[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 *
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    * 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\
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    \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\
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    \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.
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    \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\
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    \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, 
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        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. *
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    * 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.

                                  
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