Obama’s Health Care IT Stimulus…20% Inspiration, 80% Perspiration


As part of ARRA, Obama’s health care IT stimulus package is slated to dole out approximately $40B in new spending and incentives over the next few years.  These funds are targetted at accelerating the adoption of electronic medical records (EMR) in paper-based and siloed health care environments.  The promise of EMR includes significant cost savings, increased operating efficiencies and improved clinical outcomes.     

Obama’s package is merely the tip of the iceberg.  According to McKinsey, up to $170B in new EMR hardware and software spending is forecasted over the next decade, with hospitals accounting for approximately 75% of the total.  Importantly, the Obama package introduces Medicare/Medicaid claw backs for providers that do not meet certain EMP adoption goals by 2015.  This combination of spending and penalties could be a boon for EMR buyers and vendors.  However, much work needs to be done to realize value.

 Hospitals and Physicians

EMR will eventually benefit health care providers but the road will be bumpy.  Providers will have to recraft traditional policies and processes to accommodate the new technology.  As well, stimulus spending will not cover ongoing (and likely large) operating expenses including training, integration and support which we have to be funded from somewhere.  Finally, significant thought, investment and change management will be needed to fully leverage the potential for EMR-enabled next generation health care models (e.g., online diagnosis and treatment of simple conditions), which could dramatically reduce cost and improve the quality and speed of health care delivery.  

Providers may be wise to review some of the lessons from the 1990s IT boon.  During this period, project time-to-measurable-value was often longer than expected because buyers were not ready or able to rapidly incorporate the new technologies and sellers were not experienced enough to effectively deploy them.

Software Vendors & Consultancies

The next decade could be a bonanza for these players.  However, firms will need to (or continue to) get things right to maximize share.  For example, they will need to deeply understand the technological and organizational needs of clients and stakeholders.  Moreover, these companies will have to assemble a winning product/service mix and partnership ecosystem that differentiates them in what will be a crowded marketplace.  Finally, firms will need to align their delivery model to available capabilities, resources and skills, not a simple task in a people-dependant, highly-regulated industry. Given the challenges of infrastructure heterogeneity, a lack of standards and the immaturity of EMR technology, vendors and consultancies will need to quickly move down the experience curve to reduce their business risk and build competencies.

Hopefully, Obama’s package will be the impetus to finally take medical records online. However, it will require more than money for many health care players to make EMR work and to realize its huge potential.

For more information on our services and work, please visit www.quantaconsulting.com

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