VARs See Benefits From Plan To Automate Health-Care System

"If you go back a year and a half ago, the experts in the industry were all clamoring for solutions and about how the solutions could improve the delivery of health care," said Tom Leary, director of federal affairs for the Healthcare Information and Management Systems Society, which represents health-care technology interests.

Now, Leary said, policy makers and regulators are rolling up their sleeves and getting involved. Federal lawmakers doubled funding for health-care demonstration projects to $100 million in the 2005 fiscal-year budget, and Medicare administrators set a January 2006 deadline for the establishment of standards for an electronic prescription system.

In May, the Bush Administration appointed Dr. David Bailer as health-care technology coordinator within the Department of Health and Human Services to oversee the efforts. And in September, an industry group will meet to create guidelines on how products will share data with each other.

What does it all mean for VARs? Perhaps not a lot--yet.

Much of the necessary technology already exists, and the Clinton-era HIPAA legislation has been driving investment in medical records systems, said Mitch Northcutt, CEO of RapidApp, a Chicago-based solution provider that deploys infrastructure for electronic medical record (EMR) and other health-care applications. The major hurdle is a familiar one--getting all the vendors to adopt the standards.

"A lot of organizations are already moving to deploying electronic medical records, [and] they're spending a lot of money doing it," Northcutt said. "I wonder if the software they're deploying now is going to meet those standards. It's going to be tough. It will happen, but I don't think we're going to see impact on our market for a little while."

Still, there is consensus among both Republicans and Democrats that moving the health-care system from paper to electronic processes is an important goal. Though Senator John Kerry so far has been silent on the issue, Leary said the initiatives have bipartisan support and that Democrats intend to incorporate support for computerized patient records in future platform statements.

While the government and insurance industry are likely to see a big payoff in cost reduction, the question is, what's in it for doctors?

"What is the compelling reason [for] the little physician practice to upgrade their technology and get digital with their medical records? They're going to have to buy scanners, bigger servers and undergo a whole big training curve," said John Sarich, insurance industry marketing executive at FileNet, Costa Mesa, Calif.

The government will begin awarding $100 million in technology grants this September. But while demonstration projects may show that the investment can be worth it, the money is only a drop in the bucket. There are also proposals for subsidized loans, grants and changes to the Medicare reimbursement system that would reward doctors for investing in records systems.

Sarich said there are other logs on the fire as well. The proposed creation of Health Savings Accounts is also expected to transform the way the health-care system operates, driving investment in information systems. And solution providers can anticipate continued growth in this market.

"Really, the whole health-care system is in transformation," he said. "As long as the government is the 800-pound gorilla in terms of writing checks, it is going to force change. And that means technology."