I’m often asked why healthcare has been slow to automate its processes compared to other industries such as the airlines, shipping/logistics, or the financial services industry.

Many clinicians say that healthcare is different.

I’m going to be a bit controversial in this post and agree that healthcare has unique challenges that make it more difficult to automate than other industries.

Here’s an inventory of the issues

1.  Flow of funds – Hospitals and professionals are seldom paid by their customer. Payment usually comes from an intermediary such as the government or insurance payer. Thus, healthcare IT resources are focused on back office systems that facilitate communications between providers and payers rather than innovative retail workflows such as those found at the Apple Store.

2. Hiring and training the workforce – Important members of the workforce, the physicians delivering care, are seldom employed by the hospital. This is rare if not non-existent in any other industry. It’s as if Toyota built a factory that anyone can use but does not hire or train the workers who build cars. If someone wanted to create a Toyota with wings and an outboard motor, they would have the freedom to do it.

3. Negotiating Price – Reimbursement no longer is based on a price schedule hospitals and professionals can control. It is based on a prospective payment model such as DRGs that someone else designs and dictates. Where else in the US do prices get dictated to a firm?

4. Establishing referral relationships – We cannot market services to those who control our patient flow due to Stark anti-kickback regulations. In other industries, you can build relationships, offer special incentives, and arrange mutually beneficial deals to develop your referral business. In healthcare, it’s illegal even when unilaterally funding an action would make things easier for both parties and the patient.

5. Standardizing the product – In most industries, the product or service can be standardized to improve efficiency and quality. In healthcare, every person is chemically, structurally, and emotionally unique.   What works for one person may or may not work for another. In this environment, it is difficult to standardize and personalize care in parallel.

6. Choosing the customer – In most other industries, you can choose with whom you do business. Not so in healthcare. If you have an emergency department, you must provide treatment even if the customer has no means to pay.

7. Compliance – Data flows in healthcare in increasingly regulated. What other business, including the IRS, is required to produce, on-demand, a three year look back of everyone who accessed your information within their firm.

As I noted in speech about the Burden of Compliance “the more complex a health system becomes, the more difficult it becomes to find any system design that has a higher fitness.”

We are successfully automating healthcare workflows, motivated by HITECH incentives and the requirements of healthcare reform. The seven characteristics above have required vendors to create full featured software applications and organizations to create complex rollout/funding models that take time. By 2015 we will be there and I will be proud of all we’ve accomplished, given that the constraints on the healthcare industry are truly different than industries which have been earlier adopters of technology.

According to Kevin Pho, MD, if you’re a physician or hospital that relies on Medicare payments, grim times are ahead. I agree, as I believe it will be even worse than the scheduled 29% payment cut that’s scheduled to go into effect in 2013. Bottom line – It’s a terrible deal for health care providers.

Under the contentious debt ceiling agreement, significant cuts in Medicare dollars will be made. But beneficiaries are mostly protected. Instead, it’s the physicians and hospitals who will be affected the most.

According to Politico,

“Under terms of the hurried deal, the 12-member joint committee would be charged with crafting proposals that trim at least $1.2 trillion in federal spending over the next decade. Those savings could be found in a number of programs, including Medicare and especially Medicaid, which the White House has signaled it would be open to.”

If the panel can’t come up with enough savings, automatic cuts would go into effect. Medicaid, Social Security and veterans’ benefits would be protected. But providers could see a 2 percent cut in Medicare reimbursement.”

Worse, if the Congressional super committee cannot come to an agreement, a “trigger” will automatically make draconian Medicare cuts. And, yes, those cuts will specifically target provider payments.

The trigger is meant to be unappealing to both political parties, in order to incentivize them to come to a deal. For conservatives, that means deep cuts in military spending.

But for Democrats, the cut in Medicare primarily targets providers and hospitals, and leaves beneficiaries mostly untouched. That doesn’t seem too unappealing for progressives, as most believe physicians are overpaid anyways. That’s why some are saying Democrats may even prefer the trigger to a deal.

Furthermore, Politico also notes that the decision whether to “trigger” deep provider Medicare payments come at the same time as extending the doc fix.

To put it in plain terms, I wouldn’t be surprised to see deep cuts in provider and hospital Medicare payments, on top of the previously scheduled 29% cut sans doc fix. We’re talking a combined 30-40% cut or more. So, if Medicare patients are having a hard time finding a doctor now, it’s nothing compared to the shortages that will come soon.

Recently, Michael Zhuang wrote that the physician lobby was suspiciously quiet during the debt ceiling debate:

“Compared to lawyers, the insurance industry, and even seniors, time and time again physicians have failed to make their voices heard. No wonder their interests get sacrificed in every political turn of events.”

Now that we know the outcome, and the horrific impact on Medicare providers, it’s clear that we’ve paid a steep price for our silence.