The Tangled Web of Google Health – Online Medical Records Could Change Healthcare Receivables Strategies

Historians often point to the development of penicillin as a revolutionary change in modern medicine. But the World Wide Web, and the major international corporations that help users organize the way they navigate it, is on the cusp of another transformative moment in the evolution of healthcare. If you’ve picked up a newspaper — or more likely read one online — in the last month, you have probably encountered at least one story on Personal Health Records (PHRs) and the controversy surrounding plans by Google, Microsoft, Aetna, and other companies purportedly to give consumers more active control of their healthcare decisions.

On their face, the PHR systems in development by entities better known for computer operating systems and easier online searches for the latest tawdry news about former New York Governor Eliot Spitzer strive to address the new consumerism in healthcare head-on by returning control and access to individual health records directly to the consumer. Critics, however, argue that the very nature of PHRs wrests power away from consumers, and highlights the uncertain privacy protections associated with some programs. While the mainstream media has thoroughly explored the spectrum of risk attached to some PHRs, neither it nor industry-specific news sources (in healthcare or ARM) to date have examined PHRs from a healthcare receivables standpoint. In this context, PHRs still hold the potential for risk and reward on both the consumer and provider sides of the equation, but the terms of those pros and cons change when observed through an economic lens.

Background on PHRs

PHRs are individual health records that incorporate patient data from a variety of sources — doctor and hospital visits, insurance company information, and most notably the consumer himself — that are stored in a central repository, often online, and made accessible to the consumer and those parties he authorizes to retrieve it. The advantage of PHRs to consumers is that they allow health care providers in various locations to contribute to a patient’s medical history, while simultaneously allowing the consumer herself to view and add to that record. Whereas in the past records of treatment for the same patient at a hospital in San Francisco and a clinic in Buffalo would have had to be manually complied, routinely by facsimile if at all, PHRs afford providers in both cities the opportunity to view a complete medical history, almost in real time.

Critics of PHRs note, however, that third-party hosts of consumer health information do not equally afford privacy assurances and many such systems are not subject to the privacy and security rules of the Health Insurance Portability and Accountability Act (HIPAA), enacted by Congress in 1996. As the federal law that provides the foundation for governing the security of private medical information, HIPAA regulates “covered entities” under the law, not health records themselves. In general, covered entities include health insurers, healthcare providers, and medical clearinghouses. Collection agencies that work delinquent medical accounts are also subject to HIPAA regulations. But HIPAA provisions do not attach to a patient’s medical record, and vendors like Google or Microsoft Corporation, both of which have launched major PHR pilot programs in the last six months, are not bound by HIPAA statutes. As a result, opponents of PHRs, including Texas-based Patient Privacy Rights, and The World Privacy Forum (which recently commissioned a report on PHRs), contend that in the absence of HIPAA safeguards, commercial PHR providers could be vulnerable to data security breaches that would compromise consumers’ personal medical information without any federal enforcement mechanism for the privacy infringement.

A recent survey of healthcare IT managers conducted by Cisco Systems showed that data security was among the managers’ highest priorities, as reported by The Wall Street Journal. Further data revealed that of those surveyed, almost 25 percent had reported a security breach in the last year. Complicating this information is the concern among medical IT professionals that internal breaches, cited by 51 percent of managers, are a greater risk than external threats to private data, cited by 12 percent. To wit (although the circumstances might be slightly extraordinary), the Los Angeles Times said last week that UCLA Medical Center will fire 13 (non-M.D.) employees, and discipline 12 others (several of whom are doctors) for snooping into the computerized health records of troubled pop star Britney Spears, who was admitted to UCLA MC twice in the month of January for psychiatric evaluations.

Others have argued that the PHR systems, many promoted as cost free to consumers, must be somehow financially underwritten; Google and Microsoft are, after all, for profit corporations. The simple solution would be to sell certain data points from consumers’ PHRs for online marketing purposes. For example, under Microsoft’s HealthVault model, topical advertisements will appear next to a patient’s search results inside HealthVault. Thus, a patient seeking information on rheumatoid arthritis symptoms might see ads pop up for Humira, an Abbot Laboratories treatment for RA. Some detractors suggest that PHR vendors might eventually leak personally identifiable patient information to parties that would normally not be privy to it, but are more than willing to pay for the privilege to access it. BusinessWeek recently noted that the market for web-based health search advertising is estimated at $500 million to $1 billion annually. Finally, the most adamant skeptics caution that storing one’s medical records online without HIPAA protection opens the door for employers and insurers to deny applications for work or medical coverage based on health information that outside of the PHR system would have been kept private.

Recent Commercial PHR Models

On February 21, Google announced a partnership with Cleveland Clinic to launch Google Health. The pilot program, comprised of between 1,500 and 10,000 Cleveland Clinic patient volunteers, is slated to run for six to eight weeks. With nearly 40,000 employees, the nonprofit Clinic system is the largest employer in Cleveland, and has developed international partnerships in countries such as Austria, Egypt, and the United Arab Emirates. Cleveland Clinic already maintains electronic records for all of its patients, and more than 120,000 patients have enrolled in a program called eCleveland Clinic MyChart which gives patients access to their health data. Although Google Health has no current plans to sell advertising on the PHR system, it has not ruled out the practice in the future.

Last October, Microsoft Corp. introduced a beta version of its PHR system, Microsoft HealthVault, in partnership with the Mayo Clinic. Microsoft has organized a group of medical device companies (like those that manufacture blood pressure monitors) and service providers (mostly software firms) that are compatible with HealthVault. If a consumer utilizes one or more of these products or services, the patient’s medical data can be automatically added to an online PHR in HealthVault. All data outside the compatible list must be manually uploaded by the consumer. In many respects, HealthVault shares numerous characteristics with Google Health. A significant divergence for HealthVault, however, will be the placement of advertisements next to consumers’ search results.

Insurance giant Aetna revealed plans last week to bring its SmartSource free of charge to the company’s 16.8 million insured customers. The new program, similar to those of Google and Microsoft, has been put through a trial run by Aetna’s 35,000 employees. Two key factors set SmartSource apart from other commercial PHR vendors. First, Aetna is a health insurer, so much of the internal focus of the PHR system design is heavily industry-focused, pitched toward healthcare expenditures and billable medical events. The company claims that information contained in an insured patient’s PHR will not be used “to raise or lower premiums or reject membership applications,” according to The New York Times. Second, as an insurance company, Aetna is a covered entity under HIPAA; thus, consumer data housed in SmartSource is protected by the privacy and security arms of federal law, unlike the PHR systems to be offered by Microsoft and Google.

In addition to these recent and highly publicized efforts, hundreds of other smaller scale PHRs are available to consumers, many offered by individual hospitals or clinics as a component of online recordkeeping systems that sometimes include electronic patient billing, along with appointment or prescription refill reminders.

PHRs and Healthcare Receivables

Clearly, PHRs hold the potential to significantly impact the hospital industry, the ARM industry, and physicians — all on the receivables end of healthcare expenditures. And as is true for vendors like Google Health or enrollees in Aetna’s SmartSource, not all of the receivables effects will be positive.

The following list, although not exhaustive, attempts to outline several possible implications of PHRs on healthcare receivables that have been for the most part overlooked in the mainstream debates on the topic:

1. Partnerships with commercial PHRs could cushion the shock of technology investments, especially for physicians in small practice groups. A 2007 New York Times article reported that approximately “one-fourth of primary-care doctors use electronic health records, but only five percent of them are in offices with five doctors or fewer—where about 50 percent of all doctors practice.” Why? The story notes the experience of one small physician group in Philadelphia that spent $140,000 on hardware and installation, and projects annual technology costs upward of $50,000. The office now operates with three fewer full time employees and the doctors are able to quickly obtain information for hospitals, insurance companies, and patients. Were small physician groups able to defray the cost of some technology investments by collaborating with Microsoft or Google (who would absorb server expenditures, for example), the benefits of electronic patient records might begin to pay dividends that are measurable in dollar amounts.

2. Large hospitals or hospital systems, like the Cleveland Clinic, could partner with commercial PHRs to bring together their systems.

Decentralized billing procedures are the cause of major inefficiencies at many U.S. hospitals. Imagine a hospital system where the urgent care department takes patient payments and insurance in various forms, operates a pharmacy where those same patients will pay for prescriptions, and also employs a handful of primary care doctors who will schedule follow-up visits (and take additional payments) after treatment in urgent care. Paper (in the form of money, credit card receipts, drug prescriptions, and patient medical records) is the bane of existence for many hospitals. Medical errors, financial mistakes, and a costly overreliance on superfluous labor are all symptoms of decentralization.

Were a hospital to pair its ventures in centralized billing with the online platform of a commercial PHR, the hospital could market the broad-based program to consumers, reduce full time employees, and likely improve recoveries on the back end of the revenue cycle. When patients can materially appreciate the transparency of their hospital bill, and see it integrated with their own medical records, greater ownership — of one’s health and one’s share of the responsibility to pay for it –- are likely to follow.

Furthermore, even though the majority of U.S. households now pay at least one monthly bill online, disproportionately few hospitals and physician groups accept online payments. As a hypothesis, consider a restaurant that serves only split pea soup, but you don’t like split pea, or soup in general. In that context, you are unlikely to patronize that business. But if that restaurant served 4 kinds of soup, in addition to sandwiches, salads, desserts, and a variety of beverages, it is logical to assume that you could find something to eat or drink there. The analogy is apropos of hospital payment options; the more choices a hospital gives consumers for how they can pay their bills, the more likely they are to support the business in the first place. Once care has been delivered, multiple payment options mean that receivables are converted to cash in greater amounts and in less time.

3. In recent years, consumers have become increasingly responsible for footing the bill for their own healthcare, and they have become more mobile, shifting from one insurer to another and from one doctor, hospital, or emergency room to another. That’s meant a huge increase in paperwork, and in costs associated with staff filling out and transmitting forms. Online, portable PHRs would decrease the need and associated costs for service providers and patients that attend the “cafeteria style” aspects of the new consumerism in healthcare.

4. A set of analytics to determine candidates for charity care assistance could be built into PHRs, granting increased compliance control with the new IRS Form 990 for hospitals. This would help better identify patients in need of financial assistance before account delinquencies ever come into play.

5. The healthcare debt buying market, still largely in its infancy but poised to expand appreciably in coming years, could reasonably benefit from PHRs. One of the key components often missing from bad debt portfolios is the media that establishes legal chain of title. The absence of such media significantly devalues portfolios for sale, and a centralized, electronic warehouse of this information would boost the potential for hospitals (and debt buyers) to earn revenue from the sale and purchase of healthcare debt portfolios.

6. The federal judiciary has yet to take up the issue of patient privacy rights associated with commercial PHRs. In the absence of any legal precedent, healthcare creditors and their collection agency partners may perhaps discover new inroads—and increased leverage—when patients with the means to do so are reluctant to meet their financial obligations for healthcare debt. In contrast to an antiquated and decentralized system of paper bills and records, hospitals and collection agencies will more easily be able to substantiate their claims for valid debts as a result of PHRs. Furthermore, although relatively few disputes over unpaid medical bills are handled via the court system, collection law firms that do take such cases may well be able to subpoena records for a patient’s medical transaction history from a single source: a commercial PHR system.

Conclusion

The expansion of PHRs in the contemporary healthcare landscape is a foregone conclusion. Patients, healthcare providers, collection agencies, government regulators, and consumer advocates should cease to ask “if” these systems will affect the U.S. healthcare system and begin at once to ask “how” they will do so. More importantly, stakeholders at all levels—and despite mainstream media coverage to the contrary, directors of hospital billing and collections, debt buyers, and collection agencies that specialize in medical accounts are not the least among the interested parties—should endeavor to participate actively in the process of defining the shape of commercial PHRs as they develop to help create electronic record systems that produce the greatest good, both in terms of corporal and financial health.

As an analyst at Kaulkin Media, Michael conducts custom research projects and writes publications focusing on the healthcare sector of the accounts receivable management industry. Contact Michael by email or at 240-499-3836. Be sure to check out his blog in the insideARM blog center.