Policy: Safe Harbors and E-Health Technology

Between the fighting in the Middle East, the Landis disappointment, and the start of the upcoming NFL season, the Department of Health and Human services announced a new "safe harbor" for hospitals to provide IT services to physicians. A "safe harbor" is most easily defined as a piece of legislation that allows hospitals to provide services to physicians at low or no cost without fear of being fined for inducing referrals.

So, as most of my friends have asked - who cares?

While you can visit the HHS website for the full commentary or, better yet read the commentary from one of the best health care law firms in the country, below you can find a quick synopsis of the legislation and what it might mean:

1) Hospitals can provide e-prescribing and e-health services to physicians at no cost (e-prescribing software) or at 15% of cost (e-health services).

What this might mean: Physicians will likely get their PACS system and electronic medical record (EMR) services through a given hospital. This will significantly raise the switching cost for physicians to move their offices or begin working at a competing hospital. Physicians will save big bucks and hospitals will have one more way of retaining key physicians services at their facility.

2) Hospitals and Physicians must use governement "certified software."

What this might mean: The IT industry will be making a big push here to get involved since hospitals are now paying the bill (as opposed to price averse physician practices), but they'll also be lobbying hard to get on the "certified" list. While Adam Smith may have argued for a more open market...others will likely be buying stock in companies on "the list."

3) Organizations capable of donating services not only include health care providers, but also health plans.

What this might mean: Health plans will be equally trying to "tie up" key physicians by providing free software and support. This will likely put physicians in tough spot where the health plan lowers their reimbursement...but don't want to leave the plan because their using the plan's EMR and e-prescribing software (its unlikely the plans and providers will use the software as a leverage point for obvious reasons...but it still is a potential conflict of interest).

4) The Safe Harbor ends in 2013.

What this might mean: Everyone is incented to participate as quickly as possible. While HHS has set a limited timeframe, they've also provided a first mover advantage to Plans and Providers who quickly respond.

This is by no means comprehensive in description, but it is a significant step in moving health care into the 21st century. While more electonic medical records will help improve quality and coordination, its market affects should not be underestimated.