In an op-ed article in Business Week online posted 12/19/08, I describe how health record banks (HRBs) can solve the problem of making complete patient records available at any point of care while providing electronic medical records (EMRs) to all physicians and fully protecting individual privacy. I then outline the policies that the new Obama Administration should adopt to encourage the development of health record banks with only relatively modest new Federal expenditures.
I think these issues are particularly timely and relevant since funding for health information technology is being included in the Economic Recovery bill currently being drafted. Funding alone will not solve this problem; the expenditures must be directed towards a feasible and sustainable system.
In brief, the Federal Government should take four steps to create an effective health IT system that delivers complete patient records at any point of care:
I believe that these policies will lead to an effective, self-sustaining, private-sector health IT system that provides heavily subsidized EMRs to all physicians and fully protects individual privacy.
There are more details about these and related issues in the new book just published by HIMSS entitled, “Personal Health Records: The Essential Missing Element in 21st Century Healthcare” which I co-authored with Holly Miller, MD, MBA, and Howard Burde, Esq. It provides a comprehensive overview and discussion of the many issues pertaining to the adoption and use of personal health records, with chapters on PHR architecture (including the health record bank model), PHR law, and PHR business sustainability models.
In this posting, I wanted to respond to a few FAQs about the policies I’ve recommended.
How much would your plan cost?
Since there are about 100 million Federal health beneficiaries, the new HRB account benefit of $12/person/year would cost a maximum of $1.2 billion/year (if everyone signed up). This amounts to 0.2% of health care costs. Conservative analyses can easily demonstrate health care cost savings of 2% as a result of HRB accounts through improving chronic disease management and avoiding preventable hospitalizations due to outpatient adverse drug events, duplicative imaging studies, and unnecessary repeat laboratory work. This 2% total savings amounts to ten times the proposed payment for a health record bank account. But even if these estimates are grossly inaccurate, the savings most certainly will be at least as great as the expenditures, not counting additional value from more timely and complete availability of information to medical researchers, public health officials, and policymakers (with consumer consent).
Won’t a health record bank cost more to operate than your $1/person/month estimate?
The recent Center for Information Technology Leadership report on Cost and Value of Personal Health Records (PHRs) estimates the cost of an “interoperable PHR system” (i.e., a health record bank) at $8/person/year if there are 500,000+ subscribers. My own data shows that the cost will be about $6/year (50¢/person/month) with 1 million subscribers. So the estimate I use of $1/person/month is, if anything, a bit too high.
How much will it cost to subsidize electronic medical record systems for physicians?
To subsidize each physician at the rate of $5,000/yr for an Internet-accessible EMR system (which would cover most of the EMR system cost) would require about $10/person/year. The way I get $10 is that there are about 600,000 physicians and 300 million total population in the U.S. Therefore, there are about 500 people/physician — therefore, to get $5,000/physician, the cost/person is $10.
What is the business model for a health record bank?
Revenue would be about $5/year from advertising to consumers (like the advertising you see on Google) and $12/year from reminders and alerts, for a total of $17/year. The reminders and alerts would be services such as: 1) notifying you instantly if the HRB account of any of your loved ones is touched by an emergency room physician; 2) “prevention advisor” giving you reminders of anything you need to do to stay healthy (e.g. colonoscopy, etc.); or 3) medication reminders (for each dose and/or for refills). The first two would be paid by consumers (or perhaps even by health plans), the last one by pharmaceutical firms. In any case, I think $1/person/month (or $12/year) in revenue for all reminders is very conservative, even allowing for the fact that some consumers will not want to pay for any of them.
Expenses would be $6/year for the basic operation of the bank and $10/year to subsidize each physician in the amount of $5,000/year for an Internet-accessible EMR system.
With revenue of at least $17/year and expenses of only $16/year, a health record bank is profitable. And this analysis includes not only the cost of the HRB itself, but also subsidies for all the EMRs for physicians. Finally, note that I have not invoked (or tried to capture) a penny of health care cost savings in this business model.
In summary, health record banking provides a self-sustaining, private-sector health IT solution that can deliver complete patient records at any point of care, subsidize EMRs for physicians, and fully protect privacy. While it is highly likely that HRBs will result in substantial health care savings, their financial sustainability is based solely on the new value that they create for consumers.