Viewpoint -- Health-Care Industry Revived By Manufacturing Paradigm?

Dec. 21, 2004
GM looks to reduce health-care costs via alliance with medical information-technology vendor.

Other than the Federal government, probably no one spends more on health-care coverage than General Motors Corp., Detroit. It self insures -- meaning it accepts part of the risk of health-care -- some 1.2 million employees, spouses, families, and retirees. Indeed, last year GM spent in the neighborhood of $4 billion to support that coverage. Now, looking to apply some of the best practices it invokes in improving the car-making process, GM will address the quality and effectiveness of that care via an alliance with MedicaLogic/Medscape Inc., Hillsboro, Oreg. (DBA Medscape) In this three-year program, GM will evaluate the impact of computer-based Palm Pilot and PC-based technologies to facilitate improvement in the quality of patient care by reducing medical errors and lowering health-care costs. These electronic systems reduce mistakes associated with illegible handwriting, improve patient safety by identifying potential drug interactions, and offer prescription alternatives at a lower cost. Industry studies indicate that of some 900 million prescriptions written annually, 30% have to be re-evaluated due to confusion over doctor's handwriting or insurance rules, and that these errors decline by 55% when electronic prescribing systems are used, reports GM. In addition to prescription writing, the hand-held and desktop units provide access to digital health records including reference material, patient records, insurance, and billing data. Medscape also operates Web sites for practitioners ( and for individuals (, which will be available to GM. One approach also calls for kiosks at GM facilities where employees can go online and order prescription refills, identify physicians, and make appointments at "According to the National Assn. of Boards of Pharmacy, Chicago, 7,000 deaths are attributable to incorrect prescriptions," notes Thomas Wickham, manager, labor communications, GM. "If you get the wrong medicine and there are side effects to that, there is additional medical care required. If we can eliminate that, there's less for GM to pay. And of course, less pain and suffering for the patients." In 2000 prescriptions accounted for about 25% of GM's health-care expense, or roughly $1 billion, in turn a 20% increase over 1999. Now, when a physician in the program enters a prescription, the device not only highlights drug interactions, but prompts alternate medications -- giving comparison trial results -- as well as lower-cost and generic alternatives. "The fact of the matter is, [when] doctors prescribe a drug, they have no idea how much it costs," says Mark Leavitt, chairman, Medscape. "It's not part of their training." Once complete, the digital prescriptions can be printed out on the spot, or sent wirelessly to a pharmacy where they appear as a fax. The plan will be implemented in April, with GM and Medscape splitting the cost of outfitting 5,000 physicians in pockets of high GM-enrollee communities with hand-held devices, and 1,000 practitioners with PC-based systems. The impact will be measured in populations covered by the technology and those not part of the program. Number of errors, complications, cost of medications, and number of hospitalizations are some of the metrics to be evaluated. "The manufacturing sector has long recognized if you cannot measure your own quality and improve the quality of the products you are selling, you will have a lot of trouble competing," says Leavitt. "The health-care industry is almost the complete opposite in that it has never really measured quality, and never put in consistent safety systems. It's been considered kind of a black art. [People think] 'Doctors are well trained, therefore they must not be making mistakes.' [Another myth:] 'We are paying a lot of money for health-care, therefore it must be the best in the world.' Now these large companies are asking questions as to why aren't health-care providers using some basic systems for quality and safety that are completely expected in the manufacturing sector?" As part of the strategic alliance between the two companies, GM will receive warrants for 5 million shares of Medscape stock. In addition, the two companies will share the savings from prescription-drug claims realized directly from application of the technology. Tim Stevens is an IW senior editor based in Cleveland.

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