Health Care & Medical: Tech Innovation Keeps The Doctor In - InformationWeek

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Health Care & Medical: Tech Innovation Keeps The Doctor In

IT investments help ensure that health-care industry remains robust

Over the next seven years, medical-supplies distributor Owens & Minor Inc. expects to save $35 million through a newly realigned outsourcing relationship with Perot Systems Corp. Much of those savings are being reinvested into new IT developments, including a major rewrite of all Owens & Minor systems so that customers will exclusively transact with the company through Web services and XML instead of EDI, which accounts for 92% of business flow from customers, says CIO David Guzmán. That IT modernization project will make Owens & Minor dramatically faster and more flexible, further helping transform the company into a real-time buseiness and expanding its focus from a distributor of health products to a third-party logistics and services provider.

"We need to be nimble and to innovate and to have dramatic responses to business changes, and technology is the driver to do that," Guzmán says. And he should know: Owens & Minor topped the InformationWeek 500 list as the No. 1 company in 2001 and 2003 (see story, "Top Of The List: Owens & Minor Takes Supply Chain Deeper").

Meanwhile, health-care providers such as CareGroup Healthcare System and Sutter Health are adopting wireless technologies and the Internet for a range of activities, including ordering everything from drugs to lab tests to supplies. These efforts are helping replace time-intensive and error-prone paper processes, giving doctors and nurses better real-time access to information that can ultimately improve patient care.

Tech endeavors like these by hospitals, physician groups, and medical products and services suppliers show how IT is transforming the delivery and business of health care. InformationWeek 500 health-care and medical companies are catching up to industries with longer histories of using IT to become more flexible and efficient.

In fact, the health-care industry is spending more on IT. Health-care companies spent an average of 3.3% of revenue on IT during the past 12 months, up from 2.7% last year, according to the InformationWeek 500 survey.

Certainly, a big motivator for health-care providers' IT investments has been the need to comply with government regulations, especially the Health Insurance Portability and Accountability Act, to ensure patient privacy and informa- tion security and to create standards for transactions. But skyrocketing malpractice premiums, high rates of medical mistakes, and pressure from government and watchdog groups to curb those errors are forcing providers to evaluate and implement IT solutions to improve the standard of care. And they're doing so despite revenue pressures from continued cutbacks in payments that insurers and government programs, such as Medicare and Medicaid, provide.

"The bottom line is that we need to become more productive, and IT is the No. 1 tool for us to compete," says John Hummel, CIO at Sutter Health. This holds true not only for improving Sutter's quality of care, but also for recruiting and keeping the best clinical staff by providing tools to do their work efficiently, Hummel says. "IT is seen as the tool for that salvation," he says.

Sutter, which runs 33 hospitals in Northern California, spends about $100 million annually on IT and has about 680 IT projects in progress at one time. Among its biggest new projects is the building of a master patient index that will use artificial-intelligence technology to ensure that when a doctor accesses information on a patient, such as digitized lab results or X-rays, that information is actually about the person the doctor is treating and not another of Sutter's 5 million patients who has a similar name, Social Security numbers, or other identifying information.

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