The Multibillion Dollar Consequences of Fragmented Healthcare Information Systems

Editor’s note: This article is the third in an ongoing series by James McGauley, M.D., on the idea of a Coordinated Medical Record system and how it could reshape healthcare. Read the second installment here.

Fragmentation of information is the major underlying cause of most of the healthcare industry’s information-related problems. These problems include misdiagnoses, inappropriate medications, duplicate tests, medical-legal issues and fraud. The range of clinical issues that these problems cause runs the gamut from diarrhea and skin rashes to hospitalizations, long-term care and even death. The financial cost runs into the hundreds of billions of dollars.

Each of these problems cause enough trouble on their own, but the damage increases exponentially when they interconnect and feed off each other. A missed or delayed diagnosis can easily lead to inappropriate medication issues, duplicate tests and lawsuits.

However, the story isn’t all gloom and doom. All of these problems are potentially preventable. Because fragmentation of information is the identifiable underlying cause of all of these problems, then coordination of information must be the common solution.

With this realization as our guiding principle and the credit card industry as our guiding model, I led a team that developed and beta tested a Coordinated Medical Record system that literally produces a single comprehensive medical record for every patient. Each record contains all of the patient’s clinical and financial healthcare information over space and time. The records are continuously available, in whole or in part, according to privacy and need-to-know protocols for all of the clinical, financial and administrative purposes required of any medical record.

Because this type of information system enables all caregivers to work from the same comprehensive medical record for every patient encounter, it eliminates the problems of missing, conflicting, inaccurate or unavailable information — problems that are inherent in all fragmented electronic medical record (EMR) systems.

Misdiagnoses

The consensus in the medical literature is that the prevalence of missed, inaccurate or delayed diagnoses is 10 to 20% of all patient encounters. Some studies indicate that most Americans will experience a diagnostic error at least once in their lifetime. The most frequently cited cause of this problem is the unavailability of some critical information at the time of a patient encounter.

Inappropriate Medications

A lot of industry and political attention focuses on the $330 billion cost of prescription medications, but very little attention centers on the $530 billion spent on the problems that arise from inappropriate medication prescriptions and usage. These problems include additional medications, physician visits, emergency department visits, hospitalizations, long-term care and death.

There are thousands of different prescription and over-the-counter medications. There are more than a million healthcare workers who can prescribe, alter or dispense these medications. And there are hundreds of fragmented EMR systems that contain different medication profiles for any given patient. With all of these variables in play, the only way to even begin to solve the inappropriate medication problem is to assure that all caregivers are working from the same data set, the same medication profile for every patient.

Duplicate Services

The cost of duplicate healthcare services is estimated to be at least $200 billion a year, with a significant percentage attributed to the difficulty or inability to access the results of previous tests or procedures during a patient encounter. Recent studies have documented the fact that incidences of duplicate services have actually increased since the widespread deployment of fragmented electronic medical record systems.

Billing

Healthcare providers and payers spend about $500 billion a year on billing-related services, primarily because patient, provider and payer information is fragmented. During our pilot projects, we demonstrated how a small number of data management personnel working with a comprehensive and coordinated database of patient records can reverse-engineer the specific processing rules of every insurance carrier. This information, coupled with the system’s automated feedback loops and data distribution channels, can lead to 100% clean claims processing for all of the system’s participants. The system can also provide expected charges and payment information prior to making treatment decisions, thus avoiding surprise billing.

Reporting

The cost of reporting quality measures has been put at about $15 billion and 785 work hours per physician. Because a Coordinated Medical Record system contains comprehensive clinical and financial healthcare information that is automatically updated, synchronized and organized within every 24-hour period, it can produce standard and customized clinical and financial statistics and reports in near real time and at minimal cost, in ways that fragmented EMR systems can never do.

Fraud

Healthcare fraud is a $68 billion problem. Because all of the data elements in each patient’s record in a Coordinated Medical Record system are reconciled within a 24-hour window, this type of information system can use artificial intelligence, algorithms and alert notifications to both recognize and deal with fraudulent activity in near real time, in a manner that’s impossible to achieve with fragmented information systems.

Medical-Legal Issues

The processing costs surrounding medical liability issues are around $10 billion annually. About 45% of all malpractice claims are related to misdiagnoses, and about 10% are related to inappropriate medication problems. An information system that can help reduce the frontline real-time incidences of these two problems will make a major contribution to reducing the incidences and costs of more than half of all malpractice claims.

Overcoming Healthcare Information Systems Fragmentation

Because fragmentation of information is the problem that underlies all of these issues, none of them can be solved unless every caregiver receives the opportunity to access and work from medical records that are comprehensive and reliable, meaning that they are complete, accurate and continuously available.

Technology is not the barrier to producing this type of medical information system. The technical tools that can generate a single comprehensive patient record, and then automatically update, organize and distribute the data in that record, are readily available. These tools are already being used in other industries to make them more efficient and cost-effective.

In an effort to rapidly digitize itself, it seems that the healthcare industry took the wrong fork in the road with its $35 billion EMR incentive program, and its current initiative to interconnect more than 2,000 fragmented EMR products with new industry standards or middleware is heading down a blind alley.

It’s still possible to head back to that fork in the road and take a path that would lead to the type of information system that would produce comprehensive and reliable medical records for all. The technology is available, and in a subsequent article I’ll explain why physician-employer coalitions could become the driving forces to make that type of information system a reality.

If you wish to contact James McGauley, please reach out to the Inside Digital Health™ team.

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