"I got a full dose of what's wrong with not having digital records," Tauzin said.

Tauzin said that while some of the hospitals he visited had some digital records, none were able to share data with one another. For his part, Tauzin said it would have been good enough, if there had been some sort of Web-based system through which he could share a digital health record with his doctors.

"You don't necessarily need to have a connection between two hospitals, as long as a patient can make them available to the next doctor," he said. "We don't need to reinvent the wheel."

Actor Dennis Quaid, who spoke at this year's health technology industry trade show, is using personal experience to argue for better digital record keeping and accountability in medical practices. Quaid's twins nearly died as babies after being given a drug at 1,000 times the recommended dose for newborns.

"It's time for the medical industry to do what the airline industry figured out about technology a long time ago," Quaid said, according to a CRN account of his speech. Just as commercial airlines have a "black box" that records mistakes, there needs to be a technological way to track the life-and-death decision making in medicine, he suggested.

"There is a staggering number of medical errors each year that go unnoticed by the general public. One hundred thousand people die every year because of medical errors," Quaid said.

For proof that a digital-records system can reduce errors, Kaiser's Wiesenthal points to the fact that his company saw its malpractice claims drop significantly after it digitized its practice in Colorado. Actual payouts went down by 50 percent within 18 months.

There were two reasons for the drop: care improved, and everything is documented and time-stamped. Being self-insured for malpractice also represented a cost savings for Kaiser.

There is also hope that electronic health records could cut unnecessary costs from things like duplicative tests. "You go to a doctor, and they run a test. You go to the hospital, and they run the exact same test," said Halamka of CareGroup and the HITSP, who estimates that 15 percent of laboratory tests are redundant or unnecessary.

But there's no escaping the importance of changing policy along with technology. Since most hospitals aren't structured like Kaiser, many medical experts believe that the move to digital records needs to be part of a broader shift that adds financial incentives for a healthy lifestyle.

"If individuals are actually healthy, if they are actually controlling a chronic disease and don't need to utilize the industry, it is a cheaper system," said David Merritt, a project director at Newt Gingrich's Center for Health Transformation. "We need to find ways to incent health and promote health."

Systemic change is imperative, according to Sean Hogan, vice president of health care delivery systems at IBM. While Big Blue sees opportunity in selling technology and services to health care companies, Hogan said that as a large employer, IBM is also experiencing the inefficiency that characterizes today's industry.

"We certainly have seen that disparity of cost and effectiveness," Hogan said. "It's like an inverse correlation between what we put in and get out."

Hogan and others stress that the key is equipping doctors and hospitals with effective tools for both maintaining and sharing medical data. But it's when medical records move between different parties that consumer privacy and security concerns are highest.

The privacy risks
"The challenges are more on the policy side than they are on a technology side," Halamka said. "It's who gets to see what? When do you get to see it? What is the patient consent?"

There is a federal law--the Health Insurance Portability and Accountability Act of 1996 (HIPAA)--that issues some regulations, but many states also have their own privacy rules. The language of the stimulus bill adds some additional protections, but valid concerns remain, said Deven McGraw, the director of the Health Privacy Project at the Center for Democracy and Technology.

One of the lingering issues is the legal use of digital health records by insurance companies to deny membership or hike prices beyond affordability for those with existing medical conditions. While such issues also exist in the paper world, digital access also makes it easier for insurers to find reasons to deny coverage, McGraw said. "You can call it a double-edge sword."

The Kaiser example again shows the promise. In its largely self-contained world (under most circumstances, Kaiser patients have to see Kaiser doctors), doctors have instant access to any patient's medical records.

Digital records have meant lots of changes, down to the way doctors prepare to see patients, Kaiser's Wiesenthal said.

For example, Wiesenthal, like many doctors, used to prepare to see a patient by quickly skimming through a patient's chart on his way into an exam room. These days, Wiesenthal said he does all his prep work in the morning, before he begins seeing patients.

That's a big shift, but it also allows him to get a head start on providing care, such as asking for additional tests or asking a technician to get more data before the patient enters the exam room.

Health care chains are one thing, but any digitization effort will have to reach into the nooks and crannies of a vast medical system. A good chunk of the nation's health records are stored in doctor's offices.

"Generally, few, if any, industries in the country need modernization more than health care," said Merritt of the Center for Health Transformation. "Go into virtually any physician's office, and you will see tech from the 1960s, which is mostly a clipboard, a pen, and manila envelopes."

The stimulus bill provides physicians with up to $44,000 to buy a system for digitizing their practice, a move that should help remove one big hurdle to going digital--that is, if someone is available to deal with it.

"It doesn't work to put servers in doctors' offices," said CareGroup's Halamka, who expects a boon in hosted services that doctors can use to enter and store digital records online. "The doctor is not only going to be your primary health care provider, he's also going to be an Oracle administrator? That's not going to work."

Not surprisingly, there is a range of well-known companies already selling products meant to digitize health care. In addition to Epic Systems, which created the software that powers Kaiser's system, there are large medical-software makers such as Allscripts, Cerner, McKesson, NextGen Healthcare Information Systems, and General Electric's Centricity EMR. Hardware makers such as IBM, Dell, and EMC, meanwhile, are pushing their wares for businesses.

In addition to the competition to outfit hospitals and doctors with electronic records, a separate battle between Google and Microsoft is brewing over so-called personal health records--digital files kept by the individual and containing things like drug records, test results, and other medical information.

Credit: Medsphere Systems

At the recent Healthcare Information and Management Systems
Society trade show in Chicago, start-up Medsphere tried to
play up its populist open-source appeal by parking a
Volkswagen van near the luxurious trailer set up to demo
high-end health management software from Cerner.

While much of the attention (and money) is likely to go to the big companies, there are plenty of upstarts as well. One is Medsphere Systems. Although the company dates back only to 2002, its technology is actually quite old. Medsphere bases its product on Vista, the freely available source code the U.S. Veterans Administration uses to power its systemwide digital health records.

Critics say the open-source Vista code itself is dated and lacking, given that it was designed only for the VA, but Medsphere Chief Medical Officer Edmund Billings says the system is well-tested and can reduce the cost of digitizing hospitals.

"The Vista system is very deployable," Billings said. He noted one customer, Midland Memorial Hospital, that was facing a $20 million cost to upgrade a system it had in place from McKesson. Medsphere helped put in a Vista-based system for $6 million. They took some of the savings and bought laptops, remodeled nursing stations, and paid to train medical staff to use the system.

"They used the significant margin they saved, and they applied some of it to driving adoption," Billings said.

Billings has won a fan in Sen. John Rockefeller (D-W.V.), who recently introduced legislation that would mandate the use of open-source technology. But the big software makers are also pushing for guidelines that would encourage their adoption.

Although the stimulus bill has been passed, wrangling continues over which systems will qualify, as well as how to define one of the bill's key terms. Hospitals and doctors are to be paid not just for installing the systems, but also for creating "meaningful use."

"Implementing or automating technology just for the sake of getting automated is obviously not the end game," said Aurelia Boyer, a former practicing nurse who now serves as chief information officer for NewYork-Presbyterian Hospital. Her hospital is not only digitizing its own records, but also making those records available to referring physicians and patients as part of a broad digital push.

"Here is an opportunity to put our patients first," Boyer added, "empower our patients in a way that technology has done for other industries already."