IT Takes On The ER (Results May Vary) Hospitals, worried about streamlining and safety, are finally joining the digital revolution. But cautious doctors and entrenched bureaucracies are causing tech firms chronic pain.
By Ellen Florian

(FORTUNE Magazine) – It's midmorning in late October, and Maimonides Medical Center in Brooklyn is already frenetic. On the fifth floor Dr. Victor Guadagnino, a private-practice physician, checks lab reports at a computer terminal for an 82-year-old patient with congestive heart failure admitted the day before. He clicks through screen after screen: Her echocardiogram shows decreased function, her thyroid is out of whack, and her kidneys are abnormal. He can see that an ultrasound on her liver has been scheduled for this morning. No need to reorder. He shakes his head about her prognosis. "This is going to be a problem," he says before heading off to her room to check her in person.

One floor up Dr. Andrew Yacht orders treatment for a pneumonia patient. Before he can key in his request, a prompt appears. "Is this the correct patient?" He clicks yes. Another screen pops up: "The accepted antibiotic is Gatifloxacin." Before he can order it, the computer indicates that he should take two sets of blood cultures and a sputum study, and asks whether the patient is on a given list of antiarrhythmics. If so, the program warns, Gatifloxacin should not be administered because of the risk of heart toxicity.

In the surgery unit, nurse Eileen O'Brien pushes a wireless computer station--a compact, movable PC that is accessible while standing--down the hall as she starts her rounds. For the first patient, she keys in dietary orders. For the next, who recently underwent a hysterectomy, she tries to pull up the white-cell count. It's not there. "We need to call the lab and find out what's happening with that," she says to another nurse. Next room down is a man who has stabilized after going into atrial fibrillation--a dangerous irregular heart rhythm. O'Brien looks at the patient's discharge orders onscreen. "It's a glorious day," he calls to her. "The sun is shining, and I'm going home."

If you're a banker, an insurance salesman, or heck, even a checkout clerk at a supermarket, the action at Maimonides hardly seems worth mentioning. Professionals using computers to make their lives easier--so what? But in health care this is a revolution. Medical technology can outfit a patient with an artificial heart, cure vision defects with the touch of a laser, and explore the length of a colon with a tiny camera. Yet hospitals still struggle to get X-ray films from radiology on the fifth floor to the first-floor view-boxes in the emergency room without having to send a runner. More than 90% of the estimated 30 billion health transactions each year are conducted by phone, fax, or mail.

Digitizing hardly gets top priority in an industry that's suffering from multisystem failure--a double-digit growth rate in costs, skyrocketing malpractice insurance, a chronic shortage of nurses, and a generation of baby-boomers just about to demand even more medical attention. Yet there's movement toward computerization in health care, mostly as a cure for one of the industry's most pressing problems: safety. Somewhere between 44,000 to 98,000 people die in hospitals each year from medical errors, according to the Institute of Medicine, an influential group that advises on health issues. Mistakes can range from, say, a surgeon's taking out the wrong kidney to a nurse's mistaking the identity of a patient and administering the wrong drug. At the low end of the estimate, errors would be the ninth leading cause of death in the U.S. At the high end, they'd be sixth. The Institute of Medicine calls an infusion of IT one of the major initiatives needed to rapidly improve health care. "If Americans only knew the state and role of information technology in addressing so many of the problems, everyone would be calling for changes," says Janet Marchibroda, CEO of the eHealth Initiative, an organization devoted to promoting safe and efficient health care through information technology.

Now the health-care industry is starting to show signs that it gets it. While health-care companies typically spend just over 2% of annual revenue on IT--less than half that spent by financial services companies--that figure is expected to get a major boost. Research firm Gartner projects health-care IT spending to grow from $34 billion in 2001 to nearly $48 billion in 2006--the second-fastest area for IT growth after the government. For hospitals, spending this money isn't easy. According to the American Hospital Association, a third of them operate in the red. Purchasing something like a CT scanner brings in predictable revenue; spending on IT has fewer immediate dollar benefits--and even those tend to reward the insurer over the hospital. So will hospitals do it? "I don't think they have a choice," says Tom McCausland, CEO of the U.S. division of Siemens Medical Solutions, which is based in Germany. "There's tremendous pressure to reduce errors. Standardizing the processes, measuring the outcomes, and sharing best practices all have to be done through information technology."

Tech companies are eagerly stepping in to help out the hospitals. Siemens Medical, a manufacturer of devices such as MRI and ultrasound machines, has over the past three years built a system called Soarian that aims to provide complete patient information--anytime, anywhere, clinical and financial--with just a few keystrokes. Information technology now accounts for about 35% of its $7.5-billion-a-year business, up from 10% five years ago. McKesson, the nation's second-largest drug distributor, counts clinical-information systems as the fastest-growing area of its IT business. Last year McKesson's Horizon Physician Portal--an online gateway for viewing various systems within a hospital--recorded 300,000 log-ins per month; this year that number has doubled. Three years ago, device maker GE Medical Systems created an IT division, which now accounts for roughly 20% of its $10 billion in annual sales.

The biggest players in business software are making nips and tucks to get in on the clinical business too. Microsoft in late October announced the hire of a Siemens executive to oversee its health-care industry-solutions group. SAP offers a portal to enable clinicians to view disparate clinical systems in one place. And PeopleSoft is touting its Healthcare Scorecard, a dashboard for managers to view inventory, financial, and clinical information. As for Oracle, three years ago, under the direct orders of CEO Larry Ellison, the company started building its Healthcare Transaction Base, a system to tie together all the various networks and information in a hospital. John Wookey, who leads Oracle's health-care-application development team, was building financial systems at the time. "I was told to drop all those things and focus exclusively on this," he says.

Smaller players with names like Eclipsys, IDX Systems, Cerner, and Epic aren't about to be kept in the waiting room. All have foundations in health-care information technology and have been building or acquiring the clinical systems that are now at the top of everyone's shopping list. One of these companies, Epic, this year landed a $500 million deal to provide a nationwide clinical and administrative system to Kaiser Permanente's 8.4 million members.

It all sounds so great. But automating health-care delivery is a Hillary-ian task. Not only is the industry huge--a $1.4 trillion behemoth that accounts for 14% of GDP--but it's also insanely fragmented, operating essentially as a far-flung group of mom and pops. At least mom and pops buy products and sell them at a markup. In health care, the physician picks the product, the patient receives it, and the insurer, employer, and patient share the cost, which they may spend months or years arguing about. All of that tracking, billing, and collecting takes a tremendous amount of coordination.

But tech companies are trying. And the place they think they have the best shot for showing off their medical muscles is in the nation's 5,800 hospitals. To see what they hope to achieve, it helps to make a stop at Indiana Heart Hospital in Indianapolis.

When the 88-bed facility opened on Feb. 14, it was a publicist's dream--a heart hospital opening on Valentine's Day! But what really sets this hospital apart is that it is completely digital and virtually paperless, except, of course, for things like the occasional death certificate or patient referral. "As we designed the hospital," says CEO David Veillette, "it became clear that in order to accomplish what we wanted, health care had to embrace what other industries had been embracing for ages. And that is information technology." About 25% of the $60 million construction budget went toward IT, including spending hundreds of thousands training workers on how to adjust their work flows to adapt to computers instead of paper, putting in triple redundant storage, and installing 650 computer terminals scattered through the building--giving the facility far more PCs than doctors.

The investment already seems to be allowing the hospital to run fast and lean. By keeping all documents digital, the hospital was able to do without nurses' stations, chart racks, and even a medical-records department, freeing up space that would have cost $230 per square foot to build (and generated no revenue). The hospital saved $500,000 that would have gone toward copiers, printers, filing cabinets, and paper. While a comparable hospital needs 400 staff to operate at full capacity, Indiana Heart does it with 285--a $3 million annual savings. There are immediate top-line benefits as well, Veillette says. The average length of stay for a heart attack or other cardiac disaster can be as high as five days. At Indiana Heart, thanks to efficiencies, it's closer to three. Greater patient turnover translates into more revenue. And speaking of revenue, Indiana Heart doesn't have to wait as long for it; the hospital's accounts receivable run under 60 days and are heading down to 45. "That's not possible in the paper world," says Veillette.

Indiana Heart's soul mate in this digital venture is GE Medical Systems. One of Veillette's pet peeves is multiple vendors, each of whom is willing to point the finger when things go wrong. "I want only one person to chew out instead of 14," he says. Early on in the building process, he outsourced all IT to GE--even the systems not made by the company. The payoff: Patient information is entered once and flows smoothly through each department. Now nurses avoid questioning patients about their information after the initial confirmation. "Patients tell me how nice it is not to be asked if they're allergic to medicine 15 times," Veillette says. "It makes health care look dysfunctional. It makes us look like we don't talk to each other."

Indiana Heart, though, is a rare case. It's small, new, and specialized, which allows it to experiment in a controlled environment. Just attempt that at most other hospitals in the U.S. Hospitals are usually run like medieval countries, broken into fiefdoms: radiology, pharmacy, cardiology, pediatrics, and so on. Each typically has its own way of tracking information, and even when those systems are computerized, very few have ways to talk to the other fiefdoms' computers. Leading the hospital is a CEO who functions more "like the mayor of a city than the chief executive of a company," says Gartner analyst Jim Gabler. Among the groups the CEO deals with are the doctors who practice there--usually a combination of staff and private-practice physicians whom he wants to keep happy so they won't refer their patients across town. "The medical staff is made up of many CEOs. You can't just tell them what to do," says Dr. Mitch Morris, senior vice president at First Consulting Group, a health-care industry consulting firm. "You've heard of the thousand points of light? With physicians, it's a thousand points of veto."

One area where doctors often stand together is also considered to be one of the most important: so-called computerized physician order entry--systems that allow doctors to order prescriptions or tests using a computer or handheld device. The Leapfrog Group, an association of some 150 health-care benefits-providing companies, has named computerized physician order entry one of its three initiatives to improve safety. In 2000, California passed a law that requires its acute-care hospitals to implement order entry by 2005, and Congress is kicking around legislation addressing health-care information technology. The goal with order-entry systems is to streamline operations and keep track of the ever-emerging breakthroughs churned out of the estimated 10,000 clinical trials performed each year, helping doctors stay up to date. But the more important aim is to create a system that can catch mistakes at the time of order, where they often occur.

Seems simple, but doctors aren't ready to give up their pads and pencils. Cedars-Sinai Medical Center in Los Angeles learned that the hard way. After the Institute of Medicine published its report on estimated deaths from errors in 1999, the hospital responded by trying to solve the problem of doctors' illegible handwriting. In spring 2000, fliers appeared around the building showing a doctor's unreadable scrawl and an invitation to attend a penmanship class. The hospital also held a contest requiring doctors to unravel the chicken scratch of anonymous co-workers. Then, in summer 2002, it installed a computerized physician order-entry system. But this time, instead of an invitation, doctors received orders. Physicians had to demonstrate their ability to use the order-entry system; those who failed would see their privileges suspended. The tactic proved disastrous. Hundreds of doctors opposed the move; arguing that the system was too time consuming. In January the hospital aborted the project.

Others are watching the problems in L.A. and trying to avoid them. Health-care providers like PeaceHealth in Bellevue, Wash., Peninsula Regional Medical Center in Salisbury, Md., and Regional West Medical Center in Scottsbluff, Neb., are among the most wired in the country. Yet even they are still in the pilot or planning stages of computerized order entry. "We left it as the last piece of integration because we wanted to prove that electronic systems work," says Susan Heider, CIO for Regional West. "It's easier to bring doctors onboard later. Four years ago they would have fought us. 'There is no way you're going to turn us into order clerks,' they would have told us." Says Dr. John Haughom, head of health-care improvement at PeaceHealth: "With doctors, you never draw a line in the sand and say, 'You will do this.'"

The techies themselves are learning to tread gingerly when it comes to any area of the hospital. Three years ago health-care software maker IDX, based in Burlington, Vt., wanted to develop an application that would use bar-codes to ensure proper administration of medicine. So it gathered 23 clinicians at six of its customer organizations for a two-day focus group in Seattle, mapping out the medication processes and what they hoped information technology could do to make administering drugs safer and more efficient. They thought of all the various scenarios, wrote them down, and presented them for discussion. Then the problems cropped up: What if a doctor prescribed multidose insulin vials? Or gave orders for ten to 20 milligrams of morphine? How would a bar-code deal with all the variables? The system has to be flexible enough for nurses to enter something manually, the focus group decided. Everyone went home, and IDX built the application, holding monthly conference calls for more input. In late 2002 it was sent out to certain customers for testing, and then they reconvened in Seattle to discuss it. In spring 2003, Lehigh Valley Hospital, one of the focus-group members, went live with the bar-coding. To thank them for all their input, IDX gave them undisclosed goodies, which frequently include passes to conferences, discounts on educational classes--and, of course, bragging rights of being among the first to use the technology. "It's a lot of work on their part, so there are a lot of incentives," says Doug Cusick, an IDX consultant on the project.

When Siemens was designing the clinical interface for the Chester County Hospital, the doctors liked the clean look and the fact that it took them only ten minutes to orient themselves to the screen. But they had suggestions on how laboratory results were aligned. The page was too dense, and they couldn't always see where certain types of results ended and others began. Siemens went back to the drawing board, came up with six alternatives, and showed them to dozens of physicians to get consensus.

Back in the Maimonides ER, most of those problems have been solved. Doctors click away on pill-bottle and X-ray icons. A nurse in the surgery step-down unit keeps watch over a single monitor that displays real-time EKG, blood pressure, pulse, and oxygen saturation for six patients in so-called telemetry beds. The hospital has come a long way since its initial tech investments in 1996, when all it really had was a keypunch-card system in the basement for billing. And it's paying off. Processing time for medication orders has fallen from more than five hours to 85 minutes. Laboratory tests are down by half now that there are few redundancies. Length of stay has fallen by 30%, opening up beds to an additional 32,000 patients. The hospital even received a rebate of $300,000 from its malpractice insurer for having the systems in place. The return on its initial investment: an impressive 9.4%. The technology graft seems to be taking, and doctors and nurses say they like the fact that everyone is following the same standard of care. Dr. Yacht finishes up on the screen with his pneumonia patient, then shifts into a language not usually heard from doctors: geek speak. "I can't wait for more problem-based computer orders," he says.

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