Digitalizing healthcare: An Israeli perspective

07 Apr Digitalizing healthcare: An Israeli perspective

Posted at 19:08h in Biotech, Commentary, Health Technology by

CHICAGO – The concept of Digital Healthcare is working its way into our day-to-day vernacular particularly given the push by our new U.S. President, who has vowed that the U.S. healthcare system will be digitalized during the next 5 years. But for the layman what does this mean?
I have to admit – I was a novice in this topic until about 2-3 months ago when I volunteered to help organize an Illinois conference on the topic which took place last Friday, April 3, at the University of Illinois-Chicago’s Molecular Biology Auditorium, entitled “Digital Healthcare – Transforming the Management of Healthcare Information Systems”.
This event was organized by the Israel Consul for Economic Affairs of the Midwest, the America-Israel Chamber of Commerce-Chicago, and the University of Illinois-Chicago and featured 5 Israeli digital healthcare companies which had come to Chicago to attend the Healthcare Information and Management Systems Society (HIMMS) conference taking place at the McCormick Center starting today. Friday’s event also featured key digital healthcare players in Illinois’s healthcare infrastructure such as:

  • The CIO of Illinois Department of Healthcare and Family Services
  • Hospira, one of the largest hospital products companies
  • Northwestern University
  • University of Illinois
  • Health Care Service Corporation, the company which manages BlueCross/Blue Shield in 4 states, including Illinois
  • Consumer Health Advisers, an Illinois health information technology firm providing an electronic home to consumers engaging in the active management of their individual and family healthcare data.

So why all the ruckus about Digital Healthcare? What is Digital Healthcare? One definition is the computerization of healthcare information and records, transforming it into an electronic format. President Obama has made Digital Healthcare a central issue in his healthcare reformation plan. According to a CNNMoney.com article earlier this year (January 12th, 2009), the U.S. faces a major challenge in trying to digitalize healthcare information:

  • Only 8% of the 5,000 hospitals in the U.S., or 400 hospitals, share a common computerized record-keeping system, meaning that some 4,600 hospitals are using diverse different systems.
  • Only 17% of the 800,000 physicians in the U.S. are using some kind of common computerized system for healthcare records, meaning that 664,000 physicians are not using a common platform or are simply not computerized.

According to this same article, the cost to implement a fully computerized healthcare system in the U.S. is about $100 billion and would take some 10 years. The Obama government has put in $19 billion under the Health Information Technology for Economic and Clinical health Act to get this done in 5 years.
Numerous sources have pegged the actual cost of the U.S. Healthcare annual spend at over $2 trillion/year, up from $714 billion in 1990 and $253 billion in 1980. U.S Healthcare spending has been growing between 6-10%/year or 3-4 times the rate of inflation. If growth is unabated, it could be as high as $.3 trillion by 2017. This translates into a per capita spend in the U.S of $7,900/year today.
Industry data shows that 30%of U.S. healthcare spending is in hospital care with another 21% spent with physicians, for a total of 51%. This is precisely the area where digital healthcare would have the most impact. Drugs, which are oft cited as an expensive part of healthcare, only represent 10% of total U.S. healthcare expenditures.
Digitalizing healthcare, according to the article, could save some $200 to $300 billion/year, or some 10% of current costs.
Friday’s conference brought up a number of issues which policy-makers face in trying to implement a strategy and plan:

  • Consumer protection and access to their information
  • Wide state-to-state variation in information systems and data capture
  • Public health information
  • Disaster recovery
  • Redundancy, waste and errors

So where does this leave Illinois?
Illinois’s healthcare programs cover 2.4 million person out of the state’s population of 12.8 million (Illinois is the 5th largest state in the U.S. in terms of population) or about 19% of the total. The assumption is that private insurers cover the rest, but it was not clear on what percent of the Illinois population are not covered. We know, for instance, that there are 46 million people in the U.S. without access to healthcare insurance.
Of the 2.4 million person covered in Illinois programs, children represent the largest segment with about 1.4 million, with seniors representing another 160,000 person, and people with disabilities representing 240,00 persons. According to Illinois’ Dept of of Health’s CIO, the Medicaid Management Information System currently in place is over 30 years old. There is a Medical Electronic Data Interchange (MEDI) in place, and a state-wide Health Information Exchange is being initiated, as well as an updating of the state’s current Health Information Technology.
The 5 Israeli Digital Healthcare companies gave us a taste of where the future of digital healthcare is going as Israel has already implemented a national policy in this area. With only 7+ million people this is a lot easier than with the 301 million in the U.S. and 50 states. The presenting companies were:

All had different approaches to managing different issues of digital healthcare highlighting the fact that the management of this information has many different facets. There are certainly many more Israeli companies in this space; these are the ones that chose to come to Chicago. Some of these companies have already established a beachhead in the U.S., others are somewhat “virtual”, but all were looking to build customer relationships with hospitals, insurers, and other healthcare-related organizations in the U.S.
I must admit that if the future of digital healthcare is what we got a glimpse of last Friday with these Israeli companies, than it is very exciting. It is clear that the direction in the U.S. is to give the consumer much more information about his/her individual and family healthcare than we currently have access to. Let’s also hope that President Obama’s healthcare reform programs can be more effectively introduced than those that took place in the beginning of the Clinton era, which were basically shut down months after being initiated. The amazing progress of the internet during the last 16 years certainly creates an enabling tool for the implementation of digital healthcare plans and cost-savings!
Recent columns by Michael Rosen

Michael S. Rosen is president of Rosen Bioscience Management, a company that provides CEO services, including financing and business and corporate development to start-up and early-stage life science companies such as Renovar and Immune Cell Therapy. Rosen also is a founder and board member of the Illinois Biotechnology Industry Organization. He can be reached at rosenmichaels@aol.com.
This article previously appeared in MidwestBusiness.com, and was reprinted with its permission. The article is not meant to be a stock recommendation.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.