How Kaiser bet $4 billion on electronic health records -- and won

Kaiser Permanente CIO Philip Fasano explains how electronic records have paid off and the health care giant's embrace of mobile technology

In July 1907, the first great breakthrough in medical IT took place at the Mayo Clinic in Rochester, Minn.: the paper medical record, dropped into a paper folder and stored in a file cabinet. Until then, information on patients was kept in a ledger that recorded all of a day's patient visits, one after the other. Different departments kept separate ledgers, making it extremely difficult to track down patient information in a timely manner.

But 106 years later, the paper record remains the state of the practice in medicine. In 2009, only 9 percent of America's hospitals were using even a basic form of electronic health records.

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I came across that anecdote in a book called "Transforming Health Care: The Financial Impact of Technology, Electronic Tools, and Data Mining," written by Philip Fasano, CIO of Kaiser Permanente, a health care giant with 9 million members. Fasano has led Kaiser's 10-year effort to build KP HealthConnect, an electronic health records (EHR) system that stretches across every department and every Kaiser patient. It is an impressive book and worth reading as the country struggles to implement health care reform. After reading it, I had the chance to interview Fasano. Here's a slightly condensed and edited version of our conversation.

InfoWorld: Kaiser's EHR systems become fully operational in 2010. What can Kaiser do with it now that wouldn't be possible without it?

Philip Fasano: We have every piece of information about that patient available to us to draw upon. The primary care physician has all the information about the patient, the specialists have all the information about the patient, and anyone they encounter in any of our hospitals has it as well. He or she can see the patient's health history, diagnosis by other providers, lab results, and prescriptions are all there. X-rays are stored digitally and are there. That information is also available if a patient goes to the ER.

InfoWorld: How much did it cost to build?

Fasano: About $4 billion, a substantial amount of money, but we have 9 million members [so it costs about $444 per member]. You have to invest continuously in the infrastructure over its lifetime. People have to recognize that these systems are life-critical once implemented, so you have to invest in the infrastructure to be sure they are always on.

InfoWorld: What would it cost nationally to do what Kaiser did?

Fasano: The health care reform act states that "meaningful use of technology" by providers nationally would be $11 billion. At the time, I said, "That's a nice down payment." It will cost tens of billions of dollars to implement this.

InfoWorld: Kaiser abandoned an earlier system in 2004. What went wrong?

Fasano: We were building in a single region with the intention of expanding it later. That was a mistake. We were also building the system from the ground up with a partner. But we found that we were coping with decreased productivity and frustrating system outages. Former CEO George Halvorson then made a decision to write it off; it cost us $400 million.

(Editor's note: Although Fasano didn't mention it by name, the partner was IBM, according to an article in the Journal of Usability Studies, which said clinicians were taking an extra 30 to 75 minutes per day to do their work because there were too many steps to complete simple tasks. The new system was built with Epic Systems, a specialist in electronic health records that is now one of the top two EHR vendors, along with Cerner.)

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