EMR subsidies might help, but who gains from efficiency savings?

The law of unintended consequences is a nasty little bugger that seems to rear its ugly head quite often in health care. As so many of our dear readers know, the great paradox in health IT, particularly with EMRs, is that those who buy the technology to make them more efficient, i.e., hospitals and physician practices, tend to receive the least financial benefit from their hefty investment.

The American Recovery and Reinvestment Act is supposed to take some of the pressure off of providers by subsidizing their IT purchases. The problem is, without a change in how healthcare is paid for, the bulk of the savings accrue to the payers. No, we're not advocating single payer here, so hold the hate mail; we're saying that the current fee-for-service model of reimbursement encourages doctors and hospitals to see more patients and provide more services. A more efficient system with less duplication would mean a sharp drop in revenue for these providers.

The remedy could either be for hospitals to raise their prices or to move to a quality-based reimbursement model. David St. Clair, CEO of payer-side health IT vendor MEDecision, says insurers likely could be convinced to up their payments to providers, but we're concerned that the uninsured might get stuck with higher out-of-pocket costs.

For more on this paradox:
- have a look at this CNNMoney.com story