President Obama speaks with doctors in Iowa

President Obama speaks with doctors in Iowa

Healthcare in America is expensive. Wildly so. President Obama’s stimulus package, the American Recovery and Reinvestment Act of 2009, attempts in many ways to tackle this problem. The president has touted healthcare technology spending, or HC IT spending, as a significant avenue to save money. By digitizing the practice of medicine, the argument goes, doctors will be more efficient.

The HC IT portion of the bill is known as the Health Information Technology for Economic and Clinical Health Act (HITECH). Most of the spending in HITECH, however, is clinical spending. Money is given to doctors and hospitals for improving patient records, e-prescribing, etc.

However, many in the industry are upset that this spending only focuses on one portion of the healthcare spectrum. By singling out the provider (i.e., doctors and hospitals) for an upgrade in technology, the administration left out the other side of the healthcare equation: the payors.

Insurance companies still receive most claims or bills from doctors in paper form. For example, physicians’ offices will fax forms to insurors. This process is particularly tedious considering that a given medical practice can interact with dozens, or in some cases, hundreds of insurance companies. Each company has its own forms and its own way of doing things. Both the physician’s office and the insurance company must employ staff to process these forms.

The costs are staggering. According to the U.S. Healthcare Efficiency Index, huge savings would be possible by digitizing the payor side of the healthcare equation. To be exact, $29 billion could be saved on an annual basis. That’s a significant percentage of total U.S. healthcare spending. Money is not the only paper to be saved. According to the index, digitizing the process would save almost 5 billion sheets of paper annually.

Given the advantages of digitizing the process, it is a shame that HITECH failed to address the problem. However, as healthcare spending continues to spiral out of control (what other industry is actually growing right now?!), Congress will be forced to find a solution. Spending on America’s antiquated healthcare infrastructure seems like the most natural alternative for easy long-term savings.

Josh Rosenblatt

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