    [Senate Hearing 109-1149]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 109-1149

           ACCELERATING THE ADOPTION OF HEALTH INFORMATION TECHNOLOGY

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

                                    HEARING

                                   before the

          SUBCOMMITTEE ON TECHNOLOGY, INNOVATION, AND COMPETITIVENESS

                                     OF THE

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 21, 2006

                                   __________

        Printed for the use of the Committee on Commerce, Science, and
                                 Transportation

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           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                         TED STEVENS, Alaska, Chairman
    JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
    CONRAD BURNS, Montana                    Chairman
    TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West
    KAY BAILEY HUTCHISON, Texas              Virginia
    OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
    GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
    JOHN ENSIGN, Nevada                  BARBARA BOXER, California
    GEORGE ALLEN, Virginia               BILL NELSON, Florida
    JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
    JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
    DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                         MARK PRYOR, Arkansas
                 Lisa J. Sutherland, Republican Staff Director
            Christine Drager Kurth, Republican Deputy Staff Director
                 Kenneth R. Nahigian, Republican Chief Counsel
       Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
       Samuel E. Whitehorn, Democratic Deputy Staff Director and General
                                    Counsel
                 Lila Harper Helms, Democratic Policy Director
                                     ------

          SUBCOMMITTEE ON TECHNOLOGY, INNOVATION, AND COMPETITIVENESS

                         JOHN ENSIGN, Nevada, Chairman
    TED STEVENS, Alaska                  JOHN F. KERRY, Massachusetts,
    CONRAD BURNS, Montana                    Ranking
    TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
    KAY BAILEY HUTCHISON, Texas          JOHN D. ROCKEFELLER IV, West
    GEORGE ALLEN, Virginia                   Virginia
    JOHN E. SUNUNU, New Hampshire        BYRON L. DORGAN, North Dakota
    JIM DeMINT, South Carolina           E. BENJAMIN NELSON, Nebraska

                                         MARK PRYOR, Arkansas
                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on June 21, 2006....................................     1
    Statement of Senator Ensign......................................     1

                                   Witnesses

    Clancy, Carolyn M., M.D., Director, Agency for Healthcare
      Research and Quality, Department of Health and Human Services..     3
        Prepared statement...........................................     5
    Gingrich, Hon. Newt, Former Speaker of the House; Founder, Center
      for Health Transformation......................................    18
        Prepared statement...........................................    20
    Halamka, John D., M.D., M.S., Chair, Health Information
      Technology Standards Panel; CIO, Beth Israel Deaconess Medical
      Center and Harvard Medical School..............................    14
        Prepared statement...........................................    16
    Hutchinson, Kevin D., President/CEO, SureScripts, LLC............    67
        Prepared statement...........................................    70
    Leavitt, Mark, M.D., Ph.D., Chair, Certification Commission for
      Healthcare Information Technology (CCHIT)......................    53
        Prepared statement...........................................    54
    Ragon, Phillip T. ``Terry'', CEO/Founder, InterSystems
      Corporation....................................................    74
        Prepared statement...........................................    76
    Raymer, Michael, Senior Vice President for Global Product
      Strategy, GE Healthcare........................................    56
        Prepared statement...........................................    58

                                    Appendix

    American College of Cardiology (ACC), prepared statement.........    93
    American Health Care Association (AHCA) and the National Center
      for Assisted Living (NCAL), joint prepared statement...........    89
    Healthcare Leadership Council (HLC), prepared statement..........    90
    Johnson, Thomas H., MIS Manager, DuBois Regional Medical Center;
      on behalf of the West Central Pennsylvania Regional Health
      Information Organization, prepared statement...................    96
    Lumsden, Chris A., Administrator/Chief Executive Officer, Halifax
      Regional Health System, prepared statement.....................    98
        Letter, dated May 18, 2006, from Pamela J. Pure, President,
          McKesson Provider Technologies.............................   101
    Response to written questions submitted by Hon. John Ensign to:
        John D. Halamka, M.D., M.S...................................   102
        Kevin D. Hutchinson..........................................   104
        Mark Leavitt, M.D., Ph.D.....................................   103
        Michael Raymer...............................................   103
    Stevens, Hon. Ted, U.S. Senator from Alaska, prepared statement..    89

           ACCELERATING THE ADOPTION OF HEALTH INFORMATION TECHNOLOGY

                                  ----------

                            WEDNESDAY, JUNE 21, 2006

                                   U.S. Senate,
           Subcommittee on Technology, Innovation, and
                                       Competitiveness,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:30 p.m. in
    room SD-562, Dirksen Senate Office Building, Hon. John Ensign,
    Chairman of the Subcommittee, presiding.

                OPENING STATEMENT OF HON. JOHN ENSIGN,
                        U.S. SENATOR FROM NEVADA

        Senator Ensign. Good afternoon. Welcome to today's hearing
    on accelerating the adoption of health information technology.
        We all know that the promise of health information
    technology is very real. Electronic medical records have the
    potential to completely transform our healthcare system. If
    properly implemented, this technology will reduce medical
    errors, improve the quality of care, and lower healthcare
    costs.
        Last year, this Subcommittee held the first Senate hearing
    on health information technology. That hearing focused on the
    promise of health information technology. Today, I want to
    focus on progress.
        In 2004, President Bush outlined a plan to ensure that most
    Americans have electronic health records within the next 10
    years. We need to make serious and measurable progress toward
    meeting that goal. The question is: How close are we to meeting
    the President's objective?
        Since 2004, the Office of the National Coordinator for
    Health Information Technology and the American Health
    Information Community have been established to improve
    healthcare through information technology. The Department of
    Health and Human Services has issued requests for proposals and
    awarded contracts to explore key issues, including
    interoperability and certification. We need to know the status
    of the work being done in these areas. Lack of interoperable
    standards remains one of the key barriers to the widespread
    adoption of health information technology. In order to talk to
    each other, health information systems need to speak a common
    language. For that to occur, we need to agree on common data
    and messaging standards. Today, the standard-setting process is
    fragmented. The Department of Health and Human Services has
    noted that the current system lacks coordination and
    specificity. This results in overlapping standards and gaps in
    areas that need to be filled.
        We need to coordinate existing standards and develop new
    standards in areas, where necessary. This will help us ensure
    that electronic medical records can work at any point in the
    healthcare system, much in the same way that a bank card should
    work in any bank's ATM.
        Data and messaging standards in the area of electronic
    prescribing, or ``e-prescribing,'' could serve as a model for
    interoperable electronic health records. E-prescribing allows
    doctors to transmit prescriptions electronically to pharmacies.
    It also allows doctors and pharmacies to obtain information
    about the patient's eligibility and medication history from
    prescription drug plans.
        Having better access to patient information at the point of
    care makes writing, filling, and receiving prescriptions
    quicker, easier, and more accurate, and this leads to reduced
    prescription errors caused by hard-to-read physicians'
    handwriting and automates the process of checking for drug
    interactions and allergies.
        Both the public and private sectors agree on the need for
    the successful implementation of interoperable health
    information technology. Given the sheer size of the healthcare
    sector in our economy, as well as the complexity of this task,
    there is no shortcut. Success will not happen overnight, but we
    need to be making significant and measurable progress toward
    interoperability to reach our ultimate goal. The challenges are
    great, especially since our healthcare system is highly
    fragmented. Nevertheless, the healthcare system needs to begin
    adopting the technologies that are used in virtually all other
    industries. To encourage the widespread adoption of these
    technologies, we need to increase the confidence that doctors
    and other healthcare professionals have in making the decision
    to purchase health information technology. We can start by
    creating an infrastructure for interoperability and a process
    for certifying that products meet acceptable standards.
        We must focus on making healthcare more affordable, more
    available, and more accessible to hardworking Americans. We can
    make healthcare better for all Americans through health
    information technology. An interoperable, interconnected
    healthcare system will improve quality of care, and save
    patients and taxpayers' dollars.
        A key component of this system is the electronic medical
    record. An electronic record is more reliable than a paper
    record. It is exactly where it should be, even if you aren't.
    This means that an electronic record may be accessed from any
    point in the healthcare system. So, if you happen to be
    traveling in my home state of Nevada, and you get sick or get
    in an accident, a physician can instantly obtain medical
    information, such as allergies, medications, and prior
    diagnoses, to determine how best to treat you. Electronic
    medical records just makes sense.
        I am eager to hear about the progress that is being made in
    health information technology in both the public and the
    private sectors. It is my hope that this hearing will help us
    understand what needs to be done to accelerate the adoption of
    health information technology. I look forward to the expert
    testimony of our distinguished witnesses, and want to thank
    each and every one of you for attending and participating in
    today's hearing.
        Our first panel will have one witness, Dr. Carolyn Clancy.
    Dr. Clancy is the Director of the Agency for Healthcare
    Research and Quality. Today, she will be speaking on behalf of
    the Department of Health and Human Services.
        Dr. Clancy, we look forward to receiving your testimony.
    Please proceed.

            STATEMENT OF CAROLYN M. CLANCY, M.D., DIRECTOR,

              AGENCY FOR HEALTHCARE RESEARCH AND QUALITY,

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

        Dr. Clancy. Good afternoon. Chairman Ensign, I'm Dr.
    Carolyn Clancy, of the Agency for Healthcare Research and
    Quality. Thank you for inviting me to testify today, and I'd
    ask that my written statement be entered into the record.
        As you said, in----
        Senator Ensign. Your full statement and the statement
    submitted by each witness will be made part of the record.
        Dr. Clancy. As you noted in April 2004, President Bush
    announced his commitment to the promotion of health IT to
    improve efficiency, reduce medical errors, improve quality, and
    provide better information for patients and physicians, and he
    called for widespread adoption of electronic health records
    within 10 years so that health information will follow patients
    throughout their care in a seamless and secure fashion wherever
    they're getting their care. And I think it's fair to say that
    we're making good progress in reaching that goal.
        Reaching this goal requires cooperation among Federal
    agencies that play a role in advancing our understanding and
    use of health IT in coordination across all Federal health IT
    programs and with the private sector. So, to help ensure that
    we achieve the President's vision, the Secretary of Health and
    Human Services moved forward with two critical steps. One was
    appointing the Director of the Office--the National Coordinator
    for Health IT, and creating an office, and second was, in very
    rapid order, publishing a strategic framework, delivering
    consumer-centric and information-rich healthcare. And this
    framework outlined an approach toward nationwide implementation
    of interoperable electronic health records and identified four
    major goals, and these are detailed in the written statement.
        Since that time, HHS has been building the clinical
    business and technical foundations for its health IT strategy.
    We believe that health IT can save lives, improve care, and
    improve efficiency. More than 5 years ago, as many of us
    remember, the Institute of Medicine estimated that as many as
    44,000 to 98,000 people die every year as a result of medical
    errors. So, health IT, through applications such as
    computerized provider order entry, can help reduce medical
    errors and improve quality. For example, studies have shown
    that adverse drug events have been reduced by as much as 70
    percent to 80 percent by targeted programs, with a significant
    portion of that improvement attributable to the use of health
    IT.
        A recent study in the Journal of the American Medical
    Association confirmed what we believe intuitively, and
    certainly experience directly as clinicians, that information
    is frequently missing at the point of care, and that this
    missing information can be harmful to patients. The study also
    found that information was far less likely to be missing in
    those offices that had electronic health records.
        Patients know this, as well. In a survey that we conducted
    with the Kaiser Family Foundation and the Harvard School of
    Public Health, nearly one in three people reported that they or
    a family member had created their own set of medical records to
    make sure that all of their healthcare professionals had all of
    their current medical information.
        Current estimates of whether health IT will produce cost
    savings show mixed results. These estimates are based, in part,
    on the reduction of obvious errors. For example, on average, a
    medical error is estimated to cost about $3,700. But these
    savings are not guaranteed simply through acquiring health IT.
    If poorly designed or implemented IT will not bring these
    benefits, and we are seeing that health in some cases, may even
    lead to new medical errors and potential costs.
        Achieving improvements in healthcare, and realizing cost
    savings, then, must be in the result of the hardware and
    software, combined with real process change. The Department,
    through AHRQ and CMS, is currently funding over 125 projects
    and demonstrations to better understand how health IT can
    improve safety, quality, and efficiency of care. And these
    projects range from physician office integration of electronic
    prescribing to health information exchange at the state level.
    And the knowledge from these projects is being disseminated as
    rapidly as possible to providers, payers, consumers, and other
    stakeholders.
        One example is a recent report that the agency commissioned
    on the costs and benefits of health IT. This was conducted by
    one of our evidence-based practice centers at the University of
    Southern California, RAND. The report found that health IT can
    lead to significant and substantial improvements. However--and
    that's available through our National Resource Center--they
    also found that a quarter of the studies came from just four
    institutions, and most of those systems were homegrown. So,
    we're very pleased that our current portfolio is addressing the
    lessons learned from implementing commercial products.
        In 2004, HHS solicited public input about whether and how a
    nationwide health information network could be developed. Key
    questions addressed the organization and business framework,
    the legal and regulatory issues, management and operational
    considerations, standards and policies for interoperability,
    and other considerations for the development of such a network.
    So, two critical challenges to realizing the President's vision
    are now being addressed: interoperability and portability of
    health information using IT, and, second, electronic health
    record adoption. The Office of the National Coordinator is
    addressing these challenges first by harmonizing health
    information standards and promoting the certification of health
    IT products to assure consistency with standards, and you will
    be hearing from Drs. Halamka and Leavitt shortly. Second is
    addressing variations in privacy and security policies that can
    pose challenges to interoperability. And third is developing a
    prototype nationwide Internet-based architecture for sharing of
    electronic health information.
        Secretary Leavitt established a new Federal advisory
    committee, the American Health Information Community, that
    brings together the leading public payers and leading private-
    sector payers and stakeholders from the private sector. And the
    focus of this community is market power combined with consensus
    to drive change, rather than the use of mandates.
        Now that HHS is developing an infrastructure to address
    standards harmonization, compliance certification, nationwide
    health information network architecture, security and privacy,
    and electronic health record adoption measurement through its
    contracts, there is a need to gain the Federal perspective in
    these and other Federal health IT areas. And to accomplish
    this, we're working closely with the Federal health
    architecture, an OMB line of business managed by the Office of
    National Coordinator, to create interoperability and to
    increase efficiency in the public health and healthcare
    sectors, as well as to ensure that interoperability exists
    within and between the public and private sectors.
        The Department recognizes that interoperable health IT is
    critical not only for redesigning healthcare as delivered, but
    also for informing patients and other consumers about the costs
    of care and some aspects of its quality. But we're learning
    that it's more than the technology simply being put in place.
    New initiatives linking outcome, safety, and quality will only
    succeed if the technology supporting the programs is
    implemented securely and well.
        Finally, and very importantly, we cannot succeed here
    unless Americans are assured that their health information will
    not be disclosed without their permission. In addition, users
    have to have a level of comfort about the integrity of the
    information being presented to them. Attention has to be paid
    to how we maintain the public trust in the new electronic
    health information systems and how we can assure that
    safeguards are built into the technologies being used, as well
    as putting in place workplace practices that better protect
    privacy.
        I want to thank you for the opportunity to update you on
    the progress that we're making in the area of health IT. Under
    Secretary Leavitt's leadership, we're giving the highest
    priority to fulfilling the President's commitment to promote
    widespread adoption of interoperable electronic health records,
    and it's really, really a privilege to be part of this
    transformation.
        That concludes my prepared statement, and I'd be happy to
    answer any questions.
        [The prepared statement of Dr. Clancy follows:]

      Prepared Statement of Carolyn M. Clancy, M.D., Director, Agency for
        Healthcare Research and Quality, Department of Health and Human
                                    Services

        Chairman Ensign and members of the Subcommittee, I am Dr. Carolyn
    Clancy, Director of the Agency for Healthcare Research and Quality
    (AHRQ). Thank you for inviting me to testify today on some of the
    health information technology activities underway in the Department of
    Health and Human Services.

    Setting the Context
        On April 27, 2004, the President signed Executive Order 13335
    announcing his commitment to the promotion of health information
    technology (HIT) to improve efficiency, reduce medical errors, improve
    quality of care, and provide better information for patients and
    physicians. In particular, the President called for widespread adoption
    of electronic health records (EHRs) within 10 years so that health
    information will follow patients throughout their care in a seamless
    and secure manner. Reaching this ambitious goal requires cooperation
    among Federal agencies and departments that play a role in advancing
    our understanding and use of health information technology:
    coordination across all Federal HIT programs; and coordination with the
    private sector. Toward those ends, the Secretary of Health and Human
    Services established within his office the position of National
    Coordinator for Health Information Technology on May 6, 2004, to
    advance the President's vision.
        As my testimony will demonstrate, this approach is working. The
    Office of the National Coordinator works closely with AHRQ (one of the
    largest funders of HIT research projects), the Centers for Medicare and
    Medicaid Services (CMS), the Department of Defense, the Department of
    Veterans Affairs, and multiple other agencies and departments to ensure
    synergy in our efforts and avoid unnecessary duplication.
        On July 21, 2004, the Department published the ``Strategic
    Framework: The Decade of Health Information Technology: Delivering
    Consumer-centric and Information-rich Health Care.'' The Framework
    outlined an approach toward nationwide implementation of interoperable
    EHRs and identified four major goals. These goals are: (1) inform
    clinical practice by accelerating the use of EHRs, (2) interconnect
    clinicians so that they can exchange health information using advanced
    and secure electronic communication, (3) personalize care with
    consumer-based health records and better information for consumers, and
    (4) improve public health through advanced bio-surveillance methods and
    streamlined collection of data for quality measurement and research.
    Since that time, the Department has been building the clinical,
    business, and technical foundations for its health IT strategy.

    The Clinical Foundation: Evidence of the Benefits of Health IT
        We believe that health IT can save lives, improve care, and improve
    efficiency in our health system. Five years ago, the Institute of
    Medicine (IOM) estimated that as many as 44,000 to 98,000 deaths occur
    each year as the result of medical errors. Health IT, through
    applications such as computerized provider order entry can help reduce
    medical errors and improve quality. For example, studies have shown
    that adverse drug events have been reduced by as much as 70 to 80
    percent by targeted programs, with a significant portion of the
    improvement stemming from the use of health IT.
        Every primary care physician knows what a recent study in the
    Journal of the American Medical Association (JAMA) showed: that
    clinical information is frequently missing at the point of care, and
    that this missing information can be harmful to patients. That study
    also showed that clinical information was less likely to be missing in
    practices that had full electronic records systems. Patients know this
    too and are taking matters into their own hands. A recent survey by
    AHRQ with the Kaiser Family Foundation and the Harvard School of Public
    Health found that nearly 1 in 3 people say that they or a family member
    have created their own set of medical records to ensure that their
    health care providers have all of their medical information.
        Current analyses examining whether health IT will produce cost
    savings show mixed results. Models projecting the potential savings
    from health IT vary widely. These estimates are based in part on the
    reduction of obvious errors. For example, on average, a medical error
    is estimated to cost about $3,700 in 2003 dollars. But, these savings
    are not guaranteed through the simple acquisition of health IT. If
    poorly designed or implemented, health IT will not bring these
    benefits, and in some cases may even result in new medical errors and
    potential costs.

    Shortening the Translation Lag
        Achieving improvements in health care and realizing cost savings
    requires a much more substantial transformation of care delivery that
    goes beyond simple error reduction and the use of health IT. Health IT
    must be combined with real process change in order to see meaningful
    improvements in our delivery system. The Department, through AHRQ and
    CMS, is currently funding over 125 projects and demonstrations to
    better understand how health IT can improve the safety, quality and
    efficiency of care. These projects range from physician office
    integration of electronic prescribing to health information exchange at
    the state level. Further, the knowledge gained is quickly made
    available to providers, payers, consumers and other stakeholders. One
    example includes a report on the costs and benefits of health
    information technology prepared by AHRQ's Southern California Evidence-
    Based Practice Center. The report notes improvements in care for large
    organizations utilizing health IT. The report also noted an absence of
    evidence--neither pro nor con--for individual providers or smaller
    organizations. The report is now part of a much larger repository of
    nearly 6,000 knowledge products at AHRQ's National Resource Center for
    Health IT.

    Business Foundation: The Health IT Leadership Panel Report
        Recognizing that the healthcare sector lags behind most other
    industries in its investment in IT, HHS employed a contractor, the
    Lewin Group, to convene a Health IT Leadership Panel to help understand
    how IT has transformed other industries and how, based upon their
    experiences, it can transform the health care industry.
        The Leadership Panel was comprised of nine CEOs from leading
    companies that do not operate health care businesses, but purchase
    large quantities of healthcare services for their employees and
    dependents. They were called upon to evaluate the need for investment
    in health information technology and the major roles that both the
    government and the private sector can play in achieving widespread
    adoption and implementation. The Leadership Panel identified as a key
    imperative that the Federal Government should act as leader, catalyst,
    and convener of the Nation's health information technology effort.
    Private sector purchasers and health care organizations can and should
    collaborate alongside the Federal Government to drive adoption of
    health IT. In addition, the Leadership Panel members recognized that
    widespread health IT adoption may not succeed without buy-in from the
    public as health care consumer.

    The Technical Foundation: Public Input Solicited on Nationwide Network
        HHS published a Request for Information (RFI) in November 2004 that
    solicited public input about whether and how a Nationwide Health
    Information Network (NHIN) could be developed. This RFI asked key
    questions to guide our understanding around the organization and
    business framework, legal and regulatory issues, management and
    operational considerations, standards and policies for
    interoperability, and other considerations.
        Over 500 responses to the RFI were received. These responses
    yielded rich insights on how a National Health Information Network
    based on interoperability of health information exchange could be
    developed to realize our goal of the safety, quality and efficiency of
    care. Clear themes that emerged from this wide group of stakeholders
    include:

       A NHIN should be a decentralized architecture built using
            the Internet, linked by uniform communications and a software
            framework of open standards and policies.

       A NHIN should reflect the interests of all stakeholders with
            a governance entity composed of public and private stakeholders
            to oversee the determination of standards and policies.

       A key challenge will be the provision of sufficient
            safeguards to protect the privacy of personal health
            information. Others include the need for additional and better
            refined standards; accurately verifying patients' identity; and
            addressing discordant inter- and intra-state laws regarding
            health information exchange.

       Incentives may be needed to accelerate the deployment and
            adoption of a NHIN.

       Existing technologies, Federal leadership, and certification
            of EHRs will be the critical enablers of a NHIN.

    Departmental Action
        Two critical challenges to realizing the President's vision for
    health IT are now being addressed: (a) interoperability and portability
    of health information using information technology and (b) electronic
    health record adoption. Further, the gap in EHR adoption between large
    hospitals and small hospitals, between large and small physician
    practices, and among other healthcare providers must also be addressed.
    This adoption gap has the potential to shift the market in favor of
    large players who can afford these technologies, and can create
    differential health treatments and quality, resulting in a quality gap.
        These challenges are being met by key actions currently underway in
    the Office of the National Coordinator: harmonizing health information
    standards; promoting the certification of health IT products to assure
    consistency with standards; addressing variations in privacy and
    security policies that can pose challenges to interoperability; and
    developing a prototype, nationwide, Internet-based architecture for
    sharing of electronic health information. These efforts are
    interrelated, and a new Federal advisory committee, the American Health
    Information Community, is in the process of formulating recommendations
    regarding the Federal Government's role in responding to these
    challenges.

    American Health Information Community
        On July 14, 2005, Secretary Leavitt announced the formation of the
    American Health Information Community (the Community), a national
    public-private collaboration formed pursuant to the Federal Advisory
    Committee Act. The Community has been formed to facilitate the
    transition to interoperable electronic health systems in a smooth,
    market-led way. The Community is providing input and recommendations to
    the Secretary on use of common standards and how interoperability among
    Health IT systems can be achieved while assuring that the privacy and
    security of those records are protected. On September 13, 2005,
    Secretary Mike Leavitt named the Community's 17 members, including nine
    members from the public sector and 8 members from the private sector.
        At its November 29, 2005 meeting, the Community formed workgroups
    that were charged to make recommendations for specific achievable near-
    term results in the following areas:

       Consumer Empowerment--Make available a consumer-directed and
            secure electronic record of health care registration
            information and a medication history for patients.

       Chronic Care--Allow the widespread use of secure messaging,
            as appropriate, as a means of communication between doctors and
            patients about care delivery.

       Electronic Health Records--Create an electronic health
            record that includes laboratory results and interpretations,
            that is standardized, widely available and secure.

       Biosurveillance--Enable the transfer of standardized and
            anonymized health data from the point of health care delivery
            to authorized public health agencies within 24 hours of its
            collection.

        These workgroups advanced recommendations at the May 16 meeting of
    the Community, and key actions related to these and future
    recommendations are beginning to unfold. In addition to the formation
    of the Community, HHS through the Office of the National Coordinator
    has issued contracts, the outputs of which will serve as inputs for the
    Community's consideration. Specifically, these contracts focus on the
    following major areas:
        Standards Harmonization. HHS awarded a contract to the American
    National Standards Institute, a non-profit organization that
    administers and coordinates the U.S. voluntary standardization
    activities, to convene the Health Information Technology Standards
    Panel (HITSP). The HITSP brings together U.S. standards development
    organizations and other stakeholders. The HITSP is developing and
    implementing a harmonization process for achieving a widely accepted
    and useful set of health IT standards that will support
    interoperability among health care software applications, particularly
    EHRs.
        Today, the standards-setting process is fragmented and lacks
    coordination and specificity, resulting in overlapping standards and
    gaps in standards that need to be filled. A process was implemented
    where standards are identified and developed specific to real-world
    scenarios, or ``use cases.'' As of March 2006 we have three common use
    cases for the standards harmonization process, which will also be used
    in the other contracts discussed below. In May 2006, the HITSP proposed
    ``named standards'' for the three use cases and is now developing
    interoperability specifications for each.
        Compliance Certification. HHS awarded a contract to the
    Certification Commission for Health Information Technology (CCHIT) to
    develop criteria and evaluation processes for certifying EHRs and the
    infrastructure or network components through which they interoperate.
    CCHIT is a private, non-profit organization established to develop an
    efficient, credible, and sustainable mechanism for certifying
    commercial health care information technology products. The contract,
    currently scheduled for a three-year period, will address three areas
    of certification: ambulatory electronic health records, inpatient
    electronic health records, and the infrastructure components through
    which they could interoperate.
        The CCHIT has made significant progress toward the certification of
    commercial ambulatory electronic health records. In February 2006,
    CCHIT began using its final criteria to conduct ambulatory electronic
    health record certification pilot tests and has been accepting
    applications for operational certification as of March 2006, with the
    goal of having certified electronic health record products in the
    marketplace on July 18, 2006. Certification will help buyers of HIT
    determine whether products meet minimum requirements.
        NHIN Architecture. HHS has awarded contracts totaling $18.6 million
    to four consortia of health care and health information technology
    organizations to develop prototype architectures for the Nationwide
    Health Information Network (NHIN). The four consortia will move the
    Nation toward the President's goal of personal electronic health
    records by creating a usable architecture for health care information.
    The NHIN architecture will be coordinated with the work of the Federal
    Health Architecture and other interrelated infrastructure projects. The
    goal is to develop real solutions for nationwide health information
    exchange by stimulating the market through a collaborative process and
    the development of network functions. In June 2006, the contractors
    submitted proposed functional requirements for the NHIN's to HHS and a
    public meeting will be held to review them.
        Security and Privacy. HHS awarded a contract to RTI International
    working with the National Governors Association Center for Best
    Practices to study privacy and security practices that affect health
    information exchange. Through this contract, stakeholders, including
    consumers, within and across 34 states and territories will assess
    variations in organization-level business policies and state laws that
    affect electronic health information exchange; identify and propose
    practical solutions for addressing such variation that will comply with
    privacy and security requirements in applicable Federal and state laws;
    and develop detailed plans to implement identified solutions.
        All state and territory Governors were invited to submit, or have a
    designee submit, a proposal for participation. States and territories
    that participate will be required to undertake certain activities that
    include: examining privacy and security policies and business practices
    regarding electronic health information exchange; convening and working
    closely with a wide range of stakeholders in the state, including
    consumers, to identify best practices, barriers and solutions; and
    developing an implementation plan for solutions to address
    organization-level business practices and state laws that affect
    privacy and security practices for interoperable health information
    exchange.
        In the next 6 months, state consortia will produce an interim
    assessment of current privacy and security variations. To do this,
    state subcontractors will form collaborative workgroups to define this
    preliminary landscape. State solutions and implementation plans under
    this contract will be finalized in early 2007.

    EHR Adoption Study
        To assess progress toward the President's goal for EHR adoption, we
    must be able to measure the rate of adoption across relevant care
    settings. To date, several health care surveys have queried health care
    providers such as individual physicians, physician group practices,
    community health centers, and hospitals on their use of EHRs in an
    effort to estimate an overall ``EHR adoption rate.'' These surveys
    indicate an adoption gap; however, the surveys and what they have
    measured have varied. These variations occur from survey factors such
    as the type of entity, geography, provider size, type of health
    information technology deployed, how an EHR is defined, the survey
    sampling frame methodology (e.g., the source list of physicians), and
    survey data collection method (i.e., phone interview, mail
    questionnaire, Internet questionnaire, etc.).
        Due to the variations in the purpose and approach, these surveys
    have yielded varying methods of EHR adoption measurement. In
    particular, no single approach yields a reliable and robust long-term
    indicator of the adoption of interoperable EHRs that could be used for:
    (1) bench marking progress toward meeting the President's EHR goal and
    (2) informing Federal policy decisions that would catalyze progress
    toward reaching this goal. Therefore, HHS awarded a contract to the
    George Washington University and Massachusetts General Hospital Harvard
    Institute for Health Policy to support the Health IT Adoption
    Initiative. The new initiative is aimed at better characterizing and
    measuring the state of EHR adoption and determining the effectiveness
    of policies to accelerate adoption of EHRs and interoperability.

    Federal Health Architecture
        Now that HHS has established an infrastructure to address standards
    harmonization, compliance certification, nationwide health information
    network architecture, security and privacy, and EHR adoption
    measurement through its contracts, there is a need to gain the Federal
    perspective in these and other Federal health information technology
    areas. To accomplish this, we are looking to the Federal Health
    Architecture (FHA), an OMB line of business, established on March 22,
    2004, and managed by the Office of the National Coordinator for Health
    Information Technology (ONC) to create interoperability and increase
    efficiency within the public sector. To better meet the President's
    health IT goals, FHA as of March 2006, has been realigned to provide
    the Federal perspective using the processes created within ONC to
    ensure that interoperability exists within and between the public and
    private sector. FHA will achieve this refined vision by providing input
    into the established infrastructure and guidance for implementation
    within the public sector. Moving forward, FHA will be representing and
    coordinating the Federal activities in all matters relating to the
    President's health IT plan.

    Interoperable HIT as a Foundation for other Initiatives
        The Department recognizes that interoperable health IT is critical
    in not only transforming how care may be delivered, but also in
    informing patients and other consumers about costs of care, and some
    aspects of its quality. Innovative incentive programs such as value-
    based purchasing could benefit from high fidelity reliable, information
    being available.

    Conclusion
        Thank you for the opportunity to update you on the progress we are
    making in the area of health information technology. HHS, under
    Secretary Leavitt's leadership, is giving the highest priority to
    fulfilling the President's commitment to promote widespread adoption of
    interoperable electronic health records, and it is a privilege to be a
    part of this transformation.
        This concludes my prepared statement. I would be pleased to answer
    any questions.

        Senator Ensign. Very good. Thank you, Dr. Clancy. I have a
    few questions for you.
        One of the areas that I've been focusing on is the concept
    of health information technology driving best practices. A 2003
    RAND study found that patients receive care in accordance with
    best practices only 55 percent of the time. It seems like I'm a
    lonely voice when it comes to advocating for best practices and
    quality measurement provisions in health information technology
    legislation. How do you foresee that we use health information
    technology to encourage best practices in medicine?
        Dr. Clancy. This is obviously critical to many parts of
    HHS, because it has been estimated that it takes, on average,
    about 17 years to turn 14 percent of funded research to the
    benefit of patient care. Now, funding research is inherently a
    risky business. You don't always know it's going to pay off.
    But some of the quality aspects that we're still trying to
    improve now were first reported in the peer-review literature
    when I was in medical school. I won't be specific there, but it
    has been quite a while. And the point is that we need to
    shorten that translation lag very much.
        And health IT gives us the opportunity to actually bring
    evidence-based information to the point of care. So, we, right
    now, at AHRQ, and with colleagues across the Department, are
    working closely with vendors to try to understand how we can
    make that transition happen more rapidly.
        At the most recent meeting of the American Health
    Information Community, a roadmap for what's called ``clinical
    decision support,'' which is about bringing the information you
    need when you're making decisions with a patient, was presented
    to the community, and the excitement in the room was really
    quite remarkable. So, most--many parts of HHS will be following
    up on those recommendations.
        Senator Ensign. I would like to follow up on your comments.
    As you know, various medical organizations and colleges have
    established best practices and protocols. Do you have any
    recommendations on how we can get some of those protocols down
    to the practitioner level through health information
    technology? Do you have any comments on our role in achieving
    this? How can we encourage best-practice protocols and
    algorithms at the practitioner level?
        Dr. Clancy. Well, I want to just draw one distinction here.
    We, at the agency, have supported, initially in collaboration
    with the American Medical Association and what was then called
    the American Association of Health Plans, an Internet-based
    repository of evidence-based clinical-practice guidelines,
    which might otherwise be known as protocols. And I can never
    give accurate statistics on how many visits we get to this
    site, because it's constantly increasing, but it is remarkable
    how many clinicians and members of the public and people around
    the world actually seek this site out, looking for what's the
    latest practice. And we have policies in place that make sure
    that that evidence is kept up to date.
        So, for example, when Vioxx was pulled off the market, we
    actually pulled several of these guidelines down, told the
    developers that they had to make changes, because it wouldn't
    be current science. So, all of this happens very rapidly. And
    we know that doctors and patients themselves are very
    interested in this information.
        Where we're trying to get to with interoperable health IT,
    and what I think is the most exciting, is that you're not
    looking at just an electronic version of having a book on your
    shelf, but that it's actually integrated with the patient
    record in front of you, so that if you're seeing a patient with
    diabetes, the right reminder comes up that not only is about
    the current evidence and recommendations for diabetes, but also
    takes factors unique to that patient into account. We're not
    there yet, but I think we will get there, and are making
    progress toward that.
        Senator Ensign. Would clinical decision support tools
    indicate whether or not a practitioner is using best practices?
    Would these tools indicate if a practitioner veers away from
    best practices? Is that envisioned? In other words, what you
    are going to prescribe, as far as a treatment, and as far as, a
    workup is concerned, must be able to be overridden, because
    medicine is an art and a science. At the same time, however, it
    would seem to me that best practices should be flagged as a
    reminder to practitioners, to encourage them to make a decision
    to use the best practice or override it, if appropriate.
        Dr. Clancy. Right. And the sophisticated systems--
    Intermountain Healthcare, for example, in Salt Lake City--that
    have built their own systems for doing this, find that they can
    learn something when practitioners do override those reminders,
    so they can find out when a guideline doesn't necessarily fit a
    patient. And sometimes that actually leads to refinements in
    the guidelines and protocols themselves, which, I think, is
    really the exciting part, that we could actually learn as we
    are providing, and improving the care delivered to patients.
        Senator Ensign. I have one last question for you concerning
    the grant process for health information technology. Money is
    always a touchy subject around Washington, D.C., as it is
    everywhere. How do we ensure that the Federal grant dollars are
    only directed to the projects that actually improve the quality
    of care? And how should the quality of care be measured?
        Dr. Clancy. Well, that's a little bit of a complicated
    question, but I can tell you how we launched this a couple of
    years ago. We insisted that any applicant for us that was going
    to be eligible for funding had to tell us how they were
    building the community foundations for interoperability. In
    other words, what partners they had in the local community. At
    that time, as encouraged by the Congress, we actually placed a
    strong focus on those organizations providing care to rural and
    underserved populations. And they also had to tell us how they
    were going to meet certain goals in quality and safety. So,
    it's an area that I think is deserving of more work, but I
    think we're going to learn a lot about how we'll be able to
    reduce errors and how we will be able to make sure that people
    get the highest quality care that they need.
        Right now, the good news is, I think, that we do have a lot
    of good-quality measures to work with, thanks to investments
    from HHS and others. There is a private-sector entity, the
    National Quality Forum, that actually certifies or endorses
    measures. It's a consensus-setting organization, so it is a
    somewhat streamlined alternative to regulation, if you will,
    that's authorized by statute. And I think the real trick is
    not--we're going to need to develop better measures as--over
    the future, as we get smarter, but the real trick is actually
    implementing the measures that we have right now.
        Senator Ensign. This hearing is focused on the progress we
    are making in the area of health information technology. In
    your opinion, where are we? As you know, the President set a
    goal to ensure that most Americans have electronic health
    records within the next 10 years. Do you think we are on
    schedule or behind schedule? Can we accelerate the adoption of
    health information technology? Or, is it just going to take
    more time?
        Dr. Clancy. I guess I would quote my colleague, the former
    national coordinator, Dr. Brailer, who actually believes that
    we're ahead of schedule. I think a lot of very important work
    has begun to put the foundation in place for interoperability.
    That is the new piece in healthcare. But without
    interoperability, if we simply wired hospitals, physicians'
    offices, and so forth, we wouldn't have achieved very much,
    because we would simply be digitizing what we're doing on paper
    now, and that wouldn't be a terribly lofty goal.
        So, I think with the beginnings of the harmonization of
    standards, the certification of products, the nationwide health
    information network prototypes, and, very importantly, the work
    on privacy, we've put the building blocks in place for this to
    happen.
        I can tell you, in the provider community there's huge
    excitement about adopting electronic health records. And I
    think the certification process is likely to accelerate that
    interest. But, just by way of example, 30 percent of family
    physicians have already adopted electronic health records for
    their practice. And these are, by and large, physicians
    practicing in very small-practice settings. So, I think there
    are lots of good reasons to be optimistic.
        Senator Ensign. Speaking as a healthcare professional who
    has dealt with different types of computers and computer
    systems over the years, I have learned that there are
    advantages and disadvantages to technology. But if this
    technology works the way that we envision it to work, it seems
    to me that every practitioner will benefit personally from the
    implementation of health information technology--so will their
    patients. It is obvious that health information technology will
    benefit patients. However, one of the primary reasons that
    practitioners don't want to invest in health information
    technology, is because they don't see a direct benefit. Some
    practitioners do not think that health information technology
    will benefit them personally; they view health information
    technology as a benefit for health insurance companies and for
    patients. Yet, healthcare practitioners are the ones who have
    to invest in health information technology. If practitioners
    would realize the tangible benefits of health information
    technology, I think, we would see more practitioners
    voluntarily obtain the systems that they need. I recognize that
    we also have to address the interoperability barrier. At last
    year's hearing on health information technology, we learned
    that interoperability is the biggest impediment to the adoption
    of health information technology. If interoperability standards
    are agreed upon, I believe that more health care professionals
    will begin to invest in this technology.
        Dr. Clancy. I would agree, but I think we are making good
    progress in getting there, and we are going to be tracking our
    progress, on an annual basis, through a standardized adoption
    survey, so we'll be able to give you progress reports on that
    front, as well.
        Senator Ensign. Thank you, Dr. Clancy. I encourage you and
    others to continue to work with us and update us regularly on
    the progress being made in the area of health information
    technology.
        Dr. Clancy. We'd be happy to.
        Senator Ensign. We certainly have some challenges ahead.
    There are specific laws that we will have to deal with as
    health information technology efforts move forward, including
    the Stark Laws and the privacy laws. These laws are not simple.
    It is not easy to craft language to ensure that we protect
    privacy, and at the same time, allow physicians access to
    medical records when they need them. Health information
    technology is something everybody wants, but everybody also
    wants their privacy to be protected. That is not an easy
    provision to write into law. We're going to need your
    expertise, and the expertise of folks in the private sector to
    help us as we address these key areas. Experts need to educate
    those of us on Capitol Hill, who have the responsibility for
    writing these laws.
        Dr. Clancy, thank you very much for your testimony today.
        At this point, I would like to call the second panel to the
    table.
        [Pause.]
        Senator Ensign. We will start this panel with our next
    witness, Dr. John Halamka. Dr. Halamka is the Chairman of the
    Health Information Technology Standards Panel.
        Dr. Halamka, please keep your testimony to 5 minutes. If
    you need extra time, take it, but I would appreciate it if each
    witness would keep their testimony to 5 minutes. All of your
    full statements will be made part of the record.
        Dr. Halamka?

        STATEMENT OF JOHN D. HALAMKA, M.D., M.S., CHAIR, HEALTH
       INFORMATION TECHNOLOGY STANDARDS PANEL; CIO, BETH ISRAEL
                 DEACONESS MEDICAL CENTER AND HARVARD
                             MEDICAL SCHOOL

        Dr. Halamka. Great.
        Senator Ensign. Am I pronouncing your name correctly?
        Dr. Halamka. That is perfect.
        Senator Ensign. Good.
        Dr. Halamka. Great.
        Well, thank you, Mr. Chairman. I'm very happy to be here.
        My name is Dr. John Halamka. I am a practicing emergency
    physician at Beth Israel Deaconess Medical Center, in Boston,
    CIO of Harvard Medical School, and Chairman of the Healthcare
    Information Technology Standards Panel.
        This is a hearing about progress, so I am here today to
    describe the progress we have made toward standards
    harmonization.
        As an emergency physician, I completely concur with Dr.
    Clancy's testimony that often we are delivering care with a
    fractured medical record. Typically, records are spread to
    pharmacies and labs and payer databases, and scattered around
    inpatient and outpatient facilities. I, as an emergency
    physician, often have to deliver care without the benefit of
    knowing a complete medication list or allergy list.
        So, to solve these problems, it's clear that we need
    standards. And often it is said, ``Well, standards, why can't
    you simply just do what we've done for the automated teller
    network.'' I can take an ATM card and walk anywhere in the
    world, get yen, if I want to, from my regional bank in New
    England, because there are interoperable standards in the
    financial services industry.
        Well, in the financial services industry, with an ATM card,
    there are about five pieces of data you need to exchange. Who
    are you? Where is the money coming from? What's the dollar
    amount, the date/time, and maybe some security identifier, like
    a PIN code. The average electronic health record has 65,000
    pieces of information in it. So, the challenge--of course,
    doable; and, of course, as you'll hear, will get done in rapid
    time--but it's a much more significant magnitude of difficulty
    than a financial transaction. And, of course, we need to ensure
    that as doctors and patients and payers exchange data, that
    it's nonrepudiatable, that it's secure, that it's auditable.
    So, the standards in healthcare have become quite complex.
        Well, adding to this complexity is the fact that there are
    so many stakeholders. Pharmacies think about medication data as
    the kind of package. Let's say Tylenol comes in a bottle that's
    purple with a 20-percent discount. They need to identify it to
    the level of the package. The FDA needs to identify it to the
    level of the lot. Whereas, a doctor just wants to write for
    Tylenol. So, here we have a challenge of each actor in this
    stakeholder arrangement with a different set of standards with
    a different set of granularity that they may wish to employ.
        The Healthcare Information Technology Standards Panel was
    assembled to begin to reduce the complexity of all of this
    history of data exchange, multiple stakeholders, and competing
    standards. It is comprised of 170 different stakeholder
    organizations. And, importantly, that includes nine consumer
    organizations. We feel quite passionate about ensuring that
    patients and consumers are well represented. Some of us are
    doctors, some of us are payers, but all of us are patients.
        That organization seeks to have a very open and transparent
    process to reduce what today are over 500 standards in
    healthcare to a manageable and unambiguous number of standards,
    enabling the vendor community, enabling all our stakeholders,
    to say, ``I want to exchange labs, medications, allergies, or
    basic patient demographics, and do it with a cookbook, a way
    that says there's one uniform way to accomplish this.''
        To do this, we have to take all of those standards
    development organizations that have created some of the basics
    of healthcare interchange to date, all the stakeholders from
    the payer community, the vendor, the pharmacy, and the patient
    community, and ensure that we meet all their requirements.
        The American Health Information Community, as you've heard
    from Dr. Clancy, has given us an initial charge. In March of
    this year, they gave us three use cases, specifically:
    biosurveillance, looking at the ways in which we identify
    syndromes, infections, trauma, get those data to appropriate
    public-health authorities; consumer empowerment, ensuring that
    you never again need to fill out the clipboard when you go to a
    doctor's office, the idea that we can ensure that your
    demographics, medication, and allergy list follow you wherever
    you go; and also we want to ensure laboratories and electronic
    health records are interoperable.
        To do this, our process includes technical committees that
    look at each use case from AHIC, take all of the actors,
    actions, and events in those use cases, and look at all the
    standards that are out there today, and identify the most
    appropriate standards, using objective criteria such as: Is the
    standard widely implemented? Is it developed through an open
    and transparent process? Is it appropriate and applicable to
    the given need--pharmacy, payer, or patient? Those standards,
    once winnowed down using objective criteria, then are given
    from the technical committees to the entire panel of 170
    stakeholder organizations, and a consensus process is used to
    agree that, yes, 500 standards can be reduced to a much smaller
    number.
        Our progress? We started in March with 500 standards. In
    May, we reduced to 180 standards. In June, we have just
    approved 90 standards. And now we have until September--that is
    our deliverable to the Office of the National Coordinator--we
    will have a set of unambiguous cookbooks called
    ``interoperability specifications,'' that will reduce those
    standards even further.
        So, progress is real. Stakeholders are involved. The
    process is well-described and transparent. I encourage anyone
    with an interest to go to www.hitsp.org, and on that website
    you will find a complete record of all that we have done, all
    of our work in progress.
        And certainly I look forward to any comments you may have
    and any questions you have.
        [The prepared statement of Dr. Halamka follows:]

       Prepared Statement of John D. Halamka, M.D., M.S., Chair, Health
      Information Technology Standards Panel; CIO, Beth Israel Deaconess
                   Medical Center and Harvard Medical School

        Mr. Chairman and distinguished members of the Subcommittee, I am
    Dr. John Halamka, the Chair of the Health Information Technology
    Standards Panel. I am grateful for the opportunity to testify before
    you today on the need for harmonized electronic data exchange standards
    to empower patients and healthcare providers.

    The Current Landscape of Healthcare Information Technology
        As an Emergency Physician at Beth Israel Deaconess Medical Center
    in Boston, I treat patients using incomplete medical information.
    Patients often do not know their medications, their medical history or
    their latest laboratory results. Patients seek care from a
    heterogeneous collection of primary care providers, specialists,
    hospitals, clinics, laboratories, imaging centers and pharmacies--all
    of which have disconnected pieces of their medical record.
        Patients, providers and payers believe that communication among
    caregivers is key to delivering quality, personalized medicine. Many
    think that electronic records shared across the entire community of
    clinicians is key to care coordination.
        At this point, only 18 percent of clinicians in the U.S. have
    electronic health records in their offices. Massachusetts, one of the
    most wired states, has 52 percent adoption of electronic health
    records. However, data does not flow among all these systems because of
    the inconsistent use of data standards, lack of a consistent
    architecture for exchange of data, and lack of community-wide agreement
    on privacy policies.

    The Need for Standards
        While traveling anywhere in the world, I can walk up to an ATM,
    insert my card (issued by a rural New England Bank), and retrieve
    whatever local currency I need. This is made possible by the worldwide
    adoption of electronic standards for banking and cash transfers.
        However, if I suffer a major medical problem while in my hometown
    of Boston, my medical records cannot be electronically exchanged among
    the world's best teaching hospitals that are located across the street
    from each other.
        This is because there has not been consistent adoption of standards
    for the storage and exchange of medical information among clinicians,
    hospitals and insurance companies in the U.S. But all of this is
    changing in 2006.
        Health and Human Services (HHS) Secretary Michael Leavitt has
    established the American Health Information Community (AHIC), a group
    of 17 government, business, and non-profit organization leaders charged
    with fostering adoption of interoperable electronic records throughout
    the country. Further, the HHS-based Office of the National Coordinator
    for Health Information Technology (ONCHIT) has funded a coordinated
    effort to accelerate electronic medical record interoperability
    efforts. This effort is comprised of three parts:
        The first is to harmonize all the electronic standards for
    healthcare in the country. Currently there are more than a dozen
    organizations creating healthcare standards in the U.S. These standards
    are at times redundant, competitive and non-interoperable. There are so
    many versions and variations that the standards are non-standard. To
    achieve the kind of universal functionality our ATM cards provide
    today, the country must agree on a common set of healthcare data
    standards, implemented consistently by hospitals, clinician offices and
    nursing homes.
        The second step is to ensure electronic medical records provide the
    basic functions needed for a doctor to record and transmit patient
    medical information. The average patient over 80 years old has ten
    medications and three clinicians. Rarely is there any coordination of
    care among caregivers. Objective criteria to certify that an electronic
    record system meets the basic requirements for data capture and
    exchange is essential.
        The third step is to standardize privacy and security policies
    across our 50 states. In Massachusetts, doctors cannot retrieve a
    complete electronic medical list from insurance companies, even with
    patient consent, if a medication related to mental health, substance
    abuse or HIV treatment is present. In Ohio, doctors must use a
    cryptographic electronic signature to prescribe medications
    electronically. In California, only paper signed consent forms (not
    electronic forms) are considered a valid patient consent. The laws that
    created many of these regulations were appropriate 30 years ago when
    electronic systems lacked the sophistication available today, but now
    are an impediment to delivering safe, patient focused care.

    The Role of HITSP
        The Healthcare Information Technology Standards Panel, which I
    chair, was established in 2005 to convene all the stakeholders
    necessary to build consensus around the most appropriate standards for
    clinical care, public health reporting and consumer empowerment. The
    Panel brings together experts from across the healthcare IT community--
    from consumers to doctors, nurses, and hospitals; from those who
    develop healthcare IT products to those who use them; and from the
    government agencies who monitor the U.S. healthcare system to those
    organizations who are actually writing the standards.
        The HITSP is sponsored by the American National Standards Institute
    (ANSI), in cooperation with strategic partners such as the Healthcare
    Information and Management Systems Society (HIMSS), the Advanced
    Technology Institute (ATI) and Booz Allen Hamilton. Funding for the
    Panel is provided via the ONCHIT1 contract award from the U.S.
    Department of Health and Human Services.
        More than 170 stakeholder members and 15 standards developing
    organizations are working together in HITSP to identify the most
    appropriate standards for specific use cases involving patients,
    providers, and government agencies. Panel members and experts have
    committed themselves to setting and implementing standards that will
    ensure the integrity and interoperability of health data.
        A standard specifies a well-defined approach that supports a
    business process and has been agreed upon by a group of experts, has
    been publicly vetted, provides rules/guidelines/characteristics, helps
    to ensure that materials, products, processes and services are fit for
    their intended purpose, is available in an accessible format and is
    subject to an ongoing review and revision process. Harmonization is
    required when a proliferation of standards prevents progress rather
    than enables it.
        In some cases, redundant or duplicative standards will be
    eliminated. In other cases, new standards may be established to span
    information gaps. In all cases, the resulting standards serve the
    consumer and other healthcare stakeholders by addressing issues such as
    data accessibility, privacy and security.

    The Standards Harmonization Process
        HITSP's most important work is the development of a well-defined,
    repeatable process to identify the most appropriate standards for each
    AHIC use case. Our process to date is:

            a. AHIC and its working groups develop Breakthroughs.

            b. AHIC Working Groups or other customers prepare a HITSP
            Harmonization Request.

            c. HITSP Technical Committees identify candidate standards,
            which are harmonized into a final list of standards. They also
            identify overlaps and highlight gaps. Gaps are forwarded to
            standards developing organizations for their guidance as to
            emerging candidate standards or new standards requirements.

            d. HITSP Coordinating Committees provide technical committees
            with important background information to support their work,
            such as objective criteria to evaluate the appropriateness of
            standards for a given purpose.

            e. The final chosen standards produced by the Technical
            committees are discussed and ratified by the full Panel.

            f. These standards are made available for public comment and
            feedback.

            g. Technical committees work with standards developing
            organizations and other groups to produce detailed
            specifications, an unambiguous ``cookbook'' for the
            implementation of chosen standards. HITSP provides a convening
            and facilitation function for this activity.

            h. HITSP work products are delivered to AHIC for their
            endorsement.

            i. After AHIC endorses HITSP work, the Certification Commission
            on Healthcare Information Technology will include HITSP
            specifications in its certification work. Hospitals and
            clinicians will be more likely to buy products, which are
            certified as interoperable. This will lead to increased success
            of vendors, which embrace standards and interoperability.

    Coordination With Other HHS Activities
        The standards harmonization activities of HITSP are well
    coordinated with the efforts of the three other Health and Human
    Services Healthcare IT projects:

            National Health Information Network architecture (NHIN)--Four
            lead contractors--Computer Sciences Corporation, Northrop
            Grumman, IBM, and Accenture have been given contracts to
            develop a nationwide architecture for the secure exchange of
            medical records using HITSP harmonized standards. These
            contractors generate requests for harmonization to HITSP and
            the Panel shares its work products with NHIN contractors
            through ongoing group forums that ensure ongoing coordination
            and communication.

            Health Information Security and Privacy Collaboration (HISPC)--
            HITSP work products will be shared with the HISPC program
            management and harmonized privacy use cases will undoubtedly be
            shared with HITSP in the future to inform the selection of
            technical standards which enforce security.

            Certification Commission on Health Information Technology
            (CCHIT)--CCHIT staff attend HITSP meetings and CCHIT has
            committed to include HITSP work products in its future
            certification criteria as described above.

    Progress to Date and Next Steps
        HITSP has established an initial process for resolving gaps and
    overlaps in the HIT standards landscape. In May of 2006, HITSP reduced
    570 candidate standards to 180 appropriate standards for secure
    exchange of medication, lab, allergy and demographic data. By June
    2006, these 180 standards will be further reduced to a few dozen.
        By October 30, 2006, HITSP will deliver unambiguous
    interoperability specifications, which will enable vendors, hospitals
    and government to create software components for clinical data
    exchange.
        Beyond 2006, HITSP will develop harmonized standards and
    unambiguous implementation guides, which provide precise instructions
    for data sharing for all future requests for harmonization. Also, it
    will standardize the interoperability specifications for technology
    products, while permitting differentiation and competitive advantage in
    the marketplace. HITSP hopes to empower patients and care providers
    with Electronic Health Records (EHR) that facilitate easy access to
    critical health data that is accurate, private and secure.
        HITSP is a key component of the Health and Human Services vision to
    create an interoperable healthcare system, and we look forward to our
    work products empowering patients, providers and government
    stakeholders in 2006 and beyond.

        Senator Ensign. Thank you.
        I would now like to recognize and welcome testimony from
    someone I have a great deal of respect for--someone who served
    as the Speaker of the House when I was a freshman Member of
    Congress. I think our next witness is one of the great
    futuristic thinkers in America today. Speaker Gingrich, we
    welcome you to this panel, and we look forward to your
    testimony today.

                    STATEMENT OF HON. NEWT GINGRICH,

                      FORMER SPEAKER OF THE HOUSE;

               FOUNDER, CENTER FOR HEALTH TRANSFORMATION

        Mr. Gingrich. Well, thank you very much, Senator Ensign.
    And let me thank the Senate for holding this hearing on how
    health information technology is transforming health and
    healthcare in America.
        I've submitted, for the record, a fairly lengthy paper,
    which I would just ask permission to have put in the record and
    not----
        Senator Ensign. All of your statements will be placed in
    the record.
        Mr. Gingrich. I want to take my limited time and focus very
    narrowly on one area that I think the House and Senate could
    look at aggressively that would dramatically change the rate of
    implementation, and that is the degree to which the
    Congressional Budget Office is now a reactionary and stunningly
    inaccurate institution. I wanted to focus on this, in part,
    because they sent, on June 15, a letter that, in effect,
    postponed bringing up H.R. 4157, the Health Information
    Technology Promotion Act, in the House, arguing that it would
    increase direct spending and reduce revenues to move toward
    allowing institution--hospitals and other institutions to
    provide health information technology capability to doctors.
        But I want to put this in a larger context. If you just
    look on a macro level, in 2005 the CBO deficit forecast was off
    by $80 billion, or 20 percent. In 2006, in 4 months' time, they
    were off by $60 billion, or 17 percent. On the estimate for
    Medicare prescription drug premiums, they were off by 35
    percent. They estimated premiums for seniors would be $35 a
    month; they actually came in at $23 a month, which turns out to
    be a multi-billion-dollar error, because there's no sense of
    market dynamics and no sense of productivity increase at CBO. I
    mean, I think it's a major problem, because they play such a
    role in defining, for Members of the House and Senate, what
    they can do.
        So, let me take the case of the cost and savings from
    health information technology, and apply it directly to real
    cases, because I'm hoping that somebody in Congress will
    challenge CBO and will ask for hearings and will insist on
    transparency and accuracy.
        A couple of examples. At no place that I know of has CBO
    scored the cost of paper records after Katrina. The Veterans
    Administration, which had 50,000 veterans with electronic
    records, did not lose a single record. The rest of the system
    lost 1,100,000 records. Now, I don't know what the direct cost
    to the government, for example, in Medicare, Medicaid, Federal
    Employee Health Benefit Plans, TRICARE, Indian Health Service,
    recreating those records were, nor do I know what the indirect
    costs of the tax revenue loss when private insurance companies
    and private businesses had to pay to recreate records. But the
    combination had to be staggering. It's never scored, doesn't
    count.
        Piedmont Hospital recently went to computer order entry by
    physicians. They reduced the number of medication errors from
    more than 7 per 10,000 to less than 1 per 10,000. I know of no
    scoring by CBO which takes into account the savings to the
    system, the savings to Medicare, et cetera, when somebody does
    not have an adverse medication reaction. And it dropped from
    more than 7 per 10,000. Less than 1 per 10,000 is a substantial
    savings in lives, in pain, and in money.
        Henry Ford Hospital System, in Detroit, went to electronic
    prescribing, and, for a million-dollar investment, they've
    reported publicly, they saved $3 million the first year,
    because when doctors could see, on a screen, the real price of
    the drugs, they tended to order the less expensive medication.
    They also reported they saved, on average, 3 hours per nurse
    per week not having to take callbacks from pharmacists who
    could not read the physician's writing.
        Now, none of this can be scored by CBO, because it is an
    anachronistic static model, which assumes no behavioral change,
    no productivity increase, and essentially is so rigid and so
    limited that it is one of the most important straightjackets to
    us moving toward an electronic system. That has had a very
    direct impact on the Administration, which is--OMB tends to
    model off of CBO, not the reverse. And the result is that the
    Administration has gone through an elaborate talk process in
    order to avoid having to make a commitment to buy precisely the
    records we could have, which could be interoperable over the
    next 3 to 5 years. None of the technical problems are real.
    That is, all of them will be solved within a matter of time
    once the system decides to solve it.
        And I think to engage in a long talk process instead of
    making the capital investment means if we get hit by the avian
    flu in a serious way, if it crosses over to humans, if we get
    hit by an engineered biological attack, or if we get hit by a
    nuclear attach, we will all look back at the inevitable
    commission that will ask why we were still living in an
    anachronistic mid-20th-century paper world in the area of
    health. And I think there's nothing the Senate and the House
    could do more effective than to demand transparency from CBO,
    hold hearings on CBO scoring models, and bring in case after
    case after case--and we've submitted 36 in this testimony--of
    private-sector examples, several of which are right here at
    this table, where people are solving the problems for real in
    the modern world, if only the bureaucracy of CBO would go out
    and talk to people who are actually doing the job.
        Thank you.
        [The prepared statement of Mr. Gingrich follows:]

    Prepared Statement of Hon. Newt Gingrich, Former Speaker of the House;
                  Founder, Center for Health Transformation *
    ---------------------------------------------------------------------------
        * The Center for Health Transformation is a collaboration of
    leaders dedicated to the creation of a 21st Century Intelligent Health
    System that saves lives and saves money for all Americans.
    ---------------------------------------------------------------------------
        Chairman Ensign, Senator Kerry, and members of the Subcommittee:
        Thank you for the opportunity to testify today about how health
    information technology is transforming and will continue to transform
    health and healthcare in America.
        We are on the cusp of enormous change. The level of scientific
    knowledge we will discover over the next 25 years will be four to seven
    times greater than the last 25 years. Combine this fact with the
    economic engines revving in China and India, we know that our current
    path is unsustainable. Look at the American manufacturing sector,
    particularly the pain of the automakers, where they spend more dollars
    per car in healthcare than they do in steel. This is the future of all
    sectors of the economy if we do not change.
        The outlook for the Federal Government is no better. Healthcare
    consumes 26 percent of all Federal spending and growing, dwarfing every
    other priority. The looming retirement of the Baby Boomers and their
    entrance into Medicare will call for painful choices tomorrow if we do
    nothing today. With continued budget deficits running hundreds of
    billions of dollars every year, despite the recent ``success'' of
    cutting the deficit in half, we will pay a severe price if we do not
    transform health and healthcare.
        Thankfully today we can see the glimmerings of a brighter future.
    With momentum building for healthcare consumerism, chronic care
    management tools, and the adoption of health information technology, we
    know what that brighter future will look like: 100 percent insurance
    coverage; consumers will be empowered; quality and price information
    will be readily available; early detection and prevention will create a
    culture of health; reimbursement will be driven by outcomes; and the
    use of interoperable technology will be ubiquitous. We will have built
    what we call a 21st Century Intelligent Health System.
        Change of this magnitude is never easy. But the level of difficulty
    should not dissuade us from progress, because in the end our goal is a
    21st Century Intelligent Health System--a fully interoperable,
    consumer-centered healthcare system that saves lives and saves money
    for all Americans. This system will improve individual health, reduce
    costs, and build a brighter future for all Americans.
        And to get there, the widespread adoption of health information
    technology is essential.
        In this testimony, there are eleven key messages that I urge this
    Subcommittee, the Congress, and the private sector to act upon. If we
    act we will modernize healthcare through the adoption of health
    information technology and help build that 21st Century Intelligent
    Health System.

    1. Build a National Health Information Network as a Vital Part of Our
            National Security Preparedness and Response Strategies
        In 1954 Vice President Richard Nixon called for the Federal
    Government to spend ``a very substantial sum of money,'' $500 million
    at the outset, to build an interconnected interstate highway system.\1\
    He called for the Federal Government to make this a national priority
    because ``. . . our highway network is inadequate locally, and obsolete
    as a national system.'' President Eisenhower had seen the wisdom of an
    interconnected system as early as 1919, when he was on an Army convoy
    from Washington, D.C. to San Francisco. It took 60 days to complete the
    journey.
    ---------------------------------------------------------------------------
        \1\ Richard M. Nixon, Speech to the Governors Conference, Lake
    George, NY, July 12, 1954.
    ---------------------------------------------------------------------------
        On June 29, 1956, nearly 50 years ago to the day, President
    Eisenhower signed the Federal-Aid Highway Act. It called for the
    construction of more than 40,000 miles of interstate highways and
    appropriated $25 billion over 10 years. This was a vast sum of money,
    considering that total Federal spending in 1956 was $70 billion, which
    made this one of the Nation's highest priorities.
        It was no mistake that the original highway system was named the
    National System of Interstate and Defense Highways. The President, the
    Congress, and the states knew that a national, interconnected system
    would be a vital tool to properly prepare for and respond to a national
    emergency. In fact legislation required that one mile out of every four
    be built in a straight line so that military aircraft could land in
    case of a national emergency. As Vice President Nixon said, an
    interconnected system was necessary because of the ``appalling
    inadequacies [of the current system] to meet the demands of catastrophe
    or defense, should an atomic war come.''
        Fifty years later another national, interconnected system is
    needed: this time we must build a national health information system
    because it, too, is a national security necessity.
        A modernized, interconnected system could electronically monitor
    and automatically alert officials in an extreme disaster such as
    Hurricane Katrina, an avian flu pandemic, or a terrorist attack using a
    weapon of mass destruction. Advanced expert systems could
    electronically track patient visits, their symptoms, and their
    conditions; direct scarce resources to where they are most needed;
    assess the effectiveness of response strategies in close to real time;
    support contact tracing for appropriate infectious diseases; determine
    possible origins and causes of an outbreak; and capture other vital
    sources of data. The earlier we can detect a public health crisis, the
    better the chance of containing and managing it--and the better chance
    we have of saving lives and properly caring for those who need it.
        Our most recent extreme disaster, Hurricane Katrina, provided many
    lessons for us to learn. The most important lesson is that bureaucratic
    systems do not and cannot work. In Katrina we witnessed bureaucratic
    failure at every level: the city of New Orleans failed, the state
    government of Louisiana failed, and the government of the United States
    failed.
        Current bureaucracy is best described as a box, be it state
    government, the Federal Government, or a local school board. They are
    inefficient, incompetent, and arrested in time. ``Reforms'' within the
    box are nothing more than attempts to appear relevant in today's world,
    when in fact the box was created by the Civil Service Acts of the 1880s
    and has not been modernized since the 1930s. Modernization to them is
    transitioning from quill pens and long hand to manual typewriters and
    carbon paper.
        In the real world we have seen the advent of the radio, television,
    computers, and the Internet. This world is best described as a circle.
    It is highly efficient, intelligent, and extremely innovative. We use
    examples of the circle everyday through services like UPS, FedEx,
    Google, Amazon, and electronic ticketing. These organizations are
    centered upon and at the service of the individual, not the system and
    its mindless processes.
        To truly transform we must migrate to this new system over time. We
    must discard the hopeless parts of the current system, incorporate what
    does work, and build the rest.

        Transforming bureaucracy is the only way we will avert a repeat of
    the Katrina debacle. For further detail on this subject, please see
    Appendix II of this testimony, which is a working paper entitled 21st
    Century Entrepreneurial Public Management: Getting Government to Move
    at the Speed and Effectiveness of the Information Age.
        Because of bureaucratic failures, survivors of Hurricane Katrina
    had to rebuild much of their lives, but unfortunately they have had to
    rebuild their healthcare history as well. One million one hundred
    thousand paper medical records were destroyed in Katrina's fury and the
    subsequent floods. Most survivors fled the Gulf with no medical
    histories, no medication lists, no treatment regimen, no lab results--
    no healthcare documentation of any kind.
        When citizens made their way to emergency shelters, how did
    healthcare professionals properly care for them with no information?
    Think of the AIDS patients who were taking an intricate drug cocktail
    to prolong their lives. Think of the Medicare beneficiaries who were
    taking multiple prescriptions to treat a host of chronic conditions.
    What about the cancer patients who were in the middle of radiation
    treatment--what happened to them after their paper medical records were
    destroyed?
        M.D. Anderson in Houston, one of the premier cancer treatment
    centers in the world, treated hundreds of evacuees in the aftermath of
    Hurricane Katrina. For those Gulf residents who were in clinical trials
    with the National Cancer Institute, their data was electronic and
    available immediately at M.D. Anderson, and their treatments were
    resumed exactly where they left off. For those who were not in a
    clinical trial and did not have their records stored electronically,
    doctors scrambled to quickly redo tests and recreate intricate
    treatment regiments. Intuitively we know that many people died as a
    result. Their cancer ultimately killed them--but the lack of
    information most assuredly did as well.
        In the wake of Katrina, the Department of Veterans Affairs (VA)
    demonstrated the power of electronic health records in action. As the
    hurricane barreled toward the Gulf Coast, the VA made final backup
    copies of tens of thousands of electronic health records for their
    veterans in the region. Unlike the hundreds of thousands of citizens
    who received care with no documented history, when veterans arrived at
    VA facilities across the country, their full medical histories were
    intact and available immediately.
        A generation ago our leaders made a national, interconnected
    highway system a national priority, and today we have the most
    modernized transportation infrastructure in the world. It changed the
    face of America forever. It released the power of interstate commerce,
    created a national sense of community, connected rural America with
    urban cities, and drove innovation from coast to coast. The benefits,
    both economically and socially, are incalculable.
        A national, interconnected health system would have the same
    effect. When there is no emergency, this network could be leveraged in
    innumerable ways in the routine care of patients. This could be the
    information highway that every healthcare provider in the country could
    use in the course of care. From electronic prescribing and transmitting
    images to clinical trials and medical research--this could be the
    technical infrastructure that allows for the connectivity, efficiency,
    and improvement that we all aspire to achieve. Networks like the World
    Wide Web and network application platforms, such as Internet2, hold
    such explosive potential that it would be tragic to not leverage them
    in healthcare.
        The Congress must make the construction of a national health
    information network a top priority. In such a dangerous world, it
    should be an integral part of our national security strategy. I urge
    the Congress to take action on this priority now. It is an investment
    in the health and security of our country.

    2. Transform the Reimbursement System to Reward Quality Outcomes and
            Drive Adoption of Health Information Technology
        We get what we pay for. We have designed an acute-care system that
    is based on the myth of the 15-minute cure . . . just go see your
    doctor, and he will make you better. Today we are doing a wonderful job
    if our measures of success are inefficiency, high costs, and poor
    patient health. If we are satisfied with these outcomes, with its
    needless deaths and waste, then we should maintain the status quo. But
    if we truly want an intelligent, modernized health system that delivers
    more choices of greater quality at lower cost, then we must enact real
    change--starting with the reimbursement structure.
        Our current payment system is not based on the quality of care that
    is delivered. Instead it pays providers for simply delivering care,
    regardless of outcome. Hospitals and providers that deliver better care
    are for the most part reimbursed at the exact same rate as those who
    provide poorer care.
        Additionally, the payment system encourages the overutilization of
    resources. Like any contracted professional, be it a plumber or a
    builder, doctors are paid for performing their craft, which in this
    case is treating patients. They are not paid for keeping their patients
    healthy and out of their office or hospital--they are paid when they
    treat their sick patients in their office or hospital. This approach is
    so perverse that many argue that medical errors actually reward a
    hospital or physician because they can then bill for additional
    services.
        We need a new model. Reimbursement drives adoption, be it a new
    test, device, or treatment, and we need a reimbursement model that
    takes into account the quality of the care that is delivered, not
    simply that it was delivered.
        Current pay-for-performance and other incentive programs are a
    first step toward an outcomes-based payment structure. The Centers for
    Medicare and Medicaid Services (CMS) and many private insurers are
    partnering with their physician and hospital networks to pilot new
    financing and delivery models based on outcomes, from the Leapfrog
    Group and Integrated Healthcare Association to Blue Cross Blue Shield
    plans and Bridges to Excellence. All of them know that reimbursement
    drives adoption.
        In Georgia the Center for Health Transformation is leading the
    Nation's largest Bridges to Excellence diabetes program. Led by UPS,
    BellSouth and Southern Company, all members of the Center for Health
    Transformation, there are currently 14 major employers, including the
    State of Georgia, participating in the program. The state medical
    society and hospital association are actively participating as well.
    Serving in the role of administrator are Blue Cross Blue Shield of
    Georgia, Humana, Aetna, CIGNA, Kaiser Permanente, and UnitedHealthcare.
    Physician recruitment efforts are ongoing, with WellStar Health System
    and the Morehouse Community Physician Network leading the way.
        The program, like other pay-for-performance initiatives, pays
    incentives to physicians who practice best standards of diabetes care.
    The program encourages individuals with diabetes to see these
    physicians to improve their quality of life and avoid the long-term
    complications of the disease. In the process, physicians are rewarded
    for providing high-quality care, individuals with diabetes are
    healthier, and employers save money. A recent actuarial analysis of the
    program by Towers Perrin reports an estimated savings of $1,059 per
    individual if blood pressure, Hemoglobin A1C, and LDL control measures
    are met. By saving lives and saving money, this Bridges to Excellence
    module should be the minimum standard of diabetic care throughout the
    country.
        CMS will soon roll out an innovative initiative called the Medicare
    Health Care Quality Demonstration Program, also known as the 646
    demonstrations. A major focus of these five-year demonstrations will be
    to improve the delivery of care in ambulatory offices by testing
    significant changes to payment and reimbursement, as well as
    performance measures and the practice of evidence-based medicine.
    Health information technology, and reimbursing for its use, will be
    front and center.
        Reimbursement drives adoption. One example is telemedicine. This is
    an innovative and cost-effective approach that allows hospitals,
    clinics, and physicians without technology to partner with those that
    do. Videoconferencing with experts, transmitting images and records for
    second opinions, remotely monitoring patients, and virtual emergency
    rooms and tele-pharmacy services are some of its uses. Particularly for
    rural facilities, telemedicine improves patient care by increasing
    access to specialists, and it also saves money by delivering better
    care and reducing expensive services.
        Most insurers reimburse their network providers for telemedicine,
    which drives adoption, because they know it will save lives and save
    money. Colorado is poised to become the 39th state to reimburse its
    Medicaid providers for telemedicine services. Unfortunately this means
    that eleven states still do not reimburse providers for using this
    technology. This shortsighted perspective, most likely based on
    perceived budget savings, is blind to the financial savings that
    technology can bring, and, more importantly, the improved health
    outcomes.
        One way to guarantee better health outcomes--which in the system of
    the future should bring higher reimbursement rates--is to encourage the
    use of health information technology, such as electronic health
    records, decision support tools, bar coding, and computerized physician
    order entry. Please see the attached appendix to this testimony for
    documented clinical results and operational efficiencies that health
    information technology can bring.
        If we truly want better health at lower costs, the number one
    priority of every stakeholder in healthcare should be to get technology
    into the hands of every provider in the country. And the surest way to
    accomplish this is to reimburse hospitals and physicians for using
    health information technology in the course of care. Reimbursement
    indeed drives adoption.
        Insurers--especially Medicare and Medicaid--should incentivize the
    purchase of health information technology through higher reimbursement
    rates. From electronic prescribing tools to electronic health records,
    even nominally higher rates will drive the adoption of technology
    because providers want long-term, predictable revenue streams. Consider
    the Hospital Compare site, www.hospitalcompare.hhs.gov. CMS reimburses
    at a slightly higher rate those hospitals that electronically report
    their quality data. With an incentive of only .45 percent, nearly 99
    percent of hospitals electronically submit their data. Organized
    properly, the broad adoption of technology would be no different.
        Health insurance giants Aetna and CIGNA Healthcare recently
    announced that in select markets they will reimburse physicians for
    conducting electronic or web-based consultations with their patients.
    Studies have shown that utilizing technology this way decreases
    administrative time for providers and their staffs, increases patient
    satisfaction, and decreases office visits and utilization. Every other
    insurer, including Medicare and Medicaid, should follow their lead.
        The real question boils down to this: if a provider endangers their
    patients' lives by delivering care through a paper record, should we
    pay them the same as a provider that delivers better care because they
    invested thousands of dollars in technology? A rational reimbursement
    system would pay more for the latter.
        Representative Nancy Johnson introduced H.R. 3617, The Medicare
    Value-Based Purchasing for Physicians' Services Act, which begins the
    transformation to a new system. Congress should lead by holding
    hearings on this vital topic and begin the necessary process of
    building a new and rational payment system.

    3. Create Legislative Exemptions to Stark and Anti-Kickback Laws to
            Speed Health IT Adoption and Deliver Better Care
        Physician adoption of electronic health records is woefully
    inadequate, and current Stark and Anti-kickback laws are part of the
    problem. Congress should pass reforms that create new exemptions to
    these statutes so that hospital systems and other entities can choose
    to provide community physicians with health information technology,
    particularly electronic health records. These reforms will speed the
    widespread adoption of health IT, quickly close the ``adoption gap''
    between large and small physician practices, and, most importantly,
    improve the lives and healthcare of millions of Americans.
        With tens of billions of dollars lost every year due to fraudulent
    claims and payment abuses, Stark and Anti-Kickback laws seek to protect
    the system--and patients--from criminal providers and suppliers. The
    Anti-Kickback laws prohibit hospitals, home health providers, nursing
    homes, and other providers from giving or receiving ``remuneration,''
    or financial incentives, to physicians and others in exchange for
    referring patients to their facilities. The Stark statutes prohibit
    physicians from referring their patients to a hospital, urgent care
    center, laboratory, or other facility with which they (or a family
    member) have a ``financial relationship,'' be it as an investor,
    contractor, or owner of the facility.
        Unfortunately these laws are also barriers to the widespread
    adoption of health information technology. Even the Government
    Accountability Office concluded as much:

            ``[These laws] present barriers by impeding the establishment
            of arrangements between providers--such as the provision of IT
            resources--that would otherwise promote the adoption of health
            IT . . . Health care providers are uncertain about what would
            constitute violations of the laws or create a risk of
            litigation. To the extent there are uncertainties and ambiguity
            in predicting legal consequences, health care providers are
            reluctant to take action and make significant investments in
            health IT.'' \2\
    ---------------------------------------------------------------------------
        \2\ GAO-04-991R, August 13, 2004, HHS's Efforts to Promote Health
    Information Technology and Legal Barriers to Its Adoption.

        Representatives Nancy Johnson and Nathan Deal introduced H.R. 4157,
    which, among other things, creates new exemptions to these statutes
    that will permit hospitals, doctors, and other organizations to drive
    adoption of health information technology at the physician level.
    Representatives Lacy Clay and Jon Porter introduced H.R. 4832, which
    also provides clear, concise, and workable reforms. Under these
    exemptions hospital systems and other entities, such as pharmaceutical
    manufacturers and clinical laboratories, could utilize their existing
    IT infrastructure to provide the hardware, software, connectivity, and
    support to their community physicians, clinics, and rural hospitals.
        A hospital executive told us at the Center for Health
    Transformation that if the Congress were to pass straight-forward
    legislative exemptions, his system would wire 6,000 physicians within
    twelve months. That is dramatic progress that is blocked by current
    law. By preventing the rapid adoption of health information technology,
    the current Stark and Anti-kickback statutes are not protecting
    patients--they are endangering them. It is time the Congress enact
    exemptions to these statutes before even more American lives are lost.

    4. Modernize the Congressional Budget Office to Ensure Accurate Scoring
            and Encourage Transformational Legislation
        Financing the adoption of health information technology could be
    rapidly expedited with reimbursement reform at HHS and reforming Stark
    and Anti-kickback statutes. But it might be expedited even more quickly
    by modernizing the scoring processes at the Congressional Budget Office
    (CBO). Ensuring more accurate scoring at the CBO will lead to a
    dramatic improvement in American health and healthcare. Doing so will
    literally save thousands of American lives and billions of their tax
    dollars.
        Today, we spend billions of dollars on government programs that are
    financial black holes, while at the same time the CBO will not properly
    score legislation that would actually reap dramatic improvements--both
    financially and socially. The CBO ignores the economic growth,
    efficiencies, and cost savings that result from implementing innovative
    and transformational policies.
        The following results were documented by real hospitals and real
    physicians who everyday see the benefits of their investments in health
    information technology. But the CBO refuses to score these kinds of
    savings:

       The Indiana Heart Hospital in Indianapolis built a new
            facility that is totally paperless, which reduced medication
            errors by 85 percent.

        If we could achieve the same results nationwide, we would save more
            than 6,000 Americans every year, since medication errors kill
            nearly 7,500 citizens annually, according to the Institute of
            Medicine.\3\
    ---------------------------------------------------------------------------
        \3\ Institute of Medicine (IOM), ``To Err Is Human: Building a
    Safer Health System,'' 2000.

       PeaceHealth is a billion-dollar hospital system with
            facilities in Alaska, Washington, and Oregon. With the help of
            GE Healthcare, a member of the Center for Health
            Transformation, PeaceHealth built a sophisticated electronic
            health record that helped triple its patients' compliance rate
            with diabetic guidelines, thanks to a combination of online
            disease management tools and the involvement of diabetes
            educators. As a result, hemoglobin A1C levels of less than 7,
            the target level for diabetes control, improved from 44 percent
    ---------------------------------------------------------------------------
            in 2001 to more than 60 percent last year.

             Diabetes was the sixth leading cause of death in the U.S. in
            2000 and costs the system $132 billion every year. \4\ If the
            results that PeaceHealth documented with its diabetics were
            seen nationwide, we would save thousands of lives and billions
            of dollars every year.
    ---------------------------------------------------------------------------
        \4\ Centers for Disease Control and Prevention National Diabetes
    Fact Sheet, http://www.cdc.gov/diabetes/pubs/factsheet.htm.

       The Health Alliance Plan and Henry Ford Health System in
            southeastern Michigan partnered with the Big Three automakers,
            which are all members of the Center for Health Transformation,
            to implement electronic prescribing in the region. In the first
            12 months of the program, the technology electronically caught
            more than 85,000 prescriptions that generated drug-interaction
            or allergenic alerts. According to the Henry Ford Health
            System, the $1 million start-up investment generated a $3.1
            million savings, primarily due to increased generic drug
            utilization. Generic use jumped by 7.3 percent because of the
            automatic alerts that physicians receive when they begin to
    ---------------------------------------------------------------------------
            prescribe a branded drug if a comparable generic is available.

             If Federal legislation were introduced to wire the Nation's
            physician offices for electronic prescribing, the savings would
            be breathtaking. With more than three billion prescriptions
            written every year,\5\ studies have concluded that universal
            electronic prescribing could save an estimated $27 billion
            every year.\6\
    ---------------------------------------------------------------------------
        \5\ Agency for Healthcare Research and Quality. MEPS Highlights
    #11: Distribution of health care expenses, 1999.
        \6\ eHealth Initiative, Electronic Prescribing: Toward Maximum
    Value and Rapid Adoption, April 2004.

       Within the year the State of Tennessee will deploy to every
            Medicaid beneficiary an electronic health record filled with
            their personalized medical history. Tennessee officials project
            that for every $1 spent on the new technology in its first
            years of operation, the state will save $3 to $4--from
            reductions in duplicate tests, adverse drug effects, and
            unnecessary inpatient admissions. Some estimate that the
            savings from this investment could grow to as much as 9-to-1,
    ---------------------------------------------------------------------------
            as the number of doctors using the system increases.

        CBO refuses score these kinds of savings. From their perspective a
    similar Federal approach would result in a net loss against the Federal
    budget, even though such ubiquitous technology would have a dramatic
    net gain in revenue because it would help deliver better care.
        With the search underway for a new CBO director, this is the
    perfect time for the Congress to modernize the office. Representative
    Jim Nussle, Chairman of the House Budget Committee, and Senator Judd
    Gregg, Chairman of the Senate Budget Committee, should immediately hold
    hearings on this vital issue and push the CBO to modernize and ensure
    accurate scoring.

    5. Pass Federal Legislation on Health Information Technology Now
        For the last year the Congress has played games on health
    information technology. More than a dozen bills have been introduced,
    but still nothing has become law. It is time for the Congress to act.
        The Senate passed S. 1418, the Wired for Health Care Quality Act.
    This bill, among other things, directs the Secretary of Health and
    Human Services (HHS) to develop uniform quality measures to be used to
    assess the quality of care a patient receives, including elements of a
    qualified health IT system. It also contains grant funding for
    connecting physicians and creating community networks, authorizing $652
    million from 2006 through 2010. \7\
    ---------------------------------------------------------------------------
        \7\ Notwithstanding the overwhelming evidence that health
    information technology dramatically improves the quality of care while
    saving money, the CBO score did not incorporate any macroeconomic
    savings in its analysis. The CBO provided a four-page overview of the
    Federal dollars that would be spent, but not a word on the anticipated
    savings.
    ---------------------------------------------------------------------------
        Last week H.R. 4157 was passed by the House Ways and Means
    Committee, and key provisions were also passed by the House Energy and
    Commerce Committee. The bill, most notably, creates clear and workable
    exemptions to Stark and Anti-kickback laws; complements current Federal
    activities to develop interoperable data standards; lays out a roadmap
    to create a consistent and common framework of state and Federal
    privacy laws; and requires HHS to move to ICD-10 coding.
        The House and Senate should see immediately pass legislation that:

            1. Drives adoption of health information technology and spells
            out the Federal Government's role in developing
            interoperability standards, including deadlines for action;

            2. Provides meaningful grants or an innovative loan program to
            spur adoption, in the absence of reimbursement reform;

            3. Creates clear, concise, and straightforward exemptions to
            Stark and Anti-kickback statutes so that hospital systems and
            other entities can choose to provide community physicians with
            health information technology, particularly electronic health
            records;

            4. Begins the process of harmonizing the wide discrepancy
            between state and Federal privacy laws, while ensuring consumer
            confidentiality;

            5. Directs HHS to move to ICD-10 coding, despite its
            complexity, to ensure that technology captures accurate
            information, and;

            6. Makes uniform quality measures and reporting a vital part of
            this bill.

        There has been enough posturing on this issue by both chambers and
    both parties. Now it is time for leadership. When the Congress does
    send a bill to President Bush, I urge Members to avoid checking this
    issue off your list. To truly build a 21st Century Intelligent Health
    System, this must be the first of many legislative initiatives, from
    reimbursement reform to its role in national security, health
    information technology should be a priority for years to come.

    6. Solve the Interoperability Issue by Developing Data Standards for
            Health Information Technology
        Interoperability means that every stakeholder in healthcare will
    have the ability to securely exchange electronic data in the course of
    patient care. This may sound impossible, considering that we hope to
    connect hundreds of thousands of doctors; thousands of hospitals; tens
    of thousands of pharmacies; hundreds of insurers; 300 million patients;
    all 50 state governments; Medicare; public health agencies; long-term
    care facilities; and dozens of other entities.
        While this does appear daunting, technology is the easy part.
    Through the Internet, fiber-optic cables, high-speed connectivity, and
    the continued innovation of technology companies, the technology exists
    today to build a national, interconnected system.
        The private sector, particularly those companies that develop
    health information technology products and those that use them, should
    take the leading role in developing data standards that will enable the
    electronic exchange of information from one system to another.
        Data standards of interoperability have been achieved in other
    industries. Tom Friedman, in his book The World is Flat, provides an
    excellent summary of how the private sector collectively agreed upon
    data standards for the Internet, so that every system spoke the same
    language. They gave up competing over who could build the best island
    of isolation, fit with its own language, platforms, and applications.
    Instead they agreed to a common framework where they would compete on
    service, functionality, and quality. This common playing field gave
    rise to the modern Internet and all of its marvels. Healthcare should
    follow this model.
        The Electronic Health Record Vendors Association (EHRVA) is doing
    just that. EHRVA is a group of more than forty technology companies,
    lead by industry innovators like Siemens, GE Healthcare, and
    Allscripts, all of which are members of the Center for Health
    Transformation. The EHRVA recently released an updated Interoperability
    Roadmap that outlines workable and pragmatic approaches over the next
    few years to achieve a common framework where all systems can exchange
    information. The vendor community (which creates most of the health IT
    products) and hospitals and doctors (who actually use these products)
    must actively partner together for us to move ahead. These efforts
    should be mindful of or in conjunction with any Federal efforts on data
    standards and interoperability, such as Secretary Leavitt's American
    Health Information Community.

    7. Support Community Efforts to Build RHIOs and Health Information
            Exchanges
        Building the system of tomorrow requires action today. From
    adoption and interoperability to consumer engagement and data research,
    innovators at the local and regional level are not waiting for others
    to lead. Hospitals, doctors, technology vendors, health plans, state
    and local governments, employers, and consumers are collaborating in
    hundreds of communities from coast to coast to build regional health
    information organizations (RHIO) for the betterment of individual
    health.
        The Federal Government sees the value in these efforts as well.
    Last year the Department of Health and Human Services awarded four
    contracts worth nearly $20 million to build prototypes for a national
    health information network. Technology leaders such as Microsoft,
    Cisco, IBM, CSC, and Sun Microsystems will work with RHIOs from across
    the country. These demonstrations will provide key lessons that
    communities can learn.
        The characteristics of RHIOs differ greatly from one to the next,
    just as communities themselves differ from one to the next. Differences
    abound in geographic location, size, scope, sophistication, and
    stakeholder involvement. There is no single recipe for success.
    However, the experiences of health information exchanges from across
    the country will be invaluable as we progress toward building the
    national health information network. While there are significant
    differences between RHIOs, there are four crucial areas all efforts
    must address if they are to succeed: financing, health management,
    privacy and security, and interoperability.
        Financing is critical to every business--local and regional
    healthcare networks are no different. These initiatives must bring
    value to their communities, participating organizations, and perhaps
    most importantly, they must bring value to the consumer. But to build
    such a network, proper funding is needed. Many health information
    exchanges have relied on grant funding as their primary revenue stream.
    In the long run, with little hope for large Federal investments, this
    business model is not viable. Health information exchanges must be
    independent and self-sustaining, and their operating costs must be
    borne by all participating stakeholders. If the value of a RHIO is
    demonstrated to its community, the market will ensure its financial
    viability.
        The key promise and payoff from a connected healthcare community is
    improving the quality of care that all patients receive--from reducing
    medical errors to monitoring chronic conditions to discovering new
    treatments. RHIOs must be designed so that clinicians exchange patient
    data in real time for use at the point of care. Changes of this
    magnitude are always disruptive. That is why RHIOs must be designed to
    complement workflow rather than complicate it. By data-mining patient
    health information, we will yield new breakthroughs in treatments,
    therapies, and understanding of disease that will transform the
    practice of medicine.
        Health information exchanges must make privacy and security a top
    priority. If personal health information is not secure, if consumer
    privacy is not adequately protected, the network is doomed to fail. A
    uniform patient identifier is part of this process, be it a common
    algorithm or a unique number. By ensuring that the right patient's
    information is pulled at the right time, both clinicians and patients
    will have confidence in the RHIO, and the public can be convinced that
    their electronic information is accurate, confidential, and secure. One
    step in the right direction is to dramatically toughen the penalties
    for hacking into electronic medical files and making slander laws
    applicable to publishing or posting online any personal health
    information. The Congress should closely examine possible changes to
    Title 18 of the U.S. Code of Criminal Procedures that would harshly
    punish the malicious use of personal health information.
        Connecting a healthcare community means developing technologies so
    that all stakeholders can share information in real time: hospitals,
    pharmacies, physicians, nurses, long-term care facilities, health
    plans, and consumers. This is daunting--but it can be done. The
    technical architecture will differ from one RHIO to another, but the
    use of common data standards will not. Through their experiences and
    successes, RHIOs can push the industry to reach consensus and
    convergence upon common data standards that will help achieve
    interoperability. This must be done with existing systems in mind. Data
    standards must be designed so that current technologies can be upgraded
    to meet new requirements, rather than forcing providers to replace
    current systems and start from scratch.
        As industry stakeholders come together in communities across the
    country, the Congress--as well as state and local governments--must
    actively engage these efforts. From funding and regulatory reform to
    building networks and Medicaid engagement, these projects are
    laboratories of innovation. Many will likely fail, but some will likely
    succeed, and they could provide a guidepost for the rest of the Nation
    to follow.

    8. Empower Consumers with Personal Health Records, A Significant Step
            in Building a 21st Century Intelligent Health System
        Personal health records are a significant step forward in building
    a 21st Century Intelligent Health System. Hospital admissions,
    physician office visits, diagnosis codes, procedure codes, pharmacy
    orders, and other valuable pieces of information are often
    electronically captured by a health plan through the claims process.
    Laboratory and other clinical data is even more valuable. Combine these
    two data sets with other information such as family history, allergies,
    and medication history, we have a powerful foundation on which to build
    a personal health record that will help improve individual health and
    healthcare.
        Insurers, providers, and technology vendors are actively building
    and deploying interfaces that consumers can securely use for decision
    support, education on chronic conditions, and e-mail with their
    providers. Using claims data, health plan personal health records are
    often personalized with an individual's medical history, contact
    information for their physicians, and tailored information for their
    health conditions. Representatives Jon Porter and Lacy Clay introduced
    the Federal Family Health Information Technology Act of 2006 (H.R.
    4859), which complements many of the existing efforts already underway
    in the health plan community to deploy consumer-centric personal health
    records. CMS should also move quickly to deploy personal health records
    to all Medicare beneficiaries.
        Consumers will be an integral part of any national health
    information network because it will be designed around them. At the end
    of the day we are talking about the health of each individual American,
    and personal health records are an innovative and important way to
    engage them to proactively take responsibility for their health.

    9. Ensure Consumer Confidentiality by Protecting Privacy and
            Strengthening Security
        Individuals have the right to control--and must have the ability to
    control--who can access their personal health information. All health
    information technology should be deployed to improve individual health,
    not to protect the status quo of proprietary claims to data. Each
    stakeholder should be given equal access to the record--by the
    consumer--in the course of delivering care. At the same time consumer
    privacy protections at the state and Federal levels should be
    consistent. Health information technology and the sharing of medical
    data must not be constrained simply because it moves from one state to
    another. An integrated regulatory and statutory framework should
    complement technology, not complicate it. H.R. 4157 lays out a
    reasonable roadmap to accomplish this.

    10. Uphold the Individual's Right to Know Price and Quality of Health
            Services
        Every American has the fundamental right to know the price and
    quality of health and healthcare services before making a purchasing
    decision. Sites like www.myfloridaRx.com and www.floridacomparecare.gov
    must become the norm in a consumer-centered system. CMS is moving in
    this direction, by posting prices for 30 common procedures in Medicare,
    and every state should follow Florida's lead.
        An individual's right to know price and quality goes hand-in-hand
    with health information technology. Electronic physician offices, wired
    long-term care facilities, and modernized hospitals can easily capture
    and report price and quality information. But they must first have the
    capability to capture information. This is yet another reason why the
    adoption of health information technology is so vital.
        For more information on this important issue, please see my
    testimony I provided on this subject to the House Energy and Commerce
    Committee Subcommittee on Health on March 15, 2006. This is available
    at www.healthtransformation.net.

    11. Create an Undersecretary of Commerce for Health to Drive
            Innovation, Economic Growth, Competition, and Quality Care
        Most policy debates frame healthcare as a problem--whether a matter
    of financing, provision, equity, or quality. While important, these
    discussions ignore that the health sector is not only the largest
    sector of the U.S. economy, but it is a vibrant and quickly growing
    sector as well.
        The position of Undersecretary of Commerce for Health should be
    created within the Department of Commerce, and should be charged with
    ensuring that domestic and international policies do not stifle the
    innovation and competitiveness of this increasingly vital sector of the
    economy. The Undersecretary would be charged with ensuring that: (1)
    regulations do not place unwarranted burdens on healthcare companies;
    (2) foreign governments protect the intellectual property rights of
    U.S. companies and allow these companies fair access to their domestic
    markets; and (3) the U.S. Government enthusiastically and meaningfully
    promote the U.S. health sector in the international marketplace.
        The Undersecretary of Commerce for Health would be the sole
    undersecretary within Commerce charged with representing the interests
    of a specific sector of the U.S. economy. This attention is warranted
    for two reasons. First, the healthcare sector is subject to greater
    government regulation than any other leading sector of the U.S.
    economy. Thus, it follows that at least one senior official within the
    U.S. Government be explicitly charged with ensuring that these domestic
    and international regulations do not place an undue burden on the
    sector. Second, the healthcare sector is of vital importance to all
    Americans, as the following points make clear:

       Economic Engine. The healthcare sector is the largest
            component of the U.S. economy, accounting for one seventh of
            U.S. economic activity. Composed of 8,500 firms (mostly
            employing fewer than 50 people), the U.S. medical technology
            industry already sustains 350,000 high-value manufacturing jobs
            paying an average of 49 percent more than those in other
            manufacturing sectors and accounts for roughly half of the $175
            billion global production of medical products and supplies.

       Job Creation. The healthcare industry is the largest high-
            value job-creating sector in the United States--in 2002, health
            services accounted for 12.9 million American jobs. The
            Department of Labor projects that by 2012, one out every six
            new jobs will be created within the healthcare sector. A 2003
            New England Health Care Institute study showed that every job
            in the medical technology sector generates another 2.5 jobs
            elsewhere in the economy.

       International Competitiveness. Boasting the world's leading
            pharmaceutical companies, medical device manufacturers, and
            treatment facilities, the U.S. health sector holds tremendous
            potential for significantly reducing the U.S. current account
            deficit. However, the $3 billion trade surplus the United
            States has historically enjoyed in this sector has recently
            vanished, prompting serious questions about the fairness of
            overseas markets.

       Quality of Life. The most significant output of the U.S.
            health sector--increased quality of life for Americans, as well
            as for beneficiaries of U.S. innovation throughout the world--
            is not captured by conventional economic measures. Yet it is of
            fundamental importance to all Americans.

        Health information technology and the Undersecretary of Commerce
    for Health go hand-in-hand: without technology, there will be little
    innovation, and the deliver of care will continue to lag behind other
    nations. Technology, innovation, and better quality care will be a
    magnet for people from all over the world to visit our country and
    utilize our system.
        The creation of this position is another way for the Federal
    Government to take a lead role in promoting the adoption of technology
    and innovation. I urge the Congress to hold hearings on this issue and
    quickly create this vital position.
    Looking Ahead
        If healthcare in America is to survive and transcend the challenges
    of the future, we must build a 21st Century Intelligent Health System
    that saves lives and saves money for all Americans.
        In a 21st Century Intelligent Health System, every American will
    have the tools to maximize their health, happiness, and security. Every
    American will have insurance coverage and access to the care that they
    need when they need it. Every American will be empowered to make
    responsible decisions about their own health and healthcare. Every
    American will own their health records. Every American will have a
    right to know the price and quality of medical services.
        In a 21st Century Intelligent Health System, the focus will be on
    prevention and wellness. Innovation will be rapid, and the
    dissemination of health knowledge will be in real time and available to
    all. And reimbursement will be a function of quality outcomes, not a
    function of volume.
        This will require fundamental changes, but they are changes that
    are absolutely necessary. I know that this will indeed improve consumer
    health, reduce costs, and build a brighter future for America.

                                   Appendix I

        The following success stories document the progress that the
    private sector has made deploying health information technology, from
    real clinical improvements to conclusive efficiency gains. These serve
    as a small sample of what is happening in communities across the
    country where transformational leaders are coming together to implement
    technology that saves lives and saves money. While I cannot vouch for
    the accuracy of the case studies, I applaud each of the success stories
    that were forwarded to us. I urge the Congress to examine them in more
    detail, seek out other successes that are happening in your states and
    districts, and actively support them.

    Allscripts
        www.allscripts.com

        We are fortunate to have a healthcare IT industry that has
    consistently provided innovative solutions to all sectors of
    healthcare. From saving lives to saving money, the healthcare IT
    industry is working closely with doctors, nurses, technicians,
    administrators, and patients to change the paradigm of waste and
    inefficiency to one that promotes quality, efficiency, and a return on
    investment. In California the Brown & Toland Medical Group implemented
    health information technology including electronic health records and
    personal health records. The group received $3.2 million in 2004 and
    2005 from a major pay-for-performance program, scoring in the top 10
    percent of all California medical groups and IPAs enrolled. In the
    District of Columbia, in just 30 days, physicians at George Washington
    University Medical Faculty Associates, a non-profit, academic multi-
    specialty D.C.-based medical group practice decided that they couldn't
    afford to wait any longer on technology. In an impressive show of
    teamwork, GW implemented the EHR for 100 physicians in only 30 days.

    America's Health Insurance Plans and Blue Cross Blue Shield Association
        www.ahip.org and www.bcbsa.com

        America's Health Insurance Plans and the Blue Cross Blue Shield
    Association, both members of the Center for Health Transformation, are
    partnering in the area of personal health records (PHRs). Patient-
    centered PHRs hold the potential to transform the health care system.
    They will empower both consumers and their caregivers with information;
    help promote the use of effective, evidence-based treatments and
    procedures, help improve the safety and effectiveness of health care
    quality; and ultimately, decrease health care costs. However, AHIP and
    BCBSA recognize to realize these objectives, PHRs must be both portable
    and interoperable. As an individual moves through the health care
    system, from plan to plan, employer to employer, or into the Medicare
    program, the information in the PHR should be readily available. AHIP
    and the BCBSA are developing a standardized minimum PHR data content
    description, the processing rules, and standards required to ensure
    data consistency, record portability, and PHR interoperability. These
    standards will be made publicly available later this year.
        Last November, AHIP released an in-depth report on health insurance
    plans' latest IT solutions in areas such as e-prescribing, digital
    radiology, online decision support, electronic health records, and
    personal health records. A useful, one-page
    summary is available at: http://www.ahipresearch.org/pdfs/
    AHIP_InvHealthIT
    _05.pdf.

    Bridges To Excellence
        www.bridgestoexcellence.org

        Bridges To Excellence has created innovative programs that are,
    through financial incentives and public recognition, encouraging
    physicians and physician practices across the country to adopt and use
    better systems of care, in particular EHRs. This technology, as well as
    following best practices, is helping to deliver better care for
    patients with chronic conditions. During its pilot phase, more than
    1,000 physicians in the Boston area and Albany have significantly
    changed the way they practice medicine, adopted EHRs, and are
    delivering better clinical and financial outcomes for all their
    patients--Medicare, Medicaid, and private sector employers. As a result
    of the efforts, the employers participating in BTE have saved over $3
    million in direct medical costs and their employees are getting better
    care.

    CareScience, A Quovadx Company
        www.carescience.com

        With the help of CareScienceTM Quality Manager, St.
    Vincent Indianapolis Hospital has dramatically improved its approach to
    blood utilization and management. By analyzing and comparing blood
    usage practice patterns, St. Vincent Indianapolis Hospital has
    increased the safe utilization of blood, improved patient outcomes and
    reduced blood utilization costs. In fact, the organization has reduced
    total blood use by 30 percent, decreased iatrogenic blood loss in
    critical care settings by 86 percent, and documented $4.4 million in
    blood acquisition cost savings over 5 years with an estimated $35
    million in total cost savings when fully accounting for labor,
    supplies, and reduction in adverse event--all as a direct result of
    improvements in blood management.
        Utilizing CareScience Quality Manager and the philosophy of ``care-
    based management of cost,'' North Mississippi Medical Center was able
    to thoroughly investigate their trauma and neurosurgery patient
    populations, identify root causes, and engage a team of clinicians
    across departments to improve processes and treatment protocols. The
    end results included improved patient outcomes, increased staff
    satisfaction, reduced length of stay, and a savings of over $1.4
    million for Medicare patients alone.

    Citizens Memorial Healthcare, Bolivar, Missouri
        www.citizensmemorial.com

        Citizens Memorial Healthcare is an integrated rural healthcare
    delivery system with 1,538 employees and 98 physicians serving a
    population of 80,000 in southwest Missouri. The system includes one
    hospital, five long-term care facilities, 16 physician clinics and home
    care services. Citizens' electronic medical record crosses the
    continuum of care and is used by every admitting physician.
        Ninety-two percent of registered patients are ``known to the
    system'' and therefore not asked to repeat demographic information.
    20,000 bar-coded express registration cards have been issued. More than
    one half of radiology exams are scheduled directly by a physician
    office. 64,860 patient records have been created. A unique EMR
    identification number links visits together. Physicians are able to
    view individual visits, multiple visits, or all visits in one
    comprehensive online chart. Over $1,000,000 in supply and procedure
    charges are captured per month as a byproduct of care documentation.
    ``Yellow-sticker-charging'' has been eliminated from hospital inpatient
    floors. Citizens has also experienced an improvement in the revenue
    cycle through a decrease in accounts receivable for the Citizens
    physician clinics, an increase in supply charges per patient day, and a
    decrease in claim denials. Because of its efforts, CMH was awarded a
    Nicholas E. Davies EHR Recognition Program, sponsored by the Healthcare
    Information and Management Systems Society (HIMSS). The program
    recognizes healthcare provider organizations that successfully use EHR
    systems to improve healthcare delivery.

    Clearwave
        www.clearwaveinc.com

        Clearwave, a member of the Center for Health Transformation, is the
    ATM network of healthcare. Clearwave is implementing technology within
    physician offices that will allow the real-time identification of
    patient benefits, create a network for the delivery of Individual
    Health Records (IHR, PHR, VHR) to the physician, as well as allow
    patients to do a self pay as it relates to co-pays, outstanding
    balances, and high deductible amounts. For too long, physicians have
    not been in control of real-time benefit determination and/or obtaining
    payment at the time of service, and with the advent of consumer-
    directed health plans, the physicians' financials are at serious risk.
    The Clearwave network via its self-service kiosk will ensure physicians
    get paid in a more timely manner with real-time data support.
        The Clearwave network is not just for the large or financially
    viable practices. The Clearwave network is priced so that all
    physicians can participate whether in Atlanta or Vidalia because it is
    not driven by the installation of costly hardware but by an Internet
    connection. Clearwave is currently rolling out hundreds of kiosks in
    the Georgia and Florida markets, with thousands to follow in the near
    future.

    Covisint, a subsidiary of Compuware Corporation
        www.covisint.com

        Led by North Carolina State Medicaid, BCBSNC and WakeMed Health &
    Hospital's Raleigh Campus, healthcare providers and payers across the
    state coalesced around Covisint's web-based technology environment to
    exchange patient information. More than 57 hospital systems and 317
    post acute and ancillary providers within the state are managing
    external patient communications through this secure online environment.
        By expediting communications with nursing homes and the state
    Medicaid program--combined with a commitment to quality case
    management--WakeMed Raleigh reduced the average length of stay for
    patients being transferred to nursing homes by 1.35 days. Advanced Home
    Care, one of the largest privately held home medical equipment
    companies in the region, reduced Medicaid prior approval turnaround
    time to less than 10 days, where the average for the industry is 83
    days. The company attributes this improvement to rapid, online
    physician signature collection and e-form communication with Medicaid--
    enabled through the Covisint environment. Other results included
    increased employee productivity, management oversight, and
    accountability into external communications, as well as increased
    patient satisfaction. Expanding throughout the southeast to Louisiana,
    South Carolina, Georgia, Virginia and Florida, Covisint's technology
    environment is now more than 6,000 users.

    DaimlerChrysler Corporation
        www.daimlerchrysler.com

        DaimlerChrysler Corporation, along with General Motors and Ford
    Motor Company, all members of the Center for Health Transformation,
    partnered with Medco Health Solutions and RxHub to form the Southeast
    Michigan e-Prescribing Initiative (SEMI). The goals of the initiative
    are to actively promote the adoption of electronic prescribing
    standards and practices by the Southeast Michigan prescriber community,
    reduce medication errors and associated costs, and improve the quality
    of care. Also partnering in the initiative are Health Alliance Plan and
    Henry Ford Health System. Participating in the initiative are Blue
    Cross Blue Shield of Michigan and PharmaCare. This initiative is also
    supported by the United Auto Workers.
        To date, more than 800 physicians have enrolled in the SEMI
    program. In 2005, SEMI was awarded a grant by the Centers for Medicare
    and Medicaid Services to study the results of the initiative on
    seniors. Henry Ford Health System and Health Alliance Plan were awarded
    the Health Information Technology Award by the Greater Detroit Area
    Health Council in part because of their success in enrolling over 60
    physicians into the SEMI program. In February 2006, the Henry Ford
    physicians reached the milestone of 500,000 prescriptions placed via e-
    prescribing. From a quality of care standpoint, e-Prescribing messages
    alerted doctors to 6,500 potential allergic reactions. From a cost
    standpoint, 50,000 prescriptions were changed or canceled due to
    formulary alerts, which increased the use of generic drugs.
    Additionally, e-Prescribing helped improve overall generic use rate by
    7.3 percent, which will save $3.1 million in pharmacy costs over a one-
    year period.
        DaimlerChrysler has also been working with Ford Motor Company and
    General Motors to transform health and healthcare through the use of
    best practices and health information technology. Working together with
    Covisint, a division of Compuware and member of the Center for Health
    Transformation, the three automakers have engaged employers, hospital
    systems, physician groups, and health care payer organizations to join
    an eight-week pilot project that will gather input for a long-term
    healthcare IT solution in southeastern Michigan. The goal is to
    increase patient safety by reducing medical errors and reducing health
    care costs. Electronic health record technology will also provide
    patients with greater control of their information, empowering
    individuals as health care consumers. The three autos are also working
    with the State of Michigan's Health Information Network (MI HIN)
    Conduit to Care project to promote connecting health care communities
    across the State of Michigan.

    Electronic Health Record Vendors Association
        www.ehrva.org

        HIMSS EHRVA is a trade association of Electronic Health Record
    (EHR) vendors who have joined to lead the accelerated adoption of EHRs
    in hospital and ambulatory care settings. Representing an estimated 98
    percent of the installed EHR systems across the country, our industry
    contributions are founded in a competency to recognize the diverse
    needs of our combined provider clients--and a capacity to respond with
    a unified voice relative to core challenges within today's healthcare
    environment. The association focuses on issues surrounding standards
    development, the EHR certification process, interoperability,
    performance and quality measures, and other EHR issues subject to
    increasing government, provider and payer-driven initiatives and
    requests.
        The Certification Commission for Healthcare Information Technology
    (CCHIT) process for certificating EHRs was greatly advanced through
    EHRVA contributions and involvement. In addition to thousands of hours
    dedicated to providing detailed feedback to the Commission, the
    association has provided a commissioner and work group-level
    representation to the CCHIT since its inception. While continuing to
    engage the Commission in dialogue related to process transparency,
    achievable certification targets, and improving the cost effectiveness
    of the certification process, EHRVA members remain engaged in CCHIT
    efforts through participation in the certification process for
    ambulatory EHRs and in representation in current and new work groups.

    Geisinger Health System, Danville, Pennsylvania
        www.geisinger.org

        As her father was slowly dying of liver disease, Carol agonized
    over his condition. Even though she lived in New Jersey, far from her
    father, she took an active role in his care. With her father's
    permission, Carol used the Internet to securely view portions of his
    electronic medical record from Geisinger Health System in Danville,
    Pennsylvania. MYGeisinger.org allowed Carol to check her father's lab
    results, view his medications, order prescription refills, and make
    appointments. From New Jersey Carol noticed unusual fluctuations in his
    temperature and alerted his doctor in Pennsylvania. Her vigilance, even
    from hundreds of miles away, was able to forestall the possible onset
    of pneumonia.
        Another Geisinger patient was visiting her son in Bar Harbor,
    Maine, when she suddenly saw double. Her son immediately took her to
    the local emergency room, where doctors reviewed portions of her
    Geisinger medical record online. With her permission, they reviewed her
    vital signs and previous test results and compared them to her current
    status. Fortunately, her vision returned to normal and she was soon
    released from the hospital. Her online medical record avoided a series
    of uncomfortable, unnecessary, and expensive tests.

    HCA (Hospital Corporation of America)
        www.hcahealthcare.com

        HCA, a member of the Center for Health Transformation with more
    than 170 hospitals in the U.S., has created and recently completed
    implementation of eMAR (electronic medication administration record),
    the largest hospital bar code system to help prevent medication errors.
    The system uses handheld scanners and mobile laptop computers to read
    bar code labels on medications and patient armbands. An HCA nurse scans
    the bar code labels and the system checks the patient's electronic
    medication record to help ensure the right patient receives the right
    dose of the right drug at the right time through the right route. In
    2005, more than 116 million doses of medication were scanned using
    eMAR, and HCA estimates it helped prevent more than 2 million
    medication errors. According to the American Society of Hospital
    Pharmacists, only 10 percent of U.S. hospitals are using bar code
    systems like HCA's eMAR.

    HealthTrio
        www.healthtrio.com

        HealthTrio, a member of the Center for Health Transformation, has
    developed a PHR/EHR which consists of a combination of personal entry
    data and an ambulatory electronic health record. The foundation of the
    HealthTrio PHR/EHR is clinical information collected from claims data
    residing in the various health plans, which then ensures that the list
    of encounters between the consumer and the provider is completely
    irrespective of the number of providers and facilities visited by the
    patient. The PHR/EHR is supplemented by the consumer's own direct
    personal entries. Initial input is done by completing a ``Health Risk
    Assessment'' and appropriate surveys. The patient could enter their
    progress and history through free text. This record is further
    supplemented by electronic import or download of the information from
    pharmacy benefit managers, providing a medication list and history, as
    prescribed by all the providers interacting with the patient. Selected
    clinical information, which is necessary for continuing care of the
    patients from the labs, outpatient facilities, and hospital EMRs, is
    imported into the PHR/EHR by using HL7 or customized interfaces. This
    record then allows for better coordination of care and prevents
    duplication of tests and medications. In addition, SNOMED has been
    deeply integrated in the technology, so the information in the PHR/EHR
    is all encoded.
        The integration of SNOMED into the PHR/EHR is going to produce a
    transformational change in the practice of medicine by allowing
    electronic analysis of very large population-based studies and would
    provide criteria for evidence-based practice of medicine, profiling of
    the providers, allowing transparency of the cost and quality of care
    provided by the providers. Care management and disease management could
    be done more effectively at a fraction of the cost.

    Henry Ford Health System, Detroit, Michigan
        www.henryford.com

        At Henry Ford Health System (HFHS) in Detroit, Michigan,
    information for more than 3.5 million patients has been recorded
    electronically and made available to Henry Ford providers throughout SE
    Michigan since the 1980s. Henry Ford physicians have not seen a paper
    chart at hospital bedside or clinic since 2001. Everything is
    electronic.
        HFHS is currently committing approximately $90 million to convert
    its vast electronic data repository into a fully automated and
    interactive system. HFHS estimates a 100 percent return on investment
    within 4 years. They expect an 8 percent to 10 percent savings in
    operational efficiency. This savings is measured by the number of
    physician or other provider hours expended per patient day. The savings
    increase capacity and allow the same number of physicians, nurses and
    allied health professionals to provide care to more patients. HFHS
    expects a 10 percent savings on patient throughput. Rework,
    readmissions, and hospital discharge inefficiencies (resulting in
    longer lengths of stay) are a common source of cost that can be
    eliminated through the fully automated and interactive medical record.
    They expect a 2 percent to 7 percent savings in billing recovery.
    Savings accrue primarily through better capacity to bill for services
    provided, but not captured or adequately documented without the
    Automated Medical Record improvements. HFHS is deploying more than
    1,500 end-user devices in 2007, including computers on wheels,
    TabletPCs, laptops, and handheld devices at a cost of about $8 million.
    This investment supports the full spectrum of clinicians (physicians,
    nurses, therapists, pharmacists) engaged in entering and reviewing
    patient information at the point of care in a wireless environment.

    Humana and BCBS of Florida
        www.humana.com and www.bcbsfl.com

        Blue Cross Blue Shield of Florida and Humana, a member of the
    Center for Health Transformation, have partnered to roll out a
    statewide personal care profile based on health plan claims data to
    share information that may be useful to physicians in treating plan
    members. Using the existing Availity infrastructure, which all network
    physicians with Humana and BCBS of Florida currently use to check
    eligibility, a button will be added that will allow physicians and
    nurses to print a simple two-page summary with a patient's medication
    history, lab order history, diagnosis codes, and provider information.
    This effort lays a foundation upon which both health plans and
    healthcare providers can add on functionality to make the technology
    more sophisticated with the ultimate state being achieved with
    increased quality of care.
        In a future phase of this program, a consumer who currently has
    coverage with Humana changes plans and selects BCBS of Florida, their
    personal care profile will still be available to their physician
    transcending the plan to plan data barrier. This multi-plan approach is
    the only one of its kind in the country. It is the beginning of a
    permanent personal care profile that follows the consumer wherever they
    go. Nearly a third of Floridians are covered by Humana and BCBS of
    Florida, and these two plans are actively recruiting other insurers to
    join the effort, including Medicaid. By adding Medicaid beneficiaries
    to the project, more than half of the state's population will be
    involved.

    IBM
        www.ibm.com/us/

        Prospective healthcare involves collaborating with employees in a
    coordinated fashion to improve health--in effect, heading problems off
    before they occur. IBM, a member of the Center for Health
    Transformation, is developing patient-centric programs that are doubly
    proactive: they both reach out to a wider range of employees, and are
    more able to help them anticipate and manage health risks.
        The personal health records that IBM is providing to its U.S.
    employees are a prime example of this patient-centered approach. When
    an IBMer first goes to the website for their personal health record,
    they are offered a financial incentive to complete an employee health
    risk appraisal, develop a personal preventive care action plan, and
    identify quality hospitals in their area. Based on the results, an
    IBMer can subscribe to receive expert information, articles, and advice
    on how to reduce their risks. It identifies eligibility for additional
    benefits and services such as disease management and refers employees
    to those resources. Decision support tools for drug comparison and
    interactions, hospital quality and Leapfrog results (from the Leapfrog
    Group's performance measurement system) provide individual support for
    optimizing benefits quality and costs.
        For IBM, the risk assessment tools and the personal health records
    provided to its workforce are an investment that is recouped through
    improvements in employee health and the significant cost savings that
    result. As a result of our consumer-centric health programs for
    employees, IBMers are healthier and have lower health expenses than
    others in our industry. We have demonstrated that information-rich,
    patient-centric wellness programs aren't marginal benefits. They are
    very good business:
        IBM's employee injury and illness rates are consistently lower than
    industry levels; IBM has documented significant decreases in the number
    of health risks among its workforce as a result of participating in
    wellness initiatives; IBM's disease management programs have
    demonstrated a 9-24 percent reduction in emergency room visits and a
    13-37 percent reduction in hospital admissions resulting in an overall
    16 percent reduction in medical and pharmacy costs adjusted for medical
    trend over a two-year period. IBM has also had significant success in
    improving the management of care for employees with chronic problems
    such as asthma and diabetes.
        With the health improvements, IBM has seen cost benefits. IBM
    healthcare premiums are 6 percent lower for family coverage and 15
    percent lower for single coverage than industry norms. IBM employees
    benefit from these lower-costs as well--they pay 26 to 60 percent less
    than industry norms. In total, these well-being programs deliver more
    than $100 million in annual savings.

    Inland Northwest Health Services
        www.inhs.org

        Inland Northwest Health Services (INHS), a 501(c)(3) in Spokane,
    Washington, and member of the Center for Health Transformation, is a
    shared services organization providing centralized information
    technology and clinical systems across the continuum of care covering
    34 hospitals and numerous physician clinics in Washington, Idaho and
    Alaska. Four new hospitals are in progress in southern California. This
    network is significant because of its size (2.7 million patient
    records), breadth of clinical data and images available, and because
    competitive healthcare facilities have been collaborating successfully
    on the governance and technology infrastructure for more than 9 years.
    Facilities are contributing to a regional data repository, with
    standardized data and a common Master Patient Index, which allows
    health care providers to access needed patient data from any hospital
    in the region. The repository also includes data from reference
    laboratories and imaging centers, providing a single source of
    comprehensive information about any patient. Providers can either view
    the data via a secure web portal, download it wirelessly to a personal
    digital assistant, or have the data transferred as a standard
    electronic message to their clinic's electronic medical record system.
    INHS not only makes data available when and where it is needed, the
    standardized approach to hospital information systems saves money.
    Further, the centralized data repository provides a ready source of
    information on the health of the population, for use in public health
    and bioterrorism surveillance.
        INHS is also implementing a centralized approach to physician
    office electronic medical record systems. In this model, INHS serves as
    an Application Service Provider, housing EMR systems for physicians on
    central servers. This helps physicians implement and maintain EMR
    systems at a lower cost than individual physicians would pay on their
    own. Further, the centralized approach assures that INHS can readily
    develop interfaces between the hospital system and the EMR system,
    allowing bidirectional electronic transfer of data between the two
    systems. The result will be a comprehensive electronic health record,
    with healthcare providers able to access ambulatory care, emergency
    room, and inpatient data from wherever care is delivered. Because of
    this simplified approach to EMR adoption and utilization, INHS
    anticipates that 40 percent of physicians in the Spokane area will be
    using EMRs by the end of 2006.

    InterComponentWare (ICW)
        www.us.icw-global.com or www.us.lifesensor.com

        ICW is a leading international e-health provider founded in Germany
    with transforming market entry strategies for the U.S. ICW delivers
    components for interoperability solutions for healthcare stakeholders,
    utilizing ``connector'' technology and the patient-centered and
    patient-owned LifeSensor', a true interoperable Personal
    Health Record. ICW interoperability can enable bidirectional
    autopopulation of data to and from the LifeSensor PHR. Continued
    technology expansion includes recent integration of the CHILI web-
    server into the ICW hospital networking solution, now allowing access
    to DICOM image data, permitting viewing of digital images and videos,
    magnetic resonance tomographies, and x-ray and ultrasound images in a
    virtual patient record.
        ICW has played vital roles in the national e-health card (eCard)
    program in Germany and Austria. Current ICW projects in Europe include:
    (1) a physician's network enabling interoperable connectivity, which
    has been recognized as a leading RHIO in a study by the University of
    Erlangen; (2) a privately funded implementation of a regional eHealth
    network, which delivers interoperability to providers, practitioners
    and pharmacies, and via LifeSensor, patients; (3) an interoperability
    project at Rhon Hospitals connects existing, but until now, isolated
    information systems without requiring the replacement of existing
    software. ICW is also involved with hospital and clinical projects
    including the ``Partnership for the Heart'' program at Charite
    hospital, for patients with chronic heart failure, utilizing remote
    patient monitoring. ICW is also leading a breast cancer project at the
    University of Tubingen, which enables authorized medical personnel
    outside the University system to view and add treatment information,
    resulting in better patient management, improved care, and better
    health outcomes.

    McKesson Corporation
        www.McKesson.com

        For more than 170 years, McKesson has led the industry in the
    wholesale delivery of medicines and healthcare products. Today a
    Fortune 16 corporation, McKesson delivers vital pharmaceuticals,
    medical supplies, and healthcare IT solutions that touch the lives of
    more than 100 million patients each day in every healthcare setting. As
    the world's largest healthcare services company with a customer base
    that includes more than 200,000 physicians, 25,000 retail pharmacies,
    5,000 hospitals and 600 payers, McKesson is well positioned to help
    transform the healthcare system.
        Today more than 4 million care providers use McKesson's Horizon
    Clinicals' solutions to process more than 22 million orders
    per week. More than 500,000 full time equivalent registered nurses rely
    on McKesson solutions to deliver safe, high-quality care. The company's
    bar-code medication administration solution issues more than 649,000
    alerts weekly. Its interdisciplinary documentation solution automates
    chart audits required for regulatory purposes, reduces documentation
    time by up to 35 percent, and in combination with bar-coded medication
    administration, improves nursing satisfaction by up to 45 percent.
    McKesson currently records over 3 million logins each month to its Web-
    based physician portal. This online gateway lets community-based
    physicians, hospitalists, and other caregivers log on once to gain
    single-source access to the patient's virtual EHR, no matter where the
    data resides.
        McKesson offers a medication administration system that features
    bar code technology to support the hospital team and protect the
    patient by verifying the ``five rights'' of medication administration:
    right patient, right drug, right dose, right route and right time. The
    bar code technology used in McKesson's solution suite has been shown to
    reduce medication administration errors by as much as 87 percent.

    M.D. Anderson Cancer Center, Houston, Texas
        www.mdanderson.org

        The University of Texas M.D. Anderson Cancer Center has enabled its
    health transformation through the development of ClinicStation, its in-
    house developed electronic medical record system. This year, more than
    74,000 people with cancer will receive care at M.D. Anderson, and about
    27,000 of them will be new patients. Approximately one-third of these
    patients come from outside Texas seeking the research-based care that
    has made M.D. Anderson so widely respected. With the ClinicStation EMR,
    M.D. Anderson's caregivers initiate over 1.5 million patient queries a
    month reviewing digitally available information such as images (240,000
    studies reviewed/month), transcribed clinical documents (3.3 million/
    month), radiology reports (658,000/month), as well as pathology and
    laboratory reports (1.8 million/month). M.D. Anderson caregivers access
    the EMR system via both wired and wireless access in the hospital, out-
    patient clinics, offices and even remotely from home or while
    traveling. When outside M.D. Anderson, caregivers have remote access to
    their patient's records via a virtual private network (VPN) connection.
    The ClinicStation EMR allows caregivers to simultaneously review and
    consult on patient records regardless of where they are located (access
    is available anywhere with an Internet connection). While there is
    universal access to patient records, access is restricted to
    authenticated users. Every accession of patient data is permanently
    recorded in audit record databases.
        Most patients referred to M.D. Anderson have their diagnosis of
    cancer revealed on diagnostic imaging studies prior to their arrival.
    Patients bring these ``outside'' studies on film or ever more commonly
    on compact disks (CD-R). M.D. Anderson informatics personnel have
    developed innovate diagnostic image importation software to allow
    images obtained throughout the country and world to be imported
    directly onto the M.D. Anderson Picture Archiving and Communications
    (PACS) system and then made instantly available for caregivers to
    deliver expert diagnostic oncology opinions. In the past year, over
    33,000 ``outside'' studies were imported into M.D. Anderson's PACS
    system. Of the 77 million images available on PACS from the past 12
    months, over 5.6 million images (7.3 percent) originated from
    ``outside'' studies. Currently, over 190 million images, representing
    the past 5\1/2\ years of diagnostic study information is available for
    instant review. As filming of M.D. Anderson studies is no longer
    routinely performed, upon request, patients are provided CD-R disks of
    images from their M.D. Anderson studies. This technology improves
    patient health because radiologists are better able to diagnose current
    cancer status by comparing the current study to imaging studies
    obtained months or in some cases years before.

    Methodist Medical Center of Illinois, Peoria, Illinois
        www.methodistmedicalcenter.org

        Methodist Medical Center has been at the forefront in implementing
    electronic systems to reduce medical errors and improve physician
    access to patient records and test results. The 353-bed facility has
    not only reduced medication errors by 50 percent using bar code
    scanning at the bedside, but it uses technology to provide network
    physicians anytime, anywhere access to information on 18,000 inpatients
    and more than 300,000 outpatients each year. When a medication is
    scanned at a patient's bedside, it is verified against the physician
    order and screened for allergies, interactions, and therapeutic
    duplication by pharmacists using the pharmacy system. Two of
    Methodist's 15 nursing units have achieved the targeted 90 percent rate
    for medication bar code verification. For its efforts, Methodist
    achieved the National Patient Safety Goals with zero violations.
        Methodist also achieved an almost-perfect score from the Joint
    Commission on Accreditation of Healthcare Organizations--ranking it in
    the top 4 percent of all U.S. hospitals. But that was not enough for
    this hospital, which also supports 30 clinics and physician practices.
    Using McKesson's ambulatory EHR many redundant, inefficient paper-based
    processes in ambulatory settings were eliminated. Methodist
    practitioners now write more than 40,000 electronic prescriptions
    monthly, and paper charts for medication-related issues have been
    virtually eliminated. In addition, chart pulls related to medication
    refills were reduced by 93 percent. Methodist also estimates it will
    save $300,000 in external transcription fees.

    MinuteClinic
        www.minuteclinic.com

        MinuteClinic, a member of the Center for Health Transformation, is
    the pioneer and largest provider of retail-based health care in the
    United States, with 82 MinuteClinic health care centers in 10 states
    and 150-200 additional centers planned by the end of 2006. MinuteClinic
    has managed approximately 500,000 patient visits using an electronic
    medical record system that guides diagnosis and treatment, generates
    patient education materials and builds diagnostic records that are sent
    to primary care providers. The EMR embeds nationally established
    clinical practice guidelines from the Institute for Clinical Systems
    Improvement, the American Academy of Family Physicians and the American
    Academy of Pediatrics. This system provides a foundation for generation
    of Continuity of Care Records (CCR) and HL7 patient encounter reports.
    MinuteClinic actively seeks and supports ways to improve the secure,
    appropriate exchange of patient care information by electronic methods.

    North Carolina Disease Event Tracking and Epidemiologic Collection Tool
            (NC DETECT), Chapel Hill, North Carolina
        www.ncdetect.org

        NC DETECT is a secure, Web-based system that provides access to
    emergency department data (ED) in a timely manner to authorized users
    at the local, regional and state level. NC DETECT receives ED data from
    disparate hospital information systems across the state electronically
    on a daily basis. Aggregated and standardized based on CDC's Data
    Elements for Emergency Department Systems (DEEDS), the data are
    immediately available to authorized users via a secure, database-
    driven, web-based portal. The portal provides reporting on disease and
    injury conditions and utilizes both diagnostic data and syndrome-based
    data. Emergency department data, and the other sources soon to be
    loaded into production, are also instrumental in monitoring the
    public's health after natural disasters. Hurricanes especially have had
    a huge effect in North Carolina in recent years, and NC DETECT will
    greatly reduce the burden on data providers when it comes to reporting
    on disaster-related illness and injury. Because of its efforts, NC
    DETECT was awarded a Nicholas E. Davies EHR Recognition Program,
    sponsored by the Healthcare Information and Management Systems Society
    (HIMSS). The program recognizes healthcare provider organizations that
    successfully use EHR systems to improve healthcare delivery.

    Northwest Physicians Network, State of Washington
        www.npnwa.net

        The Northwest Physicians Network is comprised of nearly 400
    providers representing primary care and more than 30 different
    specialty disciplines in two Washington State counties. NPN
    incorporated in January 1995 and is now the largest IPA in the state.
    The foundation of its success is based on the belief that patient
    centered, physician driven care, coupled with solid data, responsible
    use of resources, and active disease management programs are imperative
    components to the successful delivery of care.
        NPN has sponsored the South Sound Health Communication Network,
    linking patients to their doctors and their clinical data.
    Approximately 75 independent community doctors, nurses, and office
    managers are online. Quest Diagnostics and Medical Imaging Northwest
    now push lab data and imaging results into the Network for real-time
    consultations and complete patient data storage. One seven-physician
    clinic in Pierce County, Washington, implemented the Network to
    complement their existing EHR system. A line-item audit of the previous
    twelve months versus the twelve months after implementation reveal
    impressive savings: savings from administrative supplies, $7,142;
    savings from FTE reduction, $19,600; savings from dictation reductions,
    $7,525. Total workflow net savings per physician was $4,098, for a
    total net savings per year of nearly $30,000.

    Partners HealthCare, Boston, Massachusetts
        www.partners.org

        Partners HealthCare is an integrated health system founded by
    Brigham and Women's Hospital and Massachusetts General Hospital in
    1994. In addition to its two academic medical centers, the Partners
    system also includes community hospitals, specialty hospitals,
    community health centers, a physician network, home health and long-
    term care services, and other health-related entities. Computerized
    physician order entry will be completely implemented in all Partners
    acute care hospitals by the end of 2006. Electronic medical records are
    being used or implemented by 85 percent of physicians at the academic
    medical centers and 52 percent of community primary care physicians in
    our Network. We have roughly 6,000 physicians in our Network of which
    4,300 are targets for ambulatory EMR (excluding pathologists,
    anesthesiologists, radiologists and other specialists who would be
    unlikely to use an ambulatory EMR).
        Partners IT executives, who are members of the College of Health
    Information Management Executives, are implementing a ``fail safe''
    system for medication ordering and administration, including
    computerized physician order entry, ``smart'' pumps, electronic
    medication administration record software, and bar-coding of patients,
    staff, and drugs.

    PeaceHealth
        www.peacehealth.org

        PeaceHealth is a billion-dollar hospital system with 1.4 million
    patient records with six facilities in Alaska, Washington, and Oregon.
    With the help of IDX (now GE Healthcare), a member of the Center for
    Health Transformation, PeaceHealth built the Community Health Record.
    The Community Health Record contains all the information a provider
    needs to care for a patient--from lab results to MRI images to
    cardiology charts. It is secure, HIPAA-compliant, and totally online.
    Patients can access their records from anywhere via a secure
    connection--individuals are able to refill prescriptions, correspond
    via e-mail with doctors, check lab results, schedule appointments, and
    request referrals. Every stakeholder has access to these records,
    including doctors, nurses, case managers, health plans, and independent
    physician groups.
        Adverse drug events have been reduced by 83 percent, as documented
    by a pilot study in Eugene, Oregon. Allergy lists are close to 100
    percent complete, thanks to an expert technical rule that flags missing
    information. Compliance with diabetic guidelines has tripled in three
    PeaceHealth facilities, thanks to a combination of online disease
    management tools and the involvement of diabetes educators. Hemoglobin
    A1C levels of less than 7, the target level for diabetes control,
    improved from 44 percent in 2001 to more than 60 percent last year. And
    LDL levels of less than 100, the target range, jumped from 28 percent
    in 2001 to 52 percent last year.

    Per-Se Technologies
        www.per-se.com

        In the U.S. approximately 20 percent of new prescriptions and as
    many as 30 percent of refillable prescriptions are never filled. The
    adoption of technology in the prescribing process provides a way for
    physicians to know when a patient is not taking his medication.
    Ensuring patients take their medication as prescribed significantly
    reduces healthcare costs by avoiding situations where patients arrive
    sicker at a healthcare provider than if they had taken their
    medication. To help reduce medical errors and the cost of healthcare,
    Per-Se Technologies began an electronic prescribing initiative in early
    2006 to help physicians electronically obtain a complete picture of a
    patient's medication history and plan coverage before issuing a new
    prescription.
        Through partnerships as well as Per-Se's extensive customer base,
    Per-Se is connected to more than 20 percent of U.S. physicians, more
    than 50 percent of U.S. hospitals, more than 90 percent of U.S.
    pharmacies, and all of the Nation's insurance companies. Per-Se's
    ePrescribing offering provides functionality during the prescribing
    process to a physician at the point of care. This functionality
    includes patient medication history to assess drug allergies and drug-
    to-drug interactions, and checks benefit plan drug formularies to
    facilitate less expensive generic drug use. Per-Se's goal is to
    increase ePrescribing adoption of the Nation's physicians from today's
    2-3 percent to more than 30 percent by 2010.

    Presbyterian Healthcare Services, Albuquerque, New Mexico
        www.phs.org

        A true end-to-end medication management system drives out errors at
    every stage where they can occur--ordering, transcribing, dispensing,
    and administering. Presbyterian Healthcare Services has been building
    such a system since 1999, beginning by automating pharmacy operations
    to support bar code point-of-care medication administration, or
    ``BPOC.'' Results of a three-year study showed a 77.9 percent drop in
    medication administration errors. In 2004, PHS integrated BPOC with a
    pharmacy information system that enables nurses and pharmacists to
    share information regarding patient allergies, schedule changes, and
    missing doses. Via pharmacy-laboratory system integration, the
    pharmacist is notified of abnormal values. A nursing electronic
    documentation system incorporates the updated medication administration
    record in the patient's chart after every med pass. And a secure portal
    gives clinicians anywhere, anytime access to patient information. More
    than 1,000 physicians and other caregivers use it today.
        Most recently, PHS introduced a computerized physician order entry
    system with clinical decision support (CPOE/CDS) to its hospitalists,
    with other physician groups scheduled a month apart throughout the
    year. Two-way communication with the pharmacy system simplifies the
    verification process, eliminates transcription errors and enables
    physicians and pharmacists to share a common drug knowledge base,
    formulary and allergy information. As a result of this large technology
    deployment, between 2002 and 2005 the mortality index at Presbyterian
    Hospital dropped from 1.2 to 0.9. Harm rate has also continued to
    decline to a current low of 0.48 (number of adverse drug events per
    1,000 doses), which is within the top 10th percentile for harm rate
    nationally.

    Quality Improvement Organizations
        www.ahqa.com

        Under a performance-based contract with Medicare, Quality
    Improvement Organizations (QIOs) in every state and territory in the
    U.S. are supporting healthcare transformation by giving free hands-on
    assistance with health IT adoption to more than 3,500 doctors. To help
    these doctors avoid simply automating our current system of care, QIOs
    are providing valuable support with the redesign of care processes to
    improve quality and efficiency. And QIOs are not just working with
    practices in affluent areas--nearly one quarter of the practices
    receiving QIO assistance are those that treat underserved patients.
        Medicare's investment in health IT adoption assistance through the
    QIOs holds significant promise for achieving higher quality of care for
    Americans. Policymakers should examine the approach QIOs are taking to
    help physicians effectively use health IT and consider how this
    strategy could also help the increasing number of long-term care
    providers pursuing the use of IT for better quality care for the frail
    and elderly. QIOs in at least 42 states are also supporting local
    health information exchange efforts, many in leadership roles. QIOs are
    helping accelerate the formation of these efforts by serving as neutral
    conveners, bringing together diverse stakeholders--including home
    health agencies and nursing homes--to build consensus around governance
    structures, sustainable business plans, and policies for data use and
    information sharing.

    Quest Diagnostics
        www.questdiagnostics.com

        Quest Diagnostics, a member of the Center for Health Transformation
    and the Nation's largest clinical reference laboratory, has developed
    its Care360 patient-centric physician portal for small to mid-size
    physicians and physician practices. Care360 allows a medical practice
    to easily collect, review, and seamlessly communicate vital clinical
    aspects of a patient's medical history, including laboratory and
    medication information. Care360 is positioned as an affordable
    alternative to expensive and complex EHR systems for ambulatory
    physician practices that are seeking clinical information technology
    solutions. Care360 gives the physician a convenient way to order
    laboratory tests and prescriptions online; an effective and integrated
    view of a patients' laboratory and medication history at the point of
    care; and the ability to share information securely with other
    physicians and other caregivers within and beyond their office for
    treatment and other appropriate purposes in a truly interoperable
    fashion. Additionally, Care360 provides physicians with the tools for
    participating in pay for performance programs.
        By virtue of its national network of Care360 and other systems and
    a clinical transaction infrastructure supporting over 80,000 physicians
    nationwide and over 1,000,000 clinical transactions daily, Quest
    Diagnostics is playing a leadership role in the growing number of
    community initiatives focused on healthcare information technology
    adoption and interoperability.

    Quovadx
        www.quovadx.com

        Quovadx, a member of the Center for Health Transformation and a
    worldwide supplier of healthcare interoperability solutions, has
    enabled the Florida Department of Health (FDOH) to transform a manual
    set of data collection processes and disparate applications into an
    integrated system for reporting and analysis of critical information
    for public health and safety. Utilizing Cloverleaf'
    Integration Services from Quovadx, the FDOH now provides managers and
    policymakers with access to critical data residing in various counties
    and application systems across the state.
        These vastly improved capabilities enable the FDOH to immediately
    distribute alerts as soon as lab reports are processed by the
    Cloverleaf engine for the early detection and intervention of impending
    healthcare risks. Laboratory data needed for disease surveillance
    programs can now be accessed within 48 hours compared to the previous
    average of 10 days. Additionally, on a Federal level, the Department
    can now make connections between diseases and infected persons or
    populations in multiple locations, enabling the FDOH to respond to
    national biohazard security threats, such as smallpox or anthrax,
    quickly identify and respond to regional outbreaks and environmental
    hazards, and securely transmit data from their Immunization Registry to
    the CDC.

    Southeast Texas Medical Associates, Beaumont, Texas
        www.setma.com

        SETMA began in 1995 as a single-location, primary-care practice
    with five providers utilizing transcription for documenting medical
    records. In 1997, SETMA had grown to a 10-provider practice and
    realized that future growth and development was limited by the paper-
    based medical record. Today, SETMA has three clinical locations and 36
    clinical personnel, including 23.0 full-time-equivalent physicians. In
    2005, SETMA was located directly in the eye of Hurricane Rita, however,
    no medical records were lost as a result of SETMA's EHR and back-up
    process. Because of its efforts, SETMA was awarded a Nicholas E. Davies
    EHR Recognition Program, sponsored by HIMSS. The program recognizes
    provider organizations that successfully use EHR systems to improve
    healthcare delivery.
        Patients can request prescription refills online, with requests
    automatically routed for physician approval and transmission to a
    pharmacy. Prior to implementing the EHR, SETMA had a 20 percent
    immunization compliance rate. Post EHR, it exceeds 80 percent.
    Comprehensive electronic disease management efforts have been launched,
    with over 5,000 patients assessed through a comprehensive program each
    month. SETMA has established a continuum of care model of healthcare
    delivery by tying the clinic to the hospital, to the physical therapy
    clinic, to the home, to the hospice, to the home health agency, etc.
    The full continuum of care is captured electronically.
        Decreases in medical transcription costs saved more than $340,000;
    increases in average billable charges generated more than $150,000 in
    revenue; overall average charge per patient visit increased 20 percent
    and the average collection increased 30 percent; administrative staff
    required to handle the patient's chart decreased by 76.7 percent,
    saving more than $120,000 per year; the average man-hour cost to
    establish a chart decreased 85 percent, an annual savings of more than
    $22,000; average cost for administrative supplies decreased more than
    87 percent; the practice saved more than $380,000 in paper and supply
    costs; amount of time required to handle phone call inquiries that
    required the chart has been reduced by 73 percent; number of tasks
    decreased from 18 down to 2, total annual savings exceed $103,000; and
    number of claim denials has decreased 26 percent, reduced days in
    accounts receivables by 7 days, thus increasing actual revenues by
    $102,000.

    Southwest Medical Associates, a subsidiary of Sierra Health Services,
            State of Nevada
        www.smalv.com

        The largest medical group in Nevada, Southwest Medical Associates,
    a subsidiary of Sierra Health Services, is changing the way doctors
    practice medicine. SMA successfully deploying Allscripts Electronic
    Health Record, TouchWorksTM to its nearly 250 medical
    providers, and is providing electronic prescribing to all of the
    physicians in the State of Nevada--for free.
        It has worked. In 2005, Nevada physicians wrote more than one
    million electronic prescriptions for their patients, making them a
    leader in electronic prescribing practices with a growing body of data
    proving a reduction in medical prescription errors and a significant
    improvement in utilization of generic prescription drugs. Electronic
    prescribing ensures that physicians write safe, clean prescriptions for
    their patients, and helps them select medication alternatives that are
    covered by their patients' insurance plans, thereby reducing the out-
    of-pocket cost of prescription drugs for their patients.
        More than $5 million saved. After 3 years of using electronic
    prescribing, SMA's generic fill rate (GFR) had achieved a 4.8 percent
    lead over a controlled group of physicians in other SHS network groups
    that do not use electronic prescribing. Because every one point
    increase in GFR equals a cost savings to the organization of 1.5
    percent, SMA's increased generic utilization saves $4.75 million each
    year, or 7.2 percent of its 2005 drug spend of $66 million. TouchWorks,
    which is a full electronic health record, also greatly streamlines the
    process of approving prescription refills, in the process creating
    indirect financial savings to SMA of $208,640 a year through increased
    nurse productivity. Taken together, the EHR's annual financial savings
    of $4.96 million has netted SMA a reduction in costs of $5.17 per
    prescription on average. SMA's solution also has increased formulary
    compliance for the group's physicians, and enhanced patient safety.
    Thanks largely to its eRx initiative, SMA now has a generic utilization
    rate of 73.2 percent, one of the highest rates in the country.

    SureScripts
        www.surescripts.com

        SureScripts was founded in 2001 by the National Association of
    Chain Drug Stores and the National Community Pharmacists Association to
    improve the quality, safety, and efficiency of the overall prescribing
    process through electronic prescribing. The SureScripts Electronic
    Prescribing Network is the largest network to link electronic
    communications between pharmacies and physicians, allowing the
    electronic exchange of prescription information. Through the
    SureScripts Network, providers can send and receive new prescription
    information, renewal requests, other messages related to prescriptions,
    medication history, and formulary/eligibility information. SureScripts'
    system helps to ensure neutrality, patient choice of pharmacy, and the
    provider's choice of the best therapy. The pharmacy industry has been a
    leader in implementing information technology in healthcare, resulting
    in cost savings, efficiency in the delivery of care, and better
    healthcare.

    Virtua Health
        www.virtua.org

        Virtua Health is a community based four hospital system in Southern
    New Jersey. While in the process of installing EHR and other ancillary
    technology in their hospitals, they are using the opportunity to
    streamline clinical workflows, reduce duplication and waste, and
    improve patient care. Virtua has brought in a clinical informaticist
    from PricewaterhouseCoopers (PwC) to assist in realizing these
    opportunities. An early adopter of Six Sigma methods in healthcare,
    Virtua has been able to realize savings of several million dollars in
    operations. Simultaneously, Virtua is piloting a physician practice
    based EHR which will ultimately be integrated with the hospital EHR.
    Through this process, Virtua hopes to improve communications with the
    community physicians as well as provide better continuity of care.
        Along the continuum, Virtua has implemented an electronic record
    for their home care division. Patient discharge information is
    automatically passed to the home care agency. Appointments scheduling
    is accomplished electronically before the patient leaves the hospital.
    Homecare nurses carry tablets or laptops to the patient's home where
    all of the necessary information is available. Nurses travel from home
    to the clients and transmit information to the main office each
    evening. Productivity has increased, patients are seen in a more timely
    fashion, and cost savings have been close to $1 million by implementing
    technology simultaneously with streamlining workflow.

       Appendix II--21st Century Entrepreneurial Public Management as a
          Replacement for Bureaucratic Public Administration: Getting
     Government to Move at the Speed and Effectiveness of the Information
                   Age--By Newt Gingrich (December 12, 2005)

        It is simply impossible for the American government to meet the
    challenges of the 21st century with the bureaucracy, regulations and
    systems of the 1880s.
        Implementing policy effectively is ultimately as important as
    making the right policy. In national security we have an absolute
    crisis of ineffective and inefficient implementation which undermines
    even the most correct policies and risks the security of the country.
    In health, education and other areas we have cumbersome, inefficient,
    and ineffective bureaucracies which make our tax dollars less effective
    and the decision of representative government less capable. People
    expect results and not just excuses.
        To get those results in the 21st century will require a profound
    transformation from a model of Bureaucratic Public Administration to a
    model of 21st Century Entrepreneurial Public Management.
        As Professor Philip Bobbitt of the University of Texas has noted:
    ``Tomorrow's [nation] state will have as much in common with the 21st
    century multinational company as with the 20th century [nation] state.
    It will outsource many functions to the private sector, rely less of
    regulation and more on market incentives and respond to ever-changing
    consumer demand.''
        It is an objective fact that government today is incapable of
    moving at the speed of the Information age.
        It is an objective fact that government today is incapable of
    running a lean, agile operation like the logistics supply chain system
    that has made Wal-Mart so successful or the recent IBM logistics supply
    chain innovations which IBM estimates now saves it over $3 billion a
    year while improving productivity and profits.
        There is a practical reason government cannot function at the speed
    of the information age.
        Modern government as we know it is an intellectual product of the
    civil service reform movement of the 1880s.
        Think of the implications of that reality.
        A movement that matured over 120 years ago was a movement developed
    in a period when male clerks used quill pens and dipped them into ink
    bottles.
        The processes, checklists, and speed appropriate to a pre-
    telephone, pre-typewriter era of government bureaucracy are clearly
    hopelessly obsolete.
        Simply imagine walking into a government office today and seeing a
    gas light, a quill pen, a bottle of ink for dipping the pen, a tall
    clerk's desk, and a stool. The very image of the office would
    communicate how obsolete the office was. If you saw someone actually
    trying to run a government program in that office you would know
    instantly it was a hopeless task.
        Yet the unseen mental assumptions of modern bureaucracy are fully
    as out of date and obsolete, fully as hopeless at keeping up with the
    modern world as that office would be.
        Today we have a combination of information age and industrial age
    equipment in a government office being slowed to the pace of an
    agricultural age mentality of processes, checklists, limitations, and
    assumptions.
        This obsolete, process-oriented system of bureaucracy is made even
    slower and more risk averse by the attitudes of the Inspectors General,
    the Congress, and the news media. These three groups are actually
    mutually reinforcing in limiting energy, entrepreneurship, and
    creativity.
        The Inspectors General are products of a scandal and misdeed
    oriented mindset which would bankrupt any corporation. The Inspectors
    General communicate what government employees cannot do and what they
    cannot avoid. The emphasis is overwhelmingly on a petty dotting the i's
    and crossing the t's mentality which leads to good bookkeeping and
    slow, unimaginative, and expensive implementation.
        There are no Inspectors General seeking to reward imagination,
    daring risks, aggressive leadership, or over achievement.
        Similarly, the Members of Congress and their staffs are quick to
    hold hearings and issue press releases about mistakes in public
    administration but there are remarkably few efforts to identify what
    works and what should be streamlined and modernized.
        Every hearing about a scandal reminds the civil service to keep its
    head down.
        Similarly, the news media will uncover, exaggerate and put the
    spotlight on any potential scandal but it will do remarkably little to
    highlight, to praise, and to recognize outstanding breakthroughs in
    getting more done more quickly with fewer resources.
        Finally, the very nature of the personnel system further leads to
    timidity and mediocrity. No amount of extra effort can be rewarded and
    no amount of incompetent but honest inaction seems punishable. The
    failure of the system to reinforce success and punish failure leads to
    a steady drift toward mediocrity and risk avoidance.
        The difference in orientation between what we are currently focused
    on and where we should be going can be illustrated vividly.

        Of course, it is not possible to reach the desired future in one
    step. It will involve a series of transitions, which can also be
    illustrated.

        Without fundamental change, we will continue to have an
    unimaginative, red tape ridden, process-dominated system which moves
    slower than the industrial era and has no hope of matching the speed,
    accuracy and agility of the information age.
        The Wal-Mart model is that ``everyday low prices are a function of
    everyday low cost.'' The Wal-Mart people know that they cannot charge
    over time less than it costs them. Therefore if they can have the
    lowest cost structure in retail they can sustain the lowest price
    structure.
        This same principle applies to government. The better you use your
    resources the more things you can do. The faster you can respond to
    reality and develop an effective implementation of the right policy the
    more you can achieve.
        An information age government that operated with the speed and
    efficiency of modern supply chain logistics could do a better job of
    providing public goods and services for less money.
        Moving government into the information age is a key component of
    America being able to operate in the real time 24/7 worldwide
    information system of the modern world.
        Moving government into the information age is absolutely vital if
    the military and intelligence communities are to be capable of buying
    and using new technologies as rapidly as the information age is going
    to produce them.
        Moving government into the information age is unavoidable if police
    and drug enforcement are to be able to move at the speed of their
    unencumbered private sector opponents in organized crime, slave trading
    and drug dealing.
        Moving government into the information age is a key component of
    America being able to meet its educational goals and save those who
    have been left out of the successful parts of our society.
        Moving government into the information age is a key component of
    America being able to develop new energy sources and create a cleaner
    environment with greater biodiversity.
        Moving government into the information age is a key component of
    America being able to transform the health system into a 21st Century
    Intelligent Health System.
        This process of developing an information age government system is
    going to be one of the greatest challenges of the next decade.
        It is not enough to think that you can simply move the new
    developments in the private sector into the government. The public has
    a right to know about actions which in a totally private company would
    be legitimately shielded from outside scrutiny. There will inevitably
    be Congressional and news media oversight of public activities in a way
    that would not happen in the purely privately held venture.
        As Peter Drucker warned thirty years ago in The Age of
    Discontinuities, the government is different. There are much higher
    standards of honesty and fairness in government than in the private
    sector. There are legitimately higher standards for using the public's
    money wisely. There are legitimate demands for greater transparency and
    accountability. The public really does have a right to know about
    actions which in a totally private company would be legitimately
    shielded from outside scrutiny. There will inevitably be Congressional
    and news media oversight of public activities in a way that would not
    happen in the purely privately held venture.
        There are also legitimately higher expectations of accuracy. In
    early July, in yet another adjustment to an earlier estimate, the
    Congressional Budget Office revised its budget deficit projections for
    this Fiscal Year. In less than 6 months, the CBO was off by nearly 12
    percent. If the Office of Management and Budget agrees with the new CBO
    projection, its estimate will have missed the mark by nearly 24
    percent--an error of more than $100 billion. How can our elected
    officials make informed policy decisions with such faulty analysis? We
    deserve honest answers.
        The House and Senate Budget Committees should hold hearings to
    reform the current CBO scoring processes because modernizing government
    starts with open and accurate budget projections. These projections
    must include the impact that proposed legislation will have on the
    private sector, not just its impact on the Federal budget. For
    instance, Federal spending that promotes health information technology
    or medical innovation has the potential to save countless lives and
    billions of dollars in the private sector. But without scoring these
    benefits CBO and OMB will never be able to distinguish between
    legislation as an investment and legislation as a cost.
        All of these factors require us to develop a new model of effective
    government and not merely copy whatever the private sector is doing
    well.
        That new model can be thought of as 21st Century Entrepreneurial
    Public Management.
    21st Century Entrepreneurial Public Management
        The term 21st Century Entrepreneurial Public Management was chosen
    to deliberately distinguish it from Bureaucratic Public Administration.
    We need two terms to distinguish between the new information age system
    of entrepreneurial management and the inherited agricultural age system
    of bureaucratic administration.
        The one constant is the term public. It is important to recognize
    that there are legitimate requirements of public activity and public
    responsibility which will be just as true in this new model as they
    were in the older model. Simply throwing the doors open to market
    oriented, entrepreneurial incentives with information age systems will
    not get the job done. The system we are developing has to meet the
    higher standards of accountability, prudence, and honesty which are
    inherent in a public activity.
        We have to start with a distinguishing set of terms because we are
    describing a fundamental shift in thinking, in goals, in measurements,
    and in organization. Changes this profound always begins with language.
    People learn new ideas by first learning a language and then learning a
    glossary of how to use that new language. That is the heart of
    developing new models of thought and behavior.
        Shifting the way we conceptualize, organize and run public
    institutions will require new models for education and recruitment as
    well as for the day to day behavior.
        We must shift from professional public bureaucrats to professional
    public entrepreneurs. We must shift from administrators to managers.
    The metrics will be profoundly different. The rules will be profoundly
    different. The expectations will be profoundly different.
        A first step would be for Schools of Public Administration to
    change their titles to Schools of Entrepreneurial Public Management.
    This is not a shallow gimmicky word trick. Changing the name of the
    institutions that attract and educate those who would engage in public
    service will require those schools to ask themselves what the
    difference in curriculum and in the faculty should be.
        The President, Governors, Mayors, and County Commissioners should
    appoint advisory committees from the business community and from
    schools of business to help think through and develop principles of
    21st Century Entrepreneurial Public Management.
    Principles of 21st Century Entrepreneurial Public Management
        This is a topic which is just beginning to evolve. Over the next
    few years it will lead to books, courses, and even entire programs.
    Obviously it can only be dealt with briefly in this paper. For more
    information and for developments since the date of this paper, go to
    www.newt.org and click on 21st Century Entrepreneurial Public
    Management.
        The following are simply an introductory set of principles:

        1. Every system should define itself by its vision of success.
    Unless you know what a department or agency is trying to accomplish
    (and has been assigned to accomplish by the President and the
    Congress), you cannot measure how well it is doing, how to structure
    the agency, how to train the employees so they can be an effective
    team. Definition of success precedes everything else.
        2. Planning has to always be in a deep-mid-near model. For
    government deep is probably 10 years, mid is about 3 years and near is
    next year. Unless the agency plans back from the desired future it is
    impossible to distinguish between activity and progress. In Washington
    and most state capitals far too much time is spent on today's headline
    and today's press conference and not nearly enough time is spent
    preparing for tomorrow's achievement.
        3. Every agency and every project has to be planned with a clear
    process of:

            a. defining the vision of success;

            b. defining the strategies which will achieve that vision;

            c.  defining the projects (definable, delegatable achievements
            see below) necessary to implement the strategies;

            d.  defining the tasks which must be completed to achieve the
            projects;

            e.  defining the metrics by which you will be able to measure
            whether the project is on track; and

            f.  turning to the customers, the experts, and the
            decisionmakers and following a process of listen-learn-help-
            lead to find out whether your definition of success and
            definition of implementation fits their understanding. This
            process properly used turns every person into a consultant
            helping improve your planning and your execution.

        4. Every significant system requires a reporting process comparable
    to the COMSTAT and TEAMS reporting instituted by Mayor Giuliani in the
    New York City Police Department and the Prisons. Giuliani's Leadership
    is a good introduction to the concept of COMSTAT and similar reporting
    and managing tools. The key is for senior leadership to constantly
    (weekly in key areas, monthly in others) review the data and make
    changes in a collaborative way with the team charged with implementing
    the system. Every significant strategy requires an Assessment Room in
    which the senior leadership can visibly see all the key data and review
    the totality of the strategy's implementation in one sweeping overview.
    Determining what metrics should be used to define success and
    maintaining those metrics with accuracy is a major part of this
    process. The absence of COMSTAT systems, the absence of Assessment
    Rooms, and the absence of routine review is a major factor in the
    ineffectiveness and inefficiency of the Federal Government in almost
    every department. ``You get what you inspect not what you expect'' is
    an old management rule. If no one knows what is going to be inspected
    and if no data is available for inspection it should not surprise us
    that the current system also does not function very well.
        5. When a strategy is not working well senior leaders need to ask
    the following tough minded questions:

            a.  Is the strategy the right one (this suggests a courageous
            reexamination of external realities to see if we have simply
            tried to do the wrong thing)?

            b.  If it is the right one then is the problem resources?

            c.  If we have the right strategy and the right resources then
            do the people implementing it need more training?

            d.  If we have the right strategy, the right resources, the
            right training, do we have the wrong people in charge?

            e.  If everything looks like it should be working is there
            something inherently wrong with the structure and the system
            which needs to be changed so we can achieve our goals?

            f.  If everything is in place but it still is not working, are
            there regulations which are slowing us down and making us
            ineffective and if there are who is drafting up the replacement
            regulations to be issued by the President or whatever authority
            is required?

            g.  If everything is in place that the executive branch can
            control is the problem with the law and should the President
            send to Congress proposed changes to enable the strategy to be
            implemented?

            h.  Can these seven steps be undertaken on a weekly or at most
            monthly basis so the rhythm and tempo of government can begin
            to match the requirements of the information age?

        6. The process of defining and managing projects will require
    profound changes in the laws governing personnel, procurement, etc.
    Projects are the key building block of Entrepreneurial Public
    Management. They permit the senior leader to delegate measures of
    accomplishment rather than measures of activity. A simple distinction
    is between asking bureaucracies to engage in cooking and asking someone
    to prepare dinner for 12 people at 8 o'clock tomorrow night for $11 a
    piece and making it Mexican food. The Bureaucratic Public
    Administration request for cooking allows the bureaucracy to report on
    activities (we are cooking every day, we are studying cooking, we are
    having a cooking seminar) without any metric of achievement. The
    process of defining achievements and delegating them is virtually
    impossible under today's personnel, procurement and spending laws. A
    clear example of the difference can be found by studying the division
    commanders' use of commander's emergency money in Iraq with the
    Coalition Provision Authority process. One division commander told me
    they could use the emergency money to order cars from a local Iraqi and
    that Iraqi could procure the cars in Turkey and drive them to the local
    town faster than they could process the paperwork in Baghdad to begin
    the process of purchasing through the CPA. The Congress and the
    President agreed to spend $18 billion rebuilding Iraq and 10 months
    later $16 billion was still tied up in paperwork. Only the commander's
    emergency money was being spent in a timely, effective way. The same
    experience happened in Afghanistan where the United States Agency for
    International Development could not process the paperwork fast enough
    to meet the requirements of rebuilding Afghan civil society. One
    commander said that in rebuilding a society after a war ``dollars are
    to rebuilding what ammunition is to a firefight.'' If the ammunition
    for the war were as constrained and slow as the dollars in
    reconstruction we would lose every war. Getting the system to move at
    the speed of wartime requirements and at the speed of information age
    processes requires a totally new model of delegating massively to
    project managers who are measured by their achievements not by the
    details of process reporting. This will be the most profound change in
    shifting from Bureaucratic Public Administration to Entrepreneurial
    Public Management and it will require substantial change in law, in
    culture, and in congressional and executive leadership expectation. To
    be sustained it will also have to be understood by reporters and
    analysts so the news media is focused on the same metrics as the
    leadership.
        7. At every level leaders have to sift out the vital from the nice.
    In the information age there is always more to do than can possibly get
    done. One of the keys to effective leadership and to successful
    projects is to distinguish the vital from the useful. A useful way to
    think of this is that lions cannot afford to hunt chipmunks because
    even if they catch them they will starve to death. Lions are hyper-
    carnivores who have to hunt antelopes and zebras to survive. Every
    leader has to learn to distinguish every morning between antelopes and
    chipmunks by focusing on success as defined in a deep-mid-near time
    horizon then allowing that definition of success to define the antelope
    that really have to be achieved in order for the project to work.
        8. An effective information age system has to focus on the outside
    world and ``move to the sound of the guns.'' In the Bureaucratic Public
    Administration model which was developed at the cusp of the shift from
    an agrarian to an industrial society the key to focused achievement was
    to define your silo of responsibility and stick within that silo. As
    long as you were doing your job within that system of accountability
    you were succeeding even if the larger system were collapsing or
    failing. In the information age this internally oriented approach is
    doomed to fail. There are too many things happening too rapidly for
    people to be effective staying focused only on their own system. As
    Peter Drucker pointed out, in his classic, The Effective Executive,
    effective leaders realize that all the important impacts occur outside
    the organization and the organization exists for the purpose of
    achievements measured only by outside occurrences. Since the world is
    so much larger and so much faster moving than our particular activity
    we have to constantly be paying attention to the outside world. The
    military expression of this is the term OODA-loop. In the modern
    military the winning side Observes a fact, Orients itself to the
    meaning of that fact, Decides what to do, Acts and then loops back to
    Observe the new situation faster than its competitor. The winning team
    is always more AGILE and AGILITY is a vital characteristic for winning
    systems in the information age. This process is characterized by Dr.
    Andy von Eschenbach of the National Cancer Institute as the ability to
    discover-develop-deliver as rapidly as possible. However you describe
    these capabilities, they are clearly not the natural pattern of
    Bureaucratic Public Administration. They have to become the natural
    rhythm of Entrepreneurial Public Management if government is to meet
    the requirements of the information age.
        9. When dealing with this scale of complexity and change people
    have to be educated into a doctrine so they understand what is expected
    and how to meet the expectations. We greatly underestimate how complex
    modern systems are and how much work it takes to understand what is
    expected, what habits and patterns work, how to relate to other members
    of the team. The more complex the information age becomes and the
    faster it evolves, the more vital it is to have very strong team
    building capabilities so people can come together and work on projects
    with a common language, common system, and common sense of
    accountability. Developing this kind of common understanding is what
    the military calls doctrine. Every system has to have a doctrinal base
    and the team members will be dramatically more effective if they have a
    shared understanding of the doctrine of their team.
        10. The better educated people are into doctrine, the simpler the
    orders can be. The less educated someone is into the common doctrine,
    the more complete and detailed the orders have to be. With a very
    mature team that has thoroughly mastered the doctrine and applied it in
    several situations, remarkably few instructions are required. In a
    brand new team the orders may have to be very detailed. The
    Entrepreneurial Public Management system has to have the flexibility to
    deal with the entire spectrum of knowledge and capability this implies.
        11. The information age requires a constant focus on team building,
    team development, and team leadership. It is the wagon train and not
    the mountain man that best characterizes the information age. People
    have to work together to get complex projects completed in this modern
    era. It takes a while to build teams. There should be a lot more
    thought given to changing personnel laws so leaders can arrive in a new
    assignment with a core team of people they are used to working with.
    Admiral Ed Giambastiani of the joint Forces Command (which has
    responsibility for pioneering information age transformation in the
    military) has captured the distinction in modern sophisticated team
    requirements. He has a single chart that shows the growth in maturity
    toward truly interdependent teams. These teams are integrated,
    collaborative, inherently joint, capabilities based and network-
    centric. Entrepreneurial Public Management will require similar
    standards of sophisticated organization and teamwork for it to work at
    its optimum.
        12. Information technology combined with the explosion in
    communications (including wireless communications) create the
    underlying capabilities that should be at the heart of transforming
    government systems from Bureaucratic Public Administration to
    Entrepreneurial Public Management. The power of computing and
    communications to capture, analyze and convey information with stunning
    accuracy and speed and at ever declining costs creates enormous
    opportunities for rethinking how to deliver goods and services. These
    new capabilities have been engines of change in the private sector.
    They are the heart of Wal-Mart's ability to turn ``everyday low price
    is a function of everyday low cost'' into a realistic implementation
    strategy. They are at the heart of the revolution in logistics supply
    chain management. They are this generation's most powerful reason for
    being sure we can expect more choices of higher quality at lower cost.
    We have only scratched the surface of the potential. The Library of
    Congress now has a digital library with millions of documents available
    24 hours a day 7 days a week for free to anyone in the world who wants
    to access them through the Internet. It is possible for every school in
    the country to have the largest library in the world by simply having
    one laptop accessing the Internet. This is a totally different kind of
    system for learning. NASA is now connecting to schools to allow
    students to actually direct telescopes and search for stars from their
    classroom. This is an extraordinary extension of research opportunities
    to young scientists and young explorers. The potential to use the
    computer, the Internet, and communications (again including wireless)
    has only begun to be tapped. The more rapidly government leaders study
    and learn the lessons of these new potentials the more rapidly we will
    invent a 21st century information age governing system which uses
    Entrepreneurial Public Management to produce more choices of higher
    quality at lower cost.
        13. Creating a citizen centered government using the power of the
    computer and the Internet. The agrarian-industrial model of government
    saw the citizen as a client of limited capabilities and the government
    employee as the center of knowledge, decision and power. It was a
    bureaucrat-centered model of governance (much as the agrarian-
    industrial model of health was a doctor-centered model and the
    agrarian-industrial school was a teacher-centered model). The
    information age makes it possible to develop citizen centered models of
    access and information. The Weather Channel and Weather.com are a good
    example of this new approach. The Weather Channel gathers and analyzes
    the data but it is available to you when you want it and in the form
    you need. You do not have to access all the weather in the world to
    discover the weather for your neighborhood tomorrow. You do not have to
    get anyone's permission to access the system 24 hours a day 7 days a
    week. Google is another system of customer centric organization that is
    a model for government. You access Google when you want to and you ask
    it the question that interests you. Google may give you an answer that
    has over a million possibilities but you only have to use the one or
    two options that satiate your interest. Similarly Amazon.com and E-Bay
    are models of systems geared to your interests on your terms when you
    want to access them. Compare these systems with the current school
    room, the courthouse which is open from 8 to 5, the appointment at the
    doctor's office on the doctor's terms, the college class only available
    when the professor deigns to show up. Government is still mired in the
    pre-computer, pre-communications age. A key component of
    Entrepreneurial Public Management is to ask every morning what can be
    done to use computers, the Internet, CDs, DVDs, teleconferencing, and
    other modern innovations to recenter the government on the citizen.
        14. A customer centered, citizen centered model of governance would
    start with the concept that as a general rule being online is better
    than being in line. It would both put traditional bureaucratic
    functions on the Internet as is happening in many states (paying taxes,
    ordering license tags, etc.) but it would also begin to rethink major
    functions of government in terms of the new Internet based system. The
    information age makes possible a lot more citizen self help as defined
    by the citizen's needs. If learning is individually centered and
    adapted to the needs of each person, and available when they need it
    and on the topics of skills they need, then how would that learning
    system operate? If prisoners out on parole were monitored by wireless
    information age technology to ensure they were going to work, taking
    their classes, staying out of off limits areas, etc., then how would
    the new model parole system operate? If migrant children could be
    connected to an online, videoconferencing and teleconferencing learning
    system so they had a continuity of learning experience how would that
    process operate? These are just some examples of how a citizen centered
    new model would be different from using information systems to improve
    the existing agrarian and industrial era delivery systems.
        15. One of the key side effects of information technology and
    ubiquitous communications is the development of much flatter
    hierarchies and much greater connectedness across the entire system. In
    private business, the military, and in customer relationships, there is
    a much flatter system of information flow. The power of knowledge is to
    some extent driving out the power of the hierarchy. A networked system
    seems to operate very differently than the pyramid of power which has
    been dominant since the rise of agriculture with a few at the top
    giving orders to the many at the bottom. Increasingly, who knows is
    defining who is in charge. Entrepreneurial Public Management will have
    a much more fluid system for shifting authority based on expertise and
    on identifying what knowledge needs to be applied so the right informed
    person can be brought in to make the decision as accurate and effective
    as possible. Bureaucratic Public Administration defined who was in the
    room by a system of defined authority without regard to knowledge.
    Entrepreneurial Public Management will define participation in the
    decisions by a hierarchy of knowledge and experience rather than a
    hierarchy of status and defined authority.
        16. There will be a radical shift toward online learning and online
    information. In the information age people need to know so much in so
    many different areas and the knowledge itself keeps changing in a
    rapidly evolving world that it is impossible for the traditional
    classroom based continuing education system to keep up with modern
    reality. The combination of videoconferencing, online learning,
    mentoring and apprenticeships will presently create a totally different
    system of professional development and continuing education.
    Governments will shift from flying people to conferences and workshops
    toward having video conferences. They will also shift from courses
    built around the teacher's convenience and occurring inconveniently in
    time and place toward ongoing learning opportunities that can be
    accessed 24/7 so people can learn when they need, what they need, and
    at their own convenience. This will increase the learning while
    decreasing the cost in both time and money.
        17. Personnel mobility will be a major factor in the information
    age and will require profound changes in how we conceptualize a civil
    service. The information age creates career paths in which the most
    competent people move from challenging and interesting job to
    challenging and interesting job. A government civil service that
    required a lifetime commitment was both guaranteeing that it would not
    attract the most competent people and guaranteeing that it would not
    have the flexibility to bring in the specialists when they are needed.
    A new system of allowing people to move in and out of government
    service, to move from department to department as they are needed, to
    accumulate and take with them health savings accounts and pension
    plans, to buildup seniority with each passing assignment, and to be
    able to rise without continuous service as long as their experience and
    knowledge has risen, these are the kind of changes which will be
    necessary for an Entrepreneurial Public Management system to attract
    the kind of talent it will need in the information age. It may also
    make sense for different governments to agree to count the experience
    in other governments in assigning status and pension eligibility so
    people could move between governments as well as within them.
        18. Outsourcing is inevitably going to be a big part of the
    information age. Virtually every successful private sector company uses
    outsourcing extensively. The ability to create competitive pressures
    and shift to the best provider is inherent in the outsourcing model.
    Applying these principles to the public sector will both save the
    taxpayer money and improve substantially the quality and convenience of
    services provided to the citizens. It is also simply a fact that in
    many of the most complex developments of the information age the public
    sector bureaucracy simply cannot attract the expertise and build the
    capability to manage the new systems effectively. In these cases
    outsourcing is the only way to bring new developments into the
    government.
        19. Privatization is a zone that needs to be readdressed in
    Washington and in the states. At one time the United States was a
    leader in privatization but now we have fallen far behind many foreign
    countries. There are a number of opportunities for privatization which
    would help balance the budget, increase the tax rolls of future
    contributors to government revenue, and increase the efficiency of the
    services delivered to the citizen. The Thatcher model of selling some
    of the stock to the beneficiaries of the services dramatically reduced
    resistance to privatization in Britain. A similar strategy of
    developing an economic incentive for those most likely to object to
    conclude that privatization was a good thing for them personally would
    lower the resistance and increase the opportunity to move naturally
    market oriented entities off the government payroll and into the market
    where it belongs.
        20. For activities where privatization would be wrong there is a
    pattern of public-private partnerships which should be examined. The
    Atlanta Zoo was on the verge of being disaccredited because the city of
    Atlanta bureaucracy simply could not run it effectively. Mayor Andrew
    Young courageously concluded that the answer was to create a public-
    private partnership with the Friends of the Zoo. The city would
    continue to own the zoo and would provide some limited funding but the
    Friends of the Zoo would find additional resources and would provide
    entrepreneurial leadership. The Friends of the Zoo then recruited Dr.
    Terry Maples, a brilliant professor from Georgia Tech and a natural
    entrepreneur and salesman. With Terry's leadership and the Friends of
    the Zoo's enthusiastic backing, he rapidly turned ZooAtlanta into a
    world class research institution and a wonderful attraction both for
    the families of the Atlanta area and to visitors from around the world.
    ZooAtlanta went from being an almost disaccredited embarrassment to an
    extraordinary example of a public-private partnership. Other zoos
    around America have had similar experiences with new entrepreneurial
    leadership bringing new ideas, new excitement, and new resources to
    what had formerly been a government run institution. The government
    retains ownership of the zoo but the daily operations are under the
    control of the entrepreneurial association that raises the money and
    provides strategic guidance. The result is far more energy and
    creativity and a great deal more flexibility of implementation than
    could ever be achieved with a purely public bureaucracy. This is the
    model that should be applied to creating a truly national zoo in
    Washington where the National Zoo has suffered from the problems of a
    neglectful bureaucracy. This is also a model of the kind of activities
    which could be used in many other areas. When something can't be
    privatized or outsourced the next question should be whether or not
    there is a useful public-private partnership that might be used to
    accomplish the same goals with fewer taxpayer resources and more
    creativity, energy and flexibility.
        21. As a general principle, proposals that (i) dramatically improve
    applying logistics supply chain management, go paperless, adapt a
    quality-metrics system and/or (ii) outsource or privatize, should be
    viewed by 3rd party independent experts with no financial interests as
    well as by the agency to be changed. As a general rule government
    agencies or department leaders faced with improvements that will shrink
    their workforce or shrink their budget will be reluctant to say yes.
    There are no incentives and rewards in government for downsizing and
    modernizing. The senior leader and the legislative branch need third
    party opinions as well as the in-house review and the vendor's proposal
    to ensure that the maximum improvements are being implemented.
        22. Create pressure for modernizing government at all levels by
    requiring Federal and state governments to benchmark best practices
    every year and agree to pay no more than 10 percent above the least
    expensive, most effective programs. This approach would create a
    continuous pressure to have government programs in each state
    constantly adapting toward better outcomes at lower cost. This approach
    also might entail providing a bonus to the state which has the best
    program in the country. It would also create an annual rhythm of
    benchmarking and data gathering which would revolutionize how we think
    about government. Benchmarking would also make very visible the cost of
    recalcitrant government unions and the cost of bureaucratic resistance
    to modernization.
        23. This system of Entrepreneurial Public Management requires
    profound changes in the analytical assumptions of the Congressional
    Budget Office (CBO) and the Office of Management and Budget (OMB).
    Today neither office has a model for distinguishing between investments
    (which increase productivity and lower cost) and pure costs. Neither
    system has a model for offsetting future savings against innovation and
    technological breakthroughs. Neither system has a model for the impact
    of incentives on behavior. The result is both systems are essentially
    reactionary and premodern in their assessment of proposed policies. In
    many ways the CBO-OMB reactionary models are the greatest single
    roadblock to sound investment in an incentivized, technologically
    advanced, dramatically more productive future. Their scoring systems
    reinforce current spending on obsolete bureaucracies and inhibit
    investments in profound change.
        These 23 principles are examples of the kind of thinking which will
    be required to move from a system of Bureaucratic Public Administration
    to a system of Entrepreneurial Public Management. It is one of the most
    important transformations of our lifetime and without it government
    will literally not be able to keep up with the speed and complexity of
    the information age.

    The Legislative Role in Developing 21st Century Entrepreneurial Public
            Management
        The Congress and state legislatures should begin holding hearings
    on the difference between a government run according to the information
    age principles of Entrepreneurial Public Management from a government
    run according to the principles of Bureaucratic Public Administration.
    For the legislative branch the changes will include:

       Replacing the current civil service personnel laws with a
            new model of hiring and leading people including part time
            employees, temporary employees, the ability to shift to other
            jobs across the government, the ability to do training and
            educating on an individualized 24/7 Internet based system;

       Radically simplifying the disclosure requirements which have
            become a major hindrance to successful people coming to work
            for the Federal Government;

       The Senate adopting rules to minimize individual Senators
            holding up Presidential appointments for months. The current
            process of clearing and confirming Presidential personnel
            should be a national scandal because it disrupts the
            functioning of the executive branch to a shocking degree. There
            should be some time limitation (say 90 days) for every
            appointment to reach an up or down vote on the Senate floor
            (this is separate from judicial nominations, which is a
            different kind of problem). The current Senate indulgence of
            individual Senators is a constant wound weakening the executive
            branch ability to manage;

       Creating a single system of security clearances so once
            people are cleared at a particular level (e.g., Secret, top
            secret, code word) they are cleared throughout the Federal
            Government and do not have to go through multiple clearances;

       Writing new management laws that enable entrepreneurial
            public leaders to set metrics for performance and reward and
            punish according to the achievement level of the employees;

       Within appropriate safeguards creating the opportunity for
            leaders to suspend and when necessary fire people who fail to
            do their jobs and fail to meet the standards and the metrics;

       Working with the major departments to reshape their
            education and training programs and their systems of assessment
            so they can begin retraining their existing workforce into this
            new framework;

       Developing a new set of goals and definitions for the
            Inspectors General's job and refocusing those professionals
            into being pro-active partners in implementing the new
            Entrepreneurial Public Management approach including in their
            own offices;

       Designing a new salary structure that reflects the
            remarkable diversity of capabilities, hours worked, level of
            knowledge, independent contracting, part time engagement, etc.,
            that is evident in the information age private sector;

       Passing a new system of procurement laws that encourage the
            supply chain thinking that is sweeping the private sector;

       Developing a new model of Congressional and state
            legislative staffing to ensure that enough experts and
            practitioners are advising legislators at the Federal and state
            level so they can understand the complex new systems that are
            evolving and that are transforming capabilities in the private
            sector;

       Transforming the Congressional Management Institute so it is
            playing a leading role in developing the new legislative
            version of Entrepreneurial Public Management (some states have
            similar institutions);

       Transforming the Government Accountability Office, the
            Congressional Research Service and the Congressional Budget
            Office into institutions that understand and are implementing
            the principles of Entrepreneurial Public Management;

       Developing a system for educating new Members of Congress
            and new congressional staff members into these new principles;

       Creating an expectation that within 2 years every current
            congressional staff member will have taken a course in the new
            method of managing the government in an entrepreneurial way;

       Rethinking the kind of hearings that ought to be held, the
            focus of those hearings, and the kind of questions that
            government officials ought to be answering;

       Designing a much more flexible budget and appropriations
            process that provides for the kind of latitude entrepreneurial
            leaders need if they are to be effective;

       Establishing for confirmation hearings the kind of
            questioning that elicits from potential office holders how they
            would work in an Entrepreneurial Public Management style and
            apply these questions with special intensity to people who come
            from a long background of experience in the traditional
            bureaucracy.

        With this set of changes the legislative branches will have
    prepared for a cooperative leadership role in helping the executive
    branch transform itself from a system dedicated to Bureaucratic Public
    Administration into one working every day to invent and implement 21st
    Century Entrepreneurial Public Management.

        Senator Ensign. Thank you, Mr. Speaker. You really need to
    work on your speaking skills.
        [Laughter.]
        Senator Ensign. You never have been very persuasive. No, I
    appreciate your being here. It was very good testimony. In my
    questions, you'll be interested in what I was doing yesterday.
        So, we'll next hear from Dr. Mark Leavitt. Dr. Leavitt is
    the Chairman of the Certification Commission for Health
    Information Technology.
        Dr. Leavitt?

             STATEMENT OF MARK LEAVITT, M.D., Ph.D., CHAIR,

                CERTIFICATION COMMISSION FOR HEALTHCARE

                     INFORMATION TECHNOLOGY (CCHIT)

        Dr. Leavitt. Thank you, Mr. Chairman. Thanks for inviting
    me. I'm Mark Leavitt, Chairman of the Certification Commission
    for Healthcare Information Technology, which we'll call CCHIT
    for the next 5 minutes. I'm honored to be here.
        In my written testimony, I spend a page or two on the need
    for the adoption of health IT. Today, I'm not going to attempt
    to duplicate what Speaker Gingrich has said. We know we need
    it. I'm going to talk about CCHIT and what we're doing to help
    accelerate it.
        CCHIT was formed in 2004 in response to the strategic
    framework that was put forth by the first national coordinator.
    And our mission is to accelerate the adoption of health IT in
    the United States healthcare system. And when we say ``health
    IT,'' we mean robust--does what people expect, has the expected
    benefits--and interoperable, meaning information becomes
    portable and comparable.
        We think we can do that in four ways:
        First, we think we can reduce the risk when providers
    invest in health IT that it will deliver what they need.
        Second, we want to make sure that the adoption of health IT
    produces compatibility and interoperability, not a digital
    version of the current information islands we now have with
    paper.
        Third, we want to try to unlock financial incentives.
    You've already said, Mr. Chairman--pointed out how the payback
    for the IT often goes to the payers and the purchasers, and not
    necessarily the provider. Many payers and purchasers are
    willing to send some of the gains back as incentives, but they
    need assurance that these health IT systems will deliver the
    expected benefits. We can help simplify that and provide a
    gating process.
        And, finally, we need to help ensure that when we move from
    a paper to a digital world, we enhance privacy rather than
    reduce it. And we can do that, if we do it right.
        CCHIT was founded by three health IT organizations--AHIMA,
    HIMSS, and the Alliance. They provided the seed funding and the
    seed personnel. We broadened our funding with eight additional
    organizations a year later, and, as you know, we were awarded
    the HHS contract in September 2005, a 3-year, $7.5-million
    contract. We certify the compliance of EHRs, electronic health
    records, and networks with standards.
        We work with Dr. Halamka's organization and the other ones,
    the other contractors, very much hand-in-glove. And I like to
    think of CCHIT as the interface between HITSP, the standards
    organization, the architecture prototype contractors, the
    privacy solutions contractor, and the real world marketplace of
    everyday manufacturers making products and doctors and
    hospitals buying products. We're the interface. We drive this
    new structure into the marketplace, basically using market
    mechanisms.
        I'd like to now provide a status report. We're pleased to
    report that we have met all of our contractual milestones to
    date. The first phase of the contract required development of
    standards compliance criteria and an inspection process for
    ambulatory care EHRs--doctors offices and clinics. The criteria
    were developed. The inspection process was developed. They were
    refined through multiple cycles of public comment. We responded
    to over 2,000 comments. We pilot-tested the criteria and the
    inspection process, and, finally, published the criteria on May
    1st. We accepted applications. And I'm pleased to report that
    we actually are now testing the first round of ambulatory EHR
    products. We had more than two dozen vendors apply, and we're a
    good way--about a third of the way through that process. We'll
    make our first announcement of certified products on July 18,
    2006, less than a month from now.
        The certification will then be made available every
    quarter. We do this in batches, so that our announcements have
    some significance. And we'll repeat it quarterly and update the
    criteria annually. We need to update the criteria, because this
    is an evolutionary and incremental process. Besides ambulatory
    care, in the next year we will add inpatient electronic health
    record components. And, in the following year, we'll begin to
    add the networks through which inpatient and ambulatory record
    systems interoperate.
        Although we operate in the private sector, our organization
    strives to meet the stringent requirements for openness and
    transparency that apply to governmental activities, and that's
    because we could have a substantial influence on the
    marketplace and the fortunes of vendors, so we're very
    meticulous about it. We engage a broad array of stakeholders.
    We publish all of our work. We use public comment. We've worked
    with both the private and the public sector. For example, NIST
    is helping us with a mechanism to monitor our jurors, the
    inspection juror reliability.
        So, to sum up, our goal is to help accelerate the adoption
    of health IT by certifying standards compliance of health IT
    products. We have engaged diverse stakeholders. We have
    developed the first set of criteria. We are now testing
    products, and hope to soon have an impact--a very positive
    impact on the marketplace.
        We're proud to play a role--a partial role in this strategy
    to advance the adoption of health IT. Thank you for your time,
    and I look forward to any questions you may have.
        [The prepared statement of Dr. Leavitt follows:]

     Prepared Statement of Mark Leavitt, M.D., Ph.D., Chair, Certification
            Commission for Healthcare Information Technology (CCHIT)

    Introduction
        Mr. Chairman, Mr. Co-Chairman, and distinguished members of the
    Committee, thank you for inviting me today. My name is Mark Leavitt,
    and I am here in my capacity as Chairman of the Certification
    Commission for Healthcare Information Technology (CCHIT). I am honored
    to have the opportunity to address this hearing on ``Accelerating the
    Adoption of Health Information Technology.''

    Need for Action to Accelerate the Adoption of Interoperable Health IT
        The United States may lead the world in its deployment of advanced
    diagnostic and treatment technology, but our country paradoxically lags
    behind many others in the adoption of healthcare information
    technology--computer systems and networks that can manage patient
    information, enhance care team and patient communication, support
    evidence-based decision-making, and help prevent medical errors. Dr.
    David Brailer, the first National Coordinator for Health Information
    Technology, previously testified before this Subcommittee that
    widespread health IT adoption could reduce healthcare costs by 7.5
    percent to 30 percent as well as prevent a substantial fraction of
    medical errors.\1\
    ---------------------------------------------------------------------------
        \1\ Brailer DJ, Testimony before the U.S. Senate Committee on
    Commerce, Science and Transportation Subcommittee on Technology,
    Innovation, and Competitiveness, June 30, 2005.
    ---------------------------------------------------------------------------
        Despite these potential benefits, adoption of health IT has
    proceeded unevenly. While some of the largest healthcare delivery
    organizations have fully embraced information technology, adoption in
    other settings has lagged; for example, fewer than 15 percent of
    physicians have electronic health records available in their offices
    today.\2\ Even in cases where hospitals and offices have installed this
    technology, their systems are not interoperable, and without this
    ability to electronically retrieve a patient's record of care from
    other locations, billions of dollars are wasted annually in unnecessary
    duplication of tests and procedures.\3\
    ---------------------------------------------------------------------------
        \2\ Gans D, Kralewski J, Hammons T, Dowd B, ``Medical Groups'
    Adoption of Electronic Health Records and Information Systems,'' Health
    Affairs 24:5, 1323-1333, Sept 2005.
        \3\ Walker J, Pan E, Johnston D, Adler-Milstein J, Bates DW,
    Middleton B, ``The Value Of Health Care Information Exchange and
    Interoperability,'' Health Affairs web exclusive W5-10, Jan 2005.
    ---------------------------------------------------------------------------
    The Certification Commission for Healthcare Information Technology
            (CCHIT)
        In July 2004, the National Coordinator issued a Framework for
    Strategic Action to accelerate the adoption of interoperable health IT,
    and in that report he challenged the private sector to develop
    certification of health IT products as one of the ``key actions''
    necessary to both accelerate adoption and ensure interoperability of
    these systems.\4\
    ---------------------------------------------------------------------------
        \4\ Thompson TG, Brailer DJ, ``The Decade of Health Information
    Technology: Delivering Consumer-centric and Information-rich Health
    Care--A Framework for Strategic Action, July 2004 (www.hhs.gov/
    healthit/documents/hitframework.pdf).
    ---------------------------------------------------------------------------
        In response to that call for action, the Certification Commission
    for Healthcare Information Technology (CCHIT) was formed, with the
    mission of accelerating the adoption of robust, interoperable health IT
    throughout the U.S. healthcare system, by creating an efficient,
    credible, sustainable mechanism for the certification of health IT
    products. Through certification, CCHIT seeks to help accelerate the
    adoption of health IT in four ways:

            1. By reducing the risk healthcare providers face when
            investing in health IT.

            2. By ensuring interoperability of these systems with emerging
            networks.

            3. By enhancing the availability of financial incentives and/or
            regulatory relief.

            4. By protecting the privacy of personal health information.

        Funding and staff to launch CCHIT were contributed by three
    industry associations: the American Health Information Management
    Association (AHIMA), the Healthcare Information and Management Systems
    Society (HIMSS), and the National Alliance for Health Information
    Technology (Alliance). In June 2005, eight additional organizations
    further broadened the Commission's funding base. CCHIT then responded
    to a Request for Proposal from ONC/DHHS for development of compliance
    criteria and an inspection process to certify electronic health records
    and networks, and that three-year, $7.5 million contract was awarded to
    CCHIT in September 2005. Concurrently, contracts were awarded to other
    entities to harmonize standards, develop National Health Information
    Network prototypes, and analyze and develop solutions for state-to-
    state variations in electronic health information privacy policies.

    Status Report on the Efforts of CCHIT
        CCHIT is pleased to report that it has met all contractual
    milestones to date. The first phase of the contract required
    development of standards-compliance criteria and an inspection process
    for Electronic Health Record (EHR) systems that are used in ambulatory
    care settings. These criteria, and an inspection process for certifying
    compliance, have been developed, refined through multiple cycles of
    public comment, pilot tested, and published. At the present time,
    testing of the first round of applicants is underway, with the first
    certification announcement to occur on July 18, 2006. Certification
    testing will be made available every quarter, and the criteria
    themselves reviewed and updated annually. Besides listing the criteria
    required for certification in the current year, CCHIT also publishes a
    forward-looking roadmap indicating what additional functionality,
    interoperability, and security capabilities will be required in future
    years. In the coming year, the Commission will address certification of
    components of EHR systems in the hospital, and in the following year,
    certification will be developed for the emerging networks that
    interconnect these systems.
        Although CCHIT operates in the private sector, the organization
    strives to meet the stringent requirements for openness and
    transparency that apply to governmental activities, and its work
    represents a broad consensus among both private and public
    stakeholders. In the private sector, this includes physicians,
    hospitals, other care providers such as safety net facilities, health
    IT vendors, payers and purchasers of healthcare, quality improvement
    organizations, standards development organizations; informatics
    experts, consumer organizations; and others. From the public sector,
    CCHIT has benefited from participation by representatives of Federal
    agencies including HHS/ONC, CMS, VA, and CDC. In addition, NIST has an
    active role in providing expert advice to CCHIT on the development and
    execution of its test processes. CCHIT also works collaboratively with
    the other HHS health IT contractors.

    Summary
        CCHIT's goal is to help accelerate the adoption of robust,
    interoperable health IT by certifying the standards-compliance of
    health IT products. The Commission has engaged diverse stakeholders in
    its efforts while achieving the milestones set forth in its contract
    with HHS, and the first announcement of certified products will take
    place in less than 1 month. CCHIT is proud to play a role as part of
    the Federal Government's leadership strategy in health IT.
        Mr. Chairman and Members of the Commission, thank you for your
    time. I would be pleased to answer any questions you have.

        Senator Ensign. Thank you, Dr. Leavitt.
        Next, we will hear from Mr. Michael Raymer. Mr. Raymer is
    the Senior Vice President for Global Product Strategy at GE
    Healthcare.

     STATEMENT OF MICHAEL RAYMER, SENIOR VICE PRESIDENT FOR GLOBAL
                    PRODUCT STRATEGY, GE HEALTHCARE

        Mr. Raymer. Thank you, Chairman Ensign and--for the
    opportunity to testify today on behalf of GE Healthcare.
        My name is Michael Raymer. I'm responsible for global
    product strategy for GE. In addition to being one of the
    largest health IT suppliers, GE is also both a major payer and
    employer in this country, spending approximately $2.5 billion
    on insurance today for our employers, covering almost a million
    lives.
        While GE has been active in promoting higher-quality and
    lower-cost care through the formation of two employer-led
    coalitions, the Leapfrog Group and Bridges to Excellence, the
    driving force behind these two coalitions is that our
    healthcare system still rewards providers for volume of
    services, as opposed to the quality of outcomes they provide.
    It is GE's firm belief that health IT technology will be a key
    enabler of a modern, 21st-century intelligence healthcare
    system.
        Quite frankly, the state of healthcare today is still
    troubling. Healthcare organizations and the patients they serve
    still suffer from three fundamental problems: quality, cost,
    and access. We spend two and a half times the average of other
    industrialized countries. For that investment, Americans get
    only half the appropriate acute, chronic, or preventive care,
    and as many as 100,000 Americans die each year due to
    preventable medical mistakes. Chronic disease accounts for 80
    percent of our spend, and congestive heart failure alone
    accounts for $15.2 billion of the spend within Medicare today.
        What we need is a fundamental change in the system to make
    sure medical care is both safe and effective. This
    transformation is best enabled through health information
    technology. It has been shown in other industries IT can be a
    transformation force. Just look around the world today at ATMs,
    Google, eBay, Travelocity, Yahoo!, and Amazon. They have
    revolutionized the world in which we live, yet today healthcare
    remains paper-based. As a result, most individuals have
    fragmented medical records literally littered across this
    country. This is both costly and deadly.
        Healthcare IT has been proven to do five things: one,
    reduce medical errors by providing accurate allergy lists, and
    accurate lists of medication; two, enable collaboration among
    caregivers, knitting together that care community today that
    takes care of that 80 percent chronic-care community; sets a
    foundation for clinical best practice--Dr. Clancy referenced
    the 17 years from discovery to consistent implementation of
    best practice--IT can make a difference; help clinicians
    deliver personalized care--that's not nicer care, but that's
    targeted therapies aimed at both the physiological and clinical
    condition of the patient; and, finally and most importantly,
    provide performance and quality data enabling a true market-
    driven system where consumers can make informed choices both
    about cost and quality.
        These results are not theoretical. GE is working in
    partnership with Intermountain Healthcare in Utah to
    commercialize their health advances. Intermountain has been
    repeatedly recognized as the highest quality care-delivery
    organization in this country. Actually, Dr. Clancy referenced
    them in her testimony. Intermountain routinely combines
    clinical best practice with computer-based decision support.
    Intermountain's able to provide higher quality care at lower
    cost, 27 percent lower than the national average.
        In just one example of their HIT best practice,
    Intermountain has utilized computerized decision support to
    assist in the discharge process for congestive heart failure.
    In a 1-year period of time, they prevented 551 readmissions,
    they saved $2.5 million, and prevented 331 deaths. Just imagine
    if that health IT best practice was implemented across the
    country.
        Yet, although there remains real and tangible cost and
    quality benefits to healthcare IT, adoption rates are still too
    low. We believe that cost and interoperability are creating
    barriers to widespread adoption. A recent RAND Corporation
    study published last year found that only 15 to 20 percent of
    physician offices are automated. Only 20 to 25 percent of
    hospitals have adopted EMRs. Lack of interoperability, the
    ability to share data across different systems among different
    institutions, can prevent the realization of benefits to EMRs
    on a communitywide, regional, or national basis. An
    interconnected healthcare system would save lives and save
    money. The above-referenced RAND study estimates annualized
    savings at $80 billion to $500 billion. So, following on the
    Speaker's comments, that probably wouldn't be scored by OMB.
        The same system could also be invaluable in controlling the
    spread of a natural pandemic or bioterrorism attack. And I had,
    personally, the opportunity to sit down after SARS, and,
    really, health IT played a fundamental role in getting that
    pandemic under control.
        GE Healthcare is providing industry leadership in the
    transformation of the healthcare industry. In addition to co-
    forming Bridges to Excellence and the Leapfrog Group, GE has
    also been active in the formation of standards for system
    interoperability. Historically, GE played a leadership role in
    the formation of the DICOM standard for interoperability of
    diagnostic imaging devices and information systems. This
    advance accelerated the adoption of imaging technology, while
    eliminating the second-highest operating expense for hospitals:
    film. As a result, images can be shared and transmitted
    globally regardless of the vendor system utilized. The EHR
    Vendor Association, a group of 39 of the largest EHR vendors
    today, had that same goal in mind, translated to the electronic
    medical record.
        Today, there are four specific recommendations that GE
    Healthcare would have for this body:
        One, to continue support and expand pay-for-performance
    models of reimbursement, which are necessary to promote quality
    over quantity of care.
        Two, facilitate the continuation of industry
    interoperability efforts through fair and transparent
    collaboration among private- and public-sector stakeholders in
    the AHIC process.
        Three, continue to be a strong proponent of RHIOs in health
    information exchanges by appointing a strong and effective
    successor to Dr. Brailer and adequately funding the Office of
    National Coordinator. It sent a very bad message to the
    industry when David's office was not originally funded.
        And, four, most importantly, we believe creating market-
    based incentives that allow physicians to choose a certified
    EMR system that best meets the needs of their practice.
        On behalf of GE Healthcare, Mr. Chairman, I'd like to thank
    you for the opportunity to express the views of GE.
        [The prepared statement of Mr. Raymer follows:]

    Prepared Statement of Michael Raymer, Senior Vice President for Global
                        Product Strategy, GE Healthcare

    Accelerating the Adoption of Health IT: GE Perspective
        Thank you, Chairman Ensign, Senator Kerry and other members of the
    Subcommittee for the opportunity to testify before you today on behalf
    of GE Healthcare. My name is Michael Raymer, Vice President of Global
    Product Strategy for GE Healthcare Integrated IT Solutions.
        GE Healthcare Integrated IT Solutions is a leading health IT (HIT)
    vendor with one of the most comprehensive suites of clinical, imaging,
    and business information systems available. Through our acquisition of
    IDX Systems Corporation, we now provide a comprehensive range of
    cutting-edge global healthcare information solutions, which can
    accelerate efforts to seamlessly connect clinicians across the
    continuum of care, from physicians' offices to hospitals, and can help
    reduce medical errors, improve the quality of care, and streamline
    healthcare costs.
        Our interest in the adoption of HIT extends beyond our role as a
    vendor of these systems. As a major employer and a healthcare payer, it
    is critically important that we support initiatives to improve
    healthcare quality while controlling costs. GE's direct healthcare
    costs total approximately $2.5 billion annually for our close to 1
    million employees and their dependents. Under the leadership of Dr.
    Robert Galvin, GE was instrumental in bringing together The Leapfrog
    Group--a consortium of healthcare purchasers dedicated to improving the
    quality and affordability of care by steering employees to high quality
    and highly efficient hospitals--and we founded Bridges to Excellence, a
    multi-employer coalition to reward quality across the healthcare
    system.
        We believe technology will play a key role in supporting more cost-
    effective, higher quality care--leading to transparent, free flow of
    information that will lay the foundation for a complete and much-needed
    transformation of healthcare.

    I. The State of Healthcare Today Is Troubling
        Healthcare organizations--and the patients they serve--all face the
    same three challenges: quality, cost, and access.
        As the cost of care continues to rise, we are not seeing a
    corresponding improvement in health status. In 2004 the U.S. spent $1.9
    trillion on healthcare--$6,280 per person, equivalent to 16 percent of
    GDP.\1\ By 2015, those numbers are expected to rise to $4 trillion and
    20 percent of GDP.\2\ On a per capita basis, we spend two and a half
    times the average for industrialized countries, despite the fact that
    we have fewer physicians and nurses and shorter hospital stays \3\--and
    in many cases, worse health outcomes.\4\
    ---------------------------------------------------------------------------
        \1\ Smith C., Cowan C., et al., National Health Spending in 2004,
    Health Affairs 2006; 25:186-196.
        \2\ Centers for Medicare and Medicaid Services, National Health
    Care Expenditure Projections: 2005-2015.
        \3\ Anderson G.F., Frogner B.K., et al., Health Care Spending And
    Use Of Information Technology In OECD Countries, Health Affairs 2006;
    25:819-831.
        \4\ Banks J., Marmot M., et al., Disease and Disadvantage in the
    United States and in England, JAMA 2006; 295:2037-2045.
    ---------------------------------------------------------------------------
        In a country with the most advanced medical technology in the
    world, barely half of Americans get appropriate acute, chronic, or
    preventive care.\5\ This lack of quality is pervasive, and irrespective
    of age, sex, or economic status. The challenge we face is not just one
    of providing better care to patients who can pay for it--or those who
    can't. What we need is fundamental system change to ensure that medical
    care is safe and effective, that it is based on clinically proven best
    practices, and that is focused earlier in the disease process.
    ---------------------------------------------------------------------------
        \5\ Asch S.M., Kerr E.A., et al., Who Is at Greatest Risk for
    Receiving Poor-Quality Health Care?, N Engl J Med 2006; 354:1147-56.
    ---------------------------------------------------------------------------
        When we do receive care, it is often duplicative and even
    dangerous. Medical records are fragmented--Medicare patients see an
    average of three providers, for example--so that no single provider has
    an accurate, comprehensive, and up-to-the-minute picture of the
    patient's condition on which to base critical treatment decisions. As a
    result, patients are often forced to undergo duplicate tests, which
    drive up the cost of care while providing no added benefit. With no
    access to an individual's complete medication history, especially in
    the context of other factors such as diagnoses and allergies, patients
    may receive prescriptions for drugs that can have fatal interactions if
    taken together. Preventable medical errors account for as many as
    100,000 deaths every year, and an untold number of serious injuries. A
    1997 study in the Journal of the American Medical Association
    calculated the average cost to the institution of preventable adverse
    drug events for a 700-bed teaching hospital was $2.8 million per year.
    This number reflects only increased treatment costs and length of
    stay--it does not include other costs of the injuries borne by the
    patient.\6\
    ---------------------------------------------------------------------------
        \6\ Bates D.W., Spell N., et al., The costs of adverse drug events
    in hospitalized patients, JAMA 1997; 277:307-11.
    ---------------------------------------------------------------------------
        And we have seen how paper medical charts are vulnerable to natural
    disasters such as Hurricane Katrina, that can destroy the lifetime
    medical histories of hundreds of thousands of people in the blink of an
    eye.
        All of these factors contribute to the continuing upward spiral of
    healthcare costs, straining employers who are the primary source of
    health insurance; creating hardships for individuals who are struggling
    with higher co-pays or who have no insurance at all; and squeezing
    providers who are facing shrinking reimbursements.
        We simply cannot keep doing more of what we've been doing, and
    expect a different result. Fortunately, much of the roadmap of how we
    need to change is already apparent. Both vendors and the government
    have roles to play.
        To control costs while also improving health outcomes will require
    a complete transformation of our healthcare delivery system--one that
    in large part will be based on information technology. A recent study
    by the RAND Corporation, cited in the September/October 2005 issue of
    Health Affairs,\7\ estimated that the use of electronic medical records
    (EMRs) to exchange select patient data across an interconnected U.S.
    health system could save more than $80 billion a year in healthcare
    costs. By identifying unusual areas of disease outbreak, such a system
    could also be invaluable in controlling the spread of a natural
    pandemic, or in recognizing the early stages of a bioterror attack.
    ---------------------------------------------------------------------------
        \7\ Taylor R., Bower A., et al., Promoting Health Information
    Technology: Is There a Case for More-Aggressive Government Action?,
    Health Affairs 2005; 24(5): 1234-1245.
    ---------------------------------------------------------------------------
    II. The Promise of Technology To Predict and Treat Disease Earlier
        Care for patients with chronic conditions is a major driver of U.S.
    healthcare costs, comprising as much as 83 percent of all healthcare
    spending.\8\ In 2003, the cost of treating chronic illness was $510
    billion, with estimates that number will rise to $1.07 trillion by the
    year 2020.\9\ Today, almost half of all Americans--133 million people--
    live with a chronic condition. By 2020, as the population ages, this
    number will increase to 157 million. This mounting burden can only be
    mitigated by changing how we treat disease, not just what diseases we
    treat.
    ---------------------------------------------------------------------------
        \8\ Partnership for Solutions, ``Chronic Conditions: Making the
    Case for Ongoing Care,'' September 2004.
        \9\ Landro, ``Six Prescriptions to Ease Rationing in U.S.
    Healthcare,'' The Wall Street Journal, Dec. 22, 2003.
    ---------------------------------------------------------------------------
        If you break healthcare down into four phases--predict, diagnose,
    inform, and treat--fully 80 percent of U.S. healthcare spending happens
    in the treat phase. This is much too late in the disease process to
    have any impact on improving this country's health status. The earlier
    we focus on an individual's health--rather than on a patient's
    disease--the more opportunities we will have to reverse these dangerous
    trends.
        GE's vision of ``early health'' is a transformative approach, based
    on the intersection of diagnostics, therapeutics, and information
    technology. With early health, providers use technology and clinical
    knowledge to prevent and/or treat chronic diseases in the earliest
    phases, when health impacts are less severe and effective treatment is
    less costly.
        Better care need not mean more costly care. CHF is the costliest
    chronic condition among Medicare patients, to the tune of $15.2 billion
    per year. When Duke Medical Center instituted an integrated program for
    CHF patients, it found that increased access to outpatient care--in
    this case, a six-fold increase in cardiologist visits--improved
    patients' health status markedly. Because there were fewer
    hospitalizations and shorter lengths of stay when patients were
    hospitalized, the total cost of care actually dropped by 40 percent, or
    $9,000 per patient per year.\10\
    ---------------------------------------------------------------------------
        \10\ Herzlinger R., Testimony before the Committee on Homeland
    Security and Government Affairs, Subcommittee on Federal Financial
    Management, Government Information and International Security, May 24,
    2005.
    ---------------------------------------------------------------------------
        And yet despite examples such as this, the healthcare system
    continues to reward providers for the volume of care they deliver,
    rather than the quality. The way our current system is structured, a
    provider organization that successfully works with individuals to
    prevent heart attacks and CHF will not reap the financial benefits--and
    will, in fact, make less money than a provider organization that treats
    patients after they have come down with these conditions.
        As a company, GE is uniquely positioned at the convergence of
    advances in life sciences, diagnostics, and information technology to
    promote the model of early health.

    III. The U.S. Healthcare Industry Lags in the One Area That Has Made
            Every Other Industry Successful: Technology
        While other industries have been transformed by information
    technology, the healthcare industry (especially in the U.S.) remains
    largely paper-based. Other industries that spent the last decade and a
    half integrating IT into their core processes have seen measurable
    productivity growth that is directly attributable to those efforts.\11\
    Today, bar codes are more common in grocery stores than in hospitals,
    passengers can book their airline tickets online, and ATMs are
    interconnected across a continent and around the world--but most
    healthcare providers still fax paper charts across town, or courier X-
    ray films, or handwrite (sometimes illegible) medication prescriptions.
    ---------------------------------------------------------------------------
        \11\ Hillestad R., Bigelow J., et al., Can Electronic Medical
    Record Systems Transform Health Care? Potential Health Benefits,
    Savings, And Costs; Health Affairs 2005; 24:1103-17.
    ---------------------------------------------------------------------------
        Healthcare providers still primarily manage information on paper,
    with the result that most individuals have fragmented medical records.
    No single provider has the complete picture of an individual's medical
    history. More than half of people with serious chronic conditions see
    three or more physicians concurrently,\12\ making coordination of care
    among primary care physicians and specialists a challenging task. Those
    without health insurance--who now number more than 45 million \13\--are
    unlikely to have a primary care physician and instead tend to rely on
    emergency room care, where clinicians have little or no knowledge of a
    patient's prior medical history.
    ---------------------------------------------------------------------------
        \12\ Gallup Serious Illness Survey, 2002.
        \13\ Source: U.S. Census Bureau, Aug. 2005.
    ---------------------------------------------------------------------------
        Even with the current efforts being made to incorporate IT in
    healthcare, the U.S. is a dozen years behind other industrialized
    nations in HIT adoption, and our spending on HIT is a fraction of what
    other countries have spent to date.\14\
    ---------------------------------------------------------------------------
        \14\ Anderson G.F., Frogner B.K., et al., Health Care Spending And
    Use Of Information Technology In OECD Countries, Health Affairs 2006;
    25:819-831.
    ---------------------------------------------------------------------------
        While the technology has been available for decades, adoption and
    awareness remain low. President Bush became the first American
    President to address this issue when, in 2004, he signed Executive
    Order 13335, setting forth the broad charge that every American should
    have an electronic health record within 10 years. The executive order
    also established the Office of the National Coordinator for Health
    Information Technology (ONC). In its first 3 months, through the
    visionary leadership of the country's first health IT Czar, Dr. David
    Brailer, ONC drafted a framework for strategic action, outlining four
    key goals for the use of IT to transform healthcare in the U.S.\15\
    Interoperability is vital to ONC's strategy to encourage the formation
    of regional health information organizations (RHIOs) to promote the
    exchange of medical data among providers. Numerous non-governmental
    organizations are actively supporting the concept of RHIOs, including
    the Markle Foundation's Connecting for Health, e-Health Initiative, the
    Center for Health Transformation, and others.
    ---------------------------------------------------------------------------
        \15\ ``The Decade of Health Information Technology: Delivering
    Consumer-centric and Information-rich Health Care,'' July 21, 2004.
    ---------------------------------------------------------------------------
        While the efforts of these organizations have helped to educate
    both healthcare providers and the general public about the benefits of
    electronic medical records (EMRs), actual adoption is low. A RAND
    Corporation study published last year found that only 15 to 20 percent
    of physician offices and 20 to 25 percent of hospitals in the U.S. have
    adopted EMR systems.\16\
    ---------------------------------------------------------------------------
        \16\ Fonkych K. and Taylor R., ``The State and Pattern of Health
    Information Technology Adoption,'' RAND 2005.
    ---------------------------------------------------------------------------
    IV. Measuring the Benefits of HIT Adoption
        HIT is crucial to improving the health status of Americans while
    also reining in skyrocketing healthcare costs. One study analyzing the
    savings that could be achieved nationally simply by eliminating
    duplicate testing yielded estimates of $8 billion to $26 billion
    annually.\17\ Another estimated the cumulative net savings from HIT at
    more than $500 billion over 15 years.\18\
    ---------------------------------------------------------------------------
        \17\ Walker J., Pan E., et al., The Value Of Health Care
    Information Exchange And Interoperability, Health Affairs, 10.1377/
    hlthaff.w5.10.
        \18\ Hillestad, supra, n.11.
    ---------------------------------------------------------------------------
        HIT can:

       Help prevent medication errors and other types of medical
            errors;

       Enable clinicians to collaborate and deliver higher quality
            care, while reducing redundant tests and other procedures;

       Set a foundation of clinical best practices so that care is
            more consistent from one institution to another and from one
            region to another;

       Help clinicians deliver more personalized care, based on the
            patient's condition and medical history; and

       Provide performance and quality data so that healthcare
            organizations can better assess and improve their own
            performance, and so the industry as a whole can become more
            transparent, allowing consumers to select the highest quality
            providers.

        GE Healthcare provides our customers with services to help them
    measure the value of their investment in a clinical information system,
    and to institute workflow best practices that will help them achieve
    the full potential of that system. Our value on investment team helps
    customers identify key performance indicators that track both the
    financial return and improvements in efficiency and quality of care. We
    also work with our customers to support their use of clinical best
    practices, change management techniques, and Kaizen (Lean) principles
    to support greater efficiencies of workflow.
        For example, Park Nicollet Health Services, located in the Twin
    Cities, documented a 50 percent return on investment in its clinical
    information system. The benefits spanned both inpatient and outpatient
    environments, including more efficient online documentation, improved
    registration processes, and decreased need for medical records storage.
    Park Nicollet is one of about a dozen organizations selected for CMS'
    pay for performance pilot.
        We have also seen how organizations such as the Indiana Health
    Information Exchange (IHIE) and HealthBridge in Cincinnati are
    demonstrating the cost savings that can be achieved by providing online
    access to emergency department data. The amount that participating
    healthcare institutions pay for this service--which still results in a
    net savings to them--is enough to fund other health information
    exchange projects and make both IHIE and HealthBridge self-sustaining.
    One health system served by HealthBridge has saved $500,000 per year
    simply from using electronic data exchange instead of photocopying or
    faxing for delivery of test results.
        The reduction of medical errors is another important indicator of
    the value created by HIT. Every medication order in a hospital goes
    through a multi-step process of hand-offs involving doctor, nurse, and
    pharmacist. Almost all medication errors can be traced to one of two
    stages: \19\ ordering--where illegible handwriting can result in the
    patient being given the wrong medication or the wrong dose of the right
    medication; and administration--where one patient may be given
    medication intended for another, or incorrect amounts are administered
    because packaged unit doses differ from the prescribed dosage.
    ---------------------------------------------------------------------------
        \19\ Bates D.W., Leape L.L., et al., Effect of Computerized
    Physician Order Entry and a Team Intervention on Prevention of Serious
    Medication Errors, JAMA, 1998, 280:1311-1316.
    ---------------------------------------------------------------------------
        By replacing handwritten medication orders with an electronic
    system, Montefiore Medical Center in the Bronx has reduced potential
    medication errors by 80 percent. Because the system instantly transmits
    the order from the physician to the pharmacist, Montefiore has also
    reduced by 2 hours (60 percent) the time lag from when the order is
    written to when the medication is first administered to the patient.
        Bar coding--the technology we take for granted to ensure accuracy
    at the supermarket checkout stand--is just beginning to be used to
    ensure the same level of accuracy for inpatient medication
    administration. At Lehigh Valley Hospital and Health Network in
    Pennsylvania, every hospital patient wears a bar-coded wristband, and
    every unit dose of medication is similarly labeled. Nurses scan both
    bar codes, and the software system performs a final check to ensure the
    ``five rights'' of medication administration are present: the right
    patient receives the right dose of the right drug via the right route
    at the right time. If any of these don't match up, the system alerts
    the nurse to a potential error.
        Since instituting this system, the institution has prevented 50
    potential medication errors per month on an average 30-bed patient care
    unit. Seasoned nurses were initially skeptical of the technology when
    it was first rolled out, but having seen the number of errors that were
    being caught, they became major proponents of the system.

    V. Improving the Quality and Cost of Healthcare With Portable Clinical
            Best
            Practices
        Too much of medical care is still guided by tradition, without a
    solid evidence-based foundation.\20\ The dissemination of new
    scientific discoveries can take as long as 17 years before they become
    an accepted medical practice.\21\
    ---------------------------------------------------------------------------
        \20\ See, e.g., ``Medical Guesswork,'' BusinessWeek, May 29, 2006.
        \21\ Balas, Information Systems Can Prevent Errors and Improve
    Quality, J Am Med Inform Assoc. 2001; 8: 398-399.
    ---------------------------------------------------------------------------
        As we become better able not just to treat acute disease, but also
    to diagnose serious illness earlier in its progression--and even to
    predict who is at greatest risk before the disease process sets in--
    there is a corresponding obligation to ensure that best practice
    guidelines are widely disseminated, so that patients in Nevada,
    Massachusetts, or Texas can all expect to receive the same
    scientifically proven treatment for the same condition.
        The 100,000 Lives Campaign demonstrates the power of adherence to
    best practices. A project of the Institute for Healthcare Improvement
    (IHI), the campaign's goal was to prevent 100,000 deaths over 18 months
    through the uniform application of six practice guidelines at hospitals
    throughout the country. Last week, IHI announced that it had far
    exceeded the goal, with an estimate of 122,300 lives saved.
        Where evidence-based guidelines do exist, they can be complex
    documents, not easy to evaluate on the fly while evaluating information
    from a patient's chart. Incorporating evidence-based guidelines into
    clinical information systems can help get life-saving protocols into
    common practice much faster, while at the same time helping to ensure
    that they are not inappropriately overused.
        Many healthcare organizations struggle to institutionalize best
    practices so that they can consistently provide high quality care
    across the organization--or care that is comparable to that at other
    competing institutions. GE is working on this challenge in partnership
    with Intermountain Healthcare, an integrated delivery network (IDN)
    with 21 hospitals in Utah and Idaho, as well as physician clinics and
    insurance plans. Intermountain has been recognized 5 years in a row as
    the Nation's top IDN, and is the winner of numerous national awards for
    healthcare quality. A report assessing the value of HIT in improving
    healthcare quality recognized Intermountain among only a handful of
    institutions leading the development of these systems.\22\
    ---------------------------------------------------------------------------
        \22\ ``Costs and Benefits of Health Information Technology,'' AHRQ
    Publication No. 06-E006, April 2006.
    ---------------------------------------------------------------------------
        Not coincidentally, Intermountain is able to provide higher quality
    care at lower cost--27 percent lower than national averages. One of the
    ways it does this is by combining clinical best practices with
    computer-based decision support that incorporates data from the
    patient's medical record.
        The example of congestive heart failure provides a useful
    illustration. When heart attack patients are discharged from the
    hospital, they can usually benefit from medications such as statins to
    lower cholesterol and beta blockers to reduce blood pressure, making it
    easier for the damaged heart to do its work and reduce the potential
    impact of CHF. Yet at many healthcare organizations, patients are sent
    home without the appropriate prescriptions.
        After Intermountain introduced computer alerts to prompt clinicians
    about these medications prior to a patient's discharge from the
    hospital, the institution saw dramatic results. In the first year, the
    protocol:

       prevented 551 readmissions for CHF;
       saved $2.5 million because of the reduced readmissions; and
       prevented 331 deaths from complications of CHF.

        Other GE customers are also using expert rules and clinical
    decision support to improve patient care and patient safety. Thomas
    Jefferson University Hospital in Philadelphia, for example, is
    utilizing an expert rule for pediatric dosing that automatically
    calculates the correct amount of medication based on the patient's
    weight, eliminating a common source of potentially dangerous errors.
        Our partnership with Intermountain entails encoding evidence-based
    clinical guidelines in such a way that they communicate with a
    patient's electronic medical record to deliver appropriate alerts to
    clinicians with recommendations tailored to each patient's condition.
    The alerts do not replace a clinician's judgment; rather, they provide
    the most relevant and reliable information to the clinician at the
    point of care.
        In the early stages, our work with Intermountain will focus on
    building that organization's best practices into GE's
    Centricity' Enterprise clinical information system.
    Ultimately, however, our goal is to devise an interoperable encoding
    mechanism so that any institution's guidelines can be integrated with
    any vendor's clinical system. We have already been able to demonstrate
    proof of concept that such integration is possible using a clinical
    guideline for pediatric immunizations. This work, which has been
    partially funded by a grant from the National Institute of Standards
    and Technology (NIST), also involves other prestigious healthcare
    institutions, including the Mayo Clinic, Stanford University, and the
    Nebraska Medical Center.

    VI. Overcoming Barriers to HIT Adoption
        Three major factors that impede adoption of HIT are the current
    lack of interoperability, cost and complexity of implementing the
    systems, and resistance to change.
        In order to evolve toward the promise of early health, we must
    begin to put the enabling framework in place today. Physicians are the
    backbone of our healthcare system. The evolution begins with our
    Nation's physicians being assured that they will have the freedom to
    choose the best facilities and services for their patients, the ability
    to dictate their own workflow and protocols and the ability to share
    patient data with other systems. True interoperability is absolutely
    critical to achieve these physician requirements and the Federal
    Government's efforts are key in this endeavor. The biggest challenge we
    face is the current lack of interoperability in healthcare IT systems.
    Interoperability for the healthcare industry is a challenging
    undertaking. Redundant standards, inconsistent implementations of
    standards, incomplete data models and terminology make the task
    complex, time consuming and costly. However, technical complexity is
    only a part of the problem. Interoperability is not a reality today
    because the incentives are wrong for those who could drive it. IT
    vendors' incentive under the current market structure is to lock-in
    providers into their own proprietary solutions. In this structure it is
    economically rational for them to invest money in proprietary solutions
    rather than to invest in interoperability. The providers' incentive is
    to choose the most cost effective solution. Today, once a provider is
    ``locked-in'' to a proprietary solution, the interoperability and
    switching costs are so high that the provider likely will not change a
    vendor after the initial vendor decision is made. Interestingly, this
    system lock-in works to the advantage of providers and/or health plans
    if it has the effect of locking up a referral network.
        For many healthcare organizations, especially small physician
    practices, the initial costs of implementing EMR systems can be
    prohibitive. These costs include not only purchasing and installing the
    system itself, but also lost revenue resulting from reduced patient
    visits while providers spend time learning the system. Organizations
    that choose to make this initial investment find that they can recoup
    the cost within, on average, two and a half years--and even begin to
    see significant positive benefits after that.\23\
    ---------------------------------------------------------------------------
        \23\ Miller R.H., West C., et al., The Value Of Electronic Health
    Records In Solo Or Small Group Practices, Health Affairs 2005; 24:1127-
    1137.
    ---------------------------------------------------------------------------
        There is active debate as to how best to reduce the barriers to
    adoption. As the custodian of the public health, and the largest
    employer and healthcare payer in the country, the Federal Government
    has a fiduciary responsibility to provide incentives for HIT
    adoption.\24\ Legislative approaches currently under consideration
    include increasing tax breaks for physicians who invest in HIT (H.R.
    4641, the ADOPT HIT Act, introduced by Rep. Phil Gingrey, R-GA), and
    relaxation of the Stark and anti-kickback provisions (H.R. 4157, the
    Health Information Technology Promotion Act, sponsored by Rep. Nancy
    Johnson, R-CT, and Rep. Nathan Deal, R-GA).
    ---------------------------------------------------------------------------
        \24\ Taylor R., Bower, A. et al., Promoting Health Information
    Technology: Is There a Case for More Aggressive Government Action:,
    Health Affairs, 2005; 24:1234-1245.
    ---------------------------------------------------------------------------
        PeaceHealth, an integrated delivery network serving three states in
    the Pacific Northwest, is already using an ASP model to share its
    clinical information system with unaffiliated physicians in its service
    area. This model enables providers to lease remote access to an EMR
    system without the need for investing in dedicated hardware.
        The nurses' experience at Lehigh Valley demonstrates the other
    challenge of integrating information technology into the culture of
    healthcare. Experienced clinicians in all areas of the healthcare
    organization can be highly resistant to new technologies that threaten
    their established patterns. Changing workflows--the way providers
    practice on a day-to-day basis--is not an easy task, and yet it is
    absolutely essential to realizing the benefits of HIT. The
    transformative impact of HIT comes not from transferring existing
    processes from paper to computer screens, but from thoroughly analyzing
    those processes and using technology as a means to achieve greater
    efficiencies and improve the quality of care. Institutions that have
    failed in their implementation of HIT have largely done so because they
    underestimated the cultural component of the project.
        Another important culture change that needs to happen is addressing
    patients' concern about the privacy of their medical records. Although
    digital records are in many ways more secure than paper--using, for
    example, biometric login and the automatic creation of audit trails
    that make it possible to detect unauthorized access--incidents such as
    the recent theft of 26.5 million VA employment records serve to
    undermine public confidence in the security of electronic data of any
    kind.
        As happens with any new technology, HIT has evolved ahead of
    standards that enable competing systems to easily share data. Think
    about the early days of ATMs, when a customer could enact a transaction
    only at an ATM machine owned by the bank where he or she had an
    account. Today, we can get money from an ATM halfway around the world.
    Just as standards enabled different institutions' ATMs to talk to each
    other, we need interoperability standards to enable the appropriate
    sharing of medical information. Although the content of healthcare
    records is significantly more complex, ATMs and other technologies
    demonstrate that the technological aspects of interoperability are
    clearly achievable.
        Here, too, overcoming cultural attitudes about competition and
    collaboration is critical to success. Because healthcare is primarily
    local, competing organizations are especially sensitive about sharing
    information lest they lose their advantage in the marketplace.

    VII. Delivering on the Promise of an Interoperable Digital Healthcare
            System
        In order to create a comprehensive lifetime patient record that
    will support the delivery of patient-centered care, we first need to
    ensure that the IT systems and infrastructure are capable of ensuring
    that physicians will have a portable health record and that the
    physicians have the freedom to associate with any facility, service
    provider or other physician. The next challenge is to determine who
    will pay for the IT systems for physicians use.
        Lack of interoperability--the inability to share data across
    different systems and among different institutions--can prevent
    realization of the benefits of EMRs on a community-wide, regional, or
    national basis. Many medication errors occur because patient
    information exists in different silos, with no communication between
    them. When patients cross the boundary, for example, from inpatient to
    ambulatory care, complete medical records may not make the transition
    with them. As a result, patients may receive duplicate or conflicting
    prescriptions, with sometimes fatal results. These boundary errors can
    be avoided with technology that eliminates the boundaries among
    healthcare providers.
        Unfortunately, market incentives are not aligned for vendors to
    promote interoperability. Instead, the burden of multiple standards
    falls on the end users (providers), while the benefit--in terms of cost
    savings--largely accrues to payers.\25\
    ---------------------------------------------------------------------------
        \25\ Hillestad, supra, n.11.
    ---------------------------------------------------------------------------
        The evolution of the U.S. cellular telephone industry provides an
    illustration of this. In the early days, regional cell phone carriers
    used different standards. Phones that used CDMA would not work in an
    area covered by TDMA, and vice versa. Once customers made a purchase
    decision, they were effectively locked into that vendor's telecom IT
    infrastructure. The burden of bridging different standards fell on the
    customer--who would have to buy multiple handsets or more-expensive
    dual- or tri-mode phones in order to have broader access. The
    industry's initial response to consumer demand for greater
    accessibility was more affordable handsets that would work with
    multiple standards. Consumers were still locked in to a specific
    carrier, however, until the FCC stepped in with regulations on number
    portability, enabling customers to keep their phone number when they
    changed carriers. Similarly, Federal policies and regulations for HIT
    can either create or break down barriers to transparency and choice.
        Once a healthcare organization selects an HIT system--a decision
    often based on cost as much as on other criteria--it is locked into
    that decision. The cost and disruption of replacing these systems is
    simply too great. In the same way, in the absence of interoperability
    hospitals can lock in their referral networks by influencing local
    providers to acquire the same system. When data can be freely shared,
    regardless of software, it will increase competitiveness in the market.
        GE Healthcare is committed to the development of a nationwide
    health information network as the foundation for improving the quality
    of care in the U.S. It is crucial that all participants in healthcare--
    including payers, vendors, and providers--work together to support and
    evolve to a single set of standards that enable different HIT systems
    to exchange patient data.
        We have a long history of successfully driving open, standard-based
    data exchange with other vendors. The earliest example is the Digital
    Imaging and Communications in Medicine (DICOM) standard, which has
    enabled diagnostic imaging devices and software systems to exchange
    images and related information regardless of vendor. Diagnostic imaging
    vendors historically created proprietary formats for the CT or MR
    images created by their systems. While image exchange was interoperable
    between systems supplied by the same vendor, that was not the case
    among systems supplied by competing vendors. This lock-in limited the
    flexibility of hospital radiology departments to utilize imaging
    technology in an optimum fashion. Consequently, the radiology community
    was on the verge of seeking government help to mandate interoperable
    systems when the diagnostic imaging vendors, through the National
    Electrical Manufacturers Association (NEMA), and radiologists, through
    the American College of Radiology and the Radiological Society of North
    America (RSNA), collaborated to develop the DICOM standard, which
    became available in 1993.\26\ DICOM allowed images to move from system
    to system, enabled hospitals to centralize storage of images to reduce
    costs, and led the radiology department to move toward diagnosing
    images on a computer screen. Consequently, DICOM enabled the creation
    of today's $2 billion picture archiving and communications systems
    (PACS) market, and has allowed many hospitals to eliminate the second
    highest expense in their operating budgets: film. PACS has transformed
    the workflow within the radiology department, leading to increased
    efficiency and higher quality of care. Physicians at different
    locations can consult while simultaneously examining the same images
    and comparing them with other clinical results to get a more complete
    picture of the patient's condition.
    ---------------------------------------------------------------------------
        \26\ Wiley, G. The Prophet Motive: How PACS was Developed and
    Sold., Imaging Economics, May 2005.
    ---------------------------------------------------------------------------
        More importantly, the lesson of DICOM is that market pressure to
    demand interoperability of HIT vendors is more effective than
    regulatory remedies. Through the competitive marketplace of allowing
    radiologists to choose diagnostic imaging systems, the diagnostic
    imaging industry created an interoperability solution that allows
    complex systems to plug-n-play, and demonstrates how interoperability
    led to broader and competitive innovation in healthcare.
        GE has been a long-term leader in Integrating the Healthcare
    Enterprise (IHE), an industry-led initiative that is creating a
    standards-based framework for clinical IT. IHE was established in 1998
    by RSNA and the Health Information Management and Systems Society
    (HIMSS), as the popularity of DICOM led to the desire to improve
    imaging information exchange beyond the radiology department to other
    clinical IT systems in the hospital. IHE's interoperability showcases--
    held at major industry conferences--encourage competing vendors to
    build and demonstrate data exchange between their products via a
    collaborative and transparent process. This includes laboratory
    results, radiology images, medical summaries, and cardiology reports--
    the very information that today is often still faxed, couriered, or
    mailed between the majority of healthcare organizations in the U.S.
        And GE is one of the leaders in the EHR Vendor Association (EHRVA),
    a group of the top 39 EHR vendors committed to making EMRs
    interoperable and to accelerating EMR adoption in hospital and
    ambulatory care settings. EHRVA is playing a pivotal role in driving
    standards for electronic health records interoperability, similar to
    the role NEMA played in the 1990s for diagnostic imaging. Standards for
    electronic medical records are complex, because they involve multiple
    types of data, and terminologies that are not 100 percent congruent
    from one specialty to the next--or even from one hospital to the next.
        In February 2005, EHRVA presented to Dr. David Brailer the first
    roadmap and phased timeline for the interoperability needed to
    implement a nationwide health information infrastructure (NHIN). The
    first phase of that roadmap was demonstrated less than a year later at
    the HIMSS Conference in 2006, with GE joining 37 other IT vendors,
    including the VA and DOD in showcasing multiple interoperability use-
    cases. One of the NHIN pilot implementations uses several aspects of
    the proposed roadmap, and GE and EHRVA are reaching out to other
    stakeholders to encourage further implementation and convergence of the
    roadmap.\27\
    ---------------------------------------------------------------------------
        \27\ The EHRVA interoperability roadmap can be found at http://
    www.ehrva.org/docs/roadmap_v2.pdf.
    ---------------------------------------------------------------------------
        The roadmap also contemplates that interoperability will be
    achieved incrementally. As standards become more mature, GE is fully
    prepared to incorporate them into our products, and we are encouraging
    other vendors do the same. In the early days of fax machines, there was
    little value in owning one if there wasn't anyone else you could fax
    to. Similarly, to be the only vendor implementing interoperability
    standards benefits no one.
        While pursuing technical solutions supporting data exchange is
    critical to achieving the goal of interoperability, there is only so
    much vendors can do. HHS Secretary Leavitt, speaking at the January
    2006 meeting of the American Health Information Community (AHIC),
    recognized that there are sociological barriers here that need to be
    overcome. Even if the technological capacity existed to securely
    exchange information wherever and whenever it is needed to deliver safe
    and effective care, providers may be reluctant to participate fully for
    fear of losing their edge in a fiercely competitive marketplace. That
    is why it is critical that all of us as stakeholders work together to
    try to put in place creative solutions that create market demand for
    interoperability.

    VIII. Government's Role and Responsibility
        Vendors can advocate for improved interoperability standards and
    ensure that our products meet those standards as they evolve. We can
    pioneer new technologies that make clinical best practices both
    inherent in clinical information systems and portable between competing
    systems. And we can assist customers in both realizing and measuring
    the true value that HIT can deliver in terms of both cost and quality
    of care.
        Ultimately, however, our customers still operate in a world of
    declining reimbursements and a population of increasingly older and
    more acutely ill patients. Hospital operating margins are declining:
    according to the American Hospital Association, they were 6.7 percent
    in 1996 and only 4.6 percent in 2000.\28\ Smaller physician clinics are
    even less able to make an investment in clinical information systems,
    which can cost, on average, $44,000 per provider initially and $8,500
    per provider per year on an ongoing basis.\29\
    ---------------------------------------------------------------------------
        \28\ Statement of the American Hospital Association before the
    Federal Trade Commission Health Care Competition Law and Policy
    Workshop, September 9-10, 2002.
        \29\ Miller and West, Health Affairs, supra n.23.
    ---------------------------------------------------------------------------
        Our healthcare system still rewards healthcare organizations for
    the volume of services they provide rather than the quality of outcomes
    they produce. Except for very limited pay-for-performance pilot
    programs, where providers receive higher reimbursements for instituting
    quality measures, the beneficiaries of improved outcomes are the
    payers, not the providers. Investing in HIT can generate a demonstrated
    return on investment, but the start-up costs are high enough that they
    are a deterrent to adoption.
        In this environment, there are several things government can and
    must do to improve adoption of HIT:

       Continue to support and expand pay-for-performance models of
            reimbursement, which are necessary to promote quality over
            quantity of care;

       Facilitate the continuation of industry interoperability
            efforts, through fair and transparent collaboration among
            private and public sector stakeholders in the American Health
            Information Community (AHIC) and the standards harmonization
            and nationwide health information network pilot efforts that
            AHIC oversees;

       Continue to be a strong proponent of RHIOs and health
            information exchanges by appointing a strong, effective
            successor to Dr. Brailer, and adequately funding the Office of
            the National Coordinator;

       Create market-based incentives that allow physicians to
            choose a certified EMR system that best meets the needs of
            their practice.

        The policy choices we make today regarding adoption of HIT will
    determine whether existing barriers to portability and transparency of
    health information are maintained, or whether we will encourage market
    forces to demand interoperable solutions that will support the delivery
    of highest quality care.
        On behalf of GE Healthcare, Mr. Chairman, I want to express my
    gratitude for the opportunity to share with you our perspective on
    accelerating the adoption of health information technology. I would be
    happy to answer any questions you and the Subcommittee might have.

        Senator Ensign. Thank you.
        Next, we will hear from Mr. Kevin Hutchinson, the President
    and CEO of SureScripts.

     STATEMENT OF KEVIN D. HUTCHINSON, PRESIDENT/CEO, SureScripts,
                                  LLC

        Mr. Hutchinson. Chairman Ensign, thank you for the
    opportunity to testify today on behalf of SureScripts on the
    important topic of accelerating the adoption of health
    information technology in the United States.
        My name is Kevin Hutchinson. I'm the President and Chief
    Executive Officer of SureScripts. In addition, I'm a member of
    the Board of Directors of the eHealth Initiative, and a
    commissioner on the American Health Information Community,
    appointed by Secretary Leavitt.
        Speaking on behalf of SureScripts, I thank the Subcommittee
    for inviting me to share experiences and conclusions gleaned
    from our ongoing effort to deploy electronic prescribing
    connectivity nationwide, and to share our vision of the future.
        SureScripts was created to improve the overall prescribing
    process by focusing on the efficiency, the safety and quality
    of medication decisions made as part of that process. This is
    an important point that I'd like to touch on for just a moment.
        We've found that, all too often, the popular, but narrowly
    focused term, ``e-prescribing,'' has caused confusion and
    misunderstanding about the true scope of what we hope to
    accomplish for patients and the health professionals who care
    for them. As with all health information technology, the
    solution must be comprehensive, taking into account all aspects
    of the workflow in the provider's office and care setting. The
    prescribing process is not just the act of writing a new
    prescription or a refill request. Moreover, the prescribing
    process does not begin merely when the physician's pen first
    touches the prescription pad. Nor does the process end when the
    pharmacist hands the medication to the patient.
        The case for electronic prescribing is compelling.
    According to the Center for Information Technology Leadership,
    every year more than 8 million Americans experience adverse
    drug events. CITL's research estimates that by addressing drug
    events caused by preventable medication errors, e-prescribing
    systems, with a network connection to pharmacy and advanced
    decision support capabilities, can help avoid more than 2
    million ADEs annually, 130,000 of which are life-threatening.
        By eliminating paper from the prescribing process, e-
    prescribing has also been proven to offer significant time
    savings by eliminating the need for phone calls and faxes,
    allowing prescribers, pharmacists, and their staff more time to
    care for their patients. A study by the Medical Group
    Management Association estimated that the administrative
    complexity related to prescriptions cost a practice over
    $15,000 a year for each full-time physician on staff.
    Multiplying that figure by an estimated 527,000 physicians
    practicing in an office environment reveals an opportunity to
    save more than $8 billion from conversion to e-prescribing.
        Today, more than 90 percent of the Nation's retail
    pharmacies have now tested and certified their pharmacy
    applications on the SureScripts network, and every major
    physician software vendor, whose collective customer base
    represents over 150,000 prescribing physicians, today have
    contracted with SureScripts.
        We're proud to say that the rate of adoption of electronic
    prescribing technology is increasing at a rapid rate. In fact,
    recently, community pharmacies, including NACDS and NCPA,
    sponsored the SafeRx Award. The annual SafeRx Award recognizes
    the top ten e-prescribing states in the Nation, along with
    three physicians in each winning State who have demonstrated
    leadership through their use of e-prescribing technology. The
    winning states in 2006 included the home states of several of
    the Members of this Subcommittee, including Nevada.
        But much more needs to be done. The technology exists and
    is readily available today. The problem is that there are other
    barriers to the adoption of health information technology.
    Traditionally, outside of electronic prescribing, these include
    a lack of interoperable standards, a lack of appropriate
    financial incentives to adopt technological advances, and a
    resistance on the part of providers to change the historic
    modes of operating and workflows.
        In implementing our electronic prescribing network, we
    selected the nationally recognized NCPDP SCRIPT Standard to
    serve as the foundation for our network. The NCPDP SCRIPT
    Standard was developed by the National Council for Prescription
    Drug Programs, or NCPDP, an ANSI-accredited standards
    development organization. It is our experience that the use of
    the NCPDP SCRIPT Standard improves patient safety, quality of
    care, and efficiency, without presenting undue administrative
    burden on prescribers or pharmacists.
        This opinion was further endorsed when the Medicare
    Modernization Act of 2003 adopted the NCPDP SCRIPT standard as
    the standard for electronic transmission of prescriptions for
    patients under Medicare Part D.
        The Medicare Prescription Drug Improvement and
    Modernization Act of 2003 required the Secretary of Health and
    Human Services to conduct a 1-year pilot project in 2006 to
    test the standards that will provide for the HIPAA-compliant
    transmission on a real-time basis with information on
    eligibility and benefits, medication history, and other
    prescription information. The Secretary is obligated to report
    to Congress the results of the pilot programs by April 2007.
    SureScripts was awarded a grant by the Agency for Healthcare
    Research and Quality to conduct one of the pilot programs, and
    we are providing pharmacy connectivity in three other programs.
        The pilot programs will play an important role in further
    increasing the interoperability of health information
    technology. There are several bills pending before Congress
    related to the adoption of health information technology. The
    time is now for the adoption of meaningful legislation that
    will promote health information technology, as well as the
    President's goal of making electronic health records available
    to all Americans by 2014.
        We support legislation that would codify the Office of the
    National Coordinator of Health Information Technology,
    encourage the adoption of interoperable standards by a certain
    date, provide financial assistance, whether through grants,
    pay-for-performance payments, loans, tax incentives to
    providers who adopt health information technology, that meet
    certain standards, create exceptions and safe harbors to the
    anti-kickback statute in what is commonly referred to as the
    Stark Law, to encourage the adoption of healthcare technology,
    all while protecting against the abuse that those statutes were
    enacted to address. Further standards developed to encourage
    interoperability of health information systems across a broad
    spectrum is certainly needed.
        In addition, we believe that there are a number of
    stakeholders who have an interest in promoting health
    information technology and the safety of efficiencies that come
    with it. And, in particular, stakeholders are willing to fund
    technology necessary to promote electronic prescribing.
    Accordingly, we wholly support the Government's current
    attempts to provide a clear framework in which the
    stakeholders, with the financial resources to promote the
    electronic healthcare infrastructure, may donate hardware,
    software, training, and other services in order to foster and
    promote the implementation of health information technology.
        For instance, because of the value that laboratories convey
    in the data they transmit, they pioneered the provision of
    secure, efficient IT solutions in order to transmit laboratory
    tests to physician offices. These same tools could be expanded
    to include additional clinical functions, like e-prescribing.
        Much work has been done, and there is enormous momentum,
    both in the public and private sectors, with respect to the
    adoption of health information technology, but much more needs
    to be done, and lives are at stake. We applaud the leadership
    that Secretary Leavitt and Dr. David Brailer have demonstrated
    in this area, and we are thankful for the Subcommittee's
    attention to this very important national healthcare and
    security issue.
        We, at SureScripts, thank the Subcommittee for the
    opportunity to share our experiences with respect to electronic
    healthcare.
        [The prepared statement of Mr. Hutchinson follows:]

                  Prepared Statement of Kevin D. Hutchinson,
                        President/CEO, SureScripts, LLC

        Chairman Ensign, Ranking Member Kerry, and distinguished
    Subcommittee Members, thank you for the opportunity to testify today on
    behalf of SureScripts on the important topic of accelerating the
    adoption of health information technology in the United States.
        My name is Kevin Hutchinson, and I am the President and Chief
    Executive Officer of SureScripts. In addition, I am a member of the
    Board of Directors of the eHealth Initiative, and I am a commissioner,
    appointed by Secretary Leavitt of Health and Human Services, to the
    American Health Information Community.
        Speaking on behalf of SureScripts, I thank the Subcommittee for
    inviting me to share our experiences and conclusions gleaned from our
    ongoing effort to deploy electronic prescribing connectivity nationwide
    through the SureScripts Electronic Prescribing Network,TM
    and to share our vision of the future.
        SureScripts was created by the National Community Pharmacists
    Association (NCPA) and the National Association of Chain Drugs Stores
    (NACDS) in 2001. Our mission is to improve the overall prescribing
    process and to ensure, among other things, neutrality, patient safety,
    privacy and security, and freedom of choice of a patient's choice of
    pharmacy and a physician's choice of therapy. Under the leadership and
    with the backing of the pharmacy industry, SureScripts has created an
    open, neutral, and secure information system that is compatible with
    all major physician and pharmacy software systems.
        SureScripts was created to improve the overall prescribing process
    by focusing on the efficiency, safety, and quality of medication
    decisions made as part of that process. This is an important point that
    I would like to touch on for just a moment. We have found that all too
    often, the popular but narrowly focused term ``e-prescribing'' has
    caused confusion and misunderstanding about the true scope of what we
    hope to accomplish for patients and the health professionals who care
    for them. As with all health information technology, the solution must
    be comprehensive, taking into account all aspects of the workflow in
    the providers' office and care setting. The prescribing process is not
    just the act of writing a new prescription or a refill request.
    Moreover, the prescribing process does not begin merely when the
    physician's pen first touches the prescription pad, nor does the
    process end when the pharmacist hands the medication to the patient.
        Looking at the prescribing process from the standpoint of the
    physician, one can see there are numerous indispensable steps that
    occur before the creation of the prescription. The patient's chart is
    pulled and reviewed, the patient is interviewed and examined, a
    diagnosis is decided upon, and a course of therapy is contemplated and
    then decided upon. If it is decided that medication therapy is an
    appropriate choice for the patient, it is at this point that a
    prescription is created and noted in the patient's chart.
        When it comes time to authorize a refill renewal request for the
    patient, many of these activities are repeated. All in all,
    considerable time, effort, expertise, and judgment are invested in
    these activities, and we believe there are several points in the
    process that can be improved by a comprehensive and interoperable
    health information technology solution beyond the simple act of
    generating a prescription.
        At the pharmacy end, much more is involved in dispensing a
    prescription medication than simply placing tablets or capsules in a
    vial and handing the vial to the patient. You would be hard pressed to
    find a pharmacy anywhere in the United States that does not store all
    of its patient records electronically today. Electronic pharmacy
    patient records include allergies and existing medical conditions.
    Prescription insurance information must also be entered and updated
    periodically. Upon receipt of a prescription for a patient, the
    prescription information also is entered in the pharmacy computer,
    which immediately performs a drug interaction check against medications
    listed in the patient's pharmacy record. Once the pharmacist has
    reviewed any potential drug interactions flagged by the pharmacy
    system, the prescription is billed to the insurer; during the billing
    process an additional interaction check is performed by the pharmacist
    against the insurer medication records; any resultant payer issues,
    whether financial, claim, or clinically related, are resolved by the
    pharmacist; the prescription is dispensed to the patient; and the
    patient is counseled on its use by the pharmacist. In the future,
    pharmacies and pharmacists will play a much greater clinical role in
    the care of the patient, providing medication therapy management
    services and assisting in medication adherence and reconciliation
    programs.
        My point in going into all of this detail is to emphasize to the
    Members of the Subcommittee that our goal as a nation, and certainly
    ours as a company, must be to improve the overall prescribing and care
    giving process. From our perspective, to focus too narrowly on just the
    act of generating a prescription and transmitting it to a pharmacy
    ignores many opportunities to enhance the level of safety and quality
    of health care delivered to patients.
        The case for electronic prescribing is compelling. According to the
    Center for Information Technology Leadership (CITL), every year, more
    than 8 million Americans experience Adverse Drug Events (ADEs). CITL's
    research estimates that, by addressing ADEs caused by preventable
    medication errors, e-prescribing systems with a network connection to
    pharmacy and advanced decision support capabilities can help avoid more
    than 2 million ADEs annually--130,000 of which are life-threatening.
        By eliminating paper from the prescribing process, e-prescribing
    has also been proven to offer significant time-savings by eliminating
    the need for phone calls and faxes, allowing prescribers, pharmacists,
    and their staff more time to care for their patients. A study by the
    Medical Group Management Association's (MGMA) Group Practice Research
    Network (GPRN) estimated that administrative complexity related to
    prescriptions costs a practice over $15,000 a year for each full time
    physician on staff. Multiplying that figure by an estimated 527,000
    physicians currently practicing in a physician office environment and
    prescribing medications in the United States reveals an opportunity to
    save more than $8 billion from conversion to e-prescribing.
        SureScripts was founded in late 2001. During its first 2 years, the
    Company focused on development of its technology necessary to transmit
    prescription information electronically. The Company's services were
    first put into production, sending and receiving electronic
    prescription transactions, in January 2004. Today, more than 90 percent
    of the Nation's retail pharmacies have now tested and certified their
    pharmacy applications on the SureScripts Electronic Prescribing
    Network, and physician software vendors whose customer base represents
    over 150,000 prescribing physicians today have contracted with
    SureScripts, and most have completed the process of certifying their
    applications on the SureScripts Electronic Prescribing Network. The
    remaining physician software vendors contracted will complete
    certification by the end of this year.
        The first step for improving the prescribing process was focused on
    new and renewal requests, and accompanying response messages. We have
    now started rolling out Step 2 to include other prescription messages,
    including a message confirming that a prescription has been dispensed,
    known as the prescription fill, and messages related to change
    requests. The prescription fill message can be used to let physicians
    know when patients pick up their medications or let a patient know
    their prescription is ready to be picked up. We also are rolling out
    the exchange of patient medication history between pharmacies and
    physicians, and formulary/eligibility messages between payors and
    physicians. All of this information, delivered in a secure and private
    manner to the point of care, will make the healthcare delivery system
    more efficient, more cost effective, and will save lives.
        We are proud to say that the rate of adoption of electronic
    prescribing technology is increasing at a rapid rate. In fact,
    recently, community pharmacies, including NACDS and NCPA, sponsored the
    SafeRx Award. The annual SafeRx award recognizes the top ten e-
    prescribing states in the nation, along with three physicians in each
    winning state who have demonstrated outstanding leadership through
    their use of e-prescribing technology. The winning states in 2006
    included the home states of several Members of this Subcommittee,
    including Nevada, Massachusetts, Virginia, and Florida.
        But much more needs to be done. The technology exists and is
    readily available today. The problem is that there are other barriers
    to the adoption of healthcare information technology. Traditionally,
    outside of electronic prescribing, these include a lack of
    interoperable standards, a lack of appropriate financial incentives to
    adopt technological advances, and a resistance on the part of providers
    to change the historic modes of operating and workflows.
        In implementing our electronic prescribing network, we selected the
    nationally recognized NCPDP SCRIPT Standard to serve as the foundation
    for our network. The NCPDP SCRIPT Standard was developed by the
    National Council for Prescription Drug Programs, or NCPDP, an ANSI-
    accredited standards development organization, to facilitate the
    electronic, bidirectional transmission of prescription information
    between prescribers and pharmacies. It is our experience that the use
    of the NCPDP SCRIPT Standard improves patient safety, quality of care,
    and efficiency, without presenting an undue administrative burden on
    prescribers and pharmacists. We believe that NCPDP SCRIPT is the best
    standard to meet the e-prescribing needs of patients and the physicians
    and pharmacists who serve them. This opinion was further endorsed when
    the Medicare Modernization Act of 2003 adopted the NCPDP SCRIPT
    standard as the standard for the electronic transmission of
    prescriptions for patients under Medicare Part D.
        The NCPDP SCRIPT Standard 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,
    formulary lookups, cancellation notifications, and medication history
    exchange--the nuts and bolts of e-prescribing, if you will.
        Future enhancements will address other possibilities that may
    include patient eligibility, compliance, lab values, diagnosis, disease
    management protocols, patient drug therapy profiles, and/or
    prescription transfers.
        The Medicare Prescription Drug, Improvement, and Modernization Act
    of 2003 required the Secretary of Health and Human Services to conduct
    a 1-year pilot project in 2006 to test the standards that will provide
    for the HIPAA-compliant transmission, on a real-time basis, of
    information on eligibility and benefits, medication history, and other
    prescription information. The Secretary is obligated to report to
    Congress the results of the pilot programs by April 2007. SureScripts
    was awarded a grant by the Agency for Healthcare Research and Quality
    to conduct one of the pilot programs, and we are providing pharmacy
    connectivity in three other programs. The pilot programs will play an
    important role in further increasing the interoperability of health
    information technology.
        There are several bills pending before Congress related to the
    adoption of healthcare information technology. The time is now for the
    adoption of meaningful legislation that will promote healthcare
    information technology as well as the President's goal of making
    electronic health records available to all Americans by 2014. We
    support legislation that would:

            1. Codify the Office of the National Coordinator of Health
            Information Technology.

            2. Encourage the adoption of interoperability standards by a
            certain date.

            3. Provide financial assistance, whether through grants, pay-
            for-performance payments, loans, or tax incentives, to those
            providers who adopt healthcare information technology that meet
            certain standards.

            4. Create exceptions and safe harbors to the anti-kickback
            statute and what is commonly referred to as the Stark law to
            encourage the adoption of health care technology, all while
            protecting against the abuse that those statutes were enacted
            to address.

        Further standards development to encourage the interoperability of
    health information systems across a broad spectrum is certainly needed.
    We encourage the Congress to help facilitate and encourage the
    standards setting process. The private sector has the expertise and
    capability to develop standards as necessary, and the private sector
    has the capability to react to market conditions in an effective, yet
    prudent, manner to revise and update standards as the circumstances
    warrant. A collaboration between the public and private sectors to
    adopt interoperability standards on a timely basis is key to the
    widespread adoption of health information technology.
        The implementation of healthcare information technologies requires
    a capital commitment on the part of pharmacies, physicians, and other
    providers. Physicians in particular might not always be in a position
    to devote the capital resources necessary to implement the software and
    hardware needed to permit electronic prescribing. In addition, funding
    to support efforts by pharmacies to implement new patient care tools,
    such as medication therapy management and new medication adherence/
    compliance approaches, is necessary. Accordingly, we encourage
    governmental financial incentives to promote and foster the adoption of
    healthcare information technologies that satisfy certain standards,
    including those of interoperability.
        In addition, we believe that there are a number of stakeholders
    that have an interest in promoting healthcare information technology
    and the safety and efficiencies that come with it, and in particular
    such stakeholders are willing to fund the technology necessary to
    promote electronic prescribing. Accordingly, we wholly support the
    government's current attempts to provide a clear framework in which the
    stakeholders with the financial resources to promote the electronic
    healthcare infrastructure may donate hardware, software, training, and
    other services in order to foster and promote the implementation of
    electronic healthcare information technology. For instance, because of
    the value that laboratories convey in the data they transmit, they
    pioneered the provision of secure, efficient IT solutions to order and
    transmit laboratory tests to physician offices and hospitals throughout
    the country. These same tools could be expanded to include additional
    clinical functions like electronic prescribing at low or no cost to a
    physician. As the Administration and Congress seek to expand the
    permissive donation of healthcare information technology, we strongly
    recommend that laboratories be included among the list of permissible
    donors to facilitate the exchange of their current offerings (i.e., lab
    test requisition and results) as well as other healthcare information.
        Any discussion and legislation about healthcare information
    technology must address privacy and security of patient data as well as
    user authentication requirements. There must be adequate laws regarding
    the privacy and security of healthcare information, vigorous
    enforcement of those laws, and the public must have faith and
    confidence that the laws will protect their privacy and the security of
    their information. Privacy and security is an important policy matter
    that must be addressed. The HIPAA Privacy Rule is the benchmark for
    patient privacy, and establishes the minimum standards for the
    protection and security of personal healthcare information. Many states
    have laws that go further than HIPAA. While we applaud the efforts of
    the states to maximize the protections afforded to their citizens, the
    reality is that the patchwork of Federal and state privacy laws, both
    statutory and common law, creates a barrier to the rapid adoption of
    healthcare information technology in the United States. In order to
    identify the various applicable laws and assess the impact the various
    laws have on health IT adoption, the Health Information Security and
    Privacy Collaboration, a partnership consisting of a multi-disciplinary
    team of experts and the National Governor's Association, pursuant to a
    contract with the Department of Health and Human Services, will work
    with 34 states and territories to address variations in state laws that
    affect privacy and security, and pose challenges to interoperable
    health information exchange. We believe this is an extremely important
    effort, and are pleased with the Federal and state collaboration in
    this effort.
        The adoption of healthcare information technology not only is a
    matter of the Nation's health, but we believe it is also a matter of
    national security. There is an acute need for reliable healthcare
    information to be available to healthcare providers in the event of a
    national emergency, whether man made, such as a terrorist attack, or
    caused by nature, such as a hurricane or an influenza pandemic. The
    experiences after Hurricane Katrina exemplify the acute need for
    healthcare information to be readily available to care givers
    throughout the Nation. Hurricane Katrina destroyed millions of medical
    records, and approximately 40 percent of the 1.5 million evacuees were
    taking a prescription drug. Many of these evacuees fled their homes and
    were displaced without knowing what drugs they were taking, or their
    medication regimes. Following Hurricane Katrina's landfall near New
    Orleans last August, a group of private and public health and
    information technology experts created www.KatrinaHealth.org, an online
    service for authorized health professionals. The website provided
    access to evacuees' medication information in order to renew
    prescriptions, prescribe new medications, and coordinate care.
    KatrinaHealth.org provided authorized users with access to the
    medication history of evacuees who lived in the areas affected by
    Hurricane Katrina, with data or prescription information made available
    from a variety of government and commercial sources. Sources included
    electronic databases from community pharmacies, government health
    insurance programs such as Medicaid, private insurers, the Veterans
    Administration, and pharmacy benefits managers in the states most
    affected by the storm.
        Privacy and security were central to the design of
    KatrinaHealth.org. KatrinaHealth was accessible only to authorized
    healthcare providers and pharmacists who were providing treatment or
    supporting the provision of treatment for evacuees. In addition,
    consistent with many state privacy laws, highly sensitive personal
    information was filtered from the site.
        This site was implemented after the fact, in response to the
    Hurricane--and we were pleased to play a role in this effort, but
    almost 1 year later, and now 21 days into the 2006 hurricane season,
    while we and others have the technology in place to replicate these
    efforts immediately upon the occurrence of another national emergency,
    there are insufficient policies and procedures in place to quickly
    operationalize the system in an effective and meaningful manner in the
    event of another national emergency.
        Much work has been done, and there is enormous momentum both in the
    public and private sectors with respect to the adoption of healthcare
    information technology. But much more needs to be done--and lives are
    at stake. We applaud the leadership that Secretary Leavitt and David
    Brailler have demonstrated in this area, and we are thankful for the
    Subcommittee's attention to this very important national healthcare and
    security issue. We at SureScripts thank the Subcommittee for the
    opportunity to share our experiences with respect to electronic
    healthcare, and it would be my pleasure to answer any questions that
    you might have.

        Senator Ensign. Thank you for your testimony.
        Before we hear from the next witness, we will take a two
    minute recess.
        [Recess.]
        Senator Ensign. Now, the Subcommittee will hear from Mr.
    Terry Ragon, the founder and CEO of InterSystems Corporation.

         STATEMENT OF PHILLIP T. ``TERRY'' RAGON, CEO/FOUNDER,
                        InterSystems CORPORATION

        Mr. Ragon. Thank you. Good afternoon, Mr. Chairman. My name
    is Terry Ragon, and I am the founder, owner, and CEO of
    InterSystems Corporation.
        InterSystems is a software company, with offices in 22
    countries, providing both database and integration software. In
    the United States, we are the predominant vendor of database
    software for healthcare clinical applications. For electronic
    patient records, more than 1,000 hospitals around the world use
    our technology, including all of the Department of Veterans
    Affairs and Department of Defense hospitals, and the Indian
    Health Service.
        There are two lessons that I have learned that I would like
    to share with the Subcommittee today. First, the choice of
    technology is critically important, and far more important than
    vendor size or name recognition. And, second, evolution works
    better than revolution.
        As you may have seen, NBC News recently aired a special
    report on the radical improvement of care at VA hospitals over
    the last 25 years, and credited much of that improvement to an
    extremely sophisticated computer system that has evolved over
    those 25 years. I am proud to have played a part in that
    result, and I believe the VA's success illustrates that
    technology can make a difference, and that evolution, not
    revolution, usually produces better results in health
    information technology.
        Also illustrating these points over the last decade, the
    DOD, Kaiser Permanente, and the U.K. National Health Service
    all embarked upon ambitious projects to write detailed
    specifications and build replacement systems from scratch. DOD
    has now concluded that evolving its current systems is a better
    path, and Kaiser abandoned its project in favor of acquiring a
    commercially available system. As for the U.K., the Times of
    London recently warned, ``The new NHS computer system could be
    the biggest IT disaster in history.'' Again, the choice of
    technology is critically important, and evolution works better
    than revolution.
        As the new millennium approached, some 7 years ago, many
    organizations rushed to rip and replace all of their legacy
    systems with a single new system. A high percentage of these
    projects were, frankly, failures. Companies learned firsthand
    that they had no choice but to live with their existing
    systems, even as they endeavored to move forward and modernize.
        Installing an electronic medical records system at a
    hospital has traditionally meant selecting a comprehensive
    product that replaces many of the existing departmental
    systems, even if those applications are functioning well and
    beloved by their users. It's as if, to add a sundeck on your
    house, you had to tear down the whole house, including the
    foundation. Rip-and-replace strategies are extremely difficult,
    very expensive, and often lead to failure, as the U.K. is
    discovering.
        I believe the future lies with a different strategy in
    which a medical records system is built as a new type of
    application that sits on top of existing departmental
    applications and glues them together.
        To facilitate this approach, a new generation of technology
    is required, which we have built, and others are building. This
    new technology makes it simpler to create such composite
    applications and connect them with the organization's existing
    systems.
        This need for interoperability within a hospital, to share
    information among departments, is strikingly similar to the
    emerging need to share information between organizations. The
    same technology we built for connecting an organization is also
    being used to link organizations into regional and national
    entities. For example, in the Netherlands our technology is
    being utilized to link all hospitals, clinics, and physician
    practices nationwide.
        We are now building a health information exchange product
    designed specifically for regional and national health records.
        What should the Federal Government's role be in this area?
        A lack of standards for interoperability clearly inhibits
    the sharing of medical data. It also inhibits health
    surveillance and other important public health projects. I
    believe the government can be, and is being, extremely helpful
    in establishing standards for interoperability, and I fully
    support the work of Dr. Halamka.
        However, standards also serve to limit innovation and
    inhibit the adoption of improvements. Therefore, I would like
    to emphasize the importance of limiting that standardization to
    interoperability and not to the specification of what a medical
    record should be, or what its database should be, or how the
    information should be structured within a system.
        In my opinion, there is no need for the Federal Government
    to fund the development of medical records software, other than
    the continued evolution of existing Federal clinical systems,
    which are working well.
        In closing, I would like to emphasize that the technology
    to achieve affordable and effective electronic health records
    exists today, and this goal can be more quickly realized
    through an approach that stresses evolution, not revolution;
    evolving existing systems to be connected systems.
        Mr. Chairman, thank you for the opportunity to testify
    today, and I look forward to any questions that you may have.
        Thank you.
        [The prepared statement of Mr. Ragon follows:]

        Prepared Statement of Phillip T. ``Terry'' Ragon, CEO/Founder,
                            InterSystems Corporation

    I. Introduction
        Good morning, Mr. Chairman, Senator Kerry, and members of the
    Subcommittee. My name is Terry Ragon, and I am the CEO, founder, and
    owner of InterSystems Corporation--a private company headquartered in
    Cambridge, Massachusetts.
        InterSystems, which I started in 1978, is a multinational database
    company with offices in over 20 countries, providing both database and
    integration software technology to connect enterprises. We specialize
    in extremely high performance large-scale systems used by tens of
    thousands of users, but we support systems of all sizes.
        In the United States, we are the predominant vendor of database
    software for health care clinical applications. For electronic patient
    records (EPRs), more than 1,000 hospitals around the world use our
    technology including all of the Department of Veterans Affairs and
    Department of Defense hospitals, the Indian Health Service, and Kaiser
    Permanente. In fact, all 10 of the top ranked U.S. hospitals, as ranked
    by U.S. News and World Report, are InterSystems clients. Our
    application partners, who build clinical application products with our
    software, include Epic Systems, GE, Misys, and QuadraMed, to name a
    few.
        Since I am not a member of any government task force, I am not in a
    position to report on progress in standards specifications. However, I
    do have a number of comments on healthcare IT and the state of
    interoperability.

    II. Lessons Learned
        Throughout my 28 years leading InterSystems, I have witnessed a
    fundamental transformation in the way health information is managed,
    and I have seen both successful and unsuccessful projects. There are
    two lessons that I have learned that I would like to share with the
    Subcommittee today. They are:

            1. The choice of technology is critically important--far more
            important than vendor size or name recognition.

            2. Evolution works better than revolution.

        In some respects software development is much like an artist
    painting--it is the choice of artist that counts. Hiring additional
    artists to work on the canvas does not result in it being completed
    quicker or better--nor does hiring additional people to advise the
    artist on how to paint. Better paint, canvas, brushes, lighting--better
    technology--does make a difference.
        As you may have seen, NBC News recently aired a special report on
    the radical improvement of care at VA hospitals over the last 25 years
    and credited much of that improvement to an extremely sophisticated
    computer system--a system that has evolved over those 25 years and uses
    our technology as its core database technology. I am proud to have
    played a part in that result, and I believe the VA's success
    illustrates that: (1) technology can make a difference; and (2)
    evolution--not revolution--usually produces better results in health
    information technology (IT).
        Another clear example of these two points lies in the Department of
    Defense, whose healthcare applications were initially derived from the
    VA's software in the 1980s. Those applications are based on
    InterSystems database technology and are still operating reliably in
    every DOD hospital. Over a decade ago, the Department embarked upon an
    ambitious program to specify and build from scratch replacement
    applications using legacy relational database technology. They now
    recognize the difficulty of such an undertaking and believe that the
    best path to rapidly create more advanced clinical systems is through
    thoughtful evolution--and are working with us to do so.
        Kaiser Permanente provides another good example of how the choice
    of technology is important. Kaiser spent many years and hundreds of
    millions of dollars attempting to develop clinical applications using
    legacy relational database technology. Eventually, they decided to
    abandon this internal effort and selected Epic, whose applications are
    based upon our technology, to deploy their clinical applications,
    including medical records. Although the deployment is not fully
    complete, clinicians are now realizing the benefits of sophisticated
    IT.
        As can clearly be seen in the VA, DOD and Kaiser examples, in
    healthcare evolution works better than revolution and the choice of
    technology is critically important. Why? Healthcare clinical
    applications, including EPRs, are quite complex--far more than most
    commercial applications. They are used by intelligent, dedicated, and
    demanding professionals delivering care in very sophisticated
    environments. Doctors expect their clinical systems to be just as
    sophisticated, and tolerance for errors is non-existent as the
    penalties for failure can be crushing. While more can be done, I urge
    caution in mandating sweeping changes, and I urge recognition that
    evolution that builds on past successes is more likely to work in a
    scientific setting.

    III. Leveraging Existing Investments
        A key dilemma facing many organizations today is ``How do I move
    forward with new technology when I have to live with existing systems
    that are already embedded in the organization and are doing an
    effective job of running the business?'' As the new millennium
    approached some 7 years ago, many organizations rushed to ``rip-and-
    replace'' all of their legacy systems with a single new system. A high
    percentage of these projects were failures, either admittedly so or in
    fact. Companies learned first hand that they had no choice but to live
    with their existing systems--even as they endeavored to move forward
    and modernize.
        Healthcare organizations share this same dilemma. Installing an EPR
    at a hospital has traditionally meant selecting a vendor with a
    comprehensive healthcare product that replaces many of the existing
    departmental systems such as lab, radiology, and pharmacy, even if
    those applications are functioning well and are beloved by their users.
    This ``rip-and-replace'' strategy in a mature health IT market like the
    United States is extremely difficult, very expensive, and often leads
    to failure. In most cases, it is not really what the hospital wants in
    the first place.
        I believe the future lies with a different strategy, in which the
    EPR is built as a new type of software application called a ``composite
    application'' that ``sits on top of '' existing departmental
    applications, communicating with the already installed departmental
    systems. Each system has embedded technology that optimizes the
    functionality of that particular application, and they are connected to
    support a connected enterprise.
        This approach avoids the massive ``rip-and-replace'' scenarios that
    often fail, it is less expensive, and it produces positive results much
    quicker. It also allows the hospital to continue to use a ``best of
    breed'' approach for departmental systems. While the benefits are so
    overwhelming that it may seem obvious that this is the way to proceed,
    I can assure you that it is a revolutionary approach in IT.
        In essence, this is the real interoperability issue facing
    healthcare institutions today. ``How do I get my systems to work
    together, sharing information, to achieve a true connected
    enterprise?''
        To facilitate this approach, a new generation of technology is
    required--which we have built. This new technology (Ensemble) makes it
    simpler to connect such composite applications with the organization's
    existing systems, and we have begun to see its adoption over the last
    year in a number of highly successful projects. This technology allows
    organizations to retain and leverage their substantial investments
    while continuing to modernize and enhance functionality.
        This need for interoperability within a hospital--the need to share
    information among departments--is strikingly similar to the emerging
    need to share information between organizations. There are, however,
    two additional issues in a regional or national EHR that typically do
    not occur within a hospital: (1) determining whether or not two
    patients seen at different facilities are in fact the same patient
    (which currently involves human intervention due to the lack of a
    national medical record number), and (2) differing clinical
    terminology--it's hard to communicate effectively if we don't have a
    shared vocabulary for diseases, treatments, medications, and so on.
        The same technology we built for connecting an organization and
    supporting composite applications is also being used to link
    organizations into regional and national entities. For example, in the
    Netherlands, Ensemble is being utilized to implement a national
    Electronic Health Record (EHR), linking all hospitals, clinics, and
    physician practices.
        Clearly, the technology to achieve regional and national EHRs
    exists today--the key questions are how to use such systems and for
    what purposes. That is why the health industry is currently in a phase
    of launching pilot projects, known as Regional Health Information
    Organizations (RHIOS), as experiments.
        Because of the volume of opportunities we have seen both in the
    U.S. and abroad for such regional and national EHRs, we are building a
    Health Information Exchange product designed specifically for that
    market. We look forward to better interoperability standards, which we
    will enthusiastically adopt, but we are not waiting.
        This same technology could be easily used to connect VA and DOD
    health records.

    IV. The Role of Government in Electronic Health Records
        What should be the Federal Government's role in this area?
        The main inhibitions to further adoption of EPRs by individual
    hospitals, clinics, and physicians is not standardization and
    certification--it is money and, in some cases, the usability of the
    software. However, a lack of standards for interoperability does
    inhibit the sharing of medical data between facilities to create a
    regional or national Electronic Health Record (EHR). A lack of
    interoperability standards also inhibits health surveillance and other
    important public health projects.
        I believe the government can be, and is being, extremely helpful in
    establishing standards for interoperability, including both technology
    protocols for communicating and medical content standards.
        However, I would like to emphasize the importance of limiting that
    standardization to interoperability--such as HL7 messaging standards--
    and not to the specification of what a medical record should be, or
    what its database should be, or how medical information should be
    structured within a system. Such specifications are unnecessary, stifle
    innovation, and encourage costly ``rip and replace'' strategies that
    are not in the national interest.
        In my opinion there is no need for the Federal Government to fund
    the development of EPR or regional EHR technology. The key enablers
    already exist, and we, along with other companies, are already building
    and deploying such products. Rather, the Federal Government should
    continue to facilitate evolutionary improvements to existing systems,
    especially to Federal clinical systems within the Veterans
    Administration, Indian Health Service, and Department of Defense, and
    support RHIO pilot projects that can demonstrate interoperability and
    provide ``proof of concept'' validation. Importantly, these pilot
    projects can be accomplished through limited, targeted funding, and do
    not require massive capitalization. Ultimately, Federal funding of a
    national EHR may be appropriate, but not today.
        One factor that limits the utility of an EHR is that regional EHR
    systems rely upon a human to determine if two patients seen at
    different facilities are really the same patient. While the computer
    can make estimates of the likelihood of it being the same person, in
    the absence of a unique nationwide medical record number, human
    intervention is likely to be a continuing requirement. Other countries
    are actively considering the establishment of national medical record
    numbers for their citizens and, while I do not have a formal position
    on this issue, it is something that the Subcommittee may want to
    explore further.
        In short, while the Federal Government has an important role to
    play, I believe it is already providing necessary and effective
    support.

    V. The U.K. Experience
        As the Subcommittee considers avenues to accelerate the adoption of
    health information technology, I would like to caution against the
    approach taken in the United Kingdom (U.K.) over the last few years,
    which is an example of how well intentioned public policy can produce
    extremely counterproductive results. A few years ago, the U.K.
    government concluded that improving health IT was simply a procurement
    problem that required the participation of big public companies. They
    divided the country into several regions, appointing a large well-known
    company for each region even though those companies often had little or
    no expertise in implementing complex healthcare systems.
        Rather than selecting existing software products, detailed
    specifications for new systems were created. The systems to be
    installed became huge development projects with the objective of
    ``ripping-and-replacing'' all existing systems, even those legacy
    systems that were functioning well. Software development and delivery
    is well behind schedule.
        The results have been poor for everyone involved. Health IT in the
    U.K. has been stagnant for years. Clinicians and patients are seeing no
    significant benefit and little in the way of new systems, large sums of
    money have been wasted, and vendors have reported huge loses. The
    companies who were previously providing successful health IT solutions
    have been frozen out of the market, and they are either no longer in
    business or have been damaged. A concurrent effort to connect U.K.
    hospitals, clinics, and doctors into a national EHR has met with a
    similar fate.
        The difficulties with this approach are becoming more evident each
    day. Cost estimates for completing the project range from
    15 to 30 billion and the Times of London recently warned
    that ``the new NHS computer system could be the biggest IT disaster in
    history.''
        I would argue that the lessons to be learned from the U.K.
    experience are essentially what I have stated: (1) that evolution works
    better than revolution; (2) that prior success in healthcare is
    critical in vendor selection; (3) that existing systems that are
    functioning well should be leveraged; and (4) that embarking on massive
    development projects when the needed technology already exists is
    counter-productive and a bad use of taxpayer dollars. Most importantly,
    the U.K. government failed to recognize that the choice of technology
    is critically important, and it is far more important than vendor size
    or name recognition.

    VI. Conclusion
        In closing, I would like to emphasize that the technology to
    achieve affordable and effective EPR and EHR exists today, and that the
    EHR vision can be more quickly realized through an approach that
    stresses ``Evolution, Not Revolution.'' Our Nation has invested
    substantial resources in legacy systems that continue to provide useful
    and necessary clinical information. These investments can continue to
    be effectively leveraged--avoiding the need to discard and replace
    existing healthcare systems--and system functionality can be enhanced
    through incremental modernization that connects composite applications
    to installed departmental systems.
        Mr. Chairman, thank you for the opportunity to testify today. I
    look forward to your questions.

        Senator Ensign. I want to thank the entire panel, both
    panels, for their excellent testimony. As you can see, we had a
    very diverse group testify. I also want to thank my staff for
    selecting the experts we heard from today. I think the
    information that was provided is critically important for us to
    review and consider. It is essential for us to become more
    knowledgeable about health information technology. Senators and
    members of the House know very little about this fascinating
    field. Health information technology is important and it is
    important to ensure that we get it right.
        Mr. Ragon, during your testimony, you mentioned the
    experiences of the U.K. If we go down the wrong road, and
    implement health information technology in a wrong manner, we
    will encounter problems. Healthcare is a vital and important
    issue. The name of this Subcommittee includes the word
    ``competitiveness.'' We are in a global economy today.
    Healthcare is one of the areas that is making America less
    competitive in the world today. A big reason for this is
    because health information technology has not been fully
    incorporated into our healthcare systems. Health information
    technology will allow healthcare to become more efficient, it
    will make the delivery of services more cost effective, and it
    will improve the quality of care.
        Mr. Speaker, you talked about the CBO. Interesting, we held
    a markup in the Senate Budget Committee yesterday. The markup
    was on Senator Gregg's bill, called SOS, or the Stop Over-
    Spending Act. One of the amendments I offered to the bill was
    on dynamic scoring. Unfortunately, the amendment was defeated,
    11 to 11, largely along party lines. The arguments that I made
    in support of the amendment were very similar to some of the
    things that you have mentioned today. Sometimes the scoring
    that we use with respect to tax cuts doesn't accurately take
    into account human behavior. I was making that argument. I used
    several healthcare issues as examples. I wish I would have had
    the benefit of a few of your examples for the debate we had on
    that amendment. It makes no sense that CBO doesn't fully take
    into account--human behavior when conducting scoring. It
    appears that CBO says: ``OK, this is how much it costs to
    purchase the health information technology, and that's,
    therefore, what the cost is.'' CBO doesn't take into account
    any of the cost savings that results from improved outcomes. It
    doesn't take into account the fact that improved care means
    that we can keep people out of hospitals. It seems to me that
    if you reduce medical errors, which keeps patients out of
    hospitals, that there has got to be savings associated with
    better medicine. That is just common sense. But, you are
    correct, CBO does not take that into account. And the argument
    is, that they can't. My amendment would have required that CBO
    conduct side-by-side static scoring along with dynamic scoring.
    The idea was that over time, we would have a few years of data
    to review and we could then direct CBO how to determine the
    real cost of policies that we enact into law.
        Speaker Gingrich, perhaps you and Mr. Ragon could comment
    further on this. Mr. Ragon, you have had many dealings with the
    VA. Do you happen to know the savings that the VA has
    experienced using their health information technology system?
    Is there any way to calculate that savings?
        Mr. Ragon. To be honest, I'm always suspicious of cost-
    benefit studies. As the CFO of a company once said to me when
    we explained, ``We could produce some kind of cost-benefit
    study for you,'' he said, ``Don't bother. We know how to do
    those ourselves. We can make any project look good.''
        I believe the importance of the VA system is the
    unbelievable impact it's had on the quality of patient care. I
    delivered a similar message in a speech a couple of months ago.
    Afterwards I had people come up to me, telling me that they
    called their family members who were veterans of the Vietnam
    War, and those veterans were just in tears, because of the
    unbelievable improvement that's occurred. I wandered the
    hallways in the Bronx VA, back in the 1970s, and it was dismal.
        So, I really don't know how to measure this, in terms of
    cost, but I can tell you that, in terms of quality care, the
    impact is enormous.
        Senator Ensign. Actually, now that I think about it, the VA
    system has probably showed an increase in cost, because more
    veterans are now using it now, because it's a lot better
    system.
        [Laughter.]
        Senator Ensign. And because we actually have seen that. But
    what they don't look at is the total system cost.
        Mr. Speaker?
        Mr. Gingrich. Well, you asked a question of--that leads in
    a couple of directions, and I'll start with the VA example. But
    what really got me dug into this was a conversation I had with
    Fred Smith, the founder of FedEx, when we were actually talking
    about defense modernization, and he made the point that, ``The
    government cannot distinguish investment from cost.'' And so,
    the government can't make a calculation of productivity return.
    And, therefore, he said he could never have financed FedEx
    under Federal budget rules. And that's what began this
    particular process.
        I don't talk about dynamic or static scoring; I talk about
    accurate scoring.
        Senator Ensign. That's what we use----
        Mr. Gingrich. And there's a very important distinction
    here.
        Senator Ensign. Yes.
        Mr. Gingrich. And I would say that the challenge you have,
    if I can disagree slightly about cost-benefit studies--the
    challenge you have today is that the bias of CBO, which is what
    Congress delegates to validate decisions about spending--the
    bias is to say, ``In the absence of overwhelming proof, the
    answer is no.'' And overwhelming proof is only defined by seven
    people who are lifetime employees of the CBO.
        Now, the first step, I would argue, is to simply create
    transparency, to insist that--what their scoring baseline is,
    what their formulas are, what their sources are. The second
    thing I would do is start holding hearings and bringing in case
    after case where people say, ``Oh, yes, in our hospital, or our
    company, or whatever, and in our doctor's office--these are our
    savings.'' And then to say to CBO, ``Disprove it.'' But why
    should the burden of proof be on the future, and burden of
    proof be on innovation, and all of the weight be in favor of a
    paper-based acute-care transaction system which kills people?
        Second, you mentioned competition. I just want to say, as
    an aside, I would really hope somebody up here would introduce
    a bill to create an Under Secretary of Health in Commerce. And
    the reason is, health is actually going to be the largest
    source of foreign exchange in the 21st century. Health is our
    greatest net advantage in the world market. Health is something
    we do better than any other country in the world. Look at the
    total number of pharmaceuticals, the total number of
    biologicals, the total number of breakthroughs in health
    information technology. Frankly, the reason the British system
    is so messed up is that they decided to pick a British company,
    for national reasons, that had never done a system like this,
    over picking an American company that had a track record of
    doing it. And so, they got national pride and no delivery, for
    $2.5 billion. I mean, it was a very expensive purchase of the
    flag. Because the fact is, you go around the world, and the
    leading producers of health information technology are
    American, the leading producers of pharmaceuticals are
    American, the leading producers of medical technology are
    American, and there is not a single Federal official at a
    senior level who gets up every day and says, ``How do I
    maximize American sales worldwide? How do I make sure that
    we're being treated fairly worldwide? How do I make sure that
    we create the maximum number of earnings?'' So, your
    competitiveness issue is a twofold issue. How do we lower cost
    and improve life here, and how do we make sure that we're able
    to compete overseas?
        Just one or two other quick things.
        When you talk about technology, it's not always
    complicated. Jeb Bush has created MyFloridaRx.gov and
    FloridaCompareCare.gov. And, for the first time, you can go
    online, you can put in the address or the zip code, and any of
    the top hundred drugs that are purchased in Florida--and every
    drugstore comes up, starting with the least expensive.
    Recently, when we tried it out in Fort Lauderdale, there was a
    3-to-1 gap between the least expensive and most expensive
    drugstore. And we know, from airline experience real markets
    with real information drive down cost.
        Senator Ensign. Along those lines, can you comment on
    combining health information technology with expanded HSAs,
    health savings accounts?
        Mr. Gingrich. Sure. It's a four-part process. I tell every
    business--every American, at a minimum, should have an HSA
    immediately. That's a no-risk beginning health reimbursement
    account. Every American should have the opportunity to buy a
    health savings account immediately. And, frankly, TRICARE
    should offer health savings accounts to entering military,
    because they're the healthiest population on the planet. As you
    long as you exempted all their combat--and say, ``We'll take
    care of 100 percent of any combat-related problems,'' these 18-
    , 19-, and 20-year-olds, if they stay for a career, would
    leave, at 45 or 48, with an amazing health savings account
    package that would be sitting there, that would be money they
    could take. In other words, I'm saying, if you don't combine--
    this is the VA problem--if you don't figure out a way to
    incentivize behavior, simply making it electronic gets you to
    the first step, but not the second step.
        The third thing you want to do is shift from acute care to
    prevention, wellness, and early testing. We have a Georgia
    project on obesity and diabetes at the Center for Health
    Transformation built off the Bridges to Excellence model. In
    Cincinnati and Louisville, they are saving $250 per diabetic,
    net, by having an early training, early mentoring doctor
    relationship that is a totally different payment model. Can't
    be scored by CBO, by the way. But if you take those packages,
    you begin to get a totally different model of behavior.
        Let me mention one last thing, because you start--you're
    going to get into cost presently. We work with MedImpact to
    take the Travelocity airline model of purchasing and to shift
    from a co-payment, which is my dollars up front, to an after-
    payment, which is my dollar comes at the end. And our estimate
    was that you could take 40 percent out of the cost of drugs.
    Now, this ought to be an enormous national argument, because
    I'll guarantee you, in the next 4 or 5 years, the U.S. Congress
    is going to drift to price controls. And yet, if you would go
    to a Travelocity model, since we are the largest market on the
    planet, we should have the lowest costs. That's what's true, by
    the way, of every other nonregulated, nongovernmentally messed
    up part of our economy. Big markets lead to lower costs. And I
    think that that's an example.
        Last example. Medicare--CMS currently has a staff project
    underway to figure out a new model of scoring so they can
    establish pricing in a way which is utterly irrational. I mean,
    to have a Republican administration engage in Soviet-style,
    managed, bureaucratic, centralized decisionmaking is just
    infuriating. What they ought to be doing is saying, ``Let's put
    all the prices in the country online. And if you want to leave
    the most expensive health market in the country, and go to a
    less expensive health market, and you save the government
    money, we'll pay your travel costs. So, if that means they end
    up, for example, to take a random case, in Las Vegas, getting
    their health done while they had 3 days to golf or do whatever
    else they want to do, you will drive down the cost of Medicare
    voluntarily by people doing smart things, much faster than you
    will by having bureaucrats try to out-think the people who want
    the money.
        Senator Ensign. Very interesting.
        Mr. Hutchinson, you talked about e-prescribing saving a
    minimum of $8 billion. Is that in direct costs, as far as
    savings from the physicians' offices, callbacks and things like
    that? Can you please describe all of the costs that add up to
    the $8 billion figure?
        Mr. Hutchinson. Well, this is the Center for Information
    Technology Leadership's study. And my understanding is that
    components of that cost are directly related to the adverse
    drug events and the causes and the healthcare costs associated
    with those adverse drug events. So, the patient ends up in the
    emergency room, additional lab tests are needed, additional
    follow-up visits are needed, all associated with those adverse
    drug events.
        Senator Ensign. So, the study examined the total costs?
        Mr. Hutchinson. I don't believe that it takes into account
    the administrative costs and the inefficiencies of the system,
    as associated with refill requests and others. It's strictly
    associated with adverse drug events.
        Senator Ensign. I've always thought about the amount of
    time people spend filling out medical forms in doctors'
    offices. Not only do patients fill out forms and medical
    records, but so do nurses and other health care professionals.
    And, many patients see multiple specialists. A lot of our
    senior citizens do that. They go to the doctor and they have to
    fill out the same form time and time again. Somebody has to
    input that data each time the senior goes to the doctor. The
    bureaucracy of the private sector in healthcare is enormous.
    And the idea that CBO can't score the savings from health
    information technology, is unbelievable. How health information
    technology can't save Medicare, Medicaid, and other Federal
    programs money in the long run, is mind-boggling.
        Mr. Ragon, let's get back to the VA system, just so we can
    talk. You talked about this overarching--you talked about not
    completely replacing everything. You talked about Great
    Britain--or the VA. In your description, what the VA did, did
    they put it, like, on top, or did they kind of replace their
    system just over time?
        Mr. Ragon. Well, the VA had no clinical systems at the
    time, so what a number of people in the VA actually did, was to
    start a skunkworks project. They weren't supposed to really be
    doing it. The VA Central Office was opposed. Out in the field
    of each of the VA hospitals, a number of programming teams each
    took a particular application; and, over time, each built it
    up. It was all under the radar screen, because, as I said, they
    were not supposed to be doing it. But because what they did was
    highly successful, it wound up being adopted.
        More recently, they almost fell into the same trap as
    everybody else, which is being a victim of their own success.
    They figured, ``Ah, what we really should do,'' once they
    became the victors rather than the vanquished, ``is, Why don't
    we scrap what we have and start over, and do it,'' quote/
    unquote, ``right this time?'' So, there has been a lot of
    pressures over the last 10 years or so to do that, and those
    efforts actually wound up not working very well. At this point,
    many in the VA have retrenched and recognized that continued
    evolution of what they currently have really works better for
    them.
        One of the problems is that once you've built up so much
    functionality over such an extended period of time, it's hard
    to just start out from scratch and replace all of that with a
    system that either works or satisfies people's demands.
        Senator Ensign. In my earlier conversation with Dr. Clancy,
    Dr. Halamka, and Dr. Leavitt, we talked about the Stark laws.
    We also talked about the privacy laws, HIPAA, and various other
    laws. Dr. Leavitt, I think you mentioned that we can enhance
    privacy with health information technology. Could you describe
    that? And, Dr. Halamka, if you can, could you address this
    question as well, I would greatly appreciate it.
        Dr. Leavitt. Sure. Thank you.
        Privacy is one of the issues that--it becomes kind of a
    knee-jerk reflex. We hear about, ``A hacker did something on
    the Internet,'' and people say, ``Wow, if the records are
    computerized, that's going to happen to mine.'' But, in
    reality, every day, banking is going on, credit cards are going
    on, people are buying things. And we're basically using the
    Internet for financial transactions constantly. It's just a
    matter of appropriate--not just technology, but properly
    trained people using the technology.
        The way IT can enhance privacy is that a paper record can't
    tell you who's looked at it. It lays around on a desk. It ends
    up in the trunks of doctors' cars. When you request a copy
    being sent to someone else, it's disassembled and fed to a fax
    machine, document feeders, all 300 pages. With an electronic
    system, there's an audit trail. Who looked, where was it sent,
    and you could even selectively disclose--say, just send the
    relevant information, not bulk feed it to a copier. So, the
    presence of the audit trail, especially if the consumer has the
    right to see it--and I think they should--should be able to
    actually look at the audit trail of who's looked at your
    record. That introduces a great transparency and a tremendous
    incentive against abuse.
        So, I think that this is something that we need some help
    with, getting to the consumer the message that your information
    on paper is really at risk, and, properly implemented,
    electronic systems can be more secure.
        Dr. Halamka. Oh, absolutely. I can put on a white coat and
    walk into any hospital in this country, pick up a paper record,
    make a Xerox of 17 pages, put them into a PDF and submit them
    to Google, and no one would have any idea what I have done. But
    with an electronic system, you can, as has been described,
    audit every lookup, restrict every lookup. You can, in a
    hospital, decide, well, if a clerk is registering you for care,
    they should see your home address and your insurance and
    absolutely nothing more. If a clinician is seeing you, they see
    your medications, your allergies, and your problem list;
    however, certain problems or certain aspects of the record,
    such as your HIV status or issues of mental health, are
    segregated in a very highly secure area that requires a break-
    the-glass approach. At Beth Israel Deaconess, for example, if
    you go to look up mental health records, you must justify why
    you need such access. The author of the mental health record is
    e-mailed that you accessed it, and why. And if you access it
    inappropriately, you're fired. All of that kind of control,
    authorization, role-based access, is only possible with
    electronic systems.
        Senator Ensign. Very good.
        Mr. Speaker, I've been informed that you have an
    appointment at 4 o'clock on the House side. Before you leave
    for your appointment, can you comment on health information
    technology and how it can enhance quality measurements and
    improve outcomes? Can you also explain why it is important for
    us to make sure that quality measurement is part of the focus?
        Mr. Gingrich. Well, let me start with the commonly cited
    Institute of Medicine report that it takes up to 17 years for a
    new best practice to reach the average doctor. Combine with
    that the Institute of Medicine report that up to 9,000
    Americans die annually from medication error, not counting the
    ones that get very sick. And add to that the Institute of
    Medicine report that between 44,000 and 98,000 Americans a year
    die in hospitals from mistakes. Those would imply, between
    them, an opportunity for tremendous quality breakthrough.
        If you study Deming and Juran and others who were the
    authors of ``modern quality,'' if you look at the total
    production system model, or look at Womack's ``lean
    manufacturing,'' in every case it requires data. You get data
    vastly easier when it's electronic. And one--and every hospital
    system we've talked to at the center, as they gather data,
    every group of doctors--and currently it's mostly groups of
    four or more who have done this--as they gather data, you begin
    to see an evolution. If you were to talk to Kaiser Permanente
    about how much they're learning because they have access to
    millions of patients' dataflow in a depersonalized way--and
    they surfaced Vioxx as a problem much earlier than anybody else
    because they had so much data. If you were to talk to the VA
    about how many things they now learn--I mean, just because they
    have the capacity to analyze it--or if you were to bring in the
    American Medical Group Association and Don Fisher and look at
    the best medical systems in the country, all of these are data-
    driven. Somebody cited, earlier, Intermountain Health, which I
    guess Carolyn Clancy had cited, as 27 percent less expensive. I
    think it's generally regarded as one of the three or four most
    effective places in the country.
        To go back to my--to beat my earlier drum as I get ready to
    leave, imagine if you said to CBO, ``If we could get
    Intermountain to be the standard''--I was once told by the head
    of Mayo that--Mayo did about 70 percent right--or no, he
    thought Mayo did--was at about 70 percent of what they'd like
    to be. He thought most people were at 50 or less. He said, ``If
    we could get everybody else up to 70, get Mayo up to 90,
    imagine what the health system would be like.'' Now, that's
    what we do in manufacturing. That's what we do in lots of other
    parts of the service industry, is, we actually work at a
    process of continuous improvement to set new standards. So,
    imagine you ask for a score over the next 5 years that said
    Medicare senior citizens deserve to be treated at the
    Intermountain standard of quality and cost. That would take 27
    percent out of the projected costs, while improving how long
    people live, keeping them out of nursing homes, which would
    save even more money, and giving them greater independence,
    because they'd be healthier. Now, that's the kind of dynamic
    approach that ought to be taken, as opposed to whatever the
    current backward models are. But that's a very different way to
    think about it. And I think it's doable.
        I think that you've got to get to--but it's two things.
    It's not best practices. It's this week's best practice.
    Because you're going to have--I'll just close with this, but
    it's a really important concept--you're going to have 4 to 7
    times as much science over the next 25 years as you had over
    the last 25. Literal numbers. Now, that means that the flow of
    new knowledge is going to be so enormous that every week
    somewhere, somebody's going to be inventing a new better
    practice. And so, we've got to invent a dynamic model of
    continuous improvement, and not get trapped into bureaucracies
    that make decisions so slowly that, in the name of improvement,
    we actually guarantee obsolescence. I think it's a very
    complicated, very important challenge for our generation. And I
    am very grateful that you all are holding this hearing. I think
    it's a very, very important topic.
        Senator Ensign. Mr. Speaker, I would like to share one
    quick anecdote with you. For those of you who don't know, I
    practiced veterinary medicine for a number of years.
    Occasionally, I did some research at the UCLA Medical Center on
    some of their practices when I was working down in Los Angeles.
    I found that the same studies that were being conducted in
    human medicine were also being conducted in veterinary
    medicine. But, practice implementation was happening much
    faster in veterinary medicine than it was in human medicine,
    because we didn't have the same bureaucratic processes put into
    place about changing best practices. And it happened much more
    rapidly. And I think it continues, even though costwise, we
    stay--because we can't afford to buy the new--whether it's PET
    scans or whatever, we're usually 3, 4, 5 years behind on those
    kinds of things, but when it comes to actually changing
    protocols, veterinary medicine is much farther ahead of human
    medicine, simply because of the bureaucracies that are in
    place. I think that a big part of this can be changed with the
    idea of health information technology.
        Dr. Halamka?
        Yes?
        Mr. Gingrich. One last comment along that line. Having
    Governor Perdue as a former veterinarian, and you a--I feel
    like I've now worked with people and they see me as a large dog
    and approach the conversation from a treatment perspective.
        [Laughter.]
        Mr. Gingrich. But let me just say----
        Senator Ensign. My kids actually read this book called
    ``The Big Red Dog.'' I don't know why that just came to mind.
        [Laughter.]
        Mr. Gingrich.--I ran into somebody in an information
    technology company the other day in--from Atlanta, and she
    pulled out of her pocket her dog's electronic record. And she
    said, ``This is standard at my veterinarian.'' And I just leave
    you that thought about where we're at on the evolution of these
    things.
        Senator Ensign. I guess if human medicine would follow
    veterinary medicine a little more, we would be OK. Thank you,
    Mr. Speaker.
        Dr. Halamka, I know you've been a practitioner in emergency
    rooms. There probably is no more critical of an area in
    medicine than the ER for needing electronic medical records.
    Can you comment on how health information technology would help
    you, as an ER physician? For example, you are presented with a
    patient who has been in a car accident, or brought to the
    hospital comatose and you don't know why. If that patient had a
    credit card or a smart card, that would provide you with access
    to their entire health record, how would that improve the
    quality of their care?
        Dr. Halamka. Certainly. Sir, the emergency department is
    one of the first areas we automated at Beth Israel Deaconess.
    Imagine that you've come in, and you have, as you say, a car
    accident, you're unconscious, but you have several allergies.
    Well, there are medications I may want to give you that could
    actually cause more harm, or there are medications you're
    taking--if I give you a medication, there could be drug-to-drug
    interactions. Certainly helping even me understand why you're
    unconscious--are you unconscious because of the accident, or
    did you have a seizure that led to the accident, or are you a
    diabetic, and your blood sugar has dropped below 50 and you
    became unconscious and got into the accident--could radically
    affect treatment.
        Certainly one of the things that's quite helpful to us is
    to understand cardiac history. We have two and a half million
    EKGs online in our community, and we can access those, via the
    Web, securely. So, if a patient comes in with chest pain, I can
    compare what has happened to this patient since they were last
    evaluated by a clinician, and get them to the cath lab, if
    that's necessary, in very rapid time.
        So, time and time again, it improves quality, but also it
    improves the efficiency of the way we deliver care. Our
    emergency departments are, today, in crisis. The Institute of
    Medicine issued a report last week on the future of emergency
    medicine, and it's very clear that without healthcare IT, that
    emergency care system may very well collapse out of the sheer
    demand and undersupply.
        Senator Ensign. Mr. Raymer, the Speaker was just talking
    about Intermountain Healthcare. Can you comment on what they've
    done and how they've done it, using your products?
        Mr. Raymer. Well, I think, to make clear, is that what
    we're doing is working with Intermountain to commercialize some
    of the work that they did internally. So, Intermountain, for a
    number of years, has been what the industry--what we call a
    self-developed shop. And so----
        Senator Ensign. So, similar to what Mr. Ragon was speaking
    about, Intermountain Healthcare was an evolutionary project.
        Mr. Raymer. That's correct. So, they had the basis of a
    commercial product, called the 3M HELP system, and they evolved
    that over time and became very advanced in the application of
    decision support to the care delivery workload. And so, much of
    what they've done is much more advanced than what hospitals
    routinely do in this country. They look at much more
    longitudinal history of data, they have much more complex
    algorithms, like automated weaning of patients off ventilators,
    which is not really routinely utilized in any hospital in this
    country. So, what our objective is--is commercially--is to take
    what has been developed in their location and commercially
    package that and make that available to the typical community
    hospital that does not have the informatics staff to make that
    possible and attainable.
        Senator Ensign. Mr. Raymer, I would like you to comment on
    what Mr. Ragon said about replacing systems that people were
    comfortable with. Have you found that employees reject new
    systems, or has your experience been positive? One of the
    common things that I hear is that just because a product is
    electronic doesn't mean it is good. It has to be the right kind
    of electronic, medical record. It has to be the right kind of
    system. And, to be able to improve quality, the right kind of
    training is also needed.
        Mr. Raymer. Well, Intermountain has had a very inclusive
    process of the clinician community, whether it be nurses,
    whether it be physicians, whether it be therapists that are
    involved in the care delivery process, to really map out the
    clinical processes today as they're performed in their current
    system, and how those would be enhanced and improved in the
    installation of the new product. So, Intermountain's been very
    cautious about the change management process associated with
    the clinicians.
        What they realized is that in many areas they were very
    advanced, but in other areas their application was falling
    behind the times. And they could not afford to make that
    investment on both fronts. So, what they chose is to get a
    commercial partner that could help them commercialize some of
    their ideas, get some proceeds from that, but, more
    importantly, to ride the coattails of other large-scale
    investments that are being made in routine improvements in
    health information systems.
        Senator Ensign. We try to keep subcommittee hearings to an
    hour and a half. We are just a few minutes over these time
    parameters. At this point, I would like to conclude this
    hearing. If I have questions that I was not able to ask due to
    time limitations, I will submit those questions to you in
    writing. I would greatly appreciate your responses to any
    outstanding questions.
        Health information technology is an area I am very
    passionate about and very interested in. I think it's one of
    the more important areas that we need to address. The neat
    thing about this issue is that it really isn't ideological. It
    seems to me that health information technology can be a
    completely nonpartisan issue. Republicans love that health
    information technology saves costs and improves quality of
    care. Democrats love a lot of these aspects as well. It seems
    to me that we can actually make some big improvements in our
    healthcare system by encouraging the adoption of health
    information technology and actually showing the American people
    that we can work together on something.
        In closing, thank you for your input today. It's been very
    valuable.
        At this time, this Subcommittee is adjourned.
        [Whereupon, at 4:05 p.m., the hearing was adjourned.]

                                A P P E N D I X

        Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska

        Mr. Chairman, I'm pleased we are holding this hearing today to
    explore how we may encourage the adoption of Health Information
    Technology (IT) throughout our healthcare system.
        Adoption of Health-IT holds the potential to reduce medical errors,
    improve patient care and reduce costs. The Institute of Medicine has
    estimated that between 44,000 and 98,000 Americans die each year due to
    medical errors in hospitals. This is simply unacceptable. I support
    President Bush's goal to make deployment of Health-IT throughout our
    system one of our highest priorities.
        Health-IT has the potential to aid our soldiers wherever they may
    be stationed, including in theatres of war, so that fast and accurate
    treatment may be given to them when needed. Health-IT also has the
    potential to do the same for our aging population. Health-IT in our
    non-defense health care system must be a priority.
        I also want to recognize the efforts of former Speaker Newt
    Gingrich to foster development and implementation of health information
    technology. His has been a passionate and knowledgeable voice on this
    subject for some time. I welcome him here today as a witness before
    this Subcommittee.
        Government and the private sector must work together to address
    challenges that remain before we can realize the benefits of system-
    wide Health-IT. These challenges include the high costs of implementing
    health-IT systems, especially for small providers and individual
    practitioners; privacy concerns, a lack of standards to allow sharing
    of information among providers; and resistance by some health
    providers.
        We look forward to working with public and private entities to make
    deployment of Health-IT a reality.
        Thank you, Mr. Chairman. I look forward to hearing from our
    witnesses.
                                     ______

    Joint Prepared Statement of the American Health Care Association (AHCA)
               and the National Center for Assisted Living (NCAL)

        The American Health Care Association (AHCA) and the National Center
    for Assisted Living (NCAL) thank the Senate Commerce, Science, and
    Transportation Subcommittee on Technology. Innovation, and
    Competitiveness for holding this important hearing today and we thank
    Chairman Ensign for convening this series of hearings designed to
    explore the many ways we can accelerate the adoption of health
    information technology.
        Mr. Chairman, one of the American health care system's most
    pressing problems is the fact we do not have a seamless transfer of
    patient data and information between the rapidly growing numbers of
    long term care settings. Health IT (HIT) offers the promise of better
    health outcomes for patients and residents by catching conflicting
    prescriptions, providing reminders to improve timely prevention and
    other recommended care, and better public health monitoring.
        As the Nation moves toward uniform intra-provider electronic
    recordkeeping, long-term care must be included right from the start so
    that seniors today and those just reaching retirement age can benefit
    from HIT as soon as possible. Congressional leadership and a strong
    Federal commitment are needed to ensure nursing facilities can adopt
    interoperable health information technology, electronic health records,
    and e-prescribing systems without undue financial burden to nursing
    facilities.
        To ensure adoption, grants and loans must be available to long-term
    care providers to assist them in adopting this technology. The value of
    such grants and loans will be recognized in the reduction of
    duplicative care, lowering health care administration costs, avoiding
    errors in care, and, in the final analysis, improving seniors' overall
    care quality--AHCA/NCAL's preeminent mission.
        Dr. David Brailer, the former National Coordinator for Health
    Information Technology, has estimated that the U.S. health care system
    will save an estimated $140 billion per year--close to 10 percent of
    total U.S. health spending--if health information technology is
    adopted. A recent Rand Corporation study found the U.S. health care
    system could save $162 billion annually with widespread use of HIT.
        There is widespread, bipartisan support for accelerating the
    creation of a nationwide, interoperable HIT infrastructure that can
    facilitate four major improvements in the health care system:

            1. Reducing administrative costs in areas such as claims
            processing, provider reimbursement, referrals and eligibility;

            2. Improving health care quality, efficiency and care
            coordination:

            3. Transforming systems to improve patient safety; and

            4. Significantly improving the treatment of chronic diseases.

        Adequate resources must be deployed quickly to ensure timely
    implementation of a HIT system, and AHCA has previously announced its
    support for three bills to help accomplish this objective: the Health
    Information Technology Promotion Act, sponsored by U.S. Rep. Nancy
    Johnson (R-CT), and the Wired for Health Care Quality Act, sponsored by
    Senator Enzi (R-WY).
        There are also many demonstration projects and efforts underway to
    ensure providers are prepared to adopt and become trained on such
    technology. Such existing and future efforts must support grants and
    loans to long-term care facilities, so that America's frail, elderly,
    and disabled can recognize the improvements in care that health
    information technology affords.
        On a broad policy basis, AHCA/NCAL encourages Member of Congress to
    pass legislation that: (1) encourages the setting of standards for HIT
    so different products will be interoperable and able to retrieve and
    share data for the identified functions; and (2) appropriately aligns
    incentives as part of the development of a National Health Information
    Infrastructure (NHII), so that the financial burden on nursing
    facilities is not disproportionate once these technologies are
    implemented.
        Passing legislation incorporating these important fundamental
    provisions will assist and complement our profession's quality
    improvement initiatives. and we urge every Member of Congress to help
    move this effort forward in order to help and benefit America's most
    vulnerable frail, elderly and disabled citizens. Thank you, Mr.
    Chairman.
                                     ______

         Prepared Statement of the Healthcare Leadership Council (HLC)

        The Healthcare Leadership Council (HLC), a not-for-profit
    membership organization comprised of chief executives of the Nation's
    leading health care companies and organizations supports rapid adoption
    of healthcare information technology (HIT), including electronic
    medical records, to improve quality of care, reduce medical errors, and
    lower health care costs.
        Members of HLC--hospitals, health plans, pharmaceutical companies,
    medical device manufacturers, biotech firms, health product
    distributors, pharmacies and academic medical centers--have seen
    firsthand what widespread adoption of HIT can mean to patients and
    healthcare providers.
        Several HLC member organizations have been among the earliest
    adopters and pioneers of health information technology. We believe HIT
    has the power to transform our health care system and provide increased
    efficiencies in delivering health care; contribute to greater patient
    safety and better patient care; and achieve clinical and business
    process improvements.
        More to the point, the Healthcare Leadership Council shares
    President Bush's goal that most Americans have electronic health
    records by 2014. We believe that Congress can significantly reduce or
    eliminate barriers to HIT adoption and that it must act this year to
    address this issue. Specifically, HLC asks Congress to:

       Create funding mechanisms to assist health care providers in
            investing in health information technology, including
            electronic health records.

       Enact exceptions to current Federal rules that preclude
            hospitals and medical groups from helping physicians to acquire
            health information technology.

       Create a national, uniform patient privacy standard to
            facilitate the development of a multi-state, interoperable
            health information network.

        The Healthcare Leadership Council's interest in this issue is long-
    standing. In the summer of 2003, HLC established a Technical Advisory
    Board, comprised of clinicians and others with information technology
    expertise within HLC's member companies to provide information about
    their HIT implementation experiences.
        Attached to this statement is a copy of the White Paper that
    resulted from this effort. The paper attempted to quantify key benefits
    of HIT along with barriers to HIT implementation. The paper concluded
    with the following recommendations:

       Standards to assure interoperability;

       Financial incentives and funding mechanisms;

       Liability protections to facilitate sharing of safety and
            quality data; and

       Stakeholder collaboration on best practices.

        In looking at these recommendations, it is clear that there has
    been significant progress since 2004.
        Last summer, the President signed into law the, ``Patient Safety
    and Quality Improvement Act.'' HLC advocated for this legislation as an
    important step toward fostering a culture of safety--through liability
    protections to allow voluntary information-sharing and reporting.
        In the area of standards, several public and private sector
    initiatives are making great strides to identify or develop health
    information interoperability standards that will enable disparate
    systems to ``speak the same language.'' And the work of the
    Certification Commission for Health Information Technology will
    complement these efforts by certifying that products are compliant with
    criteria for functionality, interoperability and security. This will
    help reduce provider investment risks and improve user satisfaction.
        As important as it is to applaud the progress that has been made,
    it is necessary to focus on the barriers that stand in the way of
    widespread HIT implementation. We have some significant challenges
    ahead of us, including patient privacy regulations and standards.
        Developing a multi-state, interoperable system depends on national
    technical standards as well as national uniform standards for
    confidentiality and security. The Health Insurance Portability and
    Accountability Act (HIPAA) governs the privacy and security of medical
    information. Though HIPAA established Federal privacy and security
    standards, it permits significant state variations that create serious
    impediments to interoperable electronic health records, particularly
    when patient information must be sent across state lines.
        We believe Congressional action to establish a uniform Federal
    privacy standard is essential in order to ensure the viability of a
    national health information network.
        Because the HIPAA Privacy Rule's preemption standard permits
    significant state variation, providers, clearinghouses and health plans
    are required to comply with the Federal law as well as many state
    privacy restrictions that differ to some degree from the HIPAA privacy
    rule.
        State health privacy protections vary widely and are found in
    thousands of statutes, regulations, common law principles and
    advisories. Health information privacy protections can be found in a
    state's health code as well as its laws and regulations governing
    criminal procedure, social welfare, domestic relations, evidence,
    public health, revenue and taxation, human resources, consumer affairs,
    probate and many others. Virtually no state requirement is identical to
    the Federal rule.
        HLC is not alone in calling for action in this area. The 11 member
    Commission on Systemic Interoperability, authorized by the Medicare
    Prescription Drug, Modernization, and Improvement Act to develop
    recommendations on HIT implementation and adoption, recommended that
    Congress authorize the Secretary of HHS to develop a uniform Federal
    health information privacy standard for the Nation, based on HIPAA and
    preempting state privacy laws, in order to enable data interoperability
    throughout the country.
        While we believe strongly in the need for a national privacy
    standard, HLC believes just as strongly that any regional or national
    system designed to facilitate the sharing of electronic health
    information must protect the confidentiality of patient information.
        Addressing this issue appropriately will be essential to achieving
    the interoperability necessary to improve the quality and cost
    effectiveness of the health care system--while still assuring patients'
    confidence that their information will be kept private.
        To further underscore the importance of this issue to HIT
    development, attached is a map developed by the Indiana Network for
    Patient Care. Each dot represents a patient seen at an Indianapolis
    hospital during a 6-month period. While the dots are stacked very deep
    around Indianapolis as you would expect, patients served by the Indiana
    health providers during this period were also located in 48 of the 50
    states. Today's health care providers, meeting the needs of a mobile
    society, serve patients from multiple and far-flung jurisdictions.
    Looking at this map it is easy to see why regional agreements will not
    be adequate to address the myriad regulations with which providers and
    others will need to comply to achieve ``interoperability.''

        In addition to national privacy standards, the lack of funding or
    adequate resources--combined with the high costs of HIT systems--was
    repeatedly cited in our member study as a barrier to effective
    implementation of HIT systems. There are significant front-end and
    ongoing maintenance and operational costs for HIT, including software,
    hardware, training, upgrades, and maintenance. Systems are virtually
    unaffordable for those providers who do not have ready access to the
    operating capital needed for such an investment.
        In an age in which health care providers, in many cases, must deal
    with rising costs associated with uncompensated care, medical liability
    rates, homeland security needs and addressing staffing shortages, it is
    a simple fact that many providers do not have the financial wherewithal
    to invest in these new systems.
        HLC believes that the Federal Government should drive the Nation's
    implementation of HIT through financial incentives and funding
    mechanisms to help providers defray the huge costs of acquiring and
    operating HIT. Rapid implementation of interoperable HIT is also a
    critical component of the Nation's emergency preparedness.
        While the Agency for Healthcare Research and Quality (AHRQ) and
    Office of the National Coordinator for Health Information Technology
    (ONC) contracts and grants will support the development of a national
    information network and interoperability standards, we need to do more
    to get every provider using electronic health records now.
        HLC advocates the consideration and implementation of multiple HIT
    funding mechanisms. However, we also recognize that current fiscal
    deficits and budget constraints will limit the ability of Congress to
    directly fund any new program or initiative. HLC is working with our
    member companies and organizations to develop workable, creative
    financing proposals for HIT. We look forward to sharing those ideas
    with the Subcommittee.
        However, Congress can facilitate greater physician adoption of
    electronic health records now by allowing hospitals and medical groups
    that have successfully implemented electronic health records to share
    their expertise and IT investment with physician offices. This will
    facilitate better integration of hospital and physician information
    systems to improve continuity of care, decrease duplicate tests and
    provide greater safety and quality of care to consumers. By providing
    exceptions to the physician self-referral prohibition (Stark) and anti-
    kickback rules for HIT, Congress can accelerate physician use of
    electronic health records.
        Current law prohibits anyone who knowingly and willfully receives
    or pays anything of value to influence the referral of Federal health
    care program business, including Medicare and Medicaid. Physicians are
    also prohibited from ordering designated health services for Medicare
    patients from entities with which the physician has a financial
    relationship--including compensation arrangements. The penalties for
    violating Stark and anti-kickback rules are significant. The Stark law
    is a ``strict liability'' statute and no element of intent is required.
    Violators are subject to significant civil monetary penalties and risk
    being excluded from participation in the Medicare and Medicaid
    programs. The anti-kickback law is a criminal statute that also
    provides significant penalties--including fines and imprisonment--for
    knowing and willful violations.
        Though HHS has released proposed regulations that would provide
    limited exceptions to the Stark and anti-kickback rules for e-
    prescribing and electronic health records, industry analysis suggests
    that the exceptions will be of little value under the proposed rule.
    Hospitals and medical groups that want to assist physicians with the
    adoption of HIT will need to comply with restrictive and overly
    burdensome requirements on both donors and recipients of IT products.
        Due to the severe consequences of violating these laws, providers
    need a workable safe harbor for HIT. Congress must provide a clear
    roadmap for hospitals, medical groups and others to provide HIT
    hardware, software, and related training, maintenance and support
    services to physicians.
        We believe that enactment of exceptions to the Stark and anti-
    kickback rules will help spur adoption of electronic health records and
    provide immediate benefits to consumers in the form of improved quality
    of care and patient safety.
        In conclusion, HLC believes that HIT legislation should especially
    focus on areas in which Congress and the President must act to remove
    barriers and facilitate successful implementation of HIT. Therefore,
    HIT legislation should accelerate the adoption of health information
    technology and interoperable electronic health records by ensuring
    uniform IT standards including privacy and security and providing
    exceptions to Stark and anti-kickback rules to allow hospitals, medical
    groups and others to share their expertise and investment in electronic
    health records with physician offices. HLC will continue to work with
    Congress to continue to explore other funding mechanisms to promote
    wide spread adoption of HIT.
        The Healthcare Leadership Council appreciates the opportunity to
    submit this statement for the record. *
    ---------------------------------------------------------------------------
        * Attachments to this prepared statement have been retained in
    Committee files.
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                                     ______

         Prepared Statement of the American College of Cardiology (ACC)

    Introduction
        The American College of Cardiology (ACC) appreciates the
    opportunity to provide a statement for the record of the Subcommittee's
    hearing on accelerating the adoption of health information technology
    (HIT). We believe that Congress has an important role to play in
    promoting the adoption of HIT by physician practices.
        The ACC is a 33,000 member non-profit professional medical society
    and teaching institution whose purpose is to foster optimal
    cardiovascular care and disease prevention through professional
    education, promotion of research, and leadership in the development of
    standards and formulation of health care policy.
        In the world of health care informatics, the ACC is a leader in the
    physician community and supports the national agenda to accelerate the
    integration of HIT, and specifically electronic health records (EHRs),
    into physician practices. To meet the HIT needs of its members, the ACC
    established an Informatics Work Group to coordinate the HIT activities
    and policies of the College. The ACC participates in many activities in
    the health informatics domain, and is involved with efforts related to
    interoperability, standards harmonization and EHR evaluation.
        EHR use results in time savings, improved clinical outcomes and
    increased efficiency. EHRs reduce paper-based tasks such as work-
    orders, scanning and indexing, thereby improving practice workflow and
    reducing the potential for errors. Another advantage of EHRs is the
    ability to integrate decision support software that matches a patient's
    condition with quality care guidelines for that condition.
        The successful integration of EHRs into an increasing number of
    physician practices will be largely dependent upon adequate financial
    incentives to offset the costs of HIT adoption; successful
    interoperability and standards harmonization; and educating physicians
    about the benefits of EHRs to their practices and their patients.
    Federal Financial Incentives to Promote HIT Adoption
        While the ACC realizes the potential benefits of widespread EHR
    use, including health care quality improvement, we are concerned that
    physicians face significant costs in implementing and supporting HIT.
    At a time when physicians are facing declining reimbursements and an
    uncertain future for Medicare payments, investing in HIT imposes an
    unmanageable financial burden on many physician practices. Aside from
    the significant initial investment in technology, physicians also incur
    large costs from training and maintenance over time. In fact, the
    actual software costs are far overshadowed by the infrastructure and
    staff costs over time. These costs would be especially prohibitive for
    small physician practices. While cost savings from the implementation
    of HIT would benefit the health care system overall, the return on HIT
    investment for physician practices would be more gradual and over the
    long term.
        In order to drive widespread adoption of EHRs, the Federal
    Government must provide sufficient financial assistance to help
    physicians implement HIT. The ACC strongly supports Federal financial
    assistance, such as tax credits, grants, Medicare add-on payments or
    loans, to physician offices for implementing HIT systems. Such
    assistance is critical to accelerating broad use of HIT in the Nation's
    health care system.
        The ACC also supports safe harbor provisions in existing Federal
    anti-kickback and self-referral laws that allow entities to share HIT
    systems and support with physician practices as a means to provide some
    relief from the cost-burdens associated with HIT implementation.

    Moving From ICD-9 to ICD-10
        The ACC supports the move to the International Classification of
    Diseases, 10th edition, Clinical Modification (ICD-10-CM) as a more
    precise and granular coding system than the currently used ICD-9-CM;
    however, the College is concerned with the level of resources that
    physician practices will need to invest in order to make the
    transition. Aside from the additional practice cost, the change will
    also require physician practices to dedicate resources to training of
    support staff. While physician practices would most likely be able to
    meet an implementation deadline, our concern is the processes software
    vendors and payers (including the Centers for Medicare and Medicaid
    Services) will first need to go through in order to allow for an
    effective transition will make a deadline impracticable from the
    physician perspective. The College recommends that any move to ICD-10
    include implementation benchmarks for software vendors and payers, and
    that a practical deadline for physician practices to implement ICD-10-
    CM be based upon when those benchmarks are reached. Without requiring
    that benchmarks be met throughout the transition, the situation may be
    reminiscent of the implementation delays of the transactions and code
    set requirements under HIPAA.

    Working Toward Interoperability
        To realize the benefits of HIT, software and operating systems must
    be able to exchange data, or be interoperable. This requires
    coordinated efforts across all levels of the health care system. The
    College is currently one of three North American sponsors of the
    Integrating the Healthcare Enterprise (IHE) initiative, an
    international, multi-stakeholder project that facilitates system-to-
    system connectivity within and across care settings. The ACC is the
    primary sponsor of the IHE Cardiology domain. As a lead organization in
    IHE, the College provides a much-needed clinical perspective to the
    development of an interoperable framework for cardiovascular
    information systems, including imaging. Jonathan Elion, M.D., F.A.C.C.,
    describes the IHE initiative as the way to resolve the ``pain points''
    in the cardiologist's clinical workflow through information technology,
    with an end result of higher quality patient care.
        Through its joint sponsorship of IHE, the College has developed a
    relationship with the Health Information and Management Systems Society
    (HIMSS), which is a health care industry membership organization
    exclusively focused on providing leadership for the optimal use of HIT
    and management systems. Earlier this year, the ACC participated in the
    HIMSS Interoperability Showcase at the HIMSS Conference and Exhibition,
    during which the latest advancements were demonstrated. The College
    also cosponsored National Health IT Week, June 5-10, 2006 in
    Washington, D.C., which took place in tandem with the Agency for
    Healthcare Research and Quality Annual Conference on Patient Safety and
    Health IT and the HIMSS Summit. National Health IT Week was the
    Nation's first fully collaborative annual forum where public and
    private sector organizations unite to foster widespread HIT adoption.

    The Need for Standards Harmonization
        The standards harmonization effort is crucial to the adoption of
    EHRs in the ambulatory care setting. Using existing HIT standards such
    as Health Level 7 (HL7) and Digital Imaging and Communications in
    Medicine (DICOM), as well as broader industry standards such as those
    developed by Liberty Alliance (security) and the Internet Engineer Task
    Force (IETF), the standards harmonization effort will deliver a
    consistent implementation guide or ``cookbook'' for building systems
    that can share data reliably within and across settings. Purchasers
    benefit from more efficient implementations because vendor-to-vendor
    interface negotiations are eliminated. End users benefit through
    increased and improved access to clinical information at the point of
    care as more vendors develop products according to a standard set of
    guidelines.
        The College actively participates in the Department of Health and
    Human Services Office of the National Coordinator for HIT contract for
    standards harmonization, which was awarded in 2005. As a founding
    member of the Health Information Technology Standards Panel (HITSP),
    the College was an early participant in the development of the
    processes used to produce deliverables for the standards harmonization
    contract. In addition, the College represents the clinical end user on
    the transfer of lab results across care settings (the ``breakthrough
    area for EHR/Lab'').

    Facilitating EHR Evaluation and Certification
        The ambulatory care EHR market is still immature with many vendors
    entering the market. In such a market, products vary immensely not only
    in functionality, but also in technology platforms, clinical content
    and costs. The development of a set of certification criteria and an
    associated testing program will greatly assist clinicians in the EHR
    adoption process by providing a mechanism to validate vendors'
    functional claims.
        The ACC is developing an EHR Evaluation Project to provide members
    with a toolkit to assist them in EHR implementation and to identify
    individual EHRs that have passed a juried test of functionality. The
    EHR Evaluation project will deliver much-needed education and tools to
    physicians who are considering purchase of an EHR. The ACC believes
    that the use of an EHR that meets criteria developed by members will
    improve both care and practice by providing better access to clinical
    data across care settings and through identifying areas for increased
    efficiency in the practice workflow.
        The College also is a founding member of the Physicians' Electronic
    Health Record Coalition (PEHRC), a collaborative of professional
    medical associations including the American Medical Association, the
    American College of Physicians and the American Academy of Family
    Physicians, in which member organizations share information technology
    best practices and respond to ongoing Federal initiatives by providing
    clinician input. The goal of this group is to increase the adoption of
    EHRs by physicians through education, standards promotion and policy.
        In addition, the College was selected to serve on the Commission
    for the Certification of Health Information Technology (CCHIT) to
    represent providers in the development and promotion of EHR
    certification criteria. The CCHIT will soon announce its first round of
    vendors whose EHRs meet its criteria for exchanging data. The College
    participated in the public comment phase for ambulatory EHR criteria.

    Creating Standardized Terminology
        The College is developing a program to create a subset of SNOMED
    (Systemized Nomenclature of Medicine) terms for cardiology. Since
    SNOMED has become the ``de facto'' terminology used by system
    developers of clinical systems, the College understands the great need
    for clinical expertise in defining the cardiovascular terms used by
    these vendors to develop application functionality, e.g., documentation
    templates and clinical decision support tools. As the premier
    cardiovascular society it is important for the College to leverage the
    clinical expertise of its members to inform the terminology standards
    and provide consistency of definitions for the area of cardiovascular
    medicine.
        The College also participates in the HL7 Special Interest Group
    (SIG) for Cardiology, whose goal is to identify and resolve cardiology-
    related terminology needs. HL7 is an international standards group
    whose partnership with cardiology groups sets the bar for the creation
    of international cardiology data standards.

    EHRs' Impact on Data Collection and Research
        The adoption of EHRs, along with the application of
    interoperability standards and common terminology, will help improve
    data collection and research efforts. Widespread EHR use is critical to
    the ability to measure quality, performance and efficiency. Adoption of
    EHR into physician practices is integral to payment systems structured
    around quality and performance, and will allow clinical data as well as
    existing administrative data to be collected.
        Through its participation in the Duke Clinical Research Institute
    (DCRI) Clinical Trial Networks (CTN) Best Practices project, the ACC is
    participating in the NIH Roadmap program. The College provides clinical
    expertise in the development of data standards and best practices for
    creating a more collaborative information-sharing clinical trial
    network.

    Safeguarding Privacy
        While the Health Insurance Portability and Accountability Act
    (HIPAA) provides a baseline for health information privacy and
    security, some states have implemented stronger laws. The difference in
    Federal and state privacy laws will be a challenge to interoperability
    of EHR systems. The successful nationwide implementation of
    interoperable HIT in both the public and private health care sectors
    will require a national set of privacy standards. The Veterans Health
    Administration and military health systems are good examples of why a
    uniform patient identifier is so critical.

    Conclusion
        In summary, the ACC is committed to working with the health care
    informatics community on interoperability, standards harmonization and
    EHR evaluation and to helping its membership understand and facilitate
    participation in EHRs. To drive the integration of EHRs into physician
    practices, the ACC urges Congress to provide physicians with sufficient
    financial assistance to implement and maintain HIT. As the Subcommittee
    addresses HIT this year, the ACC would like to offer itself as a
    resource.
                                     ______

     Prepared Statement of Thomas H. Johnson, MIS Manager, DuBois Regional
      Medical Center; on behalf of the West Central Pennsylvania Regional
                        Health Information Organization

        I serve as the Management Information Systems (MIS) Manager for
    DuBois Regional Medical Center (DRMC), a 214-bed rural healthcare
    center in Clearfield County, Pennsylvania. DRMC is the lead
    organization for a five hospital, Regional Health Information
    Organization (RHIO) in western Pennsylvania--The ``West Central
    Pennsylvania RHIO.''
        I submit written testimony today to share with the Committee the
    challenges our consortium and other RHIOs face as we collaborate in our
    endeavors to provide our patients with efficient, effective, quality
    health care. We also write to offer the Committee possible solutions to
    accelerate the adoption of health information technology.
    Moving Toward a Paperless System in Rural America
        Spurred on by the introduction of new technologies and the
    widespread acceptance of the Internet as an invaluable communication
    medium, hospitals and other health care providers throughout the Nation
    have been implementing electronic means to collect and review patient
    information. More recently, hospitals and others are seeking effective
    and secure ways to share health information between and among other
    health care providers. These Health Information Exchanges (HIEs) are
    forming rapidly in many states. Large multi-stakeholder organizations
    consortiums have adopted the title Regional Health Information
    Organizations (RHIOs).
        One of the greatest fears for rural community hospitals, as the
    Nation advances toward a national health Information Network (NHIN), is
    the cost associated with upgrading current systems and purchasing the
    technology needed to create Electronic Health Records Systems (EHRS).
    While EHRS allow hospitals to become more efficient and provide a
    higher degree of patient safety, the struggle to maintain a positive
    bottom line or even a solvent facility has deterred many hospitals from
    establishing EHRS.
        The benefits of the EHRS are many including, more efficient care,
    increased patient safety, timely results reporting, fewer medical
    complications and treatment errors, more comprehensive documentation,
    improved continuity of care, reduced costs in healthcare expenditures,
    medical research opportunities, biosurveillance, etc. Yet, the benefits
    of the electronic record are not in question. The question is how can
    rural hospitals afford such costly upgrades?
        Many healthcare institutions, large or small, have fragile
    financial structures. Rural community hospitals in particular, are
    confronted by numerous economic barriers such as lower reimbursement
    rates and difficulty recruiting and retaining physicians and other
    qualified healthcare professionals. These financial and personnel
    factors have contributed to the lack of capital to initiate additional
    services needed in the communities served by rural hospitals.
        Many rural hospitals struggle just to provide core services. Others
    face tough decisions like closing obstetrics and maternity services
    because of the costs of malpractice insurance and the flight of many
    obstetricians and other physicians from rural areas, such as we are
    facing in rural Pennsylvania. According to the Pennsylvania Department
    of Health, the number of rural hospital beds decreased by some 31
    percent from 1990 to 1999. Today this decline continues. In May 2006,
    Philipsburg Area Hospital some 40 miles southeast of DuBois closed its
    doors declaring bankruptcy.
        The overall financial burden is a large problem facing smaller
    hospitals that wish to initiate EHRS. Even after the initial funding to
    create the system is met, maintaining these systems will still cost
    hospitals more on a year-to-year basis. Converting their current
    medical records into the digital system also looms as a daunting task
    for many smaller institutions.

    West Central RHIO Goals and Challenges
        The West Central Pennsylvania RHIO currently consists of five small
    rural hospitals, DuBois Regional Medical Center (DRMC), Brookville
    Hospital, Clearfield Hospital, Elk Regional Health Center, and
    Punxsutawney Area Hospital.
        The goal of the RHIO is to create a link between the information
    systems of the participating consortium members. Utilizing a system
    overlay, the existing information systems of partner organizations will
    communicate/interface with one another via a private web portal to
    create a single patient record. Through both public and private
    funding, the West Central Pennsylvania RHIO aims to implement a system
    that will allow doctors and other healthcare providers to access
    important medical records via computer. This system will provide a much
    more efficient way to take care of patients with processes set in place
    to bring important patient safety alerts to the forefront.
        The goal of the RHIO is for each partner hospital to have its own
    EHRS and then, to link all partners together into one network--the
    RHIO. Partner organizations could choose to maintain their own
    databases or lease space on DRMC's medical records database, if they so
    choose. The network would provide an option to the smaller community
    hospitals, and eventually to local nursing homes, to share the latest
    in technology at a fraction of the cost of creating their own stand-
    alone system.
        Our hospitals are working very hard to realize our goal of fully
    integrating health care technology in rural Pennsylvania. Our four
    partners are smaller independent community hospitals in rural PA. We
    realized years ago that if we wanted to survive as an independent
    community based hospital in rural Pennsylvania we needed to work
    together to solve common problems that we all faced. We have a strong
    history of collaboration with our partners, sharing clinical resources
    in a manner that is mutually beneficial, while maintaining each
    hospital's independence and competitive spirit.
        We collaborated on many clinical initiatives that enabled sharing
    of information with physicians from various clinical specialties such
    as, Neonatal, Oncology, Cardiology, Neurology, Pediatrics, Radiology,
    and Psychiatry. We installed tele-radiology in three of the hospitals
    to cover for one hospital that lost their only Radiologist. We have
    also started training programs in cooperation with local universities
    to train nurses and other technical specialties that are difficult to
    find.
        Although these initiatives have made a huge impact on mitigating
    the challenges we face as health care providers in rural American, they
    all lack the appropriate flow of health information required to provide
    timely high quality healthcare. As a result, the RHIO's primary focus
    is to ensure the timely exchange of secured health information among
    the five hospitals, and any other stakeholders that impacts the
    continuum of care for the patients of our region.

    Suggested Solutions To Help Rural Areas Implement Much Needed Health
            Information Technology
        The West Central Pennsylvania RHIO, and the hospitals themselves,
    need Health Information Technology (HIT) to be successful and survive.
    Therefore, we are prepared to make investments in the IT infrastructure
    to support the type of high speed data exchange that will be required
    in a RHIO environment.
        Our RHIO believes that HIT can be acquired through further
    collaboration with our partners. We are using new business models to
    leverage group purchasing and implement cost sharing and are actively
    seeking funding from government grants and private foundations. We
    realize that each hospital cannot afford to purchase all of this
    technology by themselves. So, we plan to coordinate our efforts to
    maximize our investment in HIT, further our likelihood of successful
    implementation, and improve vendor support. Furthermore, the consortium
    also plans to involve our major payers to see how they can become the
    sustaining factor in helping to fund the RHIO. We believe that
    quantitative data will very quickly show that improvements in quality
    will serve to also reduce overall health care costs.
        Despite our commitment and efforts, the consortium also needs the
    support of government at all levels. There are a myriad of ways that
    our state and the Federal Government can help to improve health care
    for rural Americans. Specifically, we recommend the following:

       Increase Federal Health IT funding, especially in rural
            areas.

             New grant programs are absolutely critical in advancing health
            care IT. Directed Federal and state funding to form and operate
            RHIOs would be especially useful for those in rural areas who
            do not have the funding or capitol to do so on their own.

       Continue support to the Office of the National Coordinator
            for Health IT and the Certification Commission for Health IT.

             Their work on setting guidelines for the adoption of national
            standards and certification of products is vital in the
            development of RHIOs and Health Information Exchange throughout
            the Nation.

       Advance legislation that will help alleviate the current
            burdens on rural hospitals.

             Proposed cuts to Medicare and poor funding for rural hospitals
            directly threaten the health care of patients in our in state.
            This year alone, four rural hospitals in Pennsylvania closed
            their doors. Patients in rural areas are particularly
            vulnerable. When hospitals close, patients are forced to seek
            care often at a great distance and at a much more expensive
            price than locally delivered care.

       Advance legislation to address the medical liability crisis.

             Medical liability costs in Pennsylvania are simply out of
            control. We are losing physicians' to other states and it is
            impossible to recruit physicians because of the lack of
            effective tort reform in the state. Pennsylvania is retaining
            only 5 percent of medical school graduates. Training costs are
            born not only by the hospitals but by the state and Federal
            Government. Further, recruiting skilled nurses and technicians
            in all specialties of healthcare is proving increasingly
            difficult because of the lack of meaningful medical liability
            reform. As such, retaining health care professionals becomes
            the first priority, further slowing advances in health care
            technology.

       Reign in ``specialty hospitals'' expansion.

             Specialty Hospitals are taking the high dollar procedure from
            hospitals. These organizations are draining hospitals of
            critical revenues needed to support and maintain the overhead
            of a 247 general acute care facility. Federal
            legislation has been proposed for all of these issues, but none
            has been passed as law.

       Promote capital investment in hospital based IT systems.

             Systems such as EMRs, e-Rx, PACS, CPOE, etc., would streamline
            operations, improve quality, and reduce costs. Support for such
            programs at the state and Federal levels would be useful.

       Promote the installation of high speed broadband Internet
            and wide area networks in rural areas.

             These technologies would enable rural areas to share large
            volumes of secured data and also level the playing field with
            urban areas.

        Thank you for your time and interests in Health IT and for allowing
    me to submit this written testimony.
                                     ______

     Prepared Statement of Chris A. Lumsden, Administrator/Chief Executive
                    Officer, Halifax Regional Health System

        Chairman Ensign, Ranking Member Kerry, and members of the
    Subcommittee on Technology, Innovation, and Competitiveness, I
    appreciate the opportunity to testify for Halifax Regional Health
    System concerning the need for health information technology
    improvements. We believe that Halifax Regional Health System's IT
    upgrade can serve as a model for the Nation--particularly for rural,
    low income areas. Halifax is pleased to be answering the call by
    President George W. Bush and healthcare industry leaders to upgrade
    health system IT.
        For over 50 years, Halifax Regional Health System has served rural
    and low income areas of Charlotte, Mecklenburg and Halifax counties and
    adjoining communities in southern Virginia. A nonprofit locally owned
    and governed organization, Halifax offers comprehensive healthcare
    including emergency services, obstetrics, general and specialized
    surgery, acute and long-term care, dementia care, rehabilitation, home
    health, hospice and behavioral health services. Halifax employs
    approximately 1,000 individuals and has about 125 doctors on the
    Medical Staff.
        In his 2006 State of the Union Address, President Bush urged health
    systems to implement medical information technology upgrades, and
    called on the Federal Government to help create a model electronic
    system for healthcare agencies. Additionally, the Joint Commission on
    Accreditation of Healthcare Organizations, the Leap Frog Group (a
    leading healthcare safety and quality advocate), the Institute of
    Medicine and other healthcare leaders across the Nation are calling for
    improved medical safety through enhanced health system automation and
    technology upgrades.
        Halifax Regional Health System is providing leadership for the
    healthcare sector by implementing leading-edge technology upgrades
    through its Model Healthcare Information Technology Project. As a
    community-based nonprofit health system serving one of the largest
    geographic service areas in rural Virginia, Halifax can demonstrate
    improved health outcomes and efficiencies from state-of-the-art
    technological improvements, and can provide a national model for
    providing safer, more efficient healthcare in rural areas.
        Halifax Regional Health System has embarked upon a program to
    vastly improve the entire range of patient care and safety. Halifax has
    begun implementing technology upgrades including Electronic Medical
    Records (EMR), Computerized Physician Order Entry (CPOE), Picture
    Archival Communication Systems (PACS), real-time monitoring and
    diagnostics, as well as other components designed to greatly increase
    patient safety and the quality of care. According to the Leap Frog
    Group, CPOE has been shown to reduce serious prescribing errors in
    hospitals by more than 50 percent.
        Despite this growing consensus, Health Care Informatics On-Line
    reports that less than 4 percent of U.S. hospitals are implementing
    CPOE, and healthcare has lagged behind other industries in adopting
    computerized systems to prevent errors and improve efficiency. CPOE,
    EMR, PACS and related technology upgrades not only help prevent adverse
    medication effects and longer hospital stays, they also can provide
    evidence-based guidelines which physicians can use to help improve the
    overall quality of care. Doctors, nurses, and other clinical
    professionals at Halifax can attest to significant results it already
    is achieving from these technology upgrades.

    Common Medical Information Technology Problems That Plague Health
            Systems in Virginia and Throughout the United States
        The following identifies information technology related concerns
    common to almost all healthcare practices in the United States.

       Medical Errors. In traditional medical practice, 25
            individual steps routinely take place from a physician's
            consideration of an order entry to the successful execution of
            that order. Each of these steps carries with it redundancies,
            inefficiencies and opportunities for error. With the
            implementation of CPOE, these steps are removed. In addition,
            CPOE can institute on-the-spot drug allergy and drug-to-drug
            interaction checks, and can provide additional medical
            information for physicians at the point of service to improve
            patient safety and care.

       Differing Health Information Platforms. Hospital emergency
            rooms, physician medical record systems, laboratories,
            radiology units and outpatient care settings generally do not
            operate on common information technology platforms that can
            share patient information and treatment outcomes. This leads to
            delays and errors due to data transfers. Technology upgrades
            such as Electronic Medical Records link information platforms
            so that multiple providers can view and use patient records and
            data simultaneously, in real time, while maintaining security
            and HIPAA compliance. This enables faster, more accurate
            diagnoses and fewer redundancies in the health system.

       Wasted Healthcare Dollars. Healthcare workers spend
            unnecessary time assembling data and handling numerous
            telephone calls and faxes to obtain copies of x-rays, medical
            images, radiology reports and other documentation that could be
            available to them instantly through an information technology
            upgrade. Picture Archival Communication Systems (PACS) are
            computer networks dedicated to the storage, retrieval,
            distribution and presentation of medical images. PACS reduce
            the need for unnecessary phone calls, faxes and follow-up, as
            medical documentation and information is readily retrievable by
            all providers. PACS also increases the efficiency of imaging
            departments by simplifying workflow, enhancing productivity and
            making information accessible to multiple users simultaneously.
            This results in improved patient care including shorter
            hospital stays, decreased waiting times and faster diagnoses.
            Many of the Halifax doctors confirm that PACS has saved them at
            least 1 hour per day that can now be used for patient care
            activities.

       Unnecessary Patient Travel and Physician Time. Like other
            rural health systems, Halifax Regional Health System covers a
            considerable geographic area, one in which medical offices and
            nursing homes are separated by relatively long distances. This
            makes communication among healthcare professionals very
            difficult. Currently, there is little or no electronic data
            sharing between primary care and specialist settings to allow
            the continuous monitoring of disease states without requiring
            patient travel. Technology upgrades including EMR, CPOE, and
            PACS allow data to be shared across healthcare continuums,
            enabling all providers to monitor patient care in less time and
            with less travel.

       Barriers to Recruitment and Retention of Health
            Professionals. Halifax Regional Health System is located in a
            federally designated Health Professional Shortage Area.
            Additionally, Halifax Regional Hospital is designated under
            Medicare as a Disproportionate Share Hospital, where a
            disproportionately large share of the patients who rely on the
            hospital for treatment are considered low income or elderly.
            These factors pose a challenge for Halifax in recruiting and
            retaining highly trained doctors and other professionals. By
            bringing to the health system technology advancements such as
            EMR, CPOE, and PACS, Halifax will establish a superior health
            system and a national model, which in turn will increase the
            likelihood that health professionals will choose to practice in
            the region.

    Opportunity To Reduce Medical Malpractice Claims and Healthcare Costs
        By adopting technology upgrades such as EMR, CPOE, PACS, and other
    innovations, the resulting reduction in errors by medical personnel can
    in turn reduce the number of medical malpractice claims, which will
    help to lower the costs of operating the health system. Fewer
    malpractice claims leads to reduced costs of insurance and other
    expenses for healthcare providers. By spending less on liability
    insurance and legal costs, the health system can invest more funds in
    enhancing patient care.

    Halifax's Technology Upgrade: A Model Project for Virginia and the
            Nation
        Halifax Regional Health System is implementing technology that will
    provide a model for the future of safer, more effective, and less
    costly patient care. These technological upgrades remove unnecessary
    steps and obstacles in the diagnosis, decisionmaking and testing
    processes. The improvements save time, reduce medical errors and, most
    importantly, save lives. The benefits for hospitals in Virginia and
    throughout the United States are numerous, including:

       Increased Patient Safety. Due to the fact that physicians,
            nurses and other medical personnel enter data into the health
            system electronically, paperwork-based problems are eliminated,
            including misinterpretation of illegible data, needless
            duplication of tests, incomplete information, and time delays.
            Implementing technology upgrades helps health systems avoid
            medical mishaps, such as inappropriate drug selection or
            dosage, or unnecessary radiographic or laboratory testing.

       Expanded Treatment Options. By automatically providing
            evidence-based clinical protocols and care management
            guidelines, physicians have access to treatment options they
            might not otherwise have considered. Providing best-practice
            guidance for physicians and other professionals at their
            fingertips promotes optimal patient management strategies.

       Single Information Platform Communication. Coordinated real-
            time communication across an entire health system provides
            simultaneous access to patient data from any location by any
            provider. This access allows for improved rapid changes in care
            addressing patients' evolving needs in physician offices,
            hospitals, ambulatory care, or post-hospital settings.

       Data Access for Overall Disease Management. Providing
            practitioners with immediate and shared access to patient
            historical data through Electronic Medical Records and other
            upgrades helps hospitals and providers identify trends that can
            lead to significant changes to improve the management and
            treatment of disease.

    What Makes Halifax Regional Health System an Ideal Model?
        Halifax Regional Health System is an ideal model for advancing
    technology upgrades for rural areas for the following reasons:

       Halifax is a Rural Health System. Halifax Regional Health
            System is a rural health system in which healthcare providers
            and patients are spread over considerable distances. As such,
            the health system offers a proving ground for the advantages of
            data sharing among distant healthcare providers. The Model
            Healthcare Information Technology Project will allow Halifax to
            connect remote physician offices and serve rural and low-to-
            moderate income communities. Halifax intends for this project
            to serve as a demonstration model for other rural health
            systems across the Nation.

       Good Testing Ground. Halifax Regional Health System operates
            several components that together can serve as a useful testing
            ground for technology upgrades. The system is comprised of
            Halifax Regional Hospital, Volens Family Practice, Clarksville
            Family Practice, Chase City Family Practice, Woodview Nursing
            Home, and Meadow View Terrace Nursing Home, among other
            locations in Charlotte, Mecklenburg, and Halifax counties and
            adjoining areas. The hospital provides a full range of acute
            care in-patient and outpatient services including cardiology,
            obstetrics, gynecology, general surgery, internal medicine,
            urology, family medicine, pediatrics, psychiatry, radiology,
            nephrology, ophthalmology, occupational medicine, home health,
            hospice, sleep medicine and rehabilitation services. As such,
            this system operates numerous testable components that can
            provide necessary feedback in order to perfect technology.

       Spearheaded by Leading Healthcare IT Professionals.
            Halifax's technology upgrade is being designed and implemented
            with the assistance of one of the world's largest healthcare
            services and technology company, McKesson Information
            Solutions. McKesson reports that implementation of the Halifax
            technology upgrade ``has been an overwhelming success to
            date.'' The team for the implementation of the technology
            upgrade ``has been highly successful in addressing leadership,
            communication and the cultural aspects of the implementation--
            critical elements to ensuring widespread clinician acceptance
            and adoption of the deployed technology'' (See attached letter
            from McKesson's President, Pamela J. Pure.)

       Less Costly. Due to its size, Halifax Regional Health System
            would be a less costly location to pilot a model project than
            would a large urban hospital system. After implementing the
            technology upgrades at Halifax, this model can be implemented
            at rural health systems throughout the Nation.

       The Project Leverages Substantial Non-Federal Funding.
            Halifax's Model Healthcare Information Technology Project
            represents a very significant commitment of non-Federal
            funding. Non-Federal sources of funding are expected to provide
            over 80 percent of the project costs.

       Great Progress Has Already Been Made. Within the next 2
            years, the Halifax technology upgrades will be 75 percent
            successfully complete.

        Halifax Regional Health System is proud to be on the leading edge
    of innovations in health system operation. The technological
    advancements that will be achieved at Halifax will serve as a model for
    the Nation. We sincerely appreciate the opportunity to present our
    perspective on this important healthcare issue.

                                   Attachment
                                 McKesson Information Solutions
                                           Alpharetta, GA, May 18, 2006
    Mr. Chris A. Lumsden,
    Chief Executive Officer,
    Halifax Regional Health System,
    South Boston, VA.

        Dear Chris:

        It is with tremendous satisfaction that I am updating you on the
    information technology initiative underway at Halifax Regional Health
    System.
        The McKesson team reports that the implementation has been an
    overwhelming success to date. All projects have been completed on time
    and on budget. In fact, this project has gone as smoothly as any
    project across the country. Tom Kluge and his team have devoted
    significant time, energy and resources to deploy a broad range of our
    clinical systems, which have been proven to improve efficiency and
    safety and to create electronic health records.
        Equal in importance, the post-implementation feedback from the
    Halifax and McKesson staff has been very positive. The implementation
    team has been highly successful in addressing leadership, communication
    and the cultural aspects of the implementation--critical elements to
    ensuring widespread clinician acceptance and adoption of the deployed
    technology. The nursing staff has embraced documentation for charting
    care at the bedside. The physicians have embraced the use of the
    medical imaging technology and our physician portal, which enables
    medical staff to complete charts and view critical patient orders and
    results, anytime, anywhere.
        This three-year, $12 million capital project was a formidable task
    and unique in many ways. As the world's largest healthcare services and
    technology company, it is truly significant to McKesson when we are
    enlisted by a small rural hospital to digitize and automate its
    environment to enhance the quality and safety of patient care.
    Typically, hospitals in much larger and more affluent areas of the
    country have been the early adopters of our advanced technology.
        As you know, Halifax is staged to deploy Horizon Admin-
    RxTM, McKesson's bedside medication administration solution.
    Once installation is complete, your hospital will join the ranks of the
    5 to 10 percent of healthcare facilities nationwide that use bar-coding
    scanning to accurately track and record patient medications.
        This technology found in most grocery stores has been proven to
    help ensure the right patient receives the right medication by using a
    handheld device to scan medication bar codes at the bedside. It's clear
    that in organizations where there is a commitment to addressing all
    aspects of the safety equation, health IT becomes a valuable enabler in
    reducing human error, saving lives, saving lost time and avoiding
    millions of dollars in wasted money.
        We are very proud you have elected to work with McKesson to provide
    your community with the best possible array of medical services using
    the most advanced clinical tools. Please do not hesitate to contact me
    if you have any questions on our services and support as you continue
    to pursue becoming an established health leader in your community.
                Sincerely,
                                                Pamela J. Pure,
                             President, McKesson Provider Technologies.
                                     ______

        Response to Written Questions Submitted by Hon. John Ensign to
                          John D. Halamka, M.D., M.S.
        Question 1. Some individuals have indicated that we are not making
    nearly enough progress on health information technology and have
    suggested that we should proceed without interoperability standards in
    place.
        Why has it taken so long for the public-private partnership to come
    to an agreement on interoperability standards?
        Answer. The healthcare domain is very complex.

       Although the typical bank transaction has 5 pieces of data
            in it, the average health record for a patient has 65,000
            pieces of information.

       The data needs of payers, providers, patients, and
            pharmacies are all very different.

       Over 700 standards have evolved to meet these various needs.
            HITSP has been able to reduce this to 20 standards in the past
            6 months based on 206 stakeholder organizations coming together
            in a public private partnership created by AHIC/ONC.

        This partnership was a catalyst for harmonization. The government
    provided funding and a sense of urgency.

        Question 2. What would be the long-term implications of proceeding
    without interoperability standards in place; especially as we work
    toward the goal of having a national health information technology
    infrastructure?
        Answer. If standards are not adopted, stakeholders will have to
    maintain an increasingly complex set of proprietary interfaces. Imagine
    if music was distributed on 78 rpm records, LPs, 8-track tape,
    cassettes, CDs and iPods and the industry had to engineer a device to
    play all of them! That's the situation in healthcare currently.
    Standards harmonization will let us all use a single approach, reducing
    cost and improving interoperability.
                                     ______

        Response to Written Questions Submitted by Hon. John Ensign to
                           Mark Leavitt, M.D., Ph.D.

        Question 1. Some individuals are skeptical about certification and
    do not think it is necessary.
        Why do you believe a certification process is so essential?
        Answer. There are four reasons. First. the low level of health IT
    adoption--especially in physician offices--is the best evidence of the
    need for certification to reduce the risk of provider investments in
    this technology. In a recent survey by the government's National Center
    for Health Statistics, only 9.3 percent of physician respondents
    reported having all the required capabilities for a fully electronic
    record in 2005.
        Second, certification is needed to ensure health IT systems will be
    compatible with emerging health information networks, Without this
    interoperability, the electronic records of tomorrow will be as
    fragmented and incomplete as our paper records are today.
        The third reason is that without agreed-upon standards and
    certification, financial incentives and regulatory safe harbors for
    health IT could end up misdirected toward technologies that do not
    deliver the benefits needed by the public.
        Finally, certification is needed to ensure that electronic records
    are held to high standards in protecting the privacy of personal health
    information.

        Question 2. How can quality measurement standards be incorporated
    into certification initiatives?
        Answer. CCHIT already includes, as a requirement for certification,
    the ability to capture and report on clinical data from the electronic
    record. Enhanced reporting capabilities are on CCHIT's roadmap as
    additional requirements in 2007 and 2008. As quality measurement
    standards emerge. CCHIT can make the certification criteria even more
    specific, ensuring that all certified EHR systems are capable of
    reporting quality data in a standardized format.
                                     ______

        Response to Written Questions Submitted by Hon. John Ensign to
                                 Michael Raymer

        Question. Has the lack of available data and messaging standards
    hindered the development of new products at GE Healthcare?
        Answer.
        1. Duplicate or overlapping standards. The Health Information
    Technology Standards Panel (HITSP), a contractor identified by
    Secretary Leavitt to create a uniform set of healthcare IT standards,
    has identified over 900 standards relevant to healthcare information
    technology. Since there is no dominant vendor in the fragmented
    healthcare market, healthcare IT suppliers invest product development
    resources to support many duplicate standards that accomplish the same
    tasks, or delay product development until a dominant or preferred
    standard emerges in the market. HITSP is crucial for developing a
    single universal set of standards that can be implemented by all
    healthcare IT systems suppliers, and we encourage the Senate Commerce
    Committee to continue to support HITSP.
        2. Misapplication of standards. Historically standards have been
    developed to support a wide variety of uses many of which can not be
    identified at the time the standard is written. This has led to varying
    interpretations of how a standard should be implemented by the
    healthcare industry, leading to many ``dialects'' of the standard and
    adversely impacting the interoperability between systems increasing our
    cost to both develop the systems and supporting systems. The HITSP also
    provides a crucial role in providing unambiguous requirements as to how
    specific standards are to be implemented to solve specific healthcare
    workflow tasks, also referred to as use-cases. HITSP is utilizing an
    industry best practice established by a multi-stakeholder organization
    called Integrating the Healthcare Enterprise, which has created a
    process that, allows complex healthcare IT systems to seamlessly
    exchange information for very simple or very complex healthcare
    workflow tasks. IHE is an example of the marketplace demanding
    interoperability solutions and the industry responding to provide them
    in a responsive and cost-effective manner. We encourage the Senate
    Commerce Committee to explore market-based solutions such as IHE to
    promote and accelerate interoperability of healthcare information.
        3. New applications. The last area where the lack of available data
    and messaging standards impacts product development is in the area
    where technology is being used in a new way for the first time. Home
    health care is an area that currently lacks standards for
    interconnecting the emergence of information technology that is used
    for providing monitoring, data collection and other support tasks that
    improves the quality of life for patients at home. Today the private
    sector has created a multi-stakeholder organization to provide
    nonproprietary standards that can interconnect these home-based devices
    with health information technology systems that use the information to
    provide safe and effective healthcare delivery at the patient's home.
    We encourage the Senate Commerce Committee to explore ways to
    accelerate the development of open and nonproprietary standards in the
    private sector to link home health care devices with healthcare
    information technology systems.
                                     ______

         Response to Written Question Submitted by Hon. John Ensign to
                              Kevin D. Hutchinson

        Question. What is the status of e-prescribing standards and what is
    required in order to fulfill e-prescribing standards under the Medicare
    Drug, Improvement and Modernization Act?
        Answer. In enacting the Medicare Drug, Improvement and
    Modernization Act, Congress required that the Secretary of Health and
    Human Services adopt certain standards for electronic prescribing
    messages. In its final rulemaking entitled Medicare Program; E-
    Prescribing and the Prescription Drug Program (the ``Final Rule''), the
    Secretary adopted Version 5.0 of the NCPDP Script Standard as the
    applicable standard. The Final Rule requires any Prescription Drug Plan
    to comply with such standards. The NCPDP Script Standard is the
    standard that SureScripts adopted when it created the SureScripts
    Electronic Prescribing Network, and is widely used in the industry as
    the national standard. The Final Rule mandated the immediate use of
    Version 5.0 Standard for certain electronic prescribing messages, such
    as new prescriptions and renewal requests, and such standards are
    referred to as Foundation Standards. For certain other message types,
    such as medication history requests by way of example, the Secretary
    felt that there was not sufficient industry experience to declare them
    as Foundation Standards, and has directed AHRQ to conduct pilot
    programs to test the standards, with a view to declaring them a
    Foundation Standards at some time in the future based upon the results
    of that research and further rulemaking. SureScripts is participating
    in many of the AHRQ research programs on electronic prescribing.
        In addition, on June 26, CMS issued an Interim Final Rule
    permitting the voluntary use of the backward compatible Version 8.1 of
    the NCPDP Script Standard as satisfying the requirements of the adopted
    standard Version 5.0. We support the Interim Final Rule.
        Accordingly, we believe that the Federal Government has taken, and
    continues to take, appropriate action under the MMA to promulgate and
    require standards for electronic prescribing. We do encourage CMS to
    act with all deliberate speed in adopting the additional electronic
    prescribing message types supported by the NCPDP Script standard which
    expand on improving the safety and efficiency of the prescribing
    process beyond just ``new prescriptions'' and ``refill authorizations''
    to include message types like ``medication history lookup'' which can
    assist healthcare providers in making a higher quality and safer
    medication therapy decision for patients. These additional message
    types are the ones being piloted this year by four separate
    organizations, including SureScripts, under the direction of an AHRQ
    grant as required by the MMA.
        With respect to the adoption of the NCPDP Script standard, we would
    like to point out that over 95 percent of the pharmacies in the U.S.
    support and have had their software vendors implement the NCPDP Script
    standard in their software over the past 2 to 3 years. In fact, in
    order to be certified on the SureScripts Electronic Prescribing
    Network, a pharmacy must be using the NCPDP Script Standard, and today
    every pharmacy in the United States that has activated electronic
    prescribing for their store(s) is connected to the SureScripts network.
    In addition, most major electronic health record (EHR) software vendors
    also have adopted the NCPDP Script Standard and have been certified to
    work properly on the SureScripts network. In addition, most, if not
    all, stand alone electronic prescribing software vendors have
    implemented the NCPDP SCRIPT standard in their products and have also
    certified their software on the SureScripts network to connect to
    pharmacies.
        We would like to take this opportunity to comment, however, on a
    provision in the Final Rule that many in the industry rely on in order
    to avoid implementing electronic prescribing pursuant to the standards
    adopted by CMS. Section 423.160(a)(3)(i) of the Final Rule states as
    follows:

            ``Entities transmitting prescriptions or prescription related
            information by means of computer generated facsimile are exempt
            from the requirement to use NCPDP SCRIPT Standard adopted by
            this section in transmitting such prescriptions or
            prescription-related information.''

        While Congress, Secretary Leavitt, CMS, and many others in the
    government have taken steps to promote electronic prescribing pursuant
    to mandated standards, all in an effort to achieve the President's goal
    of deploying electronic health records throughout the United States by
    2014, many in the industry point to Section 423.160(a)(3)(i) as support
    for them continuing to fax prescription information, and as a result
    they do not take steps to implement electronic prescribing pursuant to
    the standards adopted by CMS. This loophole in the Final Rule has
    resulted in, and continues to result in, an adverse impact and slowdown
    in the adoption of electronic prescribing pursuant to CMS standards. We
    strongly encourage that Congress, through legislative action, or CMS,
    through rulemaking, take steps as soon as possible to delete the fax
    exception from the Final Rule.
        If you have any further questions, please do not hesitate to
    contact us.