Market failures of healthcare reform, health IT

Health IT’s role in market failures, and continued barriers caused by lack of interoperability, the “big is better phenomenon” and data lock all were discussed during a lively panel session at the Federal Trade Commission’s workshop, “Examining Health Care Competition,” on March 20.

Regulatory pressures on the healthcare industry, from EHRs and Meaningful Use to ICD-10 and HIPAA, often means that the biggest healthcare systems, vendors and payers come out on top, said Curtis L. Cole, MD, CIO and associate professor of clinical medicine and public health at Weill Cornell Medical College.

“The net aggregation of regulatory forces is the bigger is better phenomenon," he said. "When you have one [regulation] after the other, you have to have deep pockets and that means big payers, big providers and big vendors are the ones that succeed.”

While he said that isn’t necessarily bad, it isn’t conscious, “so that’s a problem.”

EHRs are designed as revenue cycle systems, not for physicians and their work delivering patient care, Cole said. Meaningful Use wiped out homegrown EHRs, which he said provided better useability and flexibility than current systems.

Arguing that certification is done at too big of a level, Cole said a transactional service to facilitate individual claims would “do a level of good.”

Health IT is supposed to support the free flow of information, but oftentimes it reinforces data silos, said Dan Haley, vice president of government and regulatory affairs at athenahealth.

“When the government comes with a check and subsidizes the purchase of a system that deliberately does not interoperate and does not communicate with other vendors, the government is supporting that phenomenon. When the government says it will issue anti-trust scrutiny waivers and put on the blinders as those entities implement closed system technologies in an effort to make their networks sticky, and consolidate market share, government is perpetuating this problem,” Haley said.

The government should not subsidize closed systems that close data networks and trap providers and patients into propriety networks, he argued. “If the goal is sharing information across networks and between networks, then the government shouldn’t be turning a blind eye to deliberate data lock and the market consolidation that comes from it.”

The government should remake incentives of healthcare so it’s more profitable to share than hoard data and in some ways it already does, said Farzad Mostashari, MD, MSc, former national coordinator for health IT and visiting fellow at the Brookings Institution, responding to Haley’s comments. For example, he said Medicare penalties for high readmissions “has fundamentally changed how a lot of hospitals view the desire to share information about their patients when they get discharged.”

In his other comments, he said another market failure is that health IT can limit the ability of smaller provider groups within larger systems to refer patients to their provider of choice.

“There are some who are concerned that hospital-sponsored ACOs are using not just the Stark exception but the claims data to identify so-called leakage and to bring pressure on their affiliated, independent physicians purportedly to limit the amount which they refer their high value or high-cost procedures and surgeries to other facilities,” he said. “We have heard that the use of an EHR provided under the Stark anti-kickback exemptions might be one way the hospital brings outpatient providers closer to it. And make it hard for them to leave.”

Data lock in and vendor contract transparency were cited as major concerns by Steven J. Stack, MD, immediate past chair of the board of trustees at the American Medical Association.

“We hear stories from physicians about contracts that are not clear on the front end about what the costs will be were you to switch from one vendor to another and to get your data,” Stack said. “That certainly does not make for a competitive marketplace because it's difficult for us to change if we would like to do that.”

Cole added that there are major consumer protection issues at stake if a vendor suddenly goes out of business and shuts off its server. “Your data are gone. And we do not have ways of dealing with that.”