How Kaiser bet $4 billion on electronic health records — and won

In July 1907, the first great breakthrough in medical IT took place at the Mayo Clinic in Rochester, Minn.: the paper medical record, dropped into a paper folder and stored in a file cabinet. Until then, information on patients was kept in a ledger that recorded all of a day’s patient visits, one after the other. Different departments kept separate ledgers, making it extremely difficult to track down patient information in a timely manner.

But 106 years later, the paper record remains the state of the practice in medicine. In 2009, only 9 percent of America’s hospitals were using even a basic form of electronic health records.

[ Also on InfoWorld: Consumerization comes to electronic health records. • The rough road to reliable data exchange among EHRs • Patient engagement will be tough task for health tech • The iPad revolution is coming to a hospital near you • iPads have won the hospitals, but Android may win the patients. | Stay ahead of the key tech business news with InfoWorld’s Today’s Headlines: First Look newsletter. ]

I came across that anecdote in a book called “Transforming Health Care: The Financial Impact of Technology, Electronic Tools, and Data Mining,” written by Philip Fasano, CIO of Kaiser Permanente, a health care giant with 9 million members. Fasano has led Kaiser’s 10-year effort to build KP HealthConnect, an electronic health records (EHR) system that stretches across every department and every Kaiser patient. It is an impressive book and worth reading as the country struggles to implement health care reform. After reading it, I had the chance to interview Fasano. Here’s a slightly condensed and edited version of our conversation.

InfoWorld: Kaiser’s EHR systems become fully operational in 2010. What can Kaiser do with it now that wouldn’t be possible without it?

Philip Fasano: We have every piece of information about that patient available to us to draw upon. The primary care physician has all the information about the patient, the specialists have all the information about the patient, and anyone they encounter in any of our hospitals has it as well. He or she can see the patient’s health history, diagnosis by other providers, lab results, and prescriptions are all there. X-rays are stored digitally and are there. That information is also available if a patient goes to the ER.

InfoWorld: How much did it cost to build?

Fasano: About $4 billion, a substantial amount of money, but we have 9 million members [so it costs about $444 per member]. You have to invest continuously in the infrastructure over its lifetime. People have to recognize that these systems are life-critical once implemented, so you have to invest in the infrastructure to be sure they are always on.

InfoWorld: What would it cost nationally to do what Kaiser did?

Fasano: The health care reform act states that “meaningful use of technology” by providers nationally would be $11 billion. At the time, I said, “That’s a nice down payment.” It will cost tens of billions of dollars to implement this.

InfoWorld: Kaiser abandoned an earlier system in 2004. What went wrong?

Fasano: We were building in a single region with the intention of expanding it later. That was a mistake. We were also building the system from the ground up with a partner. But we found that we were coping with decreased productivity and frustrating system outages. Former CEO George Halvorson then made a decision to write it off; it cost us $400 million.

(Editor’s note: Although Fasano didn’t mention it by name, the partner was IBM, according to an article in the Journal of Usability Studies, which said clinicians were taking an extra 30 to 75 minutes per day to do their work because there were too many steps to complete simple tasks. The new system was built with Epic Systems, a specialist in electronic health records that is now one of the top two EHR vendors, along with Cerner.)

InfoWorld: What about analytics and data mining?

Fasano: We have a number of analytic systems that surround the core system to help provide care. We are always doing data mining. Our analytic programs go across all systems and monitor for what we call care gaps: “Are there tests you should be having?” “Did you fail to refill your prescription and as a consequence should we be calling to remind you?” We are constantly monitoring you as a patient.

InfoWorld: Are the analytics and so on part of Epic or add-ons?

Fasano: These are proprietary to Kaiser Permanente. But we also buy many systems, so the largest part of our job is integration.

InfoWorld: What happens if a patient has to leave Kaiser? How portable is their information?

Fasano: If you asked us for your electronic medical record, we would hand you a thumb drive that is encrypted and give you the encryption code. You could then go to your next provider, and it would be able to look at your health record from Kaiser. As long as you provide them the encryption code, they can read it.

InfoWorld: How are you using technology to lower operating costs?

Fasano: Here’s a simple example: Just having an electronic health record that is connected with all the systems that have to do with delivery of care to a patient means you don’t have patients taking duplicate tests. In the United States, I believe the cost of duplicate testing is about 15 to 17 percent of the total health care spend. We don’t have that cost.

InfoWorld: Do spend a lot of time making a business case for your department?

Fasano: Absolutely. We have a very stringent business-case methodology for large IT products. If the cost is substantial enough, it goes all the way up to the board of directors.

InfoWorld: Right now, caregivers enter information on a desktop computer; sometimes the computer is on what you call a “WOW cart,” a workstation on wheels. What is Kaiser doing to embrace mobile technology?

Fasano: On the patient side, your medical record, the ability to email your doctor, look at lab results, and other functions are completely available today on iPhones and Android devices.

We are completely embracing that technology on the internal side of the organization, too. We’ve just launched a project called Health360 that is focused on embracing new mobile technology across our entire health care system. It will be the next generation of technology for all our providers, so the WOW carts you see today may be a thing of the past in four years.

I envision our entire workforce embracing and using some form of mobile device. For some people, it may be relevant to put it on a stand and have a keyboard. Others will carry it with them and take full benefit of its mobile capabilities.

InfoWorld: How is the role of IT in health care changing?

Fasano: IT in health care is supporting care first, and frankly the physicians lead. IT absolutely has to be part of the movement to change health care, and this means a significant cultural change. IT needs to be a little more impatient with itself and embrace the need to transform more rapidly than has historically been the case.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, “How Kaiser bet $4 billion on electronic health records — and won,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.