Like many industries in these turbulent economic times, health-care organizations are challenged by flat to declining revenue and increasing costs. As a result, health-care providers are refocusing IT strategic plans on initiatives that improve workflow efficiency, reduce supply-chain costs, and enhance billing capture. At CareGroup, we're focusing on these issues while also working to improve quality and increase customer service.

To improve workflow efficiency, we're rolling out the EDI transactions mandated by the Health Insurance Portability and Accountability Act. By linking payers and providers with electronic workflow for eligibility checking, referrals, and claims management, we've reduced transaction costs from $5 to less than 25 cents per transaction. For the supply chain, we're adding PeopleSoft inventory-management modules.

One of the most significant quality issues facing American medicine today is medication error. We've reduced medical error at CareGroup by eliminating all handwritten orders through the implementation of computerized provider order entry, which automatically checks all drug interactions and drug allergies and recommends the best dose for each medication prescribed for a patient.

The total cost of ownership of software solutions is another increasingly important metric in a cost-constrained environment. For selected back-office applications, we're evaluating the use of open-source software. Our early results indicate that performance, stability, and total cost of ownership of open-source products are sufficient to justify a selective deployment in our data center this year.

In the coming year, the health-care industry will be focused on computerized provider order entry, ambulatory systems, and revenue enhancement. Web systems will predominate, and XML will be used in select situations to enhance interoperability within health-care systems. We also expect infrastructure spending, especially storage and backup, will increase.

John Halamka is senior VP of I.S. at CareGroup Healthcare System. InformationWeek recognized him as one of its Innovators and Influencers for 2002.

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