David J. Brailer never really sought the spotlight. Yet here he is in Harrisburg, Pa., on a hot July day in a Hilton (HLT ) ballroom in front of 500 physicians. The 46-year-old doctor is the chief evangelist for President George W. Bush's effort to remake the $1.9 trillion U.S. health-care business by using information technology to save money and lives. In town to persuade physicians to join his cause, Brailer starts off with what's wrong with the current system. Medical errors, which cause as many as 195,000 deaths a year, are "an unmitigated epidemic," he says. Americans spend 16% of gross domestic product on health care, 60% more than Europeans, for mediocre results. And health insurance costs have resumed double-digit price surges after slowing in the 1990s. "Everyone knows someone who's had a bad experience in health care," Brailer says.
Then he switches gears. With the deft delivery of the software-company CEO he once was, Brailer begins to spin a vision of health care transformed. Technology, he says, can help doctors and hospitals invent new ways to care for patients that are safer, more effective, and cheaper. Health care can be reengineered just like U.S. manufacturing was. Thousands of lives, billions of dollars can be saved. He tells the docs it's up to them: "This is a groundswell that has a chance because it's not being done by just one of us. It's being done by all of us together."
When he finishes, the applause is warm and sustained. A parade of questioners ends with a brown-haired woman, pushing a fat notebook toward him. "Can I have your autograph?"
For years, U.S. health care has fostered something approaching a consensus of futility. Ask a doctor, patient, or insurer about the current system, and they'll rattle off a long list of complaints. The doctors and medical technology that go into American medicine may be the best in the world, but the care that comes out the other side is beset by woeful inefficiency, dizzying bureaucracy, and enough mistakes to make medical error the third-leading cause of death, behind heart disease and cancer. Reform efforts resemble the Middle East peace process: There's always a plan to make things better, but years later the fighting is still going on.
OBSCURE POST, SWEEPING TASK
Now Brailer is on a nationwide tour to attempt the most far-reaching reform in generations. He has taken his message to 40 states since Bush hired him in May, 2004, putting his issue and himself on the map. His post is an obscure one, national coordinator for Health Information Technology in the Health & Human Services Dept. Yet his task is sweeping: Give every American an electronic record of their health care by 2014, and link all the records into one giant medical Internet, called the National Health Information Network Inc. (NHIN). Brailer and his crew will build the network's backbone and set the standards for swapping data. Doctors and hospitals will have to pay for the computers, software, and other gear to connect to the network, a total tab estimated at up to $150 billion over five years.
People have talked for years about what would happen if hospitals used more computers. With Brailer's plan, the focus is shifting to what happens when those computers are hooked together. Supporters say the network should save tens of thousands of lives by speeding up the flow of information -- and innovation -- through the industry. Doctors could easily see what drugs you're taking and not give you another that could cause a dangerous interaction. Researchers would be able to sift vast amounts of patient data to accelerate adoption of promising new treatments or spot dangerous drugs faster. "It has the potential to be the biggest advance in medicine since scientific method," says Brent C. James, executive director of the Institute for Healthcare Delivery Research in Salt Lake City.
Brailer could be dismissed as just another dreamer, except that his construction project is under way. His office gave out the first NHIN contracts on Oct. 6. Health & Human Services Secretary Michael O. Leavitt is expected to award contracts by Oct. 25 for building six networks linking communities of doctors and hospitals. Those will be the prototypes for the web of regional and specialty-interest networks the national network will tie together.
His campaign also has broad bipartisan support, a rarity in Washington these days. About a dozen bills promoting e-health initiatives are before Congress, including a joint effort by Senate GOP leader Bill Frist of Tennessee and Democratic Senator Hillary Clinton of New York. One key reason: Experts believe tech can easily shave $120 billion a year from health-care costs by eliminating duplicate tests, shortening hospitals stays, and improving care for chronically ill patients. Savings estimates run as high as $600 billion a year, or nearly the gross state product of Florida. There's even talk the savings could help bail out Medicare, which is expected to see its hospital insurance trust fund run dry by 2020. "It's a key part of saving Medicare," says Leavitt.
Still, the challenges to realizing Brailer's vision are immense. He's essentially trying to impose the kind of total quality management approach used by General Electric Co. (GE ) and Toyota Motor Corp. (TM ) on one of the most chaotic and complex sectors of the economy. Yet he lacks the control or resources of a CEO.
Paying for the network will be the first major hurdle. Many cash-strapped hospitals and small-practice doctors have no interest in footing the bill for a medical Internet. One key reason is the mismatch between costs and savings: While health-care providers bear the cost of tech investments, Medicare and private insurers reap almost all the savings. Pamela R. Kushner, a family medicine physician in Long Beach, Calif., says the estimated expense to upgrade her three-doctor office is $130,000. "I'm supposed to take the burn for the initial outlay, the installation, and the transition? No, thank you," Kushner says.
Patients may stop Brailer in his tracks, too. The idea of digitizing personal medical files and networking them has privacy advocates skittish. While the NHIN is being designed with the latest safeguards, hackers have shown the ability to penetrate almost every corner of the digital world. Of the 174 consumers who filed public comments with HHS about Brailer's network, 85% expressed concerns over a loss of privacy.
Patients may also object to the network's potential to restrict their health-care choices and raise their costs. One long-term NHIN goal is to identify treatments that work best and get all doctors to use them. That could mean physicians won't be able to give patients the care they would choose first. Another goal is for the network to promote Health Savings Accounts, which let workers put aside dollars tax-free for health care if they accept high-deductible insurance. HSAs are supposed to give consumers the financial incentive to demand better-quality care. But HSAs make workers pay a higher percentage of their health expenses -- and critics fear they'll make poor patients skimp on basic care. Americans could end up asking the same question Brailer faced when BusinessWeek sat in on his private briefing of top congressional staffers in August: "Is this managed care in disguise?"
One reason the health-care network is racing forward anyway is the impact Brailer has on doctors and politicians in speeches like the one in Harrisburg. He's slick and funny, joking that he came because the state medical society was holding his mother hostage. The audience ate it up -- especially Grace Brailer, an 80-year-old retired nurse who was in the crowd. His brutal travel pace impresses people: In October alone, he's due to hit 11 states.
But for Brailer, the effort isn't just professional. Something that he leaves out of the smooth speeches pushes him to live on planes and work 3,000 miles from his San Francisco home. It's the memory of his father. Ambrose Brailer died after a drug complication just like those David's network is supposed to prevent.
Four years ago the issues this coolly intellectual doctor had studied since med school became cruelly personal. Ambrose had had Parkinson's for years. Then in 2001, the 77-year-old took enough heart medication and blood thinner to cause internal bleeding and heart rhythm irregularities. The overdoses were detected only after he was admitted to the hospital.
The end was not kind. In his last days, Ambrose believed purple people were talking to him, David's brother, Dan, says. David believes his dad lost three or four years, time that he wished Ambrose had spent with David's own son, born just a few months before. Brailer would not name the doctors involved, but he's still upset. "What bothered me most was the attitude: 'He's an old guy, he has Parkinson's, things happen,"' Brailer says, sitting in his Capitol Hill office. In an e-mail later, he adds: "It did cause a major reevaluation of what I really believed in and what I was doing about it."
What Brailer believes in is an even more capitalistic version of American medicine than today's system. He says what medicine needs most isn't more government aid or, heaven forbid, liberals' dream of a single-payer system like Canada's or Britain's.
Instead, he says the current health-care system can be saved if all the participants have the reliable, timely information they need to make wise choices. This will come, he believes, from the data generated and dissected by his network. Insurers will be able to pay doctors and hospitals for performance, rewarding quality care and slashing complications. Consumers will have quantifiable ways to judge their doctors and shift business to the best performers. Since they'll be paying more of the bill, they'll also seek out good prices. And hospitals and doctors will see how they stack up for the first time. Then they'll either mend their ways or close their doors. "The network is kind of a Trojan horse," Brailer says. "There's a restructuring that happens when the consumer has real authority. Whole lines of therapy may disappear because people don't want them any more."
This approach is an easy sell to U.S. executives. A bevy of CEOs have lined up with Brailer to promote e-health, including PepsiCo's (PEP ) Steven S. Reinemund, FedEx's (FDX ) Frederick W. Smith, and Verizon Communications' (VZ ) Ivan G. Seidenberg. "This is the No. 1 issue for many CEOs," says John Chambers, CEO of networking giant Cisco Systems Inc. (CSCO ) "Health-care costs are going up so rapidly. Society can't afford it. You've seen a change in philosophy. The country has the political will to support this."
While health-care providers have mixed feelings, some of the top hospitals and large-practice docs are joining the effort. Health-care providers have started more than 100 info-sharing networks around the country, though they're not standardized and don't connect to each other. Among the latest: a plan announced on Oct. 3 to connect 20 San Diego hospitals, 375 pharmacies, and 7,000 doctors. "What Brailer's proposing is very expensive in the short run, but will undoubtedly have major savings in the long run," says Stephen H. Carson, medical director of the San Diego County Medical Society.
But employees may be harder to convince. The skepticism goes beyond the issues they'll confront if Brailer's system works. Some labor leaders, including Service Employees International Union President Andrew L. Stern, doubt Brailer's system will work at all. Stern says most workers lack the skills -- and the desire -- to analyze data and make decisions about costs and quality. He also predicts employers will keep the savings. "One would think they would try to prove a theory this radical in a single state, as opposed to changing the whole health-care system based on ideology," says Stern.
Brailer has spent all his life preparing for this moment. The path began in Kingwood, a coal-mining town of 2,900 in northeastern West Virginia. Grace, opinionated and outgoing, worked as a surgical nurse in the local hospital, where she still sits on the board of directors. The low-key Ambrose was a coal miner and later a maintenance supervisor. David is the third of four kids.
From an early age, he attracted mentors the way Elvis Presley drew girls, says his brother Dan. The most important was David Z. Morgan, a dean at West Virginia University School of Medicine in Morgantown, where Brailer studied medicine. "DZ" was from Kingwood, too, and had gone to high school with David's father. Morgan, now 80, says he used long chats with Brailer to press his view that doctors couldn't serve patients unless they communicated better. Morgan pushed him toward bigger things: He helped his protégé become the first student trustee of the American Medical Assn., then recommended him for a fellowship at the University of Pennsylvania's medical school. "When David got exposed to DZ, he got excited about helping more people than an individual doctor can," says med school classmate Dan Martich.
As Brailer was finishing his medical training at Penn, he also earned a PhD in economics at The Wharton School. He was shocked by the divide between the two fields. In his economics studies, he read up on Total Quality Management, imbibing the teachings of quality guru W. Edwards Deming, who argued that careful planning and coherent organization would let companies make complex products with virtually zero defects. Then he would go back to the hospital and see some interns make mistake after mistake. "It was horrible quality," he says. "But families would still come up and thank us for doing so well."
The economist in Brailer came to see medicine as driven by incentives that bred complacency, if not greed. Insurers, especially Medicare, subsidized sloppiness by paying for good and bad care alike: In fact, since Medicare paid to treat complications from mistakes, it actually paid more for bad care. Hospitals were no better. Brailer's 1992 economics dissertation was about hospitals deliberately letting quality slide when they were crowded to protect profit margins. "Doctors don't get paid to do the right thing," he says. "They get punished."
But when he decided to do something about it, Brailer surprised his professors. Instead of staying in academia, he started a company. To write his thesis, Brailer had invented ways to measure health-care quality. He turned those into CareScience Inc. (QVDX ), a Philadelphia software firm that helped hospitals improve efficiency and prevent errors. The company went public in 2000, but sales stagnated at less than $20 million. The board decided to sell, over Brailer's objections. Still, it made him fairly rich -- his stock was worth $5 million when he left in 2003.
As CareScience began to seek a buyer, Brailer had a Willie Sutton-esque epiphany: To solve medicine's quality problems, he had to follow the money. The government buys nearly half of the nation's health care, and its policies for reimbursing care distort the whole market, he thought. He was first hired as a consultant to the White House and then tapped to lead the NHIN effort.
Just over a year in his government job, Brailer wrestles with rising expectations. Estimates of the potential health-care savings from IT have been skyrocketing. Most started at between $80 billion to $120 billion a year. But early this year, a group of CEOs organized by Brailer's office, including FedEx's Smith and PepsiCo's Reinemund, put potential gains at as much as 30% of U.S. health-care spending. That's where the astonishing $600 billion figure comes from.
What would it take to cut all that spending? The first $100 billion may actually be pretty easy. Two studies -- one in January by the Center for Information Technology Leadership at Harvard University and one by the RAND Corp. in September -- calculated annual savings of $81 billion to $122 billion by the middle of next decade. These amounts represent savings mostly from cutting out simple things like duplicate tests. Doctors often order up X-rays or CT scans for patients even if they recently have had similar tests somewhere else, because it takes too long to get a copy of earlier results. CITL Chairman Dr. Blackford Middleton says about 20% of hospital radiology tests are duplicates. "What we did to get to these numbers is very conservative," Middleton says.
The next $80 billion to $100 billion in savings would come from using technology to manage chronic diseases better. Patients with problems like diabetes and asthma are crucial e-health targets because they use a third of America's health-care spending. RAND says taking better care of them can slash at least $81 billion a year. With new software and better databases, insurers would be able to identify chronic disease patients and attract them into early-intervention programs, with computer-generated reminders to both doctors and patients to take preventive steps.
But to get the final $400 billion a year in savings, medical care would have to change radically. Insurance companies want to use Brailer's network to standardize care -- they believe guiding consumers to care that research says is best will boost quality and save money. The term for this is evidence-based care: Translated, it means use the data to find out which treatment is best, and then insist everyone use it.
Unexplained variations in care add hundreds of billions a year to America's health bill. They're especially dramatic among senior citizens. John Wennberg, director of the Center for Evaluative Clinical Services at Dartmouth Medical School, has spent years working with Medicare data to show that doctors in high-cost cities like Miami spend nearly three times as much per patient as doctors in low-cost cities such as Minneapolis. Worse, Wennberg contends Miamians don't get better results. He says spending in high-cost cities spikes because they have more specialists, testing facilities, and hospitals. "If the supply is big, people will sell you something quick," agrees Florida State University geriatrics professor Kenneth Brummel-Smith.
One way Brailer and others expect to squeeze out these kinds of waste is pay for performance. The idea is that insurers will reward hospitals and doctors for good care, measured by the rate of complications or adherence to strict treatment protocols. The government, primarily through Medicare, is leading the charge. Medicare is conducting a trial with more than 270 hospitals in which the top 20% in quality get bonuses and poor performers could see payments trimmed up to 2%. Legislation is pending in Congress to take this trial nationwide.
But pushing health-care reform very far in this direction could result in a serious backlash. Marcy Zwelling, a 52-year-old solo practitioner in internal medicine in Los Alamitos, Calif., just south of Los Angeles, is openly skeptical. "This government, all they want is another way to judge me, to penalize me," she says. "It's absolutely a ruse." She says government measures of quality are typically overly rigid, which likely will result in doctors performing too many unnecessary tests. "I have 80-year-old patients who simply don't need mammograms, but I get dinged when they don't get mammograms," she says. "I'm one of those old doctors who likes to take care of people."
Consumers almost certainly will have less choice, too -- the attribute of America's health-care system they like best. There are signs of this already: At Intermountain Healthcare, a 21-hospital system in Utah, researchers found that babies of healthy mothers who were induced before week 39 of pregnancy are more likely to need intensive care. So Intermountain discourages such inducements. Its elective inducement rate is about 5%, compared with 30% nationwide.
Fear of offending both doctors and patients is why most insurers plan to move slowly in exploiting data from tech systems. Private insurers like Wellpoint Inc. (WLP ) and UnitedHealth Group (UNH ) say they won't use data from NHIN to decide not to cover specific kinds of care. Instead, they plan to use the network to lobby professional associations like The American Geriatrics Society. The idea is to show data to associations and get them to do the dirty work of telling doctors they have to change practice patterns. "It's not our job to make decisions for them," says UnitedHealth Senior Vice-President Reed V. Tuckson.
There's no way to know exactly how much Brailer's national health network will shake up medicine. Though he expects to be done laying the NHIN's foundation before the end of the Bush Administration, he says the full effects won't be felt for 20 years. Lately Brailer is trying to tamp down expectations, although the economist in him wants to save billions of dollars.
The country doctor in Brailer, nurtured back in Kingwood, has more modest goals. Brailer tells the story of a childhood friend with leukemia, diagnosed a few months after Brailer's dad died. The friend, who asked not to be named, says Brailer dropped everything to drive five hours to his side. Brailer told him one key thing: Keep records of everything. Share them with your doctors. It's the only way you can make sure your doctor never has to make a decision without all the facts, he said.
Today, the friend totes notebooks full of data that Brailer wants every patient to have -- every test result, every lab workup -- to each of his doctors at every visit. The friend is in remission. It looks as if he'll never know the haphazard care that Brailer believes his father got. "He has the best personal health records I've ever seen," he says. "And he has saved his own life 100 times."
By Timothy J. Mullaney