Home / AHF Publications & Reports / The Drift

Health IT and the Squeeze Factor

At a recent health care conference featuring the usual lineup of policy wonks and industry leaders, the chief medical officer of Wellpoint, the nation's largest private health insurer, presented a peek into the power of his company's impressive electronic database to improve continuity of care for their 29 million members and assess the performance of physicians and hospitals to improve quality and efficiency over time.

Remarkably, few people in the audience jumped on a rhetorical question he raised almost in passing: Given Wellpoint's competitive edge in technology and information management systems, where is the advantage for the company to participate in efforts to develop national standards for a seamless and integrated national electronic health information database?

One can imagine Wellpoint executives saying behind closed doors, we need to be at the collaboration table, but the end game is positioning the company to dominate a growing market for just-in-time bundled information products and systems focused on improving access, quality and cost.

The same might be said by executives at United HealthCare, Aetna and Cigna, and at large information-driven, global companies like IBM and GE, which salivate at the prospect of mining the burgeoning health information market. While all see the advantage to the system as a whole to run on a common set of data standards and forms, they are locked in a competitive struggle to grow their proprietary piece of the business.

Where does this leave national, regional and state efforts to develop integrated health information systems that ideally would include everybody?

The answer depends on the Squeeze Factor. Consider the pressure points:

Health plans are squeezed by employers to improve quality and reduce costs, by government regulation and mandates to level the playing field, and by consumers to respond to their every perceived need and whim. There are only a few options for growing the business: consolidation, product differentiation or expanding beyond traditional conceptions of insurance into innovative health information and technology services. The large national players will participate in data integration efforts - and even lead them in some cases - because they have to in order to protect the private insurance "way of life."

Employers, meanwhile, are squeezed by skyrocketing healthcare costs and a cutthroat global competitive environment. Aside from beginning to question why they ought to be in the health insurance business in the first place, more business leaders are starting to pay close attention to the value of what they're buying, and look to data integration and technology as one way to get better performance at a reasonable cost. They will be at the table as well.

Then there are the physicians. Listening to them tell it, they are being squeezed by absolutely everybody, including themselves. Government is ratcheting down Medicaid and Medicare payments, health plans are forcing them into profiling systems and "industrial" algorithms of patient care, hospitals won't let them make a few extra bucks at specialty facilities, greedy lawyers are driving up malpractice premiums, nurse practitioners and other emerging professionals want a piece of their business, and consumers expect Lexus care at a Yugo price. Physicians still hold the keys to the medical kingdom, but they are increasingly disorganized and tangled in an impenetrable knot of specialization and practice patterns. Some physicians will be at the forefront of health data integration efforts with the realization that if they don't take the lead, their professional stature and scope of practice will continue to erode. Others will carp from the sidelines.

As for consumers, they are being squeezed by employer cost-shifting and new products like health savings accounts that require them to be "prudent" purchasers without access to any credible information on quality and price. Economists tell us that free markets depend on transparency of information between buyer and seller to function efficiently, but too many people are making too much money on opaque health care transactions to want to open up the process to public inspection. The vast majority of Americans in the economic middle will have to feel considerably more financial pain than they're experiencing now to get them to buck powerful provider interests and demand information they can actually use.

Information may want to be free, but people don't. The squeeze factors that are driving health data integration efforts to open up the black box of American health care practice threaten balance sheets and jobs that depend on a healthy dose of inefficiency, administrative overhead and excessive transactions. The next time you walk into your doctor's office and see four people in the front office pushing paper, think about what they contribute to the local economy in the form of mortgage payments and shopping for goods and services. One person's waste is another's meal ticket.

The squeeze factor isn't going away anytime soon. The coming information revolution in health care may well be inevitable, but no one thinks it's going to be pretty.

Feedback? Send it my way: .

*The Drift reflects the views of the author, and does not represent the official view of SLHI's Board of Trustee and staff.