Health care IT industry profits from crony capitalism

The New York Times published an article yesterday about how people who donated money to senators and election-related groups such as the Democratic Senatorial Campaign Committee earned billions of dollars in additional profits from selling software that typically has few benefits for patients or society (see this January posting).

In that January posting I talked about how a system such as Google Docs would deliver, for free, most of the benefits of the systems for which our society is now spending tens of billions of dollars. One of my spies within Google sent me the following email in response:

In the days immediately after the Haiti earthquake there was a severe problem around collecting basic patient information and records… folks were getting moved between medical camps, doctors were moving around, all sorts of workers from different non-profits were helping out in different areas with no information sharing standards. Frequently patients would go to different doctors and due to the lack of infrastructure – buildings, power, etc., there were basically no medical records or patient histories being collected ever, which caused problems if one doctor prescribed medicine and then the patient went to another doctor, lots of wasted effort collecting the same information every time a patient came in, etc.

Anyway the engineers came up with a total hack that they wanted to try out – create a Google Apps for Business domain, stick every doctor and nurse into it with an account, and then setup an enormous domain-wide shared Google Docs folder where anyone could put patient histories. Each patient history would be a single doc with the patient’s name and everything was appended as text. They thought the cell network could be kept up and running on generators so they made a really simple iPhone app (at the time very few doctors were using Android) that used the Docs APIs to make it a little bit easier to find patient records and append text to them.

They got the whole thing working in a couple of days; I don’t know how widely it was deployed, I was only involved briefly at the beginning when they needed to figure out how to set up the domain and provision users and came to the Enterprise team with questions. It was interesting how the requirements affected their design – because of the totally absurd time-crunch – people were dying and they needed to make efficient use of the doctors – basically all the requirements around privacy of information, structured records, limiting who can see whose data and keeping audit trails, etc – went out the window. And once they were gone it was actually a really easy system to build and deploy.

It is a little bit interesting that the New York Times never loses its enthusiasm for Big Government. They publish articles lauding proposals by politicians to spend billions in taxpayer money on something that is supposed to do a lot of good. Then a year later the newspaper will publish an article about how great it is that the do-gooding is actually happening. Then a year or two later the newspaper will do a follow-up about how much or most of the money turned out to be wasted, funneled into the pockets of cronies, etc. These cycles continue, usually about 50 of them in parallel, without the Times ever running an article on how government spending tends to be wasteful and to result in the enrichment of cronies.

14 thoughts on “Health care IT industry profits from crony capitalism

  1. The problem as I see it isn’t that government is “Big”, as in providing a wide range of services to us citizens, but that it is easily corrupted. I don’t think the solution is to throw out the idea of universal healthcare, but rather to make sure it is delivered effectively and efficiently (best results for the cost).

    Removing money from politics is the only way I can see this working. Prohibit using anything but public money to run a campaign. Politicians could then focus on writing good bills (and reading them) instead of 75% of their time fundraising. With no favors to be paid back I bet much of the crap wouldn’t make it in there in the first place.

  2. Larry: Thanks for the perspective. Given that Americans have had more than 200 years of experience perfecting the current system of government, why does it seem within the realm of possibility that the fundamentals of our government would be improved?

    Separately, in response to a posting about health care IT you talk about “the idea of universal healthcare”. In what sense are they related? There are plenty of countries that have universal healthcare that do not also spend billions of dollars keeping patient data organized in a plethora of incompatible computer systems.

  3. Phil, I don’t actually think it’s likely to get be improved. That makes me sad, but I’m not sure what we can do to fix it. I don’t see shrinking government down to the size it can be drowned in a bathtub as an acceptable solution.

    I was only bringing up universal healthcare because I was under the impression that most of these healthcare IT mandates came about as part of the Patient Protection and Affordable Care Act (Obama care) as a way we would ostensibly save money. I think we need universal healthcare, but I am not at all happy about the package our government delivered. It’s the same with every bill that comes out of congress. Just look at the waste involved in forming the Department of Homeland Security.

    Having reread the article I see I was mistaken, and this was included in the 2009 Economic Stimulus bill. I grudgingly supported this bill too, even though I suspected a large chunk of the money would go to special interests. Still we needed to do something, and this was the best congress could deliver.

  4. At the health insurance company I work at you’d be shot if you said this: “basically all the requirements around privacy of information, structured records, limiting who can see whose data and keeping audit trails, etc – went out the window.”

    Even though we don’t have the sharpest tools in the IT shed, I honestly believe the majority of problems that stem from incredibly dysfunctional health care computer systems isn’t the people building them, but the users requesting them. (Although we have taken three years and on-going trying to implement a group of EDI tools, for *one* team, that’s cost everyone a bunch of money and I’m sure is making the people at IBM happy in “consulting” fees.)

  5. Phil,

    I wonder if The NYT ever sees themselves as being a tad hypocritical? Too bad they don’t turn their high-powered perceptions onto themselves very often.
    Also and unfortunately, in my field (real estate) I’ve witnessed firsthand how much the skids are greased in government with relatively minor campaign donations to the appropriate politician(s). It can turn a problematic zoning issue magically into a smooth sailing ship and likewise I’ve also witnessed time and again how donating to campaigns will almost universally aid a contractor in gaining traction in bidding for government-funded construction projects. It’s kinda sad…

  6. Big certainly is the problem. The more you put continent wide decisions in the hands of a small committee in Washington, you have destroyed the system. It becomes brittle and corrupt. There is no other outcome.

    As to money, what you need to change is the attitude that a need on the part of anyone requires a government program. People should solve their own problems. The idea that government is the only actor in our country is ludicrous on its face but people actually believe that if the govt doesn’t do it it won’t get done. Hah. The only guarantee of preventing a solution is to put thousands of bureaucrats in the position of losing their jobs if the problem is solved.

  7. As to the issue at hand, how about we repeal all the laws regarding healthcare and let a person negotiate their own privacy settings with the doctors and hospitals they choose to employ?

  8. This post illustrates why, at age 75, I am “post-political”. In my lifetime we have gone from winning a world war in five years, fielding thousands of planes and ships, atom bombs, and other gadgets in the process, to being unable to deploy a new fighter jet in 30 years (and a single bomber costs $2 BILLION). Across the board, not just defense, government has simply lost its way in such a byzantine cock-up that its hard to see a way out. Phil G identifies episode after episode of failure (and points out promising anecdotes of potential success), but the broad view is almost universal near-paralysis.

    As for money, we worried and argued for generations about how to best spend $millions and even $billions, only to arrive at a weekend in September 2008 when three men could throw several $TRILLIONS down the maw of 12 banks who produce nothing.

    Only imminent collapse seems to motivate recovery, and who knows when imminent collapse will come?

  9. Without “basically all the requirements around privacy of information, structured records, limiting who can see whose data and keeping audit trails, etc – went out the window.” it is possible build data-sharing website with either file system or database back–end in hours, not in days.

  10. Russell, you stated people need to solve their own problems, and while I agree with this to an extent, it’s just not practical. We do need government and federal programs. Looking at the bigger picture, there are people who cannot advocate for themselves due to incompetence or disabilities.

    The real calamity is not our reliance on the government but rather are inability to take responsibility for our government through lobbying and other accessible channels. Too many people sit back and complain yet do nothing to help fix the problems.

  11. Strange article in Time magazine is referenced in posting 11: first it describes how Medicare is less expensive than negotiating and paying bills in person and later it says that health care is a tax burden without explaining why, if Medicare is such low – cost efficient program.

    At the end it says that medical outcomes in surveyed countries are the same: either with new artificial joint or without person remains the same 😉

  12. GK,
    The article says Medicare is more economical because at inception docs and hospitals agreed to be subject to cost control and Medicare has just executed the controls formulaically. In other areas like Medicare D drug purchasing, Medicare is precluded from cost control – it just seems to be at the whim of Congress or their overlords.

    The nasty practice in the article is the opaque hospital list price file “chargemaster” that is typically 10 TIMES the Medicare formula price, which Medicare is still profitable for these “nonprofit” hospitals. The whole article is a must-read and a tutorial on how 20 percent of the economic dog is wagging the whole system in a bizarro-world prosperity embedded in dog-slow overall growth.

    Among other big take aways: The medical/pharma lobby is 4 or 5 times bigger than the defense industry lobby, Medicare pays 84 cents to process a claim vs. $28 for Aetna. and on and on – it cannot be sustainable, just like Spanish air traffic control.

  13. Don,

    Large personal spending anecdote can not be used as the reason to explain why taxpayers spending large amount on health programs.

    I agree with your point that health insurances are getting overly expensive ( and can add that they may not compensate for necessary procedures) .

    It could be suggested that some medicare programs and private insurance could be more expensive because hospitals compensate for other enforced cheaper treatment but it has not be in my anecdotal experience.

    Most people I know used to get best price for health treatments when negotiated all procedures themselves without insurance proxy. Probably not really possible in the buyers market person in the article was in.

    Great that person in the article was healed fast, although afterwords stack with a large bill.

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