Getting Hip To HIPAA

It's become a popular pastime to knock the concept of government regulation and mourn the absence of unfettered competitive markets where, according to the free-marketers, pure capitalist economics are supposed to flourish and thrive.

Solution providers shouldn't be too quick to adopt this refrain, however. And if they start leaning in that direction, they should just chant "HIPAA" until they come back to their senses.

What's "HIPAA?" It's a little-noticed acronym that has done a lot to ignite the IT services business, the medical vertical and the government market.

HIPAA, the Health Insurance Portability and Accountability Act, may be the best thing that's happened to VARs since market development funds. And it's been brought to you by your federal government.

Originally approved in 1996--and first reflected in the Cobra laws that allow employees to transfer and continue health insurance when they lose or leave jobs--the legislation's real effect has been to drag hospitals, health maintenance organizations and other health-care providers into the electronic age by mandating industry standards and privacy safeguards. The law is being phased in through stages. As each stage rolls out, health providers have nearly two years to comply. Most of them are taking preemptive action to get ahead of the curve in meeting the new regulations. So each stage of HIPAA is having a positive impact on solution providers that specialize in the health-care or medical market.

Virtually every major hospital is modernizing its recordkeeping, patient services and privacy controls thanks to HIPAA. Typically, they are turning to solution providers to figure out what to do and how to do it.

A couple of examples: Florida's largest nonprofit hospital turned to Sysinct, the e-business solutions division of Ikon Office Solutions Technology, to implement an online patient billing and CRM system. Yale New Haven Health System in Connecticut, the state's third-largest nongovernment employer, recently implemented a state-of-the-art information system with CAP Gemini Ernst & Young. HIP Health Plan in New York turned to two solution providers to develop and install a new system to improve patient care and fight health-care fraud. HIPAA spurred much of this IT investment.

It's a scenario being repeated in virtually every state and in federal agencies like the Veterans Administration, which now must modernize the operations of its hospitals, thanks to HIPAA.

In fact, HIPAA is having a positive impact all the way through the IT "value chain." Health-care providers are making a variety of large and small HIPAA-related IT investments to ensure their compliance with the act. Dava Curtin, director of marketing for distributor Comstor, notes that HIPAA has spawned a robust opportunity for solution providers focused on security solutions. A recent workshop on security products and HIPAA brought in 75 solution providers.

The HIPAA-related IT spending couldn't come at a better time, because most of the private sector is holding off on technology initiatives until the profit picture improves. This may just be a stroke of luck. On the other hand, it might just show that government can play a pivotal role in helping improve both the state of patient health care and the state of the IT industry.