Cutting Edge Issues

eHealth:
Towards A New World of Communications in Medicine

Case Study: Overlake Hospital Medical Center

Information on Demand: Consumer-Controlled Medical Records

Finding Leaders for Internet Health Care

Building the Security-Capable Enterprise

Planning Business Strategies with Internet Support

Internet Use as a Survival Strategy

Case Study Zone

Who is eMed?

Planning Business Strategies with Internet Support

Part 3

The Internet world, however, has replaced this with a newer concept: the first-mover advantage. It seems that, along with the acceleration being seen in the cycle of change, the first entity in any Internet market is shaping that market. Those closely following may never catch a share of it. For this reason, it is necessary to consider exactly when to create change in the organization.

The enterprise that is interested in creating change and that wants to consider sustainable, long-term solutions not based on zero-sum–game survival strategies should evaluate three different possibilities. The first is the creation of new revenue sources. Half of the health care dollars now spent in the United States are buying nontraditional health care services. From an employer’s perspective, the amount spent on traditional health care is also more than outweighed by the other health costs associated with lost productivity, worker’s compensation, and disability. These are potential avenues for new revenue sources.

Another approach is to think about how care might actually be managed. Managing care should mean actually improving outcomes, and seeing that those are delivered at a lower cost. A third option is an overhead redesign, since perhaps 40% to 50% of health care dollars are spent on overhead. This is a phenomenal opportunity to add value to the system. As much money as is available from new revenue sources is probably being wasted because of the processes now used to care for patients. There is, therefore, a substantial amount to be gained through overhead redesign of the entire system.

How large is the variability that could be reduced by managing care? One way of estimating the amount is to think in terms of the inpatient cost of care versus the cost of preventing the need for that care. When I ran a hospital, I was really focused on lowering the costs of care (particularly when the hospital received a fixed payment for most admissions). Costs of care are not the only focus in considering complete systems of care, however. These systems encompass not only what is done, but where it is done, when it is done, how it is done, and by whom it is done.

A 1986 study was conducted at 13 sites using Medicare Part B claims data. The investigators reviewed 123 types of procedures to determine their frequency, adjusted for age and gender. In a large region, the overall sickness of the population should not differ from that of other populations. Therefore, it is assumed that any changes in procedural frequency are related not to the degree of illness of the patients, but to the variability of medical practice styles.