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The Machinery Behind Health-Care Reform
How an Industry Lobby Scored a Swift, Unexpected Victory by Channeling Billions to Electronic Records

By Robert O'Harrow Jr.
Washington Post Staff Writer
Saturday, May 16, 2009

When President Obama won approval for his $787 billion stimulus package in February, large sections of the 407-page bill focused on a push for new technology that would not stimulate the economy for years.

The inclusion of as much as $36.5 billion in spending to create a nationwide network of electronic health records fulfilled one of Obama's key campaign promises -- to launch the reform of America's costly health-care system.

But it was more than a political victory for the new administration. It also represented a triumph for an influential trade group whose members now stand to gain billions in taxpayer dollars.

A Washington Post review found that the trade group, the Healthcare Information and Management Systems Society, had worked closely with technology vendors, researchers and other allies in a sophisticated, decade-long campaign to shape public opinion and win over Washington's political machinery.

With financial backing from the industry, they started advocacy groups, generated research to show the potential for massive savings and met routinely with lawmakers and other government officials. Their proposals made little headway in Congress, in part because of the complexity of the issues and questions about whether the technology and federal subsidies would work as billed.

As the downturn worsened last year, advocates helped persuade Obama's advisers to dust off electronic records legislation that had stalled in Congress -- legislation that the advocates had a hand in writing, the Post review found.

Their sudden success shows how the economic crisis created a remarkable opening for a political and financial windfall: the enactment of a sweeping new policy with no bureaucratic delays and virtually no public debate about an initiative aimed at transforming a sector that accounts for more than a sixth of the American economy.

"It was perhaps a once-in-a-generation opportunity to make something happen," said H. Stephen Lieber, the trade group's president. Obama "identified the vehicle that he could use to move his policy agenda forward without the crippling policy debate."

Obama and some of his advisers had been thinking about health-care reform for years before they made it a top campaign issue. Some advocates have talked about improving use of health information technology for decades.

Government and private studies have found that much of the $2.5 trillion spent on health care each year is wasted on the duplication of tests and unneeded procedures.

Many technology advocates, including health policy specialists, say that networked electronic patient records that can be transmitted instantly would make health care more efficient and provide valuable insights about costs and care. Only a small minority of doctors use such technology to track the care they give people. Some health policy analysts have recommended the use of government subsidies and incentives to spur the adoption -- as the stimulus spending is intended to do.

Some advocates also say the savings could amount to tens of billions of dollars each year from reduced paperwork, faster communication and the prevention of harmful drug interactions. An equally important benefit, they say, could be to enable researchers to determine the most effective procedures for an ailment.

Such an approach would rely on unprecedented data-mining into medical records and the practices of doctors, a kind of surveillance that also would enable insurers to cut costs by controlling more precisely the care that patients receive.

"Finally, we're going to have access to millions and millions of patient records online," said Blackford Middleton, a physician, Harvard professor and chairman of the Center for Information Technology Leadership, whose studies have concluded the health-care system could save $77.8 billion each year through the universal use of information technology networks. "This is the biggest step for health-care information technology in this country's history."

But others said the case was far from being so clear. Some observers said the projected savings are overly optimistic and that launching such vast computer networks under tight deadlines is risky, a lesson learned by the Bush administration when it botched a variety of homeland security systems rushed into place after the Sept. 11 terrorist attacks.

Some proponents said they worry that an over-reliance on technology as a solution could distract the health-care system from difficult questions about quality of care. They said efforts to find a quick technological fix will likely run up against complex cultural challenges.

"I would like to believe that the effective use of technology to augment health care will lead to substantial savings and improvements in the quality of care," said Mark Frisse, a physician and professor of biomedical informatics at Vanderbilt University, who leads an electronic health record program in Nashville. "But the evidence does not consistently bear this out."

Many groups have been involved in the push for health information technology, including physician groups. At the center of those efforts is the Healthcare Information and Management Systems Society. Started a half-century ago, it represents 350 companies and about 20,000 members. Corporate members include government contractors such as Lockheed Martin and Northrop Grumman, health-care technology giants such as McKesson, Ingenix and GE Healthcare, and drug industry leaders, including the Pharmaceutical Research and Manufacturers of America.

The group, known as HIMSS, runs a trade show for technology vendors, publishes a health technology newspaper and operates a research unit to help members find new markets. The group also maintains a government affairs office in Washington and chapters in state capitals across the country. "HIMSS has a very effective grass roots advocacy program that reaches all levels of government," Dave Roberts, a senior executive, said in the group's literature.

For a decade, the group has pressed Congress and other government officials to mandate and subsidize the adoption of health records technology. Over the years, those meetings have included Obama and the man now leading the Office of Management and Budget, Peter Orszag.

In 2004, the group persuaded White House speechwriters to include a favorable line in President Bush's State of the Union address. "By computerizing health records, we can avoid dangerous medical mistakes, reduce costs and improve care," Bush said.

That was the group's single greatest success until the stimulus passed, Lieber, its president, said. "We worked very hard to get that one line in there," he said.

'The Nature of My Dream'

In their quest to generate a favorable policy buzz, advocates created and funded nonprofit organizations to press for electronic health records.

HIMSS has a "strategic alliance" with the Center for Information Technology Leadership, a nonprofit that produces research reports -- which HIMSS prints and distributes to Congress and elsewhere.

The center was chartered in 2002 by Partners HealthCare System, the largest health-care provider in Massachusetts. Among those sponsoring the center or its reports are Kaiser Permanente, Microsoft, Google, Siemens Medical Solutions Health Services and other technology companies.

The role of the center's chairman, Blackford Middleton, shows the web of connections behind the drive for electronic health records.

Middleton is a physician at Partners HealthCare and during the dot-com boom in the 1990s was a senior executive at a start-up that raised hundreds of millions of dollars to develop electronic health records technology. Middleton left the company in 2001, joined Partners and became an assistant professor of medicine and health policy at Harvard.

The next year, he became a fellow at the Healthcare Information and Management Systems Society. Middleton eventually came to lead the boards of directors for both that group and the Center for Information Technology Leadership, meaning he was immersed in advocacy of the issue as well as the research to persuade the public of its merit. He was also involved with other nonprofits started in part to promote the use of technology.

One of the center's most important reports was issued with HIMSS one month after Bush's 2004 State of the Union address. It concluded that a complete embrace of health information technology could save $77.8 billion annually.

In an interview, Middleton said support from the group and from technology companies came with no strings attached. "HIMSS and our corporate sponsors had no influence over the content or the conduct of the research," he said.

Middleton said research showed that the projected savings could be achieved only if the government stepped in with incentive payments for doctors, who have resisted investing in the computers because there was no evidence they could profit from them.

Middleton said he is motivated by a desire to improve the health-care system, not by financial rewards. "This is the nature of my dream," Middleton said.

'Everything We Know'

After volunteering on John Kerry's presidential campaign in 2004, Middleton said he was recruited as an Obama volunteer last year and provided information about electronic records to the candidate's health-care policy group. Middleton said he worked with several campaign officials, including David Blumenthal, a colleague at Partners HealthCare and a Harvard professor, who was Obama's health-care adviser and is now the administration's national coordinator for health technology.

"We didn't have to go very far to get our information," said one senior Obama adviser, who was not authorized to speak publicly and discussed the campaign on the condition of anonymity. Blumenthal "taught all the rest of us everything we know."

Middleton said he provided many of those details.

"I sent them a LOT of stuff, many papers and most of the reports. I probably spoke or communicated with David Blumenthal, David Cutler (the health economist on the team), or Dora Hughes about every other week during the heat of the campaign," Middleton said in an e-mail.

In an e-mail, Blumenthal wrote:

"It would be flatout wrong to say Blackford Middleton was a key campaign adviser or had an official role on the campaign. He was one of many people the campaign reached out to, and I personally had minimal contact with him."

The Obama campaign used the center's $77.8 billion cost-savings figure.

After the election, as the economy threatened to collapse, Obama pitched emergency spending on health-care technology as one of many solutions to include in a stimulus package.

In a Dec. 6 radio address, the president-elect said that "We will make sure that every doctor's office and hospital in this country is using cutting-edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes and help save billions of dollars each year."

Five days later, Obama and his top advisers listened as Thomas A. Daschle, then the nominee to lead the Department of Health and Human Services, made a PowerPoint presentation in a Chicago conference room spelling out the virtues of using the stimulus package for electronic health records. Daschle, a proponent of health information technology, had cited the center's cost-saving estimate in a 2008 book promoting health-care reform.

Orszag, the OMB director, was among those at the meeting. While the spending on health records will not stimulate the economy immediately, he said, Obama views it as a long-term "investment" against one of the most persistent drags on the U.S. economy.

"It is a key first step toward a high-performing health-care system," Orszag said in an interview.

On Dec. 17, Lieber, the Healthcare Information group's leader, said in a letter to the president-elect that a "minimum of $25 billion" in subsidies was needed to spur doctors to buy the technology.

In an interview, Lieber said his group was interested not in profit for its members but in improving the health-care system. "It's 'What will this do for health care,' not 'What will this do for GE or Siemens or Phillips.' "

'Overly Optimistic'

The stimulus bill suggests that the government will recoup about a third of the spending allocated for electronic health records over the next decade, an assumption that some health-care observers question, in part because of a critical analysis by the Congressional Budget Office last year.

The CBO, then led by Orszag, examined the industry-funded study behind the $77.8 billion assertion, among other things, and concluded that it relied on "overly optimistic" assumptions and said much is unknown about the potential impact of health information technology.

A CBO analysis of the stimulus bill this year projected that spending on electronic health records could yield perhaps $17 billion in savings over a decade.

Under the stimulus package, Medicaid and Medicare providers will receive incentive payments to offset the cost of electronic health record systems they buy. No one knows for sure how widely the technology will be adopted, and no one knows for sure whether those systems will yield the expected savings, specialists said.

Another open question relates to the development of technical standards that define what equipment qualifies for stimulus payments. Some critics contend those standards could choke off innovation and funnel profit to certain vendors, without necessarily improving care.

To qualify for federal funding, the technology must enable "meaningful use" by doctors and others, according to the legislation -- a standard that policymakers, researchers, vendors and others are struggling to define now.

Joseph Antos, a health-care policy specialist who has examined the legislation, said the risks of the technology plan are high because of the haste with which it is being implemented and the special interests seeking to profit from it.

"This is the real way things get done," said Antos, of the American Enterprise Institute, a Washington think tank. "The stimulus bill looked like a bonanza to an awful lot of people."

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