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Major Health Players Pledge To Rein In Costs

The estimates are high--key reforms to U.S. health care system could translate to trillions of dollars in cost savings over the next decade. And many of the reforms hinge on wider and effective use of information technology in an industry that's been lagging most other sectors for decades.
The estimates are high--key reforms to U.S. health care system could translate to trillions of dollars in cost savings over the next decade. And many of the reforms hinge on wider and effective use of information technology in an industry that's been lagging most other sectors for decades.A coalition of health care industry executives representing insurers, providers, pharmaceutical firms, device makers, and physicians, met yesterday with President Obama at the White House, pledging to help reduce the growth rate of health care spending by 1.5% over the next 10 years.

On first glance, 1.5% doesn't sound like much. But considering that at current growth rates, which the Obama administration says is nearly 7% annually, health care costs are projected to account for more than 20% of the GDP by 2018, up from about 17.6% in 2009. A 1.5% reduction in annual growth could translate to about $2 trillion of health care savings in 10 years.

The sorts of reforms that the health care industry is talking about include better management of chronic diseases, realigning incentives to reward health care providers for improved quality care and better patient outcomes, and eliminating complex administrative processes.

That's where IT comes in. Lots of those changes are dependent on not just "more" information technology, but much better use of technology--including the collection, sharing, analysis of data.

"I think of IT as a base" for the kind of modernization needed for in the U.S. of health care system, says David Cutler, a professor of applied economics at Harvard University and author of a new report, "Health System Modernization Will Reduce Deficit," from the Center for American Progress Action Fund and the Democratic Leadership Council.

While the organizations that put out the report aren't exactly non-partisan, Cutler's research points out that the idea of modernizing the U.S. health care system in order to squeeze out costs is pretty much a no-brainer embraced by a bipartisan consensus.

That's not to say politicians won't be fighting over the details about what "modernizing" the health care system entails if and when Congress haggles over major health care reform legislation that's expected Obama's administration.

But in general, many of the key roles that IT can play in all this seem pretty clear. In his report, Cutler notes:

"The industries with the fastest-growing productivity are those that use information technology the most. These include wholesale and retail trade, and durable goods manufacturing, in addition to the computer industry. This correlation is more than just observational. Productivity in IT-intensive industries has grown 1.5% to 2.0% above that of other industries."

Not only can IT help boost productivity in health care by streamlining administrative processes, it can help reduce medical mistakes and support decision making by providing doctors and patients with pertinent information that might otherwise be buried in a pile a paper folders.

Productivity gains of 1.5% to 2% in health care annually could translate into annual saving s of $600 billion over the next decade, and up to $9 trillion in 25 years, says Cutler.

But it's not just technologies used by health care providers and insurers that can help transform the industry.

Patient-centric technologies, including web-enabled devices that allow patients to manage their chronic illnesses will also play an increasingly important role in curtailing healthcare costs. At-home monitoring devices, which remotely connect patients to care managers, can red-flag potential medical complications that can be addressed before patients become so sick that they end up in the hospital.

And it's not just specialized at-home monitoring devices that can aid the wellness of patients, says Fran Turisco, research principal of Computer Science Corp.'s global health care sector emerging practices group.

"When you add applications to cell phones, smart phones, PDAs, to support wellness and prevention, adoption rates are much higher," she says.

Automatic text messages reminding forgetful diabetic patients when it's time to test their blood are one of many small tech-enabled steps that are headed in the right direction. But the biggest steps to modernizing the nation's health care system and reining in costs need to be made by doctors, hospitals, insurers, health plans and other large health organizations.

Hopefully yesterday's meeting in at the White House was a sign they're serious about beginning that journey.

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