In my last post, I proposed the President-Elect Obama should appoint a cabinet member to focus on public policy for E-Commerce to support improvements to the US economy, environment, health care system and homeland security strategy. Below are four examples of how e-commerce technologies could be leveraged to generate not only significant cost savings, but also improvements in the quality of care within the US health care system.
Electronic Health Records
The majority of personal health records in the US are paper-based, which is one of the root causes of inefficiency in many health care operations today. For example, patients must be asked and answer the same series of questions about medical history and health profile each time they visit a different care provider. However, of even greater concern are the health risks to human life by not having network-based access to a portable medical profile. Consider the case of an unconscious patient admitted to an emergency room. The attending physician on-staff has no access to information about the patient’s current prescriptions, allergic reactions or medical history. If the physician could access Electronic Health Records, it could prevent a misdiagnosis or serious medical error. Independent studies by groups such as the RAND Corporation have found that a migration towards EHR could yield savings of over $70B annually to the US health care system. EHR would contain all of the content specific to an individual’s medical profile including demographic information, prescribed medications, completed immunizations, known allergies and laboratory test results. There are numerous early adopters of EHR in the US including several Fortune 500 corporations, technology vendors and insurance companies. However, utilization of electronic health records remains confined to a small percentage of the provider, payer and patient population.
Electronic Prescriptions
E-prescriptions can improve the quality of care and cost-effectiveness of the health care system. E-prescriptions reduce handwriting mistakes that can lead to adverse drug reactions. Costs and quality are enhanced by eliminating fax transmissions with real-time, electronic data transfer. An additional benefit of e-prescriptions is that the transactions can be integrated relatively easily into electronic health records. Significant progress has been made in the US with e-prescriptions. Over 50M prescriptions have been issued electronically since 2004 according to the SureScripts National Progress Report on E-Prescribing. Regulatory barriers have been reduced as all 50 states have established a legal framework to support e-prescriptions. However, only 7% of the 1.5B new prescriptions and renewals eligible for electronic routing were transmitted digitally in 2008. Pharmaceuticals regulated by the Controlled Substances Act, which represent about 10% of prescriptions, are not eligible for electronic transmission, limiting the business case for provider adoption. Furthermore, the competing objectives of industry constituents such as pharmacy benefit managers, pharmaceutical brands and chain drug retailers are delaying progress.
E-Pedigree
One of the key tenets of Obama’s Health Care plan is to allow the importation of safe drugs from other countries. Prescription drugs are one of the largest and fastest-growing components of health expenses in the US. Obama’s plan would allow Americans to buy pharmaceuticals from other developed countries if the drugs are safe and less expensive. An electronic pedigree system based upon RFID and e-commerce could be a key enabler of Obama’s drug-importation policy. E-pedigree would track the chain of custody for medicines as they travel from the original manufacturer to regional and national distributors and finally to retailers. Using e-pedigree chain drug retailers could validate that pharmaceuticals imported from Canada or Western Europe were only handled by reputable sources. E-pedigree would serve to reduce the population of counterfeit drugs in circulation. Furthermore, e-pedigree could ensure that vaccines, which are temperature sensitive, are not exposed to conditions outside of the tolerance range.
Health Care Administration
Another key tenet of Obama’s health care plan is to reduce billions of dollars wasted on administration and overhead because of inefficiencies in the health care system. Claims processing represents one of the largest opportunities for improvement. A 2007 study by the management consulting firm McKinsey found that 15% of every dollar spent on health care in the US is applied to administrative costs to facilitate payment between payers and providers. Financial settlement in the health care sector is horribly inefficient when compared to other segments such as retail, which average only 2% administrative overhead for payment processing. The root cause of many of the excessive time and costs for health care claims remittance is due to the manual, paper-intensive nature of the process. The Health Information Portability and Accountability Act (HIPAA) regulations launched in the earlier part of this decade provide a framework for digitizing common health care transactions such as eligibility verification, referral authorization, claims submission and remittance advice. However, only a percentage of the health care community is actively using the HIPAA-EDI transaction sets to facilitate settlement due to the costs and complexities of implementation. Increasing utilization of e-commerce from its current adoption rate of 40% to a more widespread of 90% would yield $6B in savings.
GXS
