Electronic Health Records

Thank you.

May I first express my real disappointment, and I mean that in a heartfelt way, I have looked forward to this day. I have actually worked hard to get to this day and it is with a great deal of disappointment that I am unable to be with you to participate. Because I view what will be announced in Cincinnati today as a very important milestone on the pathway towards a system of health care that will create better quality and lower costs for all Americans. It's not only an important milestone on the pathway, it's a direction post that I believe will be profoundly acknowledged and recognized in the marketplace.

I want to say a greeting to my good friend Rob Portman, who I know is there with you. I want to acknowledge the fact that Rob has had a significant hand while he was at the Office of Management & Budget in being able to shape this policy and to make it possible. I'm confident, despite the fact that I'm not there, that Kerry Weems will carry this forward in a very correct way. He is an enormously valuable person at HHS, and now in his role as Acting Administrator at CMS, he represents the largest payer in the world of health care. Also, I want to acknowledge Dr. Rob Kolodner. Rob is well known to all of you in the health IT field for his brilliance over the years in managing what has become a well-known and well-respected system at the VA.

I'm disappointed that I'm not able to see the demonstrations that we'll be undertaking. I'm aware of what has gone on in the Cincinnati area. We chose Cincinnati specifically for this announcement because of what you have done and I look forward to seeing it personally at a different time.

I'd like to just briefly touch on the vision of all of this and I'll ask Kerry Weems to be more specific. As most of you I think have experienced, and certainly I have been prone to say, I don't think we have a real health-care system in our country. What we have is a big economic sector. There's nothing that qualifies our health-care marketplace as an economic system, and we're surrounded by economic systems. You use an economic system every time you go to the bank and use your ATM card where you can transact business from anyplace in the world. It's all connected into an economic system. The banks compete, but they use the same system to optimize the value. We have the same thing with cell phones and airlines and other economic systems. Health care has not found its way into that place. What we're talking about here is a very important step in being able to transition from an economic sector into an economic system.

This is something that's not only good for the system, but it's very good for consumers. All of you have seen and know that when this is all in place, we'll see doctors and hospitals and pharmacies and labs all connected electronically; we'll see prescriptions that will be sent electronically to drug stores and labs that can be sent directly to doctors; we'll see patients able to consult their doctor by e-mail and we'll see medical records that are transitioned by computer. All of you know that vision very well.

But it's also important to recognize how good this is for quality, where patients will be given the cost and quality comparisons of doctors and hospitals; where doctors and hospitals can be rewarded for the kind of quality of care that they provide and not just the quantity of care; where patients will be able to save money and get better care. That's the kind of quality and convenience that we have to have if we're going to see health care go from an economic sector to a system.

I have become fond of referring to four cornerstones that it requires to make that economic sector become a system. One is electronic medical records. The second is a way of being able to measure quality on a standardized, uniformly accepted basis. The third is the ability to measure price so that you can compare price with quality. And the fourth is how do we create incentives so that everyone in the system of health, including the consumer, has a reason and a motivation to seek high quality and low cost.

Well, this particular announcement we're making today really brings all four of those cornerstones together. One of the major challenges with electronic medical records, for example, is that we have not seen systems adopted in a way that would allow it to work. We have 25% of the physicians in this country who have some kind of electronic information system, but only 10% are actually using an electronic health record. That's a critical difference. Less than 5% of the sole practitioners in the country use an electronic medical record. That's almost five times less than the doctors in practices with more than ten physicians.

So today we're announcing a new, five-year Medicare demonstration program that will reward providers who are using certified electronic health records to deliver high quality care. The project will be targeting physicians in small- to medium-sized practices where Americans receive most of their health care. In the first year, Medicare is going to be reimbursing practices that use certified electronic health records at a higher rate. Those that are using more sophisticated technology will receive even higher payments.

The second year, we want to up the ante. That is to say, we want to reward practices that are using electronic health records to report performance. Again, higher payments will go to those who use more technology.

The third year, we want to move to what we think is the critical point of all of this and that is to begin paying those who are able to improve the performance that patients see. Now we expect to involve about 1,200 small- to medium-sized physician practices in this demo. That means, based on the average sized practice, that we could see as many as 3.6 million Americans receive better care. Besides expanding the number of physician practices that have them, we think we'll also learn a great deal about how to make this work better. We also need to gain experience in how we pay doctors based on how they treat patients, not just how many patients. In other words, we want to learn and need to get better at paying for value not just volume.

Now, this is not just about getting computers in every doctor's office. Most doctors' offices have computers. This is about creating interoperable systems; about connecting providers like hospitals together, connecting them with the doctors' office, with the lab, with the pharmacy and with the consumer. To do that we've got to have standards so that everyone can agree on how we connect interoperably. We're working hard to remove those barriers. We think that we've made tremendous progress and this demo is a reflection of that, and I'm going to let Kerry Weems tell you about the specific actions we're taking to do that. But I do want you to know that our vision is aimed at solving simultaneously the problem of adoption, getting physicians in place in a way that is sustainable in a business model, in a small clinic; and interoperability, the ability to connect into a larger economic system, not just a sector. I just simply am optimistic that this is an important step - an important milestone - on the pathway towards the President's vision of having all Americans able to access an electronic health record. I think it's an important direction pointer for the market and we have every reason to believe that this will be a red letter day when this history is written.

Kerry, I'm going to turn to you and to John to go from there.

Last revised: March 13, 2008