This week, a large national survey of physicians’ use of electronic health records (EHRs) was published in the New England Journal of Medicine.  The results generated a lot of attention in the general media.

The good news is that physicians with EHRs are largely very satisfied with them and believe that EHRs improve patient care.  The bad news is that nationally only 4% of doctors use EHRs.  The largest barrier cited as preventing physicians from adopting EHRs is the expense.

In any other industry, that would be unthinkable.  Imagine if a hotel came up with an easier way for guests to make a reservation.  If the new technology was very expensive, only those hotels with the most resources would be able to afford it initially.  But eventually the price of the new technology would drop and almost all hotels would use it.  Within a few years the older way of making reservations would be gone.  That’s why you can’t listen to an LP record anymore or find a public phone booth or send a telegram.  Better technology spreads like wildfire through a marketplace, regardless of how expensive it is initially.

So if EHRs are better for patients, why the slow adoption?  For that matter why haven’t CT scans dropped in price?  Or pacemakers or MRIs?  Most medical technology should be dirt cheap.  My son’s laptop is much more powerful than the desktop PC I had in high school and cost less.

The answer is that the insurance model corrupts the incentives that work in other marketplaces.  By fixing the price for care, insurance companies make it impossible for doctors to make more money by providing better care.  Doctors in the insurance model can only make more by seeing more patients.  In such a system there’s no reason to invest in an EHR, because the investment will not lead to increased revenue.

The same perverse incentives keep prices high.  Since the insurance company sets the price for a CT scan, there’s no incentive to drop the price for a CT to compete against other providers.  The incentive is to get as many patients through the scanner as possible.  So while Dell keeps making better computers cheaper, CT scan prices stay the same.

Now academicians and lobby groups are clamoring for insurance companies and government to pay doctors to adopt EHRs.  But insurance companies and government got us in this mess.  Having them subsidize EHRs misses the point, and would keep EHRs expensive forever, like CTs.

A few doctors dedicated to excellent care have already taken the financial risk to invest in an EHR.  Some of us have abandoned our relationship with insurance companies so that we can work for our patients.  Some patients who are also discriminating consumers have looked for such physicians and are willing to pay more to see them.  More doctors and patients, increasingly dissatisfied with the insurance model, will hear about us and follow our lead.  That’s the solution.

Learn more:

New York Times article:  Most Doctors Aren’t Using Electronic Health Records

New England Journal of Medicine article:  Electronic Health Records in Ambulatory Care — A National Survey of Physicians