Top Health Industry Issues of 2011

2011 is a makeover year for health industry organizations reacting to and preparing for new rules and payment models. Continuing cost pressures and new customer demands require a fresh look at existing roles of industry players.

This issue is one of six health industry issues for 2011. For the full Top Health Industry Issues of 2011 report, please see www.PwC.com/us/TopIssues2011

Issue #1 Highlights:

Booming business in health information technology

2011 looks to be a record year for health information technology (HIT) spending, boosted by new government regulations and tight deadlines by which to meet them. More than $88.6 billion was spent by providers in 2010 on developing and implementing electronic health records (EHRs), health information exchanges (HIEs) and other initiatives. This surge is a sign of technology’s critical place in health system improvement. Whether it’s establishing “meaningful use” of EHRs within provider organizations, working with multiple players to establish new population management models like ACOs, or using technology to drive down costs in pharma/life sciences companies, more skilled resources are needed to pull it all off.

“Meaningful use”: Hospitals and physicians can start drawing down on stimulus payments in 2011, but they have to achieve at least stage one of the government’s new “meaningful use” criteria for EHRs. Stage one requires that providers have the capability to provide patients with electronic copies of their health records upon request. This would be a sea change for patients. Only 14% of consumers surveyed said they currently access their medical records electronically. Of those who can access their electronic medical records, approximately 40% to 50% can’t access information such as lab tests or physician visit notes (See Figure 1). The policy goal of EHRs is to allow consumers to participate in shared medical decision-making. A majority of consumers who have electronic medical records said they use them only for their own information (54%); only one third (34%) use them to share information among primary care specialists.

Figure 1

HIPAA 5010 and ICD-10: Aside from the “meaningful” use of EHRs to provide and deliver care, back-end business operations have their own work to do in 2011. As a part of the HIPAA administrative simplification effort, rules governing electronic transactions between providers, payers, and clearinghouses are coming on line in 2012 and 2013. ICD-10, a new coding system that will add five times the number of current diagnosis and inpatient codes, requires providers and payers to use HIPAA 5010, a new version of the current nine electronic transactions including eligibility checks and claims transactions; modifications must be made by January 2012. Providers, payers and vendors should be testing and training internally for HIPAA in the beginning of 2011 so that they can begin external testing among trading partners throughout the remainder of the year.

Electronic medical device reporting (eMDR): Technology will also play a part in the tightly regulated medical device arena, where accountability doesn’t stop after the sale. The Food and Drug Administration will increasingly hold medical device companies accountable for quality and compliance by ensuring device traceability after the sale, from initial calibration to patient and physician support throughout the life of the device. The government wants manufacturers, healthcare facilities, and importers to reduce paper and go to reporting adverse events (e.g., deaths, injuries, malfunctions) through a federal electronic gateway. A final regulation is expected in 2011, and organizations will have a year to get into compliance.

Look for more discussion in the full Top health industry issues of 2011 report www.PwC.com/us/TopIssues2011

Implications:

Beyond specific regulatory requirements, strategic discussions about ACOs will bring in players such as insurers, as well as technology and pharma companies. These organizations have an opportunity to be the aggregators of performance data throughout the continuum of care, to help consumers navigate the system and adhere to provider treatment regimens, and to help business leaders and physicians make decisions.

  • Rather than charging forward to simply meet compliance deadlines that boost Medicare and Medicaid payments in 2011, the C-suite needs to weave together all of the compliance projects with strategic, financial, and operational goals.
  • Merger and acquisition activity could be seen as a way to share the increasing costs of health information integration. Some insurers are partnering with providers as they plan integrated IT testing, but there are many more opportunities to collaborate.
  • Device companies have an opportunity to use technology for increasing the traceability of medical devices throughout the supply chain. Beyond tracking support, technology can help providers manage outcomes and help device makers determine the root causes of adverse events.

Subject matter specialist

Daniel Garrett

US Healthcare IT (HIT) Practice Leader

Show details Daniel Garrett

Mark J. Williams

US Healthcare Payer Practice

Show details Mark J. Williams

Bruce Henderson

US Healthcare Provider Practice

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