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Where does informatics fit in health care organizations?

Medical informatics is an emerging science that concentrates on applying computing and communication technology to decision making for clinicians and managers.

It enhances the understanding of how information and communication systems opportunities can impact the work health care managers must accomplish. As the cost of technology for digital information management continues to decline, organizations and individuals will look for ways to offset the human costs of managing and conveying information.

What does it mean to store information in digital form?

Information can be stored in digital format using text, recorded sounds, graphics, video, and still images in strings of one's and zeros that computers can interpret in binary digits, represented by the two states of a transistor--either charged or not charged, on or off. We have learned to condense millions of transistors into microprocessors as small as postage stamps, reducing the distance electrons need to move and increasing the occasions each second when electrons can flow. Nowadays, we produce microprocessors that are the size of your finger nail. Those microprocessors can move 32 bits of data into and out of themselves hundreds of millions of times per second--they can process records from hundreds, even thousands, of patients every second, and tens to hundreds of thousands of records every hour.

Can you imagine trying to find every medical record in your group practice or hospital referring to specific medication? You may have to identify all such people if the medication were recalled because of an adverse outcome newly discovered. You'd have to establish a team of people to wade through thousands of paper records, who could miss some of the relevant cases from boredom or illegible records. And you and everyone else involved would rue the day they decided that the organization would keep pharmaceutical information in digital form only as long as the patient is in the hospital, or in the clinic for an appointment, after which the data would be printed and stored in analog format, on paper.

The cost of storing information in digital form on magnetic or optical disk drives is so remarkably low, less than a penny to store the information that would fill hundreds of pages of paper. Managers who insist the data be printed on paper are literally being penny wise and pound foolish. They may not know any better, but when is ignorance a suitable defense? It is not a defense under the law. Should it be a valid excuse for administrators and clinicians managing budgets for information processing? By the way, what activity in medical care does not involve processing information? Which of those activities could be performed more effectively and efficiently if the information were in digital form?

The new paradigm

Why is informatics relevant now, when it would not have excited much interest a few years ago? Because health care costs continue to rise, reimbursement for visits to providers is shrinking, and more and more providers accept capitation every day, which shifts the financial risk for the costs of care to them. Providers cannot manage their revenue the way they could under fee-for-service payment arrangements. They need to find every opportunity to reduce their operating costs, since their profit margins are made by managing costs. So, why do computers matter to companies in the service sector trying to manage their operating costs?

Recall that the first computers cost a fortune to lease, compared to the salaries of the people operating them. A popular IBM mainframe of the 1960s, the 7090, was about $20,000 per month to lease, while the people who operated it cost between $500 and $1,500 per month in payroll expenses. The computer was expensive and the people were cheap. Computing resources were scarce and used sparingly on simple clerical work, such as performing calculations for payroll checks, claims processing, and patient accounting.

Today, however, the ratio of the costs of computing and personnel have reversed. A powerful personal computer, far more robust than the 7090 of 35 years ago, is $200 per month to lease, but the person using it has a monthly salary of $2,000 to $20,000. Now, computers are plentiful and inexpensive, and people are the expensive resource in relatively short supply. The role of a manager trying to reduce operating costs and improve quality of care will look for ways to replace payroll expenses with computing costs. Leaders of health care organizations need to look for every opportunity to deploy networks and computers to reduce the labor costs of data collection, storage, retrieval, and analysis.

Happily, computers are becoming far easier to use, and much more powerful. Every day, we find more opportunities to automate information exchange that previously was based on paper records; to make data collection and retrieval easier for the people who rely on those records to make decisions at the bedside and in the boardroom. Moving information in bits now costs less money and time than moving information in atoms, and the economic advantage to digital information management increases daily as equipment prices continue to decline.

Why is applied informatics relevant to health care leaders?

Leaders of practices, departments, and organizations of all sizes in health care know that most operating costs are consumed in payroll. Physicians are the most expensive resources per hour of work. Payers continue to reduce the income per unit of service by reducing the fees they pay for the procedures performed by physicians. Hospitals earn less for hospital stays than they once did.

One would think promoting efficiency in information management by people would become more important every day. Reduce the time nurses spend completing records. Reduce the time physicians spend trying to find records, and the frequency with which they repeat diagnostic studies because the results of the prior examinations cannot be found. Reduce the time patients spend visiting clinical consultants, and the time those consultants spend finding out what other physicians have found, performed, and prescribed. Reduce the variation in practice habits and clinical outcomes among equally credentialed, but not equally trained, physicians. Increase the attention given to cost-effective screening procedures for diseases far more expensive to treat than they are to prevent.

There are plenty of jobs available for people who want to work. Deploying information technologies to reduce the inefficiencies inherent in medical practice today will not increase unemployment. Instead, making health care services, which consume nearly 15 percent of the U.S. gross national product, more effective and efficient will reduce the operating costs of every industry, making them all more profitable, and more successful in global competition.


To say the work habits of clinicians and managers of 20 years ago were good enough then so they should be good enough now misses the fact that our wherewithal to manage information digitally has improved enormously. In the past 20 years, we have invented the personal computer and the World Wide Web of the Internet, the standardized, multimedia global network, and produced the greatest increase in information processing efficiency in human history. The rate of improvement continues to accelerate. The costs of digital information processing have plummeted, and will continue to decline for the foreseeable future. The tools at our disposal to reduce administrative and clinical inefficiencies have improved beyond belief. As stewards of health care organizations, we are obligated to learn about the new tools at our disposal, and deploy them to improve the efficiency and effectiveness of our work.

Marshall's Recommended Reading

Being Digital, by Nicholas Negroponte, published in 1995 by Knopf, is now available in paperback. A brief, entertaining, illuminating, witty, inspiring, well-interrelated collection of essays by the director of the venerable Media Lab at MIT--absent equations or abstruse terms. Altogether, an entertaining introduction to the implications of moving information in bits, in electronic digital format, through computers and digital networks, rather than in the atoms of paper.

The Digital Economy: Promise and Peril in the Age of Networked Intelligence, by Don Tapscott, published in 1995 by McGraw-Hill, is for those more seriously studying the economic implications of the digital revolution.The book gives plenty of examples from all industries, including health care, about the relative changes in operating costs, revenue, and market position of organizations that do, or do not, take advantage of the extraordinary economies of scale digital information processing offers, compared to analog, paper-based information exchange.

Computers in Clinical Practice: Managing Patients, Information and Communication, is edited by Jerome Osheroff, MD, and was published in 1995 by the American College of Physicians. This book explains how computer systems can benefit physicians in their private practice office settings, facilitating business operations, continuing education, patient education, differential diagnosis, access to electronic summaries and full text of articles in medical journals, and selecting therapies. It's discussion on the products of some vendors already is out-of-date, but readers will find useful the methods described for selecting commercial computer systems.--Marshall Ruffin, MD, MPH, MBA, FACPE

Marshall Ruffin, MD, MPH, MBA, FACPE, is President of The Informatics Institute in Bethesda, Maryland. He can be reached by calling 800/844-0922, via fax at 301/986-4546, or by e-mail at
COPYRIGHT 1997 American College of Physician Executives
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Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Health Care Bytes
Author:Ruffin, Marshall
Publication:Physician Executive
Geographic Code:1USA
Date:May 1, 1997
Previous Article:Don't be an accidental physician executive.
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