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High Price Tag of Health IT a Burden on Small Businesses

By Danielle Parnass, CQ Staff

August 1, 2008 -- Small specialty health care practices are feeling the pinch of implementing a costly electronic health records system, which could possibly prevent greater adoption and widespread use of information technology services, said witnesses and lawmakers at a House Small Business Committee hearing.

Installing electronic medical records can cost upward of $44,000 per physician plus upkeep fees, said Committee Chairwoman Nydia M. Velázquez, D-N.Y., during Thursday's hearing. "For small health care providers with limited resources, these upfront costs are enough to break the bank," she said.

Physicians and lawmakers alike recognize the importance of a robust health information technology system to control costs and improve quality, and health IT legislation (HR 6357) is currently making its way through the House. But because of the high costs of implementation, "only a handful of solo practitioners" use electronic medical records, compared with 57 percent of larger care centers, Velázquez said.

Physicians at the witness bench called on Congress to establish standards for health IT to prevent interoperability problems where physicians cannot communicate with pharmacies or laboratories because their different programs are incompatible.

They also encouraged incentives for different providers who adopt these systems and criticized the "stick" approach for adopting greater use of electronic medical records, as recently proposed by Congressional Budget Office Director Peter R. Orszag.

"Doctors don't respond well to penalties and to forcefulness," said Ralph Hale, executive vice president of the American College of Obstetricians and Gynecologists. He said it could foster resentfulness among small practitioners who will look at the system and say they want to adopt health IT but because of the cost factor they cannot afford to do so.

Specialty doctors such as neurosurgeons, psychiatrists, and pediatricians also face challenges in finding appropriate electronic systems that are often geared toward mainstream medical practices, Velázquez said.

Edward Gotlieb, a pediatrician in Georgia representing the American Academy of Pediatrics (AAP), said channeling health IT incentives through the Medicare program would pose significant obstacles for pediatricians who receive their funds from Medicaid. Through this system, more than 60,000 practicing pediatricians will be excluded from these incentives.

And although the State Children's Health Insurance Program would provide more than $200 million in grants toward health IT, the Bush administration has twice-vetoed bills that would reauthorize the program, he said.

"The already inequitable system of funding programs for children will only be worsened," Gotlieb said. "This is not a good investment in our future."

Confidentiality and privacy issues also arise when making the switch to electronic records. Robert Plovnick, director of the Department of Quality Improvement and Psychiatric Services of the American Psychiatric Association, said many patients with mental illnesses—7 percent, according to the Department of Health and Human Services—do not seek treatment due to privacy concerns. He said a variety of technological solutions can solve this and should be implemented with standards to ensure strict security.

"Health information technology is a complex issue," said Ranking Republican Steve Chabot, R-Ohio. "The decision to implement health information technology in a small medical practice is considered an act of courage by many physicians."

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