To The Rescue!

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At Kokomo Family Care, a clinic in Kokomo, Ind., many doctors no longer reach for a pen to write prescriptions or notes. Instead, they use a computer and software from McKesson HBOC, which have started to siphon away the sea of paperwork the small practice has been drowning in. Not only is there less chance of medication foulups or misplaced records, but the clinic has dropped nine employees whose sole job was taking care of paper--instead of patients.

On the West Coast, at San Diego-based Scripps Health, a new IDX system helps give doctors remote access to comprehensive digital records, CT scans, X rays and lab tests. "Over the next five years, we'll be the rule, not the exception," says Chris Van Gorder, Scripps CEO. "Patients, doctors, employers and the government are going to demand it."

They're already starting to. Despite heated opposition from the nation's cash-strapped health-care providers, President Bush made the surprising decision last week to put controversial new medical-privacy rules into effect immediately. The guidelines, which will, among other things, give patients access to their charts and a record of who has seen them, are part of the Health Insurance Portability and Accountability Act--which is set to usher the medical system, kicking and screaming, into the electronic age. Consider: a report out last week from the federal Agency for Healthcare Research and Quality said electronic prescriptions and monitoring could help eliminate many of the medication errors and other adverse drug events that kill or injure 770,000 people in hospitals each year.

The government is trying to accomplish what some of America's best entrepreneurs have failed to do so far--successfully apply the Internet treatment to the bureaucratic hernia that is health care. No other major business relies so heavily--and so inefficiently--on old-fashioned pen and paper. But health care doesn't have much spare change to spend on information technology, and the outdated systems that have been installed over the years have only made doctors more skeptical of tech's miracle cures. Billions have been lost trying to use the Net to cut the estimated $250 billion in administrative waste. Investors have been hammered, notably by WebMD, the start-up launched by Netscape co-founder Jim Clark and Internet boy wonder Jeff Arnold. WebMD's stock, which soared to $126 in 1999, is currently on life support at $7.59.

Now the next wave of e-health firms is making the rounds, and this group might actually get the patient back on its feet. IBM, Microsoft and Pfizer have formed a new company that, armed with deep pockets and a strong sales force, will probably try to sell a Web-enabled clinical system to doctors' offices. The new venture will go head to head with MedicaLogic/Medscape and a streamlined, refocused WebMD. At the same time, Allscripts and a ton of software start-ups with colorful names like Epocrates, Iscribe, Ephysician and PatientKeeper are all struggling to get small practices to use handhelds for writing prescriptions, checking drug interactions or insurance coverage, and storing patient data. Fighting to bring large medical groups and hospitals into the info age are traditional health-IT vendors such as IDX, Cerner, Epic, Eclipsys and Siemens Medical. Last month rehabilitative-care specialist HealthSouth announced plans to build a $100 million, model digital hospital.

Consumers may also get a taste of the new medicine. The same companies are helping providers launch their own so-called physician portals, which allow patients to make appointments, send secure e-mail to doctors and view their own charts and lab results. As part of a pilot project in Silicon Valley, insurers for a group of companies, including Oracle and Cisco, will soon reimburse doctors for certain e-mail consultations. At the end of the trail, WebMD's goal of online, real-time insurance-eligibility checks and claims adjudication is very slowly starting to become a reality.

It's not just about the bottom line. More than a year ago, the Institute of Medicine issued a now famous report that documented up to 98,000 annual avoidable deaths caused by medical errors. Last month the I.O.M. followed that up with a more sweeping indictment of the sorry state of IT in hospitals and doctors' offices. California has passed a bill requiring many hospitals to install technology by 2005 that will help reduce medication errors. "The pen," says Neal Patterson, chairman of health-IT veteran Cerner, "is the most dangerous, wasteful medical device."

Though doctors seem proud of their illegible handwriting, it has a huge cost. Each year pharmacies make 150 million calls to doctors to clarify confusing prescriptions. Today's tech-savvy medical students will probably never use an R pad, but doctors currently write only 1% of prescriptions electronically. "We can take the headache out of their most common practices," says Allscripts CEO Glen Tullman.

Only a few thousand M.D.s have moved to complete electronic prescribing, but almost 100,000 rely on a basic drug database from Epocrates to check out side effects, recommended dosages and interactions. Allscripts' E-prescription product also lets doctors do their dictation and automatically enter the appropriate billing codes for each procedure--thus eliminating a common error that usually results in drawn-out disputes with insurers. The business got a boost in February when the nation's three largest pharmacy benefit managers (PBMS) announced that they were building a standardized network, dubbed RXHub, to let doctors instantly beam e-prescriptions to client pharmacies.

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