U.S. to Dole Out $1.2 Billion for Health Records Technology

By Robert O'Harrow Jr.
Washington Post Staff Writer
Friday, August 21, 2009

The Obama administration unveiled $1.2 billion in federal grants for electronic health records systems on Thursday, the first wave of funding under a health-care reform plan to create vast records-sharing networks aimed at cutting costs and improving care in the coming decade.

The administration has described such computer systems as a crucial step in overhauling the nation's increasingly expensive health-care system. It allocated more than $36 billion in the landmark stimulus legislation -- including the funding announced Thursday -- to spur adoption of the equipment by doctors and hospitals along with the development of the networks that will link them all together.

The upbeat announcement by Vice President Biden came at a time of distress for supporters of health-care reform, whose goal of winning congressional approval for a sweeping proposal this fall has been cast into doubt by growing criticism from the GOP and some Democrats about the methods and cost assumptions.

Biden said about half the grant money would help establish 70 technology-extension centers that will assist hospitals and other medical providers in choosing and utilizing the equipment. The rest is directed to state initiatives to create or expand medical information sharing networks.

Billions more is set to flow to doctors, hospitals and other care providers next year in the form of reimbursements for the equipment they buy. Under the stimulus legislation, providers have until 2015 to make purchases and qualify for the reimbursements. The administration estimates that the stimulus program will eventually yield some $17 billion in savings.

"With electronic health records, we are making health care safer; we're making it more efficient; we're making you healthier; and we're saving money along the way," Biden said. "These are four necessities we need for health care in the 21st century."

The government's planned spending on electronic health records is a relatively small financial slice of reform plans. But President Obama, White House advisers and some advocates have said the adoption of the computer systems could help transform a system that is still remarkably reliant on paper and pens. Advocates say that proper use of digital records would make health care more efficient, cutting down on duplicative tests, unneeded procedures and harmful drug interactions.

Some studies have estimated that the universal adoption of electronic health technology could save more than $77 billion a year, a figure that the Obama administration has used widely to justify the plan. But the Office of Management and Budget has questioned the validity of that research, in part because of the complexity and unknowns involved in implementing such massive networks quickly and, in many cases, virtually from scratch.

Some medical technology specialists say that such computer systems -- though vital to reform -- will not be a quick fix. The technology, even if it improves efficiency, must be used as part of a larger cultural change among medical providers and patients to address the endemic problems in the health-care system.

The announcement was well received by a trade group that represents many of the major health technology vendors. H. Stephen Lieber, the president and chief executive of the Healthcare Information and Management Systems Society, said the newly funded programs "are examples of the government's commitment to improving cost-effective, quality care through the use of health information technology."

"Both of these are critical steps in establishing a strong technology infrastructure supporting the American health-care system," said Lieber, whose group is one of the leading promoters of electronic health records and helped fund a study that found the potential for $77 billion in annual savings.

Carol Diamond, managing director of health at the nonprofit Markle Foundation, also praised the announcement as a good step toward helping doctors and others sort through the myriad challenges of embracing new technology. She said many questions and policies still need to be worked out before the electronic health records will have the desired impact. Chief among them: The need to establish clear objectives for using the technology to improve patients' health.

"The mere use of technology in health care is not enough," Diamond said.

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