Despite U.S. push, health e-records years off

By Susan Heavey

WASHINGTON (Reuters) - A congressional plan to spend up to $24 billion on health information technology could be a boon for companies that support electronic medical records, but it will still take years for patients and doctors to see results.

By offering physicians, hospitals and others cash incentives to convert paper files to computerized systems, Congress hopes to prevent costly errors and repeat tests as well as save the nation''s ballooning health-care system money.

The measure, included in the massive economic stimulus legislation, could give providers as much as $44,000 each over five years, although the payments will not start for two years.

Hospitals could also receive at least 2 million dollars as an incentive to go digital, with additional funds based on the number of patients discharged.

Lawmakers'' efforts have boosted the shares of health information technology companies such as McKesson Corp and Allscripts-Misys Healthcare Solutions Inc, among others.

"As talk of the stimulus bill was building with continuous mention of health IT, people were bidding up the stocks," said Charles Rhyee, a senior health-care services analyst at Oppenheimer & Co, who has remained cautious on the sector.

Other big players in health records include giants such as Microsoft Corp, Google Inc, Siemens AG and General Electric Co.

Proponents say new funding will give practitioners confidence to move forward with the paperless switch while creating jobs for software installers and others. But it is not clear how soon either will happen due to lingering arguments over medical record formats and privacy issues.

"The bulk of the spending on health IT -- more than 97 percent -- is in 2011 and 2012 when the economy should be back on track," Sen. Charles Grassley, ranking Republican on the Senate Finance Committee, said at a hearing last week.

Democrats, including Senate Finance Chairman Max Baucus of Montana, have said it will still take years before most Americans'' health records are digitized. But rather than wait for broader health reform, the time to act is now, they said.

"I think we should get an early start," Baucus said.

INCENTIVES AND SAVINGS

The nonpartisan Congressional Budget Office has said savings may not occur until 2015, and that under the U.S. House of Representatives version about 90 percent of doctors and 70 percent of hospitals would have electronic records by 2019.

Without the stimulus boost, 65 percent of patients and 45 percent of hospitals would be digital by then, it reported.

"The significant investment in (health information technology) will pave the way for widespread adoption," the American Medical Association said after last month''s approval of the House bill, which includes $20 billion for health IT.  Continued...