those multiple providers and locations by the 
caregivers and patients (intranet, extranet, and Internet technology 
provides this flexibility).

Benefits:

    1.  Leverages the prior investment in information technology by the 
hospitals, clinics, pharmacies, laboratories, government agencies and 
vendors i.e. it is cost effective and does not disenfranchise previous 
investments in information technology and people (the approach is low 
cost and fast).
    2.  Requires very limited additional human or capital resources.
    3.  There is very limited change in the way physicians, nurses, 
pharmacists, researchers, laboratory technicians, and others do their 
jobs because the information is being delivered in a familiar and 
useful form where and when they need it. (minimum disruption, cultural 
change and training).
    4.  Limits changes on the part of the Information Technology 
organization i.e. they are still maintaining and supporting their 
current systems.
    5.  Easy to introduce new information systems (just connect the new 
information source).
    6.  Easy to access and share information intra and inter-
organization (hospitals, clinics, pharmacies, laboratories, government 
agencies, etc.)
    7.  The technology to solve the problem of information access is 
readily available and cost effective.

    The good news in healthcare is that only 25% of hospitals and 5% of 
clinics in the US have an investment in clinical information systems 
(CSI). This means that there are many green fields where standard based 
systems could be employed if one existed. I would submit there is not a 
CIS vendor in the market today that has industry standards based 
technology. They each have their own standards. Their technology 
implementation is their competitive advantage. Rather than interface 
with other vendors or a hospital's own products the vendor prefers the 
healthcare provider replace their own systems or another vendor's 
system with their product. This is good for the vendor but not very 
good for the healthcare provider or the escalating cost of healthcare. 
In addition, no single vendor today has an integrated CIS that meets 
all the needs of the customer.
    I would suggest that the approach that is being taken by the Health 
and Human Services in creating the National Health Information 
Infrastructure and Local Health Information Infrastructure is correct. 
That is using technology to connect various EHR systems and using 
standards where appropriate. Keeping in mind that the cost and change 
management barriers are very large and difficult to overcome when 
implementing standards.

Near Term Suggestions:

    1.  Focus on the most wired hospitals, clinics, pharmacies, 
laboratories, and government agencies and create a shared information 
environment between a limited numbers of these organizations within a 
community and demonstrate the viability of the Local Health Information 
Infrastructure. This approach limits the risk and increases the chances 
of success.
    2.  Do not mandate STANDARDS. Use STANDARDS only where they are 
cost effective and where people will buy in to them.
    3.  Do not try and force CIS vendors to adopt standards. They have 
no financial incentive to change their product. In addition, if there 
is one common standard they lose their competitive position in the 
market.
    4.  Do not try and force healthcare providers that develop their 
own CIS to adopt standards. Just like the vendors they have no 
financial incentive to change.
    5.  Use an Internet GLUEWARE approach, to facilitate the 
connectivity between various organizations in the Local Health 
Information Infrastructure (LHII) and the National Health Information 
Infrastructure (NHII). If the LHII works the NHII will work by 
definition.
    6.  For the 75% of hospitals and 95% of clinics that do not have 
EHR today, HHS can provide financial incentives for them to implement 
CIS through Medicare and Medicaid.
    7.  Make sure the caregivers are on board before starting any CIS 
initiative. Many CIS installations still fail because the caregivers 
were not intimately involved in the decision process of which CIS 
vendor should be used. Physicians have a great deal of influence in the 
hospitals concerning the technology used or in many cases not used. 
Highly educated experts do not take kindly to mandates.
    8.  Do not repeat the mistakes of the petroleum industry. One size 
may fit all, but it is difficult at best to get a person to wear the 
garment if they don't pick it out themselves.
    9.  Most physicians have told me they spend limited time with their 
patients in the hospital, therefore it is imperative that the patient's 
EHR is accessible from the clinician's office, home and on the road.
 10.  Since many of us spend a large amount of time away from home and 
move frequently it is critical that our EHR is available to our 
caregivers and ourselves throughout the US. Internet technology 
provides this capability.

    The real challenge in meeting the goal of an EHR for all of us is 
not so much a technology challenge but a culture change in the way 
highly trained people work. If the correct information is available in 
context for the caregivers when and where they need it to make 
decisions the EHR will be a success. I went through information 
cultural revolution in the petroleum industry.
    I sincerely appreciate the opportunity to provide any insight, I 
can, in to the challenge of providing an accessible life long 
electronic health record for the citizens of our great nation. I am 
very encouraged to see that our leaders and congress are taking action 
to improve our Nation's healthcare system in a substantive way. If I 
can be of any further assistance, please do not hesitate to contact me.
    Thank you for your time and consideration.
            Sincerely,
                                                     Glenn R. Breed
                              Chief Executive Officer and President

                                 
               Statement of MedMined, Birmingham, Alabama

SUCCESSFUL USE OF INFORMATION TECHNOLOGY TO IMPROVE HEALTHCARE OUTCOMES

    ``Bloodstream infections were reduced 31%, for a measured P/L 
impact of 1.8M.'' Bill Wing, CFO, Florida Hospital
    ``In only six months, non-reimbursed costs from hospital infection 
were down $618,000.'' Lance Peterson, MD, Evanston Northwestern
    ``After only one year, infections were down 19% hospital-wide, 
saving $1.05M.'' Gerry Fornoff, CEO, Lakeland Medical Center
    Hospital-acquired infections affect about 6% of all patients 
admitted to U.S. Hospitals. In addition to morbidity and mortality, 
these infections are a major financial burden. When they occur among 
the fixed fee patient population (approximately 55% in the average U.S. 
hospital), most of the average $13,973 in direct treatment costs are 
not reimbursed. These non-reimbursed costs total millions of dollars 
each year and are a drag on operating margins. Thus, reducing the 
incidence of hospital-acquired infections both improves the quality of 
care and operating margins.
    The key to reducing the number of infections is the proactive 
correction of process breakdowns that cause them. However, finding 
specific opportunities to improve care is a daunting challenge. Using 
current methods, Infection Control must wade through oceans of data to 
identify a few pieces of critical information. This data comes to 
Infection Control mostly in the form of printed reports regarding 
individual patients and results. The vast majority of time is currently 
spent digesting, organizing and analyzing this data (and not on the 
teaching and interventions that actually prevent infections). Many 
warning signs that reveal important issues remain concealed by the 
volume and complexity of data that must be monitored. And, tracking 
outcomes and measuring financial impact hospital-wide is nearly 
impossible.
    MedMined combines patented technology, clinical support, evidence-
based action plans, outcomes measurement, and cost/benefit analysis 
into a comprehensive, hospital-wide initiative to reduce hospital-
acquired infections. This model has proven effective in measurably 
reducing the incidence of hospital-acquired infections and their 
associated costs in many types and sizes of hospitals. This success has 
been highlighted in publications as diverse as Fortune, MIT Technology 
Review, and the New England Journal of Medicine and in over twenty 
efficacy studies.

Human and Financial Impact of Hospital-Acquired Infections

    Each year in the United States hospital-acquired infections affect 
2 million patients and account for 50% of all major hospital 
complications.\1\ Behind heart disease, cancer, and strokes, hospital-
acquired infections are responsible for approximately 88,000 deaths 
annually, making them the fourth leading cause of death in the United 
States.\2\
---------------------------------------------------------------------------
    \1\ Centers for Disease Control and Prevention. Public health focus 
surveillance: prevention and control of nosocomial infections. 
Morbidity and Mortality Weekly Report 1992; 41:783-7.
    \2\ Hacek DM, Suriano TS, Noskin GA, et al. Medical and economic 
benefit of a comprehensive infection control program that includes 
routine determination of microbial clonality. Am J Clin Path 1999; 
111:647-654. Jarvis WR. Selected aspects of the socioeconomic impact of 
nosocomial infections: morbidity, mortality, cost and prevention. 
Infect Control and Hosp Epidemiol 1996;17:552-557.
---------------------------------------------------------------------------
    In addition to morbidity, mortality, legal risk, impact on 
malpractice rates, etc., hospital-acquired infections take a 
substantial, direct economic toll on hospitals. A May 2002 audit of 
over 50 studies about the cost of hospital-acquired infections computed 
the average, direct cost per infection to be $13,973.\3\
---------------------------------------------------------------------------
    \3\ Stone PW, Larson E, Kawar LN. A systematic audit of economic 
evidence linking nosocomial infections and infection control 
interventions 1990-2000. Am J Infect Control 2002; 145-52.
---------------------------------------------------------------------------
    When these infections occur among the fixed fee patient population, 
very little of these costs are reimbursed. A study published in the 
Journal of the American Medical Association directly addressed this 
issue.\4\ Under a DRG-based payment system, reimbursement for the cost 
of treating a hospital-acquired infection must overcome several major 
obstacles. The study found that among this patient population, 95% of 
the treatment costs were not reimbursed (avoidance of which would be a 
direct financial gain to the hospital).
---------------------------------------------------------------------------
    \4\ Haley RW, et al. The financial incentive for hospitals to 
prevent nosocomial infections under the prospective pay system. An 
empirical determination from a nationally representative sample. JAMA. 
1987; 257(12):1611-4.
---------------------------------------------------------------------------
    The effect of these non-reimbursed costs is quite substantial. In a 
study of 151,459 admissions among a seven hospital system in the 
Southeast, we found that the 95% of admissions that had not acquired an 
infection provided a $59M inpatient operating profit. However, the 5% 
of admissions that had acquired a hospital infection accounted for $33M 
in net operating loss (risk adjusted). Thus, 5% of admissions eroded 
55% of operating profits. (See the Figure at right).
[GRAPHIC] [TIFF OMITTED] 99674A.001

    In one Midwest hospital, a 2001 financial analysis revealed the 
following differences between patients with and without a hospital-
acquired infection (HAI):

------------------------------------------------------------------------
                                               Without HAI    With HAI
------------------------------------------------------------------------
Ave. Length of Stay                                5 days       24 days
------------------------------------------------------------------------
Ave. Total Cost Per Patient                        $5,026       $28,864
------------------------------------------------------------------------
Ave. Direct Cost Per Patient                       $3,119       $21,006
------------------------------------------------------------------------

    An examination of net operating margin (Net Revenue-Variable Cost) 
by payor, comparing patients with a hospital infection with patients 
without a hospital infection in the same DRG, revealed that every one 
of the 519 patients with a hospital infection was unprofitable for the 
hospital.

----------------------------------------------------------------------------------------------------------------
                                                                                         Blue Cross
                                    Medicare       Medicaid    Commercial  ManagedCare    HMO/PPO      Self-Pay
----------------------------------------------------------------------------------------------------------------
Total Loss                        ($3,766,757)   ($914,166)   ($435,978)   ($342,978)   ($102,255)    ($42,960)
----------------------------------------------------------------------------------------------------------------
# Patients with HAI                        379           81           27           12           12            9
----------------------------------------------------------------------------------------------------------------
Ave. Loss per Patient                ($10,793)    ($11,286)    ($16,148)    ($28,582)     ($8,521)     ($4,773)
----------------------------------------------------------------------------------------------------------------

Infection Control Surveillance

    Many hospital-acquired infections are preventable, because they 
stem from correctable process breakdowns (staff using poor sterile 
technique, improperly cleaned equipment, etc.) that recur. Although the 
solutions are straightforward and inexpensive (one study found the 
average cost of correcting such breakdowns was less than 
$1,2003) the real challenge has always been identifying 
where and when these systematic patient care breakdowns are occurring 
early enough to avoid unnecessary morbidity, mortality, length of stay 
and cost.
    Better surveillance is the key to reducing hospital-acquired 
infections, antimicrobial resistance, and their associated costs. This 
has been proven in many studies, including the landmark SENIC Project 
of the 1970's.\5\ At Northwestern Memorial Hospital in Chicago (683 
beds), investigators showed that modest improvements in Infection 
Control surveillance with increased pattern detection led to a 23% 
reduction in the number of patients with a hospital-acquired infection 
and an estimated cost savings of $4.3 million over two years.\6\
---------------------------------------------------------------------------
    \5\ Haley RW, Culver DH, White J, et al. The efficacy of infection 
surveillance and control programs in preventing nosocomial infection in 
U.S. hospitals. Am J Epidemiol 1985; 121:182-205.
    \6\ Hacek DM, et al. Medical and economic benefits of a 
comprehensive infection control program that includes routine 
determination microbial clonality. Amer J Clin Path. 111:647-54, 1999.
---------------------------------------------------------------------------
    Traditionally, surveillance for outbreaks of hospital-acquired 
infections includes a manual review of microbiology data and suspected 
cases of hospital-acquired infection followed by the tabulation of 
basic summary statistics. Such summaries are arduous, time consuming, 
lack timeliness, and often mask emerging, complex patterns. 
Consequently, it has been widely recognized that sophisticated, active, 
and timely intra-hospital surveillance is needed.

Integrated Solution

    MedMined's unique and patented technologies target quality 
improvement resources in ways not currently possible. But, technology 
alone does not improve process. MedMined has created a comprehensive 
model to elevate infection prevention to an effective, hospital-wide 
initiative. These components work together to produce measurable cost 
savings. The model includes: 1) capture, cleaning and mapping of 
existing data sources, so that they are amenable to electronic 
epidemiological analysis, 2) patented technologies, such as data 
warehousing and data mining/artificial intelligence, that automatically 
detect warning signs of patient care breakdowns and direct staff to 
problem areas, 3) clinical support by MedMined's expert clinical staff 
to help address known issues, 4) evidenced-based action plans and 
educational materials that generate real process improvement, 4) 
outcomes measurement to track progress at all levels, and 5) financial 
reporting to allow management at the executive level and support 
investments in infection prevention.
[GRAPHIC] [TIFF OMITTED] 99674A.002

``Where Can We Improve?''--Data Mining Surveillance '

    Specific and correctable quality breakdowns that cause hospital 
complications are evidenced by subtle patterns of related infections, 
colonization, contamination, and antibiotic resistance. However, 
because there are billions of potential patterns within electronic 
patient and laboratory data, these patterns often remain hidden.
    MedMined's Data Mining Surveillance Service (DMSS) rapidly 
identifies patterns that indicate a specific and correctable quality 
breakdown. Because DMSS is able to ``learn'' from the millions of 
records within your hospital's varied databases, it can identify these 
breakdowns without search criteria, data entry, or lengthy paper chart 
review. The Data Mining Surveillance Service empowers your hospital to 
proactively address quality breakdowns that cause hospital-acquired 
infections.

Fusion of Technology and Clinical Expertise

    DMSS is not software. It is a service whereby clinical staff get 
the important actionable information they need to improve process 
without having to learn and maintain very complex technology.
    Data mining is a form of artificial intelligence which allows 
scientists to discover important, useful patterns within large amounts 
of data without predefined search criteria. Using specially-designed, 
patented data mining techniques, MedMined monitors billions of 
potential patterns across inpatient and outpatient communities, and 
identifies relevant, actionable information. Results from the 
technology are reviewed by MedMined clinical staff and reduced to a 
concise report (including expert interpretation and suggested course of 
action) of important and clinically actionable items.
    Each report from MedMined's Data Mining Surveillance Analysis 
represents a concise overview of important patterns indicating issues 
which should be investigated and addressed by hospital Infection 
Control and Quality staff. The reports delivered by MedMined typically 
contain 3-5 ``alerts'' each month. Each pattern describes a cluster of 
patients or isolates which represent a statistically significant 
departure from the baseline at your facility, and indicate a 
potentially important Infection Control issue.
Sample Alert:

Hospital Staphylococcus aureus Isolates from 5West Resistant to 
        Clindamycin, Oxacillin
        [GRAPHIC] [TIFF OMITTED] 99674A.003
        
    Issue: There is a 520% increase in the incidence of Hospital 
Staphylococcus aureus Isolates from 5West resistant to Clindamycin and 
Oxacillin. Given the baseline history and the unusual resistance to 
Clindamycin, we suspect this represents a breakdown in barrier 
precautions on 5West. This organism has a very long survival time--
weeks to months in the environment--environmental survival is believed 
to play a part in transmission.

Recommended Actions:

      Person to person spread via direct contact, especially 
between a patient and the transiently colonized hands of a health care 
worker, is thought to be the principal mode of transmission. Assure 
that the staff has a waterless hand cleanser close at the bedside for 
use between patient contacts.
      The staff in the 5West area should be directly involved 
in the plans for control of this organism in their patients. Include 
all services who provide care or consultation, such as PT/OT, 
nutrition, respiratory therapy, physicians, nursing, environmental 
services, radiology and all others.
      Recent findings also suggest that virtually all patients 
colonized or infected with MRSA have acquired their strain from an 
external source, thus control must focus on prevention of transmission 
as well as antimicrobial use. This finding has applied to patients with 
both community and ``Hospital'' isolates.
      Current recommendations for control include surveillance 
cultures for patients, stringent barrier precautions and cohort 
nursing.
      Environmental contamination occurs rapidly for both 
continent and incontinent patients, therefore gowns plus gloves are 
recommended for contact with the patient or the patient's environment.
      All equipment that comes into direct contact with the 
patient becomes capable of transmitting this organism; therefore each 
patient must have their own stethoscope at the bedside, their own 
blood-pressure cuff, and all other equipment. Any equipment that cannot 
be individualized must be thoroughly wiped down with a hospital-grade 
disinfectant before removing it from the patient room or area.

``We Need More Time to Act''--Virtual Surveillance Interface

    Forty percent (40%) or more of Infection Control Professionals' 
time is spent reviewing laboratory and patient data. Time spent 
reviewing data is time taken away from infection prevention activities. 
That is why MedMined streamlines this process with the Virtual 
Surveillance Interface (VSI), which allows customizable event 
monitoring and reporting of patients across the entire health system.
    As a secure online service, the VSI is accessible from any 
Internet-enabled PC, and can travel with the busy ICP as rounds are 
made throughout a healthcare facility or across multiple sites. Event 
monitoring can be customized to the specific goals of each surveillance 
program, and can include reportable diseases, sentinel results, and 
bioterrorism agents.
[GRAPHIC] [TIFF OMITTED] 99674A.004

    Reporting capabilities of the VSI allow rapid, targeted review of 
important information, with the option of exporting results to 
Microsoft Excel for further analysis or formatting. Drill-down 
capabilities allow patient movement data to be rapidly correlated with 
laboratory results.
    Studies have demonstrated that this service alone can save 
Infection Control Professionals 8-14 hours of manual data review each 
week.\7\ This effort saved, allows Infection Control to focus more 
attention on educational initiatives and effective interventions.
---------------------------------------------------------------------------
    \7\ MA Gould, PA Hymel, SE Brossette. Paperless Infection Control: 
Time Savings and Process Improvements. Presented at SHEA 2002.

---------------------------------------------------------------------------
Financial Outcomes Measurement

    The bedrock of current Infection Control practice is the National 
Nosocomial Infection Surveillance (NNIS) program, orchestrated by the 
Centers for Disease Control and Prevention (CDC). NNIS is a 
benchmarking program, allowing hospitals to measure their infection 
rates among certain types of infection in certain hospital locations 
against their peers.\8\
---------------------------------------------------------------------------
    \8\ National Nosocomial Infections Surveillance (NNIS) System 
Report, data summary from January 1992 through June 2003, issued August 
2003. Am J Infect Control 2003;31:481-98.
---------------------------------------------------------------------------
    Because it was designed in 1970 to account for the difficulty of 
manual surveillance, the NNIS system has limitations. For example, the 
focus on only certain infections in certain locations may leave many 
opportunities to reduce nosocomial infections undiscovered. Julie 
Gerberding, Director of the CDC, wrote, ``Data from the NNIS System 
have generally been used to motivate institutions with higher-then-
expected infection rates to strive for the relevant national benchmark 
rate. The result may be both an underestimation of the preventable 
infections and missed opportunities to discover new prevention 
strategies.'' \9\ Moreover, data on the inaccuracy and subjectivity of 
NNIS reporting has been published.\10\
---------------------------------------------------------------------------
    \9\ Gerberding JL. Hospital-Onset Infections: A Patient Safety 
Issue. Ann Intern Med 15 October 2002/Volume 137 Issue 8/Pages 665-670.
    \10\ Emori, TG, Edwards JR, Culver DH, et al. Accuracy of reporting 
nosocomial infections in intensive-care-unit patients to the National 
Nosocomial Infections Surveillance System: A pilot study. Infect 
Control and Hosp Epidemiol 1998;19:308-16.
---------------------------------------------------------------------------
    Perhaps the biggest limitation on Infection Control departments 
caused by NNIS' epidemiological focus is the lack of translation to 
financial outcomes. As in most businesses, the allocation of scarce 
resources among departments requires that each department demonstrate 
its financial impact on the business. Those departments which cannot 
measure their impact to the bottom line are at a significant 
disadvantage in each budget cycle. Many Infection Control departments 
suffer this fate, because the statement that ``ABCHospital has 2.6 
central-line associated bloodstream infections per 1,000 central line 
days in the SICU, which is 25% percentile'' does not say anything about 
how much nosocomial infections are impacting the bottom line of 
ABCHospital.
    MedMined tracks the incidence of nosocomial infections (hospital-
wide) and their financial implications through the use of the patent-
pending Nosocomial Infection MarkerTM (NIM). The NIM is a 
method for identifying distinct nosocomial infections through the 
analysis of existing electronic patient movement and microbiology data. 
Because it is automated, it is objective, efficient and comprehensive.
    The MedMined Marker has been validated by several studies. In the 
first, clinical chart review of consecutive admissions revealed that 
the NIM had a sensitivity of >80% and a specificity of 99% (compared to 
traditional manual/NNIS surveillance sensitivity of 0.4% and 
specificity of 95%) in the identification of nosocomial infections.
[GRAPHIC] [TIFF OMITTED] 99674A.005

    In a second study of 308,000 admissions across 18 hospitals, each 
NIM (patients may have more than one, just as they may have several 
separate nosocomial infections) correlated to 6.35 extra days LOS and 
$11,967 in extra variable cost (risk-adjusted).
    This study found that the 5% of patients that had at least one NIM 
eroded 56% of the total inpatient operating profits. The 95% of 
patients that did not acquire a hospital infection accounted for $59M 
in profit, whereas the 5% of patients that did acquire a hospital 
infection accounted for $33M in operating losses.
    A third study of 66,780 admissions across 14 hospitals concluded 
that each MedMined Marker added 7.2 days to LOS and $15,300 in variable 
cost (risk-adjusted).
    Thus, the Marker is a not only a clinically valid measurement tool, 
but also useful for measuring the financial implication of these 
infections.

Published Case Studies

    At a 600-bed university-affiliated, tertiary-care hospital, 
MedMined's Data Mining Surveillance increased pattern/cluster detection 
of related infections 10-fold, when compared to traditional NNIS 
surveillance, while maintaining 90+% specificity. Among patterns 
discovered by both traditional methods and the data mining analysis, a 
bloodstream outbreak of VRE was identified 4 weeks earlier by the data 
mining analysis.\11\
---------------------------------------------------------------------------
    \11\ Hymel PA, Brossette SE, Moser SA. Data Mining-Enhanced 
Infection Control Surveillance: Sensitivity and Specificity. Presented 
at SHEA 2001.
---------------------------------------------------------------------------
    Seven months of DMSS at LakelandHospital (156 beds) led to 
significant changes in policies and procedures, as well as direct 
intervention by Infection Control staff. Previously unidentified 
patterns detected include: (1) A pattern of multidrug-resistant 
Klebsiella among ventilated patients in the ICU (2) An increase in 
blood culture contaminants from the ED (3) An unusual cluster of 
resistant E.coli on a specific ward (4) A cluster of VRE from urinary 
isolates (5) A cluster of Alcaligenes on a specific ward.\12\ After 12 
months of prospective DMSS reporting, LakelandHospital documented a 22% 
overall reduction in hospital-wide infection rates.
---------------------------------------------------------------------------
    \12\ Vance, P, Meyers, D, Hymel, PA. Prospective Identification of 
Quality Issues Related to Nosocomial Infections through Data Mining 
Surveillance in a Community Hospital. Presented at SHEA 2002.
---------------------------------------------------------------------------
    MedMined's Virtual Surveillance Interface reduced time spent by 
Infection Control reviewing paper charts by 8-14 hours per week at 
Children's Hospital of Alabama (250 beds), while also rapidly 
identifying unsuspected outbreaks of nosocomial Acinetobacter and 
community-acquired Yersinia.\13\
---------------------------------------------------------------------------
    \13\ MA Gould, RN, CIC and SE Brossette, MD, PhD. An outbreak of 
Acinetobacter baumannii in ventilated patients of a pediatric hospital 
identified by data mining surveillance. Presented at SHEA 2002. MA 
Gould, PA Hymel, SE Brossette. Paperless Infection Control: Time 
Savings and Process Improvements. Presented at SHEA 2002.
---------------------------------------------------------------------------
    Retrospective DMSS analysis at a 100-bed VA facility revealed the 
source of a multi-drug resistant Pseudomonas outbreak 6 weeks before it 
was detected by traditional surveillance methods. Prospective analysis 
revealed several patterns of multi-drug resistant Acinetobacter and 
Klebsiella which were proactively managed.\14\
---------------------------------------------------------------------------
    \14\ SE Brossette, BD Taylor, B Warren, KC Avent, SA Moser. 
Improving Infection Control Surveillance Using Data Mining Technology. 
Presented at ICAAC 2001. September 22-25, 2001. Chicago.
---------------------------------------------------------------------------
    DMSS detected a previously unknown outbreak of central line-
associated bloodstream infections at a 250-bed pediatric hospital. This 
discovery led to focused investigation and interventions. In the months 
following implementation of these targeted interventions, patient-day 
adjusted analysis revealed that the incidence of hospital-acquired CVL-
associated bloodstream infections decreased by 43% (p=0.03).\15\
---------------------------------------------------------------------------
    \15\ DC Branca, MA Gould. A reduction of bloodstream infections in 
an oncology unit following data mining surveillance and targeted 
interventions. Submitted for poster presentation, SHEA 2003.
---------------------------------------------------------------------------
    At Hilo Medical Center (278 beds) Data Mining Surveillance alerted 
Infection Control to a previously unrecognized, dramatic (410%) 
increase of hospital Pseudomonas aeruginosa isolates. Chart reviews 
revealed that 15 of the 18 isolates were hospital-acquired infections, 
resulting in a yield of 83% predictive value. Focused investigation led 
to intervention efforts on the unit with the majority of cases. In the 
third quarter, only 1 subsequent respiratory isolate of hospital P. 
aeruginosa occurred. From Oct 1 through Nov 30, 2002, only 2 
respiratory isolates of hospital P. aeruginosa were noted. Had the 
cases continued unchecked for the following three months, 
HiloMedicalCenter would have spent approximately $628,785 in treatment 
costs for infected patients.\16\
---------------------------------------------------------------------------
    \16\ JH Halloran. Rapid Mitigation of Pseudomonas aeruginosa 
outbreakidentified by novel surveillance technology at Hilo Medical 
Center, Hilo, Hawaii in June 2002. Submitted for poster presentation, 
SHEA 2003.
---------------------------------------------------------------------------
    At FloridaHospital (1,752 beds), Data Mining Surveillance revealed 
a 190% (p value 0.004) increase from baseline of A. fumigatus 
respiratory isolates. Since HVAC systems are often suspect in cases of 
hospital-acquired aspergillus the air handlers were examined. Fungal 
cultures were obtained from the final filters of the suspect HVAC. 
Cultures grew out A. fumigatus. Physical inspection of the filters 
revealed that they had not been seated properly, allowing some passage 
of unfiltered air. The filters were replaced and seated properly. The 
incidence of hospital-acquired aspergillus decreased 80% (p 
value=0.034).\17\
---------------------------------------------------------------------------
    \17\ Kaptur KC. Identification of Nosocomial Aspergillis Fumigatus 
Using Virtual Surveillance. APIC 2004.
---------------------------------------------------------------------------
    At Providence St. Vincent Hospital (450 beds) in Portland, Oregon, 
Data Mining Surveillance detected an unsuspected, significant increase 
in hospital-associated Serratia marsescens isolates from respiratory 
sources. Upon IC investigation, it was discovered that respiratory care 
staff on the units involved were utilizing tap water in the humidifiers 
on the ventilators. A pre-packaged humidifier with sterile water system 
was implemented (that was cheaper than the old system). Compared with 
the three month period in which the alert was generated, the process 
change generated a 58% reduction.\18\
---------------------------------------------------------------------------
    \18\ Church NK. Cluster of Serratia marsescens associated with tap 
water utilization on ventilated patients: Identification, investigation 
and correction. APIC 2004.
---------------------------------------------------------------------------
    Data Mining Surveillance identified a previously unknown pattern of 
community-acquired urinary isolates from patients collected while in 
outpatient radiology. This cluster represented a 4-fold increase from 
the previous 9 month baseline (p= 0.026). All patients had a 
urethrogram procedure. Infection Control discussed pattern with unit 
director, staff educator and charge nurse. Supervisors reviewed 
policies and performed competency checks on staff. ICP visited staff at 
random to establish if technique was consistent with policy. In the 20 
weeks following full implementation there was a 33% reduction in 
positive urine cultures from this unit versus the 20 weeks prior to 
improvement efforts. (p = 0.039).\19\
---------------------------------------------------------------------------
    \19\ Vasson BA. Identification, investigation and correction of 
urethrogram-associated urinary tract infections in a pediatric 
facility. SHEA 2004.
---------------------------------------------------------------------------
    The combination of Data Mining Surveillance, the ability to provide 
regular feedback on progress, and a team-based approach to infection 
prevention led to an 87% reduction in the incidence of nosocomial MRSA 
in an ICU and a concurrent decrease in VRE hospital-wide. The cost 
avoidance was estimated to be $3,183,030. A decrease in average length 
of stay of 2 days was also noted on this ICU unit over the post-
intervention period.\20\
---------------------------------------------------------------------------
    \20\ Breaux DB, Baker JD, et al. A Unit Based Council Develops a 
Team Approach to Reduce Methicillin-resistant Staphylococcus aureus 
Infections in the Intensive Care Unit. APIC 2004.
---------------------------------------------------------------------------
    MedMined alerted Children's Hospital of Alabama to four patients in 
June 2003 with initial blood isolates obtained late in the hospital 
stay among patients on the Oncology Unit, representing a 16-fold 
increase from the previous 4 month baseline (p=.009). Culturing 
practices were unchanged, during, and after pattern identification. 
Interventions directed at bloodstream infection prevention were 
implemented. In the 12 weeks following full implementation only one 
hospital-associated isolate was obtained, a reduction of 90% (p = 
0.014).\21\
---------------------------------------------------------------------------
    \21\ Vasson BA, et al. A reduction of bloodstream infections in a 
pediatric oncology unit following electronic surveillance and targeted 
interventions. APIC 2004.
---------------------------------------------------------------------------
    At St.FrancisHospital in Memphis, MedMined's service enabled an 
aggressive team approach to reducing the incidence of bloodstream 
infections and contaminated specimens. Weekly average of non-duplicate 
bloodstream isolates fell from.85 (17 pts / 20 weeks) to.30 (6 pts / 20 
weeks), a 64% reduction. Focused surveillance for clinical infection 
yielded 14 weeks without a single hospital-acquired bloodstream 
infection in the post intervention period.\22\
---------------------------------------------------------------------------
    \22\ Breaux DB, Baker JD, et al.Focused Bloodstream Infection 
Prevention Success Using a Team-based Unit Level Approach. APIC 2004.
---------------------------------------------------------------------------
    MedMined's objective measurement of hospital-acquired infection 
rates received clinical validation at EvanstonNorthwesternHospital. 
Using its Nosocomial Infection MarkerTM, MedMined calculated 
the hospital-acquired infection rates across the hospital to be 4.56% 
of admissions. An independent chart review of consecutive admissions 
calculated the infection rate to be 4.67%. Over the same period, 
traditional targeted surveillance methods indicated the rate was 0.3% 
and required significantly more time and resources to compute. Thus, 
MedMined's method was more accurate and efficient method of computing 
infection rates.\23\
---------------------------------------------------------------------------
    \23\ Gavin PJ, et al. Comparison of `Whole House' Versus Routine 
Targeted Surveillance for Detection of Nosocomial Infection. SHEA 2004.

                                 
  Statement of National Association of Chain Drug Stores, Alexandria, 
                                Virginia
    Madame Chairwoman and Members of the Health Subcommittee. The 
National Association of Chain Drug Stores (NACDS) is pleased to submit 
this statement for the record regarding health care information 
technology. NACDS represents more than 200 chain pharmacy companies 
that operate nearly 32,000 community-based retail pharmacies. We are 
the primary provider of outpatient prescription drugs in the United 
States, dispensing about 70 percent of the 3.1 billion prescriptions 
that are provided each year. We believe that our industry has been in 
the forefront of using technology to increase efficiencies and improve 
patient care in the delivery of pharmacy services. Almost all pharmacy 
claims are adjudicated and paid through an online real time standards-
based communications system.
    We recognize and appreciate the leading role that you and this 
Subcommittee have played in moving forward the health care information 
technology agenda. In particular, we want to thank you for your efforts 
in including specific language in the Medicare Modernization Act (MMA) 
of 2003 that requires the development of standards for an E-Rx (E-Rx) 
program for Medicare prescriptions. We also know of your interest in 
exploring the issues and benefits that can be derived from the use of 
electronic health records. We believe that both initiatives will 
enhance quality of health care for patients, as well as create 
unparalleled efficiencies in the health care delivery system.

``E-Rx'' Principles

    NACDS is working with the HHS National Committee on Vital and 
Health Statistics (NCVHS) as its members prepare to recommend standards 
to the Secretary for the E-Rx program mandated by MMA. Many of our 
pharmacies are already electronically connected to physicians, and are 
able to receive approvals from physicians for prescription refills. We 
look forward to the additional efficiencies that will result as the 
more expanded E-Rx program is implemented over the next several years.
    To improve the overall prescribing process, and create momentum for 
the adoption of E-Rx, the National Community Pharmacists Association 
(NCPA) and NACDS created SureScripts in 2001. SureScripts is a neutral, 
secure E-Rx network that is compatible with all major physician and 
pharmacy software systems.
    More than 60 percent of the nation's retail pharmacies have now 
tested and certified their pharmacy application on the SureScripts 
network. That number is expected to grow to more than 75 percent of the 
pharmacies in the U.S. by end of summer 2004. SureScripts uses the 
National Council for Prescription Drug Programs (NCPDP) SCRIPT Standard 
to serve as the foundation for the software used to transmit 
prescriptions. SCRIPT was developed through a consensus process among 
community pharmacy organizations, pharmacy software vendors, database 
providers, and other stakeholders. Currently, the standard addresses 
the electronic transmission of new prescriptions, prescription refill 
requests, prescription fill status notifications, and cancellation 
notifications.
    The strength of NCPDP SCRIPT standard is that it is a national 
standard that addresses the vast majority of the core functionality 
required by the MMA. It currently facilitates the bidirectional 
transmission of prescription information between prescribers and 
dispensing pharmacies and pharmacists, and holds the potential to allow 
for the transmittal of information on eligibility and benefits and 
medication history. SCRIPT will likely be among the standards that are 
suggested by NCVHS to the Secretary to serve as basis for the broader 
E-Rx system.
    As we move forward with building on these existing standards for an 
E-Rx system, and prepare for more widespread use of this technology, 
NACDS believes the following principles should be incorporated into any 
pilot or program for the electronic transmission of prescriptions:
    Physician-pharmacist-patient choice and relationship should be 
protected: Prescriptions are communications between health care 
professionals--primarily physicians and pharmacists--regarding a 
specific course of pharmaceutical treatment. Most of these 
communications are currently paper based, but the goals of E-Rx are to 
replace this paper system with a secure, efficient, quality-enhancing, 
high-tech system.
    E-Rx should be used as a tool to enhance the pharmacist-physician-
patient relationship, not displace or change it. For example, patients 
must still be able to obtain needed prescriptions from the pharmacy of 
their choice. That is, this technology should not be used for the 
purposes of steering patients to ``preferred'' drugs that are not in 
the best interest of the patient, or steering patients to pharmacies 
that may not be the patient's choice.
    Physicians must be assured of their ability to prescribe both ``on 
formulary'' and ``off formulary'' and consumers must be assured of 
their choice of pharmacy, and not be coerced into using mail order 
prescription drug sources.
    Prescriptions should be not be altered once sent by to the 
pharmacy: Electronic prescriptions should be transmitted directly from 
physicians to pharmacies without interference from third party payers 
or PBMs who may manipulate or change the prescription for various self-
interested economic reasons. Once a physician has transmitted an 
electronic prescription, no intervening entity should alter the 
prescription information or content, or change the pharmacy site that 
the patient has chosen. Physicians and pharmacists must be able to rely 
on the security of the transmitted prescription information. Any 
altering by an intermediary of prescribed drug, strength, quantity, 
allowed refills, or directions would certainly adversely affect patient 
safety, and would constitute the unauthorized practice of medicine and 
pharmacy in most instances. Changes to the prescription should only be 
made after a dialogue between the prescribing physician and the 
dispensing pharmacist.
    Patient medication and medical history should be routed through the 
pharmacy: The goal of the E-Rx system should be to help the physician 
make the best choice of medication possible at the point of 
prescribing. The most complete information about the patient's medical 
and medication history will be provided to the physician if all 
information is routed through the pharmacy to the physician. That is 
because payers have only a subset of the full medical and medication 
history, and can only provide information on prescription that they 
have paid for.
    This excludes anything that the patient paid for out-of-pocket, 
such as prescriptions not covered by the payer, and a vast array of 
nonprescription items including herbal and nutritional supplements. 
Payers also do not have information that patients provide specifically 
to the pharmacy during patient counseling, such as potential allergies, 
sensitivities, and other adverse reactions. Therefore, the most 
complete medication history would be provided to the physician if it 
was routed through the pharmacy.
    Value of the pharmacist must be preserved: Pharmacists are 
medication experts that collaborate with physicians to enhance overall 
prescription drug use, and reduce the likelihood of medical errors and 
adverse drug reactions.
    We believe it is only logical that E-Rx programs encourage such 
collaboration, and should not create standards or procedures that would 
disrupt such collaboration. Moreover, the E-Rx system should not push 
some of pharmacists' traditional duties upon already overworked 
physicians, such as drug utilization review (DUR) and checking for 
other medication-related concerns. Such proposals would act as a 
barrier to physician adoption of E-Rx.
    E-Rx standards and tools must be free of non-clinical influence: 
MMA requires E-Rx standards to ``allow for the messaging of information 
only if it relates to the appropriate prescribing of drugs, including 
quality assurance measures and systems.'' An efficient E-Rx process 
would not burden physicians with extraneous electronic promotional 
messages. To protect the prescriber-patient relationship, a physician 
should not be influenced by advertising, such as ``pop-up messages'' at 
the point of E-Rx. MMA standards should enhance the physician's 
clinical decision-making process.
    The program should also allow physicians to ``have ready access to 
neutral and unbiased information on the full range of covered 
outpatient drugs.'' Physicians should be able to view with equal ease 
all necessary information, including information about drugs that are 
preferred on-formulary, non-preferred on-formulary, and off-formulary, 
without having to click through multiple screens or other burdensome 
steps. All information provided to physicians should be fact-based and 
transparent, and should identify the source of the information. Any 
incentive payments given to technology vendors to display information 
in a particular way should be fully disclosed to the physician and 
pharmacist and any advertisements, such as banner ads, should be 
clearly labeled as a paid advertisement.
    In addition, the system should show the physician and the patient 
all the choices of pharmacy providers that they have--both in network 
and out of network. There should be no steering of beneficiaries to 
mail order pharmacies. While the selection of a particular pharmacy 
would not change the cost sharing required, it would allow the patient 
the full range of options when selecting their pharmacy provider.
    EHR should be compatible with E-Prescribing: The primary goal of an 
electronic health information system is to allow the sharing of 
information between E-Rx and Electronic Health Records (EHRs). However, 
the MMA requires more information to be shared than the e--prescribing 
SCRIPT messaging format standard can share today. Therefore decisions 
must be made to determine the most appropriate standards to carry the 
additional MMA required information. A number of possibilities exist. 
Some of the MMA required information could be added to the SCRIPT 
standard. However, only that information that is to be shared between 
prescribers and pharmacists should be added to the SCRIPT standard, 
which has historically been limited to that use.
    In addition, some of the additional MMA required information could 
be included in the new EHR standards, which are currently being created 
by the standards development organization known as Health Level 7 
(HL7). The good news is that work is already underway to make sure that 
information included in the EHR standards can be transmitted to those 
using the e-prescribing SCRIPT standard and vise versa. NACDS is 
involved in this effort.
    Financial incentives for E-Rx should be provided to pharmacies: MMA 
provides for grants to physicians to encourage physician adoption of E-
Rx. The grant money is intended to assist physicians in computer system 
upgrades and staff training that will enable them to engage in E-Rx. 
There are significant costs associated with the successful 
implementation of E-Rx for both physicians and pharmacists; incentives 
should be made available to pharmacists as well.

Conclusion

    NACDS believes that enactment of the E-Rx provisions of MMA will 
encourage the further development and enhancement of E-Rx. We look 
forward to active engagement in the development of policies, standards 
and infrastructure to make widespread E-Rx a reality, along with 
electronic interactivity among physicians and other health care 
practitioners for the sharing of patient medical and medication 
histories.

                                 
 Statement of Thomas W. Hughes, National Electronic Attachment, Inc., 
                            Atlanta, Georgia
    My name is Thomas W. Hughes and I am the President and CEO of 
National Electronic Attachment, Inc. Our company is in the electronic 
attachment business (attachments being defined as anything sent to an 
insurance payor in support of an electronic claim. In dental, this 
could be an x-ray, perio-chart, and/or narrative or in medical this 
could be a certificate of medical necessity, doctor's notes, ambulance 
notes, lab reports, etc.)
    Today attachments in the non-MEDICARE world, transmitted between a 
provider and a clearinghouse can move over a secure internet. In fact, 
attachments for Medicare patients transmitted from a general provider 
to a specialist also can move over a secure internet. However, an 
attachment or claim may not be transmitted over a secure internet 
between the clearinghouse and the medical payor.
    In many cases, the Medicare payor receives non-medical claims and 
attachments over the secure internet. However, the moment the patient 
becomes Medicare eligible, the claim MUST be sent electronically 
(previously it MIGHT be sent electronically) and the attachment must be 
sent via mail (previously it MIGHT have been sent electronically even 
to the same payor).
    We as a company as well as well as the Association for Electronic 
Health Care Transactions (AFEHCT), are working through this 
organization toward standardizing both transactions and attachments. My 
best guess is that a mandated electronic attachment rule will be ready 
by 2008, even if the NPRM comes out in the Fall of 2004. At this time 
next year, our own company should have about 600 hospitals and 30,000 
providers processing electronic attachments, all over the internet.
    The latest research for attachments on the institutional side shows 
a cost of processing each attachment as $20-$24 per attachment to the 
institution. Cost on the payor side is $6-$10 per attachment. On the 
physician/professional side cost is approximately $4-$8 each to the 
physician, and in dental $1-$2 each to prepare.
    The cost of administrative work in this area is alarming, 
especially when the cost would fall to less than 25% of the current 
rate if the internet could be used to transmit Medicare attachments 
from provider to payor. As we move to the electronic health records, it 
is imperative that we as a country open up the secure internet to all 
possibilities of getting these records into the hands of healthcare 
professionals as well as to the patients themselves.
    Since covered entities fall under the HIPAA umbrella, we have 
proper safeguards built in our system for both privacy and security. I 
am concerned that we have tools today available to cut healthcare 
costs, and are not using them. The marketplace is waiting for this to 
open up and I predict if the government does open up the secure 
internet, the electronic health record will be a lot closer than ten 
years out. In my conversations with various vendors, I find that the 
lack of being able to use the internet in MEDICARE is a major stumbling 
block to progress in healthcare. Since the federal government pays out 
more than half the healthcare dollars, they have been the only ones to 
deny free use of the secure internet.

                                 
    Statement of Charles Homer, National Initiative for Children's 
               Healthcare Quality, Boston, Massachusetts

Introduction

    The National Initiative for Children's Health Care Quality (NICHQ) 
is pleased to submit this statement for the record as part of the 
Subcommittee's Hearing on Health Care Information Technology (IT). 
NICHQ, a premier independent national organization committed to leading 
the way to high quality care for all children, enthusiastically 
supports the President's goal of assuring that most Americans have 
electronic health records within the next ten years. We represent 
talented health professionals working every day to improve care for 
children and adolescents, experts in pediatrics and quality, and 
parents who share their stories and experiences to make sure that we 
achieve our goals. With healthcare IT now a central focus of public and 
private efforts to improve health care, Congress has a tremendous 
opportunity to assure that this attention also contributes to better 
quality and efficiency of care provided to children, particularly 
thosewhose care is either financed or provided by public programs. 
Nearly 25 million children have their care overseen or provided by 
programs within various Federal Agencies, including the Department of 
Health and Human Services, the Department of Defense, and the Federal 
Employee Health Benefits Program.\1\ Realizing this benefit for 
children will require understanding and attention to the specific 
issues unique to IT applications in children's health care.
---------------------------------------------------------------------------
    \1\ Dougherty D, Simpson L. Measuring the Quality of Children's 
Healthcare: A Prerequisite to Action. Pediatrics Supplement ( Editor 
and paper Author), January 2004, Vol. 113, No. 1: pp 185-196

---------------------------------------------------------------------------
Background

    A common saying among child health professionals is that ``children 
are not little adults.'' These differences have been well described and 
are often referred to as the four D's. Children are dependent on 
parents and their families for access to the health care they need. 
Thus, strategies must take into account how to collect and provide 
information to more than one patient. Childhood is characterized by a 
developmental trajectory that entails rapid change and emerging 
abilities to use health information. Children's health is characterized 
by a differential epidemiology of fewer major chronic illnesses, many 
acute illnesses, and a high need for preventive services. Finally, 
children have different demographic patterns, being the poorest and 
most diverse segment of our population. Current census projections 
estimate that by the year 2050, the majority of the U.S. population 
will be represented by racial and ethnic minority groups.\2\ 
Projections for this transition in the pediatric population are even 
more rapid, and some regions in the US already have experienced a shift 
in pediatric demographics to ``majority minority.'' \3\ The poverty 
rate among children and their families also means that they rely 
disproportionately on public health insurance (through Medicaid and 
SCHIP) and public health systems for health care, making the 
coordination of services and information even more 
critical.4,}5
---------------------------------------------------------------------------
    \2\ U.S. Bureau of the Census, decennial census and population 
projections. Available at: www.census.govprod/3/98pubs/p23-194.pdf. 
Last accessed July 1, 2004.
    \3\ State of California, Department of Finance. CountyPopulation 
Projections with Age, Sex, and Race/Ethnic Detail, July 1, 1990-2040. 
Available at: http://www.dof.ca.gov/html/Demograp/projca.pdf. Last 
accessed July 1, 2004.
    \4\ Forrest C, Simpson L, Clancy C. Child Health Services Research: 
Challenges and Opportunities. Journal of the American Medical 
Association June, 1997, 277(22):1787-1793
    \5\ Simpson L, Zodet MW, Chevarley FM, Owens P, Dougherty D, 
McCormick M. Health care for children and youth in the United States: 
2002 report on trends in access, utilization, quality, and 
expenditures. Ambulatory Pediatrics. 2004; 4:131-153.
---------------------------------------------------------------------------
    At the same time, children experience the same chasm in the quality 
and safety of care that the Institute of Medicine (IOM) documented for 
populations overall.6,}7,}8 Children present unique 
challenges when studying quality and safety which often leads to their 
exclusion from research. Indeed, the landmark IOM report on patient 
safety noted above contained fewer than a half dozen citations that 
were specific to children. Examples of poor quality of care for 
children exist for all types of care (e.g. preventive, acute, chronic 
and end of life care), in all settings (e.g. ambulatory care, hospital 
care), and all types of systems (public, private, managed care, fee for 
service). Millions of children fail to receive the care they need (e.g. 
immunizations), receive care that has the potential to harm them (e.g. 
medication errors), or care that they do not need and which provides no 
benefit (e.g. antibiotics for the common cold. And racial/ethnic 
minority children often suffer disproportionately from poor quality 
care.9 When errors do occur their impact may be greater due 
to the different physiologic capability of children, particular 
infants, to buffer the incorrect dosage or other error.10 We 
have the scientific knowledge, dedicated health professionals, and 
tools available to do much better today!
---------------------------------------------------------------------------
    \6\ Institute of Medicine, (1999). To err is human: building a 
safer health system. Edited by L.T. Kohn, J.M. Corrigan, and M.S. 
Donaldson. Washington, DC: NationalAcademy Press.
    \7\ Institute of Medicine. (2001). Crossing the Quality Chasm: A 
New Health System for the 21st Century. Washington, DC: NationalAcademy 
Press.
    \8\ Leatherman, S & McCarthy, D. (2004) Quality of Healthcare For 
Children and Adolescents: A Chartbook. Commonwealth Fund, New York, NY. 
Available at http://www.cmwf.org/programs/leatherman--pedchtbk--700.asp
    \9\ Horn IB, Beal AC. Child Health Disparities: Framing a Research 
Agenda. Ambulatory Pediatrics, forthcoming Summer 2004.
    \10\ Kaushal, R., Bates, D.W., Landrigan, C., et al. (2001) 
Medication errors and adverse drug events in pediatric inpatients. JAMA 
Vol. 285:2114-2120.

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The Role of Healthcare Information Technology

    Accelerating the use of information technology is an essential step 
toward improving the quality and safety of children's health care. 
Fortunately, momentum is building thanks to the efforts of the 
Department of Health and Human Services with Secretary Tommy Thompson's 
leadership and commitment. For example, the Agency for Healthcare 
Research and Quality is supporting numerous research and other projects 
to develop the information needed to understand the most effective ways 
of integrating IT into healthcare as well as assisting hospitals to 
plan and implement major IT deployments. Recently, a comprehensive 
agenda was laid out at an important national meeting which was held in 
Atlanta, Georgia last December and hosted by the Public Health 
Informatics Institute.\11\ A follow-up meeting sponsored by the 
American Academy of Pediatrics and the Maternal and Child Health Bureau 
is planned for September. Also, thanks to the leadership of key 
pediatric organizations,\12\ a pediatric Special Interest Group has 
been formed within HL7 to address clinical standards. And pediatricians 
will participate in the second meeting of the National Health 
Information Infrastructure in July.
---------------------------------------------------------------------------
    \11\ Public Health Informatics Institute. Developing Child Health 
Information Systems to Meet Medical Care and Public Health Needs. 
Available at http://www.allkidscount.org/pdfs/12-03MeetingSummary.pdf
    \12\ American Academy of Pediatrics, American Board of Pediatrics, 
Child Health Corporation of America, National Association of Children's 
Hospitals and Related Institutions, National Initiative for Children's 
Healthcare Quality, Nemours Foundation.
---------------------------------------------------------------------------
    However, because of numerous differences between adult and 
pediatric services themselves as well as specific issues with pediatric 
IT applications, one cannot assume that a high degree of IT investments 
will naturally translate into similar levels of benefit for adult and 
pediatric patients. The AmericanAcademy of Pediatrics has identified 
special requirements to be included in electronic medical record 
systems for use in pediatrics.\13\ For example, many of the medications 
errors we see today that harm children are due to dosing errors because 
most medications are prescribed based on a child's weight and require 
calculation. Incorporating weight-based dosing features to electronic 
health records will save children's lives. Children and families rely 
on our health care system for health promotion and disease prevention 
and monitoring growth is a key part of this important service. 
Electronic health records need to facilitate the charting of a child's 
height, weight, head circumference and body mass index using 
standardized growth charts to identify problems early. This has never 
been more important than now as we face an epidemic of childhood 
overweight and obesity. Many children rely on multiple systems for 
their health care needs, including schools and the foster care system, 
and electronic health records should facilitate the coordination of 
care across these settings. Finally, many of the strategies being used 
today to foster more rapid adoption of evidence-based health care may 
be particularly difficult for child health providers to implement.\14\ 
Because pediatricians and family practitioners have the lowest incomes 
and may practice more often in undercapitalized settings,\15\ resources 
for improvement, including information technology and participation in 
improvement collaboratives, are less available. For all of these 
reasons, we must make sure that children's unique needs are addressed 
as we move forward. The following steps would assist in that goal.
---------------------------------------------------------------------------
    \13\ AmericanAcademy of Pediatrics, ``Special Requirements for 
Electronic Medical Record Systems in Pediatrics'', Pediatrics 108 (2): 
513-515.
    \14\ Simpson L. Lost in Translation? Reflection on the Role of 
Research in Children's Health Care Improvement. Health Affairs, 
Forthcoming April, 2004
    \15\ C.K. Kane and H. Loeblich, ``Physician Income: The Decade In 
Review'', in American Medical Association, Physician Socioeconomic 
Statistics, (American Medical Association, Chicago, Illinois, 2003)

---------------------------------------------------------------------------
Recommendations

    1.  Support specific attention to child health care's unique 
characteristics as healthcare IT standardization moves forward.
    2.  Include a requirement that all government contracts for health 
care IT which will be used in settings where children are cared for 
specify how they will address the special information technology 
requirements for optimal care of children.
    3.  Ensure that federal healthcare IT initiatives, such as those 
detailed by Dr. David Brailer in his testimony, specifically include 
the many settings where children receive care, including children's 
hospitals, local health departments, and schools.
    4.  Facilitate monitoring of progress towards the reduction of 
health care disparities for children by supporting efforts to include 
race, ethnicity and primary language among standard demographic 
measures.
    5.  Make investments in quality improvement and clinical 
information systems (including registries) eligible for enhanced match 
under Medicaid.
    6.  Establish access to low cost loans and other capital strategies 
to support child health providers in the purchase of healthcare IT 
systems.
    7.  Increase the budget of the Agency for Healthcare Research and 
Quality to at least $443 million including adequate funding to support 
additional research and demonstrations of the impact of healthcare IT 
in child and adolescent health care with a particular emphasis on the 
interoperability of systems across public and private sectors and 
settings.

    Madam Chairman and Members of the Subcommittee, the child health 
professionals of this country stand ready to assist Congress and the 
Administration in advancing the use of health information technology to 
improve the quality and safety of health care for all Americans, 
including our children.

                                 
         Statement of Kenneth W. Kizer, National Quality Forum
    On behalf of our more than 200 member organizations, the National 
Quality Forum (NQF) commends Chairwoman Johnson's leadership in calling 
for greater use of information technology to make healthcare better and 
safer.

Information Technology and Healthcare Quality

    Few technological advances have held so much potential to improve 
healthcare, yet has so far realized so little actual impact on everyday 
patient care, as has electronic information management. This is 
especially ironic when one considers that healthcare is the most 
information-intense enterprise that human beings have ever engaged in 
and that many diagnostic and treatment technologies are models of 
electronic sophistication. Unfortunately, patient medical records and 
methods of moving patient-related information along the continuum of 
care have remained much the same as they were a hundred years ago.
    The absence of a national electronic information management system 
to support coordinated, comprehensive, patient-centered healthcare 
contributes to the occurrence of medical errors; hinders efforts to 
measure and improve health system performance; and makes improvements 
in efficiency extremely difficult.

NQF's Role in Information Technology and Quality

    The National Quality Forum (NQF) is a voluntary consensus standards 
setting body (similar to the American National Standards Institute or 
ANSI) that operates in accordance with the National Technology and 
Transfer Advancement Act of 1995, OMB Circular A-119 and other relevant 
federal guidance. The NQF is dedicated solely to healthcare, and 
healthcare quality improvement in particular. The NQF was established 
in 1999 subsequent to the recommendation of a Presidential Commission.
    The NQF has a keen interest in healthcare IT because information 
technology is a critical enabler of improved quality and because the 
national performance measures, quality indicators and other standards 
endorsed by the NQF will be core data elements used in healthcare IT 
systems in the future for reporting of performance, pay-for-performance 
programs and other similar purposes.
    In so far as improved medical informatics is a critical enabler of 
healthcare quality improvement, the NQF has promoted the development 
and widespread deployment of improved healthcare information technology 
since its creation. In this vein, in partnership with the Institute of 
Medicine of the National Academy of Sciences and with support from the 
Markle Foundation, the NQF held a National Summit on Information 
Technology and Healthcare Quality in March 2002. Building on the work 
of the National Committee on Health and Vital Statistics and others, 
this Summit appears to have accelerated the momentum for more 
collaborative efforts in this area and highlighted the need for a 
shared vision of a national health information infrastructure (NHII).
    Implementation of a national health information infrastructure is 
one of the nation's most urgent needs. Participants in the National 
Summit on Information Technology and Healthcare Quality agreed that 
implementing a NHII is fundamental to achieving major improvements in 
the efficiency and quality of healthcare, and they generally agreed on 
the basic design principles for such a system.\1\
---------------------------------------------------------------------------
    \1\ Power EJ, Kizer KW, Nishimi RY, Gorban LD (eds). Information 
Technology and Healthcare Quality: Proceedings of a National Summit. 
Washington, D.C. National Quality Forum. 2003.
---------------------------------------------------------------------------
    While the workgroups convened at this Summit occasionally differed 
regarding specific potential strategies recommended for achieving 
universal implementation of clinical information strategies, there was 
remarkable consensus about several fundamental issues; namely:

    1.  The federal government has a crucial leadership role in 
promoting a national health information infrastructure. However, to 
achieve rapid adoption, compatible incentives, and consistent public 
messages, it is essential that private organizations and government 
entities collaborate and take reinforcing actions.
    2.  The highest priority should be given to adopting uniform 
standards for message formats, nomenclature, data exchange, and other 
aspects necessary for interoperability among systems. Without 
underlying standards, healthcare IT investments will continue to be 
risky, limited in function, unnecessarily costly, and potentially 
rapidly obsolete. While the federal government can lead this effort 
through its many regulatory and purchasing activities, private 
healthcare entities must ``buy into'' the effort if they are to 
purchase products using these standards.
    3.  Opportunities to provide financial support and incentives for 
adopting and using healthcare IT abound. Although grants to support 
connectivity and IT purchases are important, other incentives could 
productively target health professional education, accreditation, 
reimbursement, safety, and other objectives. Incentives also could be 
targeted to particular clinical IT components, such as emergency public 
health surveillance and computerized medication order entry systems. 
The costs of investment can be shared by the various healthcare 
stakeholders and across the public and private sectors.

    The conclusions remain as relevant today as they were when the 
Summit was held in March 2002.

Conclusion

    The National Summit on Information Technology and Health Quality 
reaffirmed the urgency of implementing a national health information 
infrastructure. Although the participants realized the challenges in 
reaching this objective, they all agreed on the importance of 
standardizing the underlying components of healthcare information 
technology and the necessity of both the public and private sectors 
working together in this endeavor. There is a recognized need for 
leadership--in all sectors of healthcare--to champion the 
implementation of a NHII. Although there was some concern about the 
Federal government imposing mandates, there was agreement that the 
Federal government should exercise leadership and use the tools it has 
available to move implementation forward. The existence of generally 
agreed upon standards (e.g., HL7, ANSI-X12N and SNOMED), previous 
recommendations (e.g., from the National Committee on Vital and Health 
Statistics), and organizations such as the National Quality Forum, 
which can be the vehicle for gaining broad national endorsement of IT-
related standards, provide the means to make immediate progress.
    The National Quality Forum remains committed to making the goals 
and action plans of the Summit a reality. We look forward to working 
with the Committee and other healthcare, IT and community leaders to 
achieve the vision of a ``connected'' healthcare system.
    Thank you for holding this hearing to highlight this issue. The NQF 
would be pleased to be of assistance to you in your efforts.

                                 
                 Statement of Patient's Healthcare Card
    The Patient's Healthcare Card recognized the need more than a 
decade ago for implementation of information technology in health care 
to control costs and improve quality of care. Patient's Healthcare Card 
program is a patent-pending intellectual property with application to 
the health care industry and is based on technology currently employed 
by the financial services industry. Patient's Healthcare Card's initial 
value proposition offers objective, equitable, and efficient management 
of patient out-of-pocket--co-payments, deductibles, uninsured and 
underinsured.
    Current Medicaid regulations permit provider reimbursement even 
though the patient may have the ability to pay some or all of his/her 
obligation for health care products and services. Patient's Healthcare 
Card program, as an independent third-party, eliminates conflicts of 
interest to provide objective, accurate and timely information 
concerning patients' eligibility for and the amount of public sector 
benefits.
    ``For years, doctors and hospitals have lagged behind other 
industries in joining the information-technology club-and it didn't 
look like they'd ever sign up,'' according to Laura Landro in 
``Healthcare Goes Digital,'' The Wall Street Journal, September 10, 
2002. ``Because of the unusual payment structure of the health-care 
industry, providers have never had many incentives to actually improve 
the quality of their product or install clinical-information systems 
that would let them manage patient care better.'' The primary reason is 
when technology reduces operating costs, duplications, errors and 
unnecessary care, the financial benefits don't go to the providers but 
to insurers, third party payers, government, and patients.
    Patient out-of-pocket is at the core of escalating costs in health 
care and offers the greatest opportunity for technology to affect the 
healthcare delivery system. Out-of-pocket represents 22%, projected to 
increase to 25% by 2007, of provider revenue; however, providers 
currently collect less than 20% of the potential revenue. 
Implementation of existing, reliable, proven systems and methods from 
the financial services industry adapted to the specific needs of health 
care's patient out-of-pocket (consumer credit), offers a significant 
opportunity for patients, government, providers and third-party payers. 
The Patient's Healthcare Card program can be of service today, not in 
ten years, with objective and equitable management, in real time, of a 
patient's ability to pay health care obligations.
    Credit experts (Experian, Equifax and TransUnion), based on income 
of the unprotected, believe collection of patient out-of-pocket can be 
increased to 50% or greater from the current 20%. Using today's 
consumer credit technology and systems, an independent third party 
administrator can objectively evaluate a patient's ``ability to pay'' 
(means testing), based on benchmarks established by public policy, and 
manage that amount equitably at less operating expense. (Appendix 8,9)
    U.S. Census Bureau, 2002, data demonstrates the financial capacity 
of the unprotected to pay some or all of their out-of-pocket 
responsibilities.
[GRAPHIC] [TIFF OMITTED] 99674A.006

                       Patient's Healthcare Card

      Providers have the same relationship with Patient's 
Healthcare Card as participating banks have with the VISA program
      Patent-pending (intellectual property) system and methods
      Provider Account--Healthcare Card program creates a 
discrete account for each provider
      Patient Account--providers create a singular discrete 
account for each patient--universally accepted within healthcare
      Healthcare Card program maintains a registry (repository) 
of each Patient Account for providers
      Secure infrastructure--accurate, complete, current 
information
      Shared service model--providers share costs ratably 
(proportionally)
      Patients benefit from single statement billing from all 
providers--single payment

Federal and State FY 2007: Relief in Medicaid Payments:

(Assuming the same distribution of costs between the federal government 
        [CMS] and states)

    In 2002, the Medicaid program cost $245 billion to provide medical 
assistance (MAP) and $14 billion for administrative costs (ADM). MAP 
average payments are currently divided with 57% CMS and 43% states. ADM 
average payments are divided 55% CMS and 45% states.\1\ By 2007, MAP 
and ADM costs are expected to increase by 5% or more annually, based on 
prior experience.
---------------------------------------------------------------------------
    \1\ ``The average enrollment for Medicaid was 39 million in FY 
2002, about 13 percent of the U.S. population. Nearly 7 million people 
are dually eligible, that is, covered by both Medicare and Medicaid.'' 
CMS Management's Discussion and Analysis FY 2002.
---------------------------------------------------------------------------

   Substantial Reduction in Medicaid Payments with Implementation of 
                       Patient's Healthcare Card

 
                                     Federal (CMS)                   State                       Total
 
ADM                                  $5.8 billion (55%)          $4.7 billion (45%)   $10.5 billion (reduction)
 
MAP        The precise financial impact cannot be determined at this time due to the variables associated with
 public policy, data, projections, assumptions, and the amount of long-term care expenses as a percentage of
 total expense; however, the impact will be significant.
 


Reduced Administration Costs

Substantial Reduction in Administration Costs

    Patient's Healthcare Card (PHC) offers a substantial reduction in 
administrative costs; the amount can only be estimated. (Appendix 10, 
11, 12, 13, 14) Based on private sector programs in operation for 
years, the program, using a shared service model and secure internet 
infrastructure, offers a projected 75% or greater reduction in 
administrative costs as compared to current systems and methods.
    Medicaid's current administrative expense is greater than $300.00 
per beneficiary annually.
    A typical ``quality service provider,'' such as American Express, 
operates within parameters:

    1.  Cost to evaluate financial capacity and establish a new account 
less than $3.00
    2.  Cost to maintain account annually $18.00
    3.  Cost per transaction in the account $.015

    American Express' annual cost to establish and maintain an account 
is less than $25 annually.

Increased Collection--Out-of-Pocket Charges

    In a survey conducted of the nation's hospital CFOs, the 
respondents indicated their own business office was performing below 
their expectations. Healthcare providers lack the expertise and scale 
necessary to effectively and efficiently manage patient out-of-pocket 
(consumer credit). By utilizing proper management and structure, 
experts (Experian, Equifax and TransUnion) believe out-of-pocket 
collections can be improved from less than 20% currently to 50% or 
greater.
    Darren Lehrich, an analyst at SunTrust Robinson Humphrey, said in 
2003: ``Of self-pay business, only 14 percent ends up being collectable 
and last year it was in the 18 percent range'' for HCA Inc. (Appendix 
5)
    HCA Inc. reported ``in their first quarter (2004), the company's 
provision for doubtful accounts--an indicator of unpaid bills--
increased to $694 million, or 11.7 percent of revenue, from $428 
million, or 8.1 percent of revenue, a year ago.'' \2\
---------------------------------------------------------------------------
    \2\ ``HCA Blames Uninsured for Income Drop,'' Reuters, New York: 
April 22, 2004, Yahoo! News: May 11, 2004.

---------------------------------------------------------------------------
Increased Collection--Ability to pay

Illustration of potential financial impact:

    Using ``ability to pay''--a patient is determined eligible for 
public sector benefits.
    Positive eligibility establishes MAP amount payment to provider--
$10,000.
    Amount of patient's ``ability to pay''--$3,000.
    Currently, the provider would receive the MAP amount funded 
entirely by the public sector (taxpayers)--$10,000--with the patient 
paying little or nothing.
    Implementation of ``ability to pay'' in compliance with Medicaid 
policy, permits a patient to have the same eligibility determination, 
with the public sector (taxpayers) paying $7,000 and the patient paying 
$3,000.
    In the example, the provider will receive the $3,000 owed by the 
patient at time of service in the form of a working capital loan, with 
a cost of capital generally at commercial paper rates, from Alliance 
National Healthcare Receivables Funding Corporation (ANHRFC). Servicing 
of the provider's working capital loan is accomplished through the 
patient's monthly payments; monthly payments are intuitive for patients 
(car payments, house payments, etc.) Additionally, the provider 
receives (earns) the interest income on outstanding patient balances.
    In the example, the patient's positive eligibility determination 
forces the provider to accept the associated payment code established 
by Medicaid. The provider receives $10,000 under either payment scheme, 
from government or government and patient. There is no financial 
incentive for providers to increase patient out-of-pocket collection. 
The public sector (taxpayers), as payer of the cost of Medicaid, would 
be the beneficiary of any opportunity to redirect resources.
    Patient's Healthcare Card was positively received in discussions 
with the American Hospital Association, American Medical Association, 
and many others. However, providers are concerned that government 
(taxpayers), federal and state, would be the beneficiary of increased 
collections. Providers feel they are entitled to some, if not all, of 
the potential opportunity to redirect resources created from 
implementation of the Patient's Healthcare Card.
    The issue of provider participation in any opportunity to redirect 
resources must be resolved. The incentive must be sufficient as to 
promote provider participation and move the healthcare community beyond 
its institutional ambivalence concerning information technology. An 
objective of the initial demonstration project(s) will be to determine 
the amount of incentive providers require to assure full participation 
of the health care community.

Patient's Healthcare Card Creates An Objective, Equitable, Efficient 
        System

    The U.S. Census Bureau, Statistical Analysis of the United States, 
2002, Chart No. 112 projects a substantial increase in health care 
spending to $2.174 trillion. (Appendix 6)
    Based on benchmarks established by public policy, Patient's 
Healthcare Card, as an independent third-party administrator, can 
objectively evaluate a patient's ``ability to pay'' (means testing), 
and service that amount equitably.
    Patient's Healthcare Card program, using a shared service model, 
internet-based application and infrastructure, will provide more 
accurate and timely information concerning a patient's eligibility for 
Medicaid benefits. Patients, providers and government benefit when 
those using the health care system pay their share based on their 
``ability to pay.'' Patient's Healthcare Card establishes an auditable 
national standard for determining eligibility for benefits, eliminates 
conflicts of interest and brings equity and integrity to the out-of-
pocket portion of health care.
    With national implementation of Patient's Healthcare Card, CMS and 
states will have the opportunity to redirect significant resources from 
MAP and ADM by 2007. (Appendix 1)
    Implementation of Patient's Healthcare Card program into the health 
care delivery system is justified on its initial value proposition as 
an opportunity for fiscal relief for patients, providers, government, 
and other third party payers and as a network for claims processing and 
payments.

Elimination and Streamlining of Operations

    Patient's Healthcare Card's use of secure internet infrastructure 
or approved gateway or EDI service that complies with Alliance National 
Healthcare Network's (ANHN) reduced fee model moves the administration 
of the Medicaid program from paper to the digital age at little or no 
cost to government. The program's systems and methods eliminate or 
streamline administrative activities within the program at both federal 
and state levels. The following are some, but certainly not all, 
activities that change.

Eligibility Validation

    Patients will be issued a Healthcare Card with a discrete singular 
account number. Providers, using a card swipe machine at the point of 
sale, access the appropriate database via secure internet method or 
ANHN approved, compliant gateway service to validate eligibility of the 
patient (Blue Cross & Blue Shield, Charter, Medicare and Medicaid, 
etc.) Once the card is swiped and the provider validates that the 
patient who is covered is the individual presenting the Card, 
eligibility is confirmed, electronically and in real time, to all 
appropriate parties. Claims rejected due to eligibility can be 
significantly reduced with real time validation of provider, payer and 
patient. Additionally, the card swipe system and method are well 
adapted to the dynamic nature of Medicaid beneficiaries.

Claims Process Flow

    Using systems and methods refined in the financial services 
industry (credit cards), providers file claims via secure internet 
infrastructure. At time of eligibility validation, a discrete reference 
number is created, which is applied to a web page to be used for filing 
the claim. The discrete web page contains transaction data for 
providers and payers, who can review and edit for any deficiencies, 
make corrections or any other action required on their part to move any 
pending claims onward through the adjudication process, without 
requiring additional action by Medicaid servicing agents or incurring 
further needless delays.

Claims Status Inquiry (CSI)

    Just as a credit card holder is able to track and maintain his/her 
credit card transactions via secure internet methods, providers can 
access the discrete web page (reference number) in the same manner and 
view the status of each discrete transaction (claim).

Claims Status Remittance Advice (ERA)

    Pending ERAs for a patient/provider can be delivered to providers 
as a component of a status inquiry. The notice will avoid/eliminate 
providers needing to make additional ERA inquiries with the Medicaid 
service center.

                                 
           Statement of Lawrence L. Weed, Burlington, Vermont
    A deep, fundamental flaw in the infrastructure of the whole medical 
enterprise is not only not being discussed and corrected; its existence 
is not even being recognized.
    The flaw: The diplomas from medical schools and the licenses to 
practice from the states could not possibly mean what the public thinks 
they mean.
    The medical establishment and the public still believe that 
graduate medical education and credentialing as now practiced are 
adequate for controlling cognitive inputs. On this view, the minds of 
licensed professionals are central to bringing knowledge from its 
source in laboratories and libraries to the people who need the 
application of that knowledge. We have lived with the belief that the 
unaided minds of those professionals can solve two problems: first, 
recall and process general knowledge relevant to unique individual 
patients under time constraints no respectable scientist would ever 
accept, and second, maintain awareness and control of all the patient-
specific data points that good problem solving requires.
    The unaided minds of professionals cannot do these things. These 
difficulties can only be overcome with external tools designed to 
extend man's cognitive abilities. The tools are as necessary as 
microscopes and X-rays are necessary to extend the unaided eye. As 
Francis Bacon saw 400 years ago: ``The unassisted hand and the 
understanding left to itself possess little power. Effects are produced 
by means of instruments and helps, which the understanding requires no 
less than the hand''.
    The field of medicine is where astronomy was centuries ago when it 
did not have the telescope. And the medical establishment and the 
government are where the church was when it either refused to look 
through the telescope or refused to accept what others saw when they 
did look. New tools for controlling cognitive inputs in medicine have 
been in existence for over 20 years but that existence has been either 
ignored or denied.
    A 9/11 commission is spending millions of dollars to investigate 
3,000 deaths and the failed intelligence system that had not developed 
the proper tools and infrastructure to ``connect the dots'' and prevent 
what may happen again. And yet in medicine we have 90,000 deaths that 
occur every year and no leaders of the medical establishment are being 
publicly interrogated on why they persist in the use of such archaic 
tools for moving knowledge from its source to those who need the proper 
application of that knowledge. The transmission lines for knowledge are 
so flawed and the voltage drops across them so great that it boggles 
the mind that the government and the universities are not only blind to 
the chaos but are actually providing the licensing laws and educational 
systems that enable it.
    This problem goes far beyond ``medical error'' as usually 
conceived. The prevailing medical culture remains in denial about the 
scope of the problem and the wrenching changes needed to solve it. The 
consequence is that reliance on the physician's mind stifles use of a 
superior alternative. For the want of that alternative, cognitive 
inputs to medical decision making are uncontrolled. For want of 
controlled inputs to medical decision making, the quality of care, the 
cost of care, the education and credentialing of caregivers, and the 
development of medical knowledge itself, are unmanageable.
    The superior alternative is Knowledge Coupling tools. Knowledge 
Coupling tools make possible a fundamental change in the way we move 
knowledge from its source in laboratories and libraries to the people 
who need the rigorous application of that knowledge. The physician's 
mind is no longer required to be the vehicle for bringing medical 
knowledge to the point of need in patient care. In turn, medical 
education and credentialing of providers will have to change from a 
knowledge-based to a skills-based approach. We must shed the illusions 
instilled by graduate medical education. Physicians are ``educated'' to 
believe that, in Herman Blumgart's words, ``The application of 
knowledge at the bedside is largely the function of the sagacity 
inherent in or personally developed by the individual physician.''
    The way physicians are taught to function flies in the face of 
decades of research in cognitive psychology, decades of research in 
health care quality, decades of experience in other industries, and 
common sense. Common sense tells us to rely on maps and a compass or 
GPS device, not on our sense of direction, when navigating in 
unfamiliar territory. An airline pilot uses radar; he does not claim to 
be able to see through clouds. In other areas we have extended our 
muscles with machines and our eyes with microscopes and telescopes. 
Similarly, we should extend our cognitive capacities to recall and 
process the many variables in solving clinical problems. Relying on 
recall is unsafe, unreliable and unnecessary. We must use technology 
and system organization to create a rational division of labor, where 
people and machines are assigned functions to which they are suited. 
The present infrastructure of the medical system with its flawed 
beliefs, inadequate information tools, and poorly defined linkages 
among its parts does not support such a rational division of labor. 
Until a new infrastructure is put into place, acceptable quality and 
productivity will remain out of reach.
    How much longer can we get away with ignoring not only Francis 
Bacon, but our own leading cognitive research scientists such has Robyn 
Dawes who wrote:

         States license psychologists, physicians, and psychiatrists to 
        make lucrative global judgments in the form of `It is my 
        opinion that . . .' People have a misplaced confidence in their 
        global judgments, a confidence that is strong enough to dismiss 
        an impressive body of research findings and to find its way 
        into the legal system. The greatest obstacles to using external 
        aids may be the difficulty of convincing ourselves that we 
        should take precautions against ourselves. The idea that self--
        imposed, external constraints on action can actually enhance 
        our freedom by releasing us from predictable and undesirable 
        internal constraints is not a popular one

    New premises and new tools have implications for cost and quality 
of medical care, and in particular for coordination among patients and 
providers. A few of the many implications are:

    1.  The gap between the fixed cognitive capacities of physicians 
and the ever-increasing volume of medical knowledge and technique leads 
physicians to specialize by body system (musculoskeletal, 
cardiovascular etc) and by procedure (cardiac catheterization, hip 
replacement etc). That specialization, however, can at times be a major 
cause of failures of quality and economy, because the patient's 
problems and total situation cross specialty boundaries. The cardiac 
catheterization was done perfectly but the original patient problem of 
chest pain had its origin in the thoracic spine or the esophagus. The 
hip replacement may have been done perfectly but the patient died in 
heart failure. Tolstoi understood this problem when he wrote about 
Natasha's illness in ``War and Peace'', ``The simple fact never 
occurred to any of them (the doctors) that they could not know the 
disease that Natasha was suffering from, as no disease suffered by a 
live man can be known, for every living person has his own peculiar, 
personal, novel, complicated disease unknown to medicine--not a disease 
of the lungs, liver, skin, heart, nerves and so on, mentioned in 
medical books, but a disease consisting of one of the innumerable 
combinations of the maladies of those organs''. (12) And Francis Bacon 
understood this when he wrote 400 years ago ``And generally let this be 
a rule, that all partitions of knowledge be accepted for lines and 
veins rather than for sections and separations; and that continuance 
and entireness of knowledge be preserved. For the contrary hereof hath 
made particular sciences to become barren, shallow and erroneous, while 
they have not been nourished and maintained from the common fountain.'' 
(13) In the field of medicine a patient needs a system that defines the 
role of each provider and the connections among them, using tools to 
access the current necessary, up-to-date knowledge. Many a patient has 
suffered because no one ever ``connected all the dots''--a process that 
only a system, not the unaided mind of the licensed physician, can ever 
achieve. And that system must be based on: (1) a coherent philosophy of 
total care over time, (2) powerful tools to extend the hand, the 
senses, and the mind, (3) disciplined users of the tools, and (4) 
strong leadership.
    2.  Rather than helping users cope with information overload in 
medicine, some electronic information tools exacerbate the problem. 
Tools that accelerate retrieval of general knowledge without 
determining its relevance to the unique problem situation at hand 
overwhelm the mind. The result is to worsen the disorder that results 
from the failed functioning of the unaided mind when faced with large 
volumes of information.
    3.  The only escape from disorder in medicine is the simultaneous 
routine use by patients and providers of two types of information tool: 
(1) a front-end tool for applying general knowledge to patient 
problems, so that the right data can be selected and comprehended 
efficiently, and (2) problem-oriented medical records, so that all 
caregivers and the patient are constantly confronted with a complete, 
organized picture of the whole patient's known medical needs.
    4.  With the right information tools, it becomes possible for 
medical education and credentialing to become skills-based rather than 
knowledge-based. Skills-based credentialing can foster a free market in 
health professional services in three ways: (1) reducing educational 
and financial barriers to entry in the health professions, (2) 
equipping less expensive, non-physician skilled caregivers with 
knowledge tools that will define when, and only when, it is appropriate 
for them to exercise their particular skill on a given unique patient, 
and (3) assuring skillful performance, so that patients and other 
purchasers can safely choose among competing providers based on non-
medical factors (price, location, interpersonal skills) for which no 
expert advice is necessary.
    5.  When patients and purchasers access the same information tools 
on which their caregivers rely, they create an informational 
environment of transparency and accountability. In that environment, 
patients become autonomous decision makers and are aware of the degree 
to which their individual constellation of findings fits the diagnostic 
and management options that are in the textbooks and journals. At times 
the match to a classical picture will be very good, whereas at other 
times it will be poor and there will be much ambiguity. They will learn 
to tolerate that ambiguity and not be victims of diagnostic notions and 
unfounded therapeutic schemes. Credentialed caregivers will have little 
opportunity to generate artificial demand for their own skills. And 
third party purchasers will have little opportunity to disguise 
economic decisions as medical ones.
    6.  The right information tools expose large gaps between the 
generalizations of ``evidence-based'' medicine and the realities of 
unique individual patients. Routine patient care thus becomes a vehicle 
for refining medical knowledge in ways that expensive, limited 
population studies and some clinical trials cannot achieve. Patients 
should no longer hear or read statistical results of the mortality of a 
given procedure or the effectiveness of a given therapy on large number 
of patients. They should hear about how closely they match in great 
detail those patients in whom a given drug or procedure succeeded and 
how well they match those in whom the drug or procedure failed. 
Tailoring medical action of this sort to individual patients cannot be 
achieved without the routine use of new tools. Or put another way, an 
astronomer without a telescope is a very limited astronomer indeed.
    7.  The common element of knowledge coupling software, the Problem-
Oriented Medical Record (POMR), and skills-based credentialing, is that 
they permit tight control over provider inputs. Control over inputs is 
a fundamentally different approach to quality improvement than the 
prevailing approach of outcome-based comparisons. Outcomes cannot be 
evaluated meaningfully without controlled inputs, and without reliable 
outcome studies the development of the science of medicine as well as 
the science of medical practice are compromised.
    8.  The POMR and the combinatorial standards of care, and skills-
based credentialing, are intended to satisfy the medical needs of 
patients, not the expectations of physicians. Analogizing these 
concepts to financial accounting standards in business, medicine lags 
far behind the business world in developing standards for transparency, 
accountability and control.
    9.  The POMR standard was once taught in most medical schools, but 
is applied now only in fragmentary and diluted form, if at all. PKC's 
knowledge coupling software is resisted because the combinatorial 
standard it imposes is alien to the way physicians are trained to 
function. Skills-based credentialing combined with a system that 
clearly defines when these skills should be applied, is another 
alternative to the current training. This, too, may be resisted because 
it would subject physicians to competition by less expensive 
caregivers.
 10.  Giving patients access to the necessary information tools, and 
demonstrating to them the higher standards of care made possible by 
those tools, is essential to overcoming the status quo. The difficulty, 
however, is that the prevailing medical culture blocks awareness and 
resists disruptive innovations. The outcome is that marketplace demands 
are diverted to marginal improvements.
 11.  Change of the necessary magnitude requires four elements coming 
together: philosophy, tools, committed users, and leadership. The next 
step is for a few institutions and communities to become models of what 
patients and skilled caregivers can achieve when equipped with the 
necessary tools and informed with a clear vision.

                                 
Statement of the Honorable David Wu, a Representative in Congress from 
                          the State of Oregon
    Chairwoman Johnson, thank you for giving me the opportunity to 
testify this afternoon about an important topic for Oregonians and all 
Americans--health care information technology.
    We live in a time of vast technological advancements--today, our 
cars have more computing power than the Apollo spacecraft. Yet our 
doctors have not been able to take advantage of these advancements.
    It is not for a complete lack of technology. Clinical decision 
tools exist today that would allow doctors to pull up the latest 
research information immediately. But currently, we do not have the 
systems in place to ensure this technology gets used by our health care 
professionals.
    I am proud that one of the innovative companies in health care 
information technology is located in the heart of my congressional 
district. Formed in 2001, Kryptiq aids communication within the medical 
industry through a Windows-based software system that utilizes secure 
e-mail. Kryptiq's system adds a layer onto standard email that gives 
medical professionals the ability to connect workflow, such as 
patients' medical records, while maintaining privacy.
    This is technology that we need to better serve patients and extend 
health care information to rural areas. But we must ensure that we 
restructure our health care system to ensure that that this type of 
technology is not only expanded but that it is accessible to all 
physicians and health care professionals.
    That is why this hearing is so important, and I thank you for 
holding it. I believe that information is the answer to improving 
health care. If we use the technology that we have today, we can 
drastically improve the quality of care we all receive in this country.
    I look forward to working with Chairwoman Johnson and the Committee 
to increase the amount of information generated in and about our health 
care system, to improve the dissemination of that information to 
everyone who needs it, and help to build the IT infrastructure that 
will make that possible.

                                 
