The White House on Dec. 9 announced plans to spend $88 million in unused stimulus funds to pay "health communities" to adopt electronic medical records, foreshadowing a likely confrontation between those with sincere privacy concerns and those who believe the change is medically necessary.
A nationwide EMR system would give health-care providers instant access to patients' medical records, enabling them to view and share information needed for diagnostic or treatment purposes. The system also would provide research labs with a treasure trove of new medical information, make it easier for patients to monitor their own care, and help hospitals and other providers streamline administrative and management practices. EMRs would save our country $77 billion a year in health-care costs, the experts estimate.
There's a big problem, though. One person's savings is another person's loss of income. With fewer tests and procedures, hospitals and doctors stand to lose revenue as a result of implementing EMRs. Insurance companies will lap up the savings instead. That's one reason most doctors and hospitals continue to use paper files.
EMR software can cost up to $100,000, more than most small medical practices can afford. Privacy is another concern. A paper file seems safer than all that information flying around the Internet.
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Our country once faced strikingly similar problems in the retailing industry. During the 1800s, small shopkeepers maintained individual customer histories and provided customers with short-term credit. Like doctors today, they hoarded information, since there was no incentive to share. As a result, little lending occurred.
In the 1880s credit bureaus arrived. These new institutions offered to handle the task of managing customer payment histories. Businesses and lenders would receive a customer's complete credit history if, in exchange, they added their own information to the database.
The benefits of sharing information soon exceeded the benefits of hoarding it. Credit quickly expanded.
Today, a customer's credit history is available electronically within seconds. Loans are often approved seconds later.
Health information bureaus could assume a similar role in managing patient medical histories. Doctors and hospitals would agree to file information electronically in exchange for complete, instant access to their patients' medical histories, creating an incentive to share information.
Ideally, patients would own the intellectual property rights to their medical histories, established by government regulation. Individuals could freely choose (or not) to license their medical records to the bureaus.
Even with the inevitable recording errors that would surface, an electronic medical records system would allow far fewer mistakes than the rudimentary file system we have now. A radiologist in St. Louis could examine the same X-ray as a pulmonary cardiologist in Las Vegas and discuss treatment options over the phone. Doctors and patients automatically could be reminded about prescriptions and appointments. Patients would have a sense of ownership of their medical histories. And the cost of care would decline while quality rises.
Credit bureaus cost zero tax dollars to create and led to both the expansion of the retail sector and to great innovations in the delivery of credit. A parallel innovation in the health care market could over time lower costs and improve care, without undermining privacy or adding billions to the national debt.
Richardson is visiting research fellow at the American Institute for Economic Research (www.aier.org), and associate professor of economics at Winston-Salem (N.C.) State University.