The much anticipated economic stimulus bill turned the final legislative corner and finally arrived. Health IT advocates eagerly wait to see how the details of the package might shake out.
The $787 billion plan allocates approximately $19 billion to "modernize health information technology systems" -- mostly through Medicare Part B incentives to physicians for deploying and using certified electronic health records.
Though there has been some debate as to the efficacy of such an incentive program, most policymakers view health IT investment as an obvious short- and long-term win. Upgrading health information systems could immediately stimulate the economy and, over time, provide higher quality care at lower costs.
But will the stimulus achieve the outcomes we desire? And is $19 billion the right amount? Perhaps it'd be helpful to examine the issue from a slightly different perspective.
The Space-Time Continuum
It was more than 90 years ago when Albert Einstein was working on his breakthrough papers on special and general relativity.
Special relativity proposed that distance and time are not absolute concepts (as suggested by Isaac Newton) but rather relative -- linked together by a single construct called the space-time continuum. Counterintuitively, a simple measurement by yardstick or clock is dependent on the relative motion of the observer. One hundred yards is not the same 100 yards when measured by observers moving at different rates of speed. Clocks that are moving appear to tick slower than those that are stationary.
General relatively further expanded the theory to include gravity that, like motion, would also affect the intervals of time and space. Clocks in stronger gravitational fields would appear to tick slower than those in weaker gravitational fields.
Hailed as one of the great breakthroughs in physics since Newton 250 years before, Einstein provided a new perspective on relationships that were once considered fixed and absolute. He showed that distance and time were relative -- influenced by both speed of motion and strength of gravity.
Distortions in Expenditure?
Though a far cry from relativity theory, some of the proposed health IT expenditures appear to be exhibiting similar counterintuitive distortions of reality.
Generally speaking, most lawmakers and industry experts believe that total health IT expenditures should correlate with health IT adoption and the subsequent improvement in the cost and quality of health care. Simply put, dollars put into the system should correlate to outcomes achieved. Though many including myself would take issue with that statement, let's agree for the moment that this might be true.
Assuming a Newtonian correlation between expected outcome and proposed expenditures, what does that say about the proposed health IT expenditures? What impact should we expect from $19 billion? And is this the appropriate amount given our expectations?
In the latest version of the stimulus bill, $19 billion is proposed to help physicians adopt certified EHRs over the next several years. How does that compare with what we're already currently spending? As context, some of today's largest EHR mega-vendors such as Allscripts and NextGen generate annual revenues of $150 million to $300 million, or about just 1% of the proposed total. And in 2007, the size of the total EHR market was estimated to be $1.2 billion. Spent over time, $19 billion would represent about 3.5 times the total expenditures in 2007 for the entire EHR market, for each of the next five years.
In addition, the stimulus bill includes $2 billion that would be allocated to the Office of the National Coordinator for Health IT. Just a year ago, former President George W. Bush proposed a 2008 ONC budget of $117.9 million, of which only $61.3 million was approved (the same amount it received in 2007). A $2 billion budget would represent a whopping eight-fold increase in spending on an annual basis for the next five years. That would be enough to employ more than 3,200 employees at ONC.
If we're to believe that health IT expenditures should generally correlate with improvement in outcomes, do we honestly expect adoption rates and outcomes to improve three- to eight-fold over the coming five years? If not, what could be accounting for the huge disparity in expenditures and expectations?
The Relativity of Expenditures
The reality is that the environment in which the health IT expenditures are being evaluated today is like no other in recent decades. With massive unemployment and prolonged recession looming, legislators are being forced to act broadly and swiftly with a general stimulus bill 40 times larger than the health IT portion alone. Given the context of trillion-dollar deficits, multibillion-dollar bailouts, millions of job losses, and a $787 billion stimulus package, $19 billion almost appears trivial.
It is the urgency and magnitude of the economic context today that are distorting our ability to measure the potential impact and efficacy of health IT expenditures. Just like distance and time are influenced by motion and gravity, so are the expected outcomes and metrics of expenditures distorted by the urgency and the gravity of the underlying situation.
In a normal economic environment, I think it'd be hard to find legislators who believe that $19 billion spent on health IT infrastructure alone would make for a sound investment. More individuals would question why health IT vendors haven't created the market for themselves. And others might consider modifying the economic incentives for quality and cost-efficiency directly, rather than indirectly through health IT.
Unfortunately, given the times we're in, it's hard to fully criticize the intent of the health IT expenditures proposed in the stimulus bill. But over time, we may be reassessing this decision for years to come. Will it create the health IT utopia we all imagine? Or will it lead to hasty adoption of inadequate systems that only erode the crumbling infrastructure of medical practices for years to come? Perhaps the only reliable outcome we can predict from the stimulus bill is that health IT vendors should expect a financial windfall that could fully stretch across the space-time continuum.