Get Ready to Get Wired

Last winter's flu-vaccine shortage brought chaos and anxiety to the nation's already strained health-care system. But it didn't worry anyone at the Palo Alto Medical Foundation clinic in Silicon Valley, Calif. While the elderly and infirm lined up outside hospitals to get shots on a first-come, first-serve basis, the doctors in Palo Alto sat down at their new computers and searched through the electronic medical records of their 220,000 patients. Within a few hours, they had a list of the youngest, oldest and sickest, and knew exactly how many shots they would need. After sending their surplus doses back to anxious regional-health officials, the clinic mailed letters to the high-risk patients asking them to come in for vaccines. It was a sensible and orderly process, and one that was wholly remarkable to the doctors who had spent most of their careers practicing medicine on paper. "In the old days, estimating who the high-risk patients were and how many doses we needed would have been total guesswork," says public-affairs director Jill Antonides.

In a world that is increasingly wired, health-care institutions like this one are a surprisingly small minority. While other data-intensive industries like banking and retail long ago embraced the transforming wonders of digital technology, health care remains largely stuck in a sea of manila folders, prescription pads and clipboard-bound patient charts. But the vision of a national digital health-care network--modeled on systems like the one in Palo Alto--promises revolutionary changes. With widespread use of computerized health records, hospitals and doctors can share information about patients, cut down on repetitive procedures and avoid many of the medical errors that claim thousands of lives each year. The federal government has seized on computerized health records as a way to pull a teetering health-care system back from the brink. President George W. Bush has inveighed against a "19th-century paperwork system" and set an aggressive goal of establishing electronic medical records for most Americans in the next 10 years.

There's still a long way to go. Less than 20 percent of the nation's hospitals and clinics track the health data of patients with the software called electronic medical records, or EMRs. Yet studies have repeatedly shown that practicing medicine on paper leads to mistakes and poor care. A widely publicized 1999 Institute of Medicine study found that 44,000 patients die in U.S. hospitals every year because of medical errors, mostly due to dispensing drugs for which a patient has a known allergy, or because of a simple lack of coordination between doctors. Recent research by the Stanford University hospital found that in 81 percent of cases, physicians could not find all the patient's information they needed during the patient's visit. "Health care is all about information, and yet we manage it the same we did 100 years ago," says Kenneth Kizer, former under secretary of the Department of Veterans Affairs.

Ironically, the hospital chain with perhaps the worst historical reputation is now a vivid illustration of how technology can improve health care. In the early '90s, the VA was viewed as decrepit, ineffective and a poor way to treat the nation's war heroes. After Kizer took over in '94, he initiated a computerized record system to track each vet's health data through the network of 157 hospitals and 869 outpatient clinics. VA doctors and nurses now review charts with patients on the PCs in each exam room. Docs can also view images from lab tests such as angiograms on their computers, even when they're at home, facilitating quick, informed decisions. The technology is smart, too. If a doctor prescribes a drug that might trigger an allergy or react with another medication, the computer pipes up and lets the doctor know. Doctors can also e-mail drug prescriptions right to the VA pharmacy--an easy fix for the ill effects of illegible physician handwriting. Perhaps most significantly, when a patient moves from a VA hospital to a clinic or rehab center, his computerized record follows him or her every step of the way.

So why have so few other institutions followed the VA's footsteps into the digital frontier? The first problem is what health- care insiders call the "perverse incentives" of the U.S. health-care system. Hospitals get paid for each procedure they perform--even the unnecessary ones--so cutting back on waste actually costs them money. If the expensive new computer systems reduce costs, insurance companies and Medicare would reap the benefits. So hospitals are being asked to make huge expenditures that benefit someone else, when they could otherwise spend money on much-needed equipment, like a new MRI machine, that improves care quickly. (At the VA and in countries like Sweden and the Netherlands that now use computerized records, the government is both provider and the payer, providing a natural incentive to upgrade.)

Digitizing health care can also create some unexpected headaches, and, in a few cases, has even caused serious problems. At Harvard's Beth Israel Deaconess Medical Center in 2002, a researcher ran a computer program that crashed the network for four days, forcing a mad scramble to improvise. At L.A.'s Cedar-Sinai Hospital in 2003, doctors complained that entering records into the balky software was too time consuming, and that the computers were second-guessing even routine decisions. Facing a mutiny, the hospital shelved its $34 million software and went back to paper. Even the VA has had to tweak its celebrated software to counter an unlikely problem: plagiarism. Some lazy or harried docs were cutting and pasting prior evaluations, instead of re-examining patients to offer a second opinion (revisions to the software now display copied text in a different color). Switching to computerized records "represents a huge sociological upheaval that is not going to be without unintended consequences," says Russ Cucina, a doctor and IT expert at the University of California, San Francisco.

Despite the obstacles, two recent developments make health insiders optimistic about the transition to digital care. The first is federal leadership. Last year President Bush appointed physician and technology expert David Brailer as the national coordinator for health-information technology. When Brailer makes his public recommendations this summer, he'll likely urge the 100 or so competing companies that design health-record software to make all their technology work together. It might sound geeky, but if electronic databases don't communicate seamlessly, an emergency room could never transfer the records of a patient to a specialist or a primary-care physician--the dynamic that works so well inside integrated systems like the VA's.

The other development is the emergence of, at last count, 134 regional health-information systems, dubbed RIOs. These are consortiums of community hospitals and physicians working together to create local networks of electronic health records. In many cases, regional planners have successfully reached out to the insurers who would benefit from digital care and persuaded them to partially fund the transition. Last year, for example, insurer Blue Cross gave $50 million to the Massachusetts E-Health Collaborative to wire community hospitals with interoperable computerized health records.

The final piece of the puzzle: wooing consumers to the e-health transition. If hospitals can track an individual's data over computer networks, health-care professionals reason, patients will ultimately want to access their records online. The idea of "personal health records," or PHR software, is not new--a range of companies offered the software during the dot-com boom and then went bust--but now more hospitals and doctor's offices plan to give their customers online access to their own electronic records. "That puts the patient at the center of the network and helps them do a better job of managing their own treatment," says Wendy Angst, managing director of the Florida-based PHR firm CapMed. That may be the ultimate reason the U.S. health-care system will make the difficult transition from paper to digital tools: patients will demand it.