Online Extra: Power to the Patient

In building a medical Internet for all Americans, David Brailer wants the industry to evolve bottom up, with choices in consumers' hands

David J. Brailer is spearheading an initiative that could lead to the most far-reaching health-care reform in generations.

The national coordinator for health-care information technology in the Health & Human Services Dept., he is building the National Health Information Network, a medical Internet designed to hold medical records and health histories for all Americans.


  Brailer, a doctor and economist, helped hand out the first contracts on Oct. 6, but he says building the network signifies just the beginning (see BW, 10/21/05, "This Man Wants to Heal Health Care").

The idea: Once collected, all this information will enable consumers and insurers to impose unprecedented market discipline on the health-care industry. Brailer foresees wasteful, low-quality care being pushed from the marketplace and savings reaching up to 30% of all health spending. Most of the amount saved would be reinvested in new therapies and expanding coverage.

Brailer has been selling this vision around the country since taking his job last year. Doctors, especially from bigger practices and hospitals, are climbing on board. Congress is considering about a dozen bills to promote e-health. Brailer talked with BusinessWeek's E-Business editor, Tim Mullaney.

When I saw you speak, someone asked for your autograph. Was that the first time?

No. It's happened pretty systematically. My reaction to that is, first, embarrassment. Second, there's kind of a bubble going on with health IT, and someone has to be the face of it. I think it's become me.

Is e-health in a hype cycle like that of the late-1990s Internet? And have you fed it? Should people take seriously estimates from your office that the network could save $600 billion a year?

There is a hype cycle going on. I've tried to let some air out of it. The question is how we make sure it'll have a soft landing. Because there is a lot of reality here that's very good.

These [recent] economic studies are important, but not just in the numbers. The importance is in the method. We do have an obligation to collect and report the scientific evidence. The evidence does show numbers in that range, but I've always been cautious to make sure people understand that those are potentially realizable [and not guaranteed].

I've also been very conscious to tell people that it's not as if health-care costs will go down. As we take waste out, I think the question is: How do we get more buying power? I don't happen to believe that the nation's bill is going to start going down because of health IT.

When we talked the first time, you started to explain how the network would set off greater change than eliminating duplication and mistakes. How will that work?

The vision is that consumers are responsible for their health-care decisions. They have the information and the tools to decide about treatment choices, about choosing providers, about how they're going to consume health care and how they're going to prevent the need for catastrophic care.

That consumer is aided to some degree -- and I think this is a big open question -- by agents. An obvious candidate is their doctor, but I think other life-forms could emerge over time, entities designed to help them make good choices.

They'll act not unlike how agents act in other complex transactions, whether it's stock brokering or real estate. So it's an aided consumer market. I don't believe this is going to be like music retailing or other markets where it's completely free.

The idea from Republicans, particularly from health-care thinkers like Newt Gingrich, is that health savings accounts are a crucial part of the deal, because they make consumers pay for more of their care. Is that a good thing?

At a global level, consumers have to have financial consequences for their choices. Whether it's a health savings account or other financial means, it's an absolute precursor. Consumers don't have to have 100% exposure. Very small exposures, 5% variation in their costs based on their treatment choices, could be enough.

Some people will want 100%, but I think we can accomplish this with a much more limited exposure to the consumer, so we don't have health care become not only the determinant of your health but also a determinant of your wealth.

Lots of people think the health-care market you see will be hard on weak players, especially urban hospitals that don't have the capital to invest. What do you see?

At the far end, I would again say a kind of restructuring happens where there's a consumer who has some real authority in the market, and that means choices about treatments are being made in different ways than they've ever been made before. {There may be] whole new forms of therapy, and whole lines of therapy may not continue because consumers don't want them anymore.

Like what?

The capacity of hospitals may change, the structural capacity of the industry, changes in the number of CT scanners and the number of primary-care offices, because consumers change the fundamental utilization pattern of the industry. Or it could be drugs, or it could be other things, because they can make these choices.

If it gets that comprehensive, it's a kind of libertarian alternative to the Clinton health-care plan. Why is creating a freer market through IT better than having the government orchestrate competition?

I've never seen top-down restructuring of an industry. If you look even back to the 1970s, the restructuring of the airline industry happened because the government stepped back from it.

What IT has done in most industries is create a bottom-up restructuring. It pushes power and decision-making away from the central node of maybe Washington or another center of control.

A market can't come to be because it's required by the government. You can't have a bunch of regulators in a room trying to figure out how to unleash the creative forces of American ingenuity. It works the other way around. So this will play out over the course of 20 years. But the foundations of it have to be set.

I have a lot of respect for Senator Clinton. I understand that there are a lot of people who think a government agency should do this. I just disagree. I disagree even more now that I'm in the government.


I have eyes and ears.

Will doctors like these newly empowered patients you have in mind?

I think many doctors and many nurses feel trapped in today's system. And they can't do what they feel like they need or want to do to help consumers work through decisions. So I think they would come along. Maybe not every doctor, not every nurse, but many of them. Enough to begin to shape this.

You've talked about hospitals and insurers and everyone else using data, once the network is there, to reengineer even the culture of health care. What do you mean?

Ossified, sclerotic industries like health care that aren't subject to the kinds of organic and evolutionary changes that affect every other market in the U.S. develop a cultural [norm] of abnormality. They accept the status quo. In medicine, there's a culture of normalcy around medical errors. People see them, but they just think that's part of health care.

The ultimate key is transparency, because that's the only way to make people start to look at the same facts in a startlingly different way. They say: "My God, look at all the errors we're having! Gosh, look at all this excess utilization!"

What can keep the national health network from having the impact you think it will?

At this point, physicians using computers is just inevitable. The only question now is: Are we going to get it right or wrong? Is it to transform the industry around the patient? Or is it just going to become computers in doctors' offices? Either outcome is possible.

What would make it the latter?

Electronic paperweights, you mean? When physicians put in any kind of electronic health records that don't have the right privacy features, security features, critical prompts or reminders, or the ability to share data [among doctors and hospitals]. We want to give some support in the market to help doctors pick systems that do lead to better consumer welfare.

A lot of people are worried about privacy. Your strategy says the network will be built so there's no one central, hackable place where all records will be kept. Is that enough?

There might in the end be a need for new privacy laws or protections. Right now I think our infrastructures are on track to get us where we're going. There might be a government regulatory role there in the future.

One argument is that consumers, especially poor or sick consumers, don't have the desire or skills to exercise the market power you think they will. What do you do about that?

Yes, you could argue that not every consumer is going to want to do that. But I would argue that 20% of consumers really pushing back on what they want will create a huge shift in how the whole business of health care works. That's why it's so important that consumers get in the game.

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