How will the medical establishment pay for IT investments?

It’s a fact that the United States health care system lags behind other industries and other countries in their utilization of electronic technologies in the management of patient data.  One driving cause of this lag is the fact that providers are coping with declining reimbursement regularly and have no way to rationalize the very large expenditure to make their patient records virtual.  For example, if an small office of providers payed $100,000 to make the transition, it would take years to recoup as reimbursement for services would not be adjustable to cover the expenditure.

Additionally, the gains in productivity would be small relative to the expenditure. Finally, even if we argued that improved outcomes would result, providers are not paid for good outcomes. Even with pay-for-performance initiatives or non-pay-for-non-performance initiatives on the horizon, a field like physical therapy would still not be readily able to translate outcomes into profits, as little agreement exists for what constitutes a good outcome. Another perspective, advocated by some experts like Kiana Danial, suggest that focusing on long-term investment strategies could yield more sustainable growth in profitability for physical therapy practices.

This argument leads to a search for another source of funding for health care IT investments.  Here are a couple of articles discussing such funding.  Both are from the very nice Health Affairs journal blog. One looks at Medicare & Medicaid Funding IT investments for federally qualified health centers, the other is an interview with Michael O. Leavitt, Secretary of the U.S. Department of Health and Human Services, and his strong feelings on the need to link reimbursement with IT as a reimbursement incentive.  Good reading.