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National Research Council (US) Committee on Enhancing the Internet for Health Applications: Technical Requirements and Implementation Strategies. Networking Health: Prescriptions for the Internet. Washington (DC): National Academies Press (US); 2000.

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Networking Health: Prescriptions for the Internet.

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4Organizational Challenges to the Adoption of the Internet

Health care organizations have had to adapt to many changes in the world around them, from advances in diagnostic and therapeutic procedures to the emergence of administrative innovations such as managed care and the invention of new information technologies. The Internet represents a particularly profound change that will enable or force significant changes in organizational form and processes—a transformation as profound as any that have gone before. The Internet's capability to empower consumers, support dynamic information exchanges among organizations, and "flatten" organizational hierarchies promises to result in new operational strategies, business models, service delivery modes, and management mechanisms. The changes will have such far-reaching implications that health care organizations need to start preparing now to adopt the advanced Internet applications that are expected to appear in the near future. Organizations need to evaluate the potential and implications of new Internet technologies, adapt them to local needs and conditions, minimize the risks associated with new product and service deployment, and plan to demonstrate the value of their efforts.

This chapter examines challenges to the adoption of Internet-based technologies by health care organizations. It attempts to identity fundamental impediments to greater use of the Internet that may be expected to persist for some time. The first section of the chapter provides a context for the analysis by reviewing the experiences of other industries that have achieved some success in changing business practices by adopting Internet technologies. The second section discusses in general terms why more health care organizations should be interested in adopting the Internet: because it can advance their strategic interests. The third section deals with organizational barriers that hinder Internet use. The discussion there addresses internal and external factors, such as policy and technical barriers, that influence and constrain the form and extent of Internet use, as well as the range of uncertainties that inhibit decision making regarding the Internet. The last section addresses the importance of organizational leadership.

The chapter focuses primarily on Internet adoption by care provider organizations. To be sure, Internet technologies will need to be adopted by a number of different players in the health care arena, including consumers, physicians, and administrators. But because they are likely to bear many of the implementation costs and will have to address issues of acceptance by consumers and care providers, health care organizations are a suitable focus for this analysis.1 The discussion recognizes that health care organizations come in many forms—community-based health facilities, managed care organizations (MCOs) and health maintenance organizations (HMOs), integrated delivery networks (IDNs), and nonacute facilities—each of which may adopt the Internet for different applications, whether management and administration, communications among health care professionals, consumer education, or patient management. The specific factors that facilitate or impede Internet applications will differ from one organization to the other, but the discussion that follows is broadly applicable because it identifies common challenges faced by a variety of health care organizations as they attempt to implement a range of applications serving different types of end users.

Lessons from Other Industries

Internet technologies offer a range of potentially useful applications to organizations in many different industries. Simple Internet applications such as electronic mail (e-mail) can facilitate communication within distributed multinational corporations. Related networked applications can simplify flows of information among elements of a single organization and among multiple organizations. Real-time teleconferencing technologies can support meetings involving individuals located in different cities. Direct capture of sales information can enable retailers to streamline the delivery of inventory and forecast purchasing patterns. New automation systems can allow for distributed management of supply chains, support of human resource functions, and exchange of contact and other sales information. Although the deployment of these systems is still in an early stage, Internet technologies appear to have enhanced organizational performance by lowering costs, increasing efficiency, differentiating products and services, or creating broader markets. Leading users of these technologies have found that the value of the Internet lies not simply in automating existing business processes but in creating new means of interaction between suppliers and consumers of products and service, often with significant implications for industry structure.

Industries differ in many respects, and their degree of success achieved in applying the Internet varies as well,2 but the experiences of leading companies in different industries in which Internet use is common suggest a number of general trends. The Internet clearly is transforming the retail marketplace. Online retailers such as and Barnes and Noble have changed the nature of the book industry by creating direct relationships between book buyers and book suppliers that have significantly reduced inventory costs and eliminated many middle layers in the distribution chain—a process called disintermediation.3 Manufacturers of personal computers, such as Dell and Compaq, increasingly use the Internet to market their wares directly to consumers, enabling the consumers to customize their orders and enabling the firms to control inventory at the lowest possible levels. Online auction sites, such as eBay, have pioneered new ways to link buyers and sellers in a virtual marketplace, with some companies expanding on the auction concept to exploit spot markets for last-minute airline tickets, car rentals, hotel rooms, and other services.

Internally, the effective use of information technology (IT), including Internet technologies, can have a profound impact on organizational structure and function. As information is distributed efficiently to those who need it when they need it, lines of control and influence become clearer, and individual units often self-organize in new and more effective ways. The impact may be multifaceted, not only flattening organizational structures but also changing the skill mix of employees. Early evidence suggests that online sales of automobiles reduce the set of skills needed by salespeople (McGarvey, 1999). In contrast, some stock brokerage firms report that online trading requires brokers to have a broader set of skills, although the total number of brokers needed may decline because much of the effort of executing a stock transaction can be passed on to the consumer.

Online interactions boost consumer expectations. Many traditional storefront industries—from retail to manufacturing to news—are now open around the clock, competing in a highly visible and competitive environment. Consumers conduct many transactions at night or on holidays, when many traditional merchants shut their doors, and buyers often compare the prices of many Internet vendors before making purchases. In fact, many Internet companies encourage consumers to discuss topics or items of particular interest. Internet book merchants, for example, allow readers to contribute reviews and rate the quality of an offering. Internet-based vendors of financial information sometimes support client-generated discussion groups on specific equities or investing techniques. These techniques are intended to assist consumers in making educated decisions and, simultaneously, attract them to particular sites.

Internet technologies also allow merchants to develop a deeper understanding of consumers. By automatically recording consumer choices and preferences, merchants can offer both goods and advertising that have a high likelihood of reaching a desired consumer audience. If applied successfully, these technologies enable merchants to develop a sense of one-on-one personalized service for thousands or even millions of customers—a process sometimes called mass customization. Vendors can also allow consumers to preview, or experiment with, products prior to purchase. The film industry now routinely provides previews of upcoming movies on company sites on the Web. The music industry also distributes promotional material online in the hopes of generating traditional sales. Online mortgage vendors allow consumers to simulate the cash-flow implications of various mortgage packages.

Most importantly, the customer relationships established by successful Internet companies are not static. Rather, the companies evolve as their customers' needs and sophistication evolve. The active empowerment of consumers forces companies to provide highly targeted services and a degree of variety commensurate with the buyers' needs. During this period of rapid Internet evolution, companies are literally reinventing their online demeanor on a weekly basis in response to changing perceptions developed through experimentation with the Internet. In essence, merchants and consumers are engaged in a consensual exploration of the means by which this technology can more effectively satisfy perceived mutual needs.

Advancing the Strategic Interests of Health Care

Just as it is transforming other industries, the Internet could enable profound changes in the nature and structure of the health care industry and, ultimately, the delivery of health care services. The health care industry is—and will continue to be—diverse, with individual organizations facing different environmental pressures, pursuing different missions, and cultivating different cultures, but the Internet appears capable of supporting at least a handful of common strategic interests. It could, for example, help organizations to do the following:

  • Improve the efficiency and effectiveness of processes that customers use to judge organizational performance (e.g., scheduling an appointment) or processes that form the core of the organization's business (e.g., medical management);
  • Develop partnerships with related organizations in an effort to leverage respective strengths (e.g., MCOs partnering with pharmaceutical companies to develop disease management programs or regional alliances of providers partnering to form a continuum of care);
  • Reach consumers directly to solidify brand names and eliminate intermediaries (disintermediation);
  • Improve, differentiate, and deliver new services to key customers; and
  • Improve organizational decision making.

The Internet already is empowering consumers to become more involved in and take greater control of their own health and care. Patients are coming into doctor's offices armed with information downloaded from the Internet and suggestions for diagnoses and treatments. They may soon be able to access information on the quality of care delivered by different health care providers or facilities in their geographic region. The relationship between health care organizations and consumers could change even further when an organization uses networks effectively to expand its customer base beyond a specific geographic region. The assumption that just because a patient lives near a particular hospital he or she will opt to be treated at that hospital is challenged by the ease with which networks afford patients access to clinical specialists worldwide.

The Internet also offers institutions the capacity to separate their business operations from the operations of the physical plant. The effective use of computer networks could change the fundamental nature of a health care organization: from a unified entity providing a specific, fixed set of resources and services to a broker entity that acquires services and resources and offers them on an as-needed, on-demand basis. For example, physician practice groups could use the Internet to acquire necessary expertise on demand and deliver health care from a distance or to gain access to distributed decision-support systems and high-end applications offered by application service providers, contracting for specific medical services from remote practice groups rather than investing in an expensive, but seldom used, on-site resource. The use of network technology to reach customers in their homes, schools, and workplaces would extend the opportunity for the delivery of services and products at locations away from a health care organization's physical site (e.g., clinic, hospital, or campus).

The Internet also allows the integration of clinical data from affiliated organizations (such as two hospitals that contract with the same MCO), enabling the assembly of a medical record that is more complete than before and ensuring greater continuity and documentation of care. This is a useful feature because the increased specialization of clinical treatment has contributed to a differentiation of health care services. Specialization has led patients to acquire health services from different organizations (e.g., hospitals, physician's offices, dentists, laboratories), with the result that the clinical records of most individuals are scattered across several institutions. Other opportunities exist for hospitals to use the Internet to improve internal operations. They could communicate, in a just-in-time fashion, with distributors of supplies—perhaps diminishing the need for an inventory management department—and with each other to share patient records. They could reduce their reliance on local specialists by centralizing specialty services and offering them remotely via teleconsultations. Care providers and payers could link together to consolidate utilization review activities.

The Internet also could affect the nature of health care research. Network-enabled ''collaboratories" could allow individual research operations within a particular health organization (such as a research hospital) to interact with research groups at other organizations, creating a complex set of interacting research groups that share information and results across multiple organizations and even national borders. Private research institutes, either free-standing or organized as research and development arms of pharmaceutical companies, could enhance their scientific collaborations with academic medical centers. The Internet also would enable schools and universities to educate not only the students who arrive on their campuses but also authorized learners anywhere in the world who have access to computers and Internet connections.

The contours of such change are beginning to emerge. Health care organizations are beginning to experiment with Internet-based systems to serve a variety of functions. Many MCOs, for example, are developing Web sites to provide consumers with health-related information, the ability to select physicians or schedule appointments, and the tools to evaluate their immediate health care needs. Other organizations—both MCOs and new Internet start-ups—offer personally tailored health information over the Web, matching profiles of a patient's health status with existing network-based health information resources. They also offer specific programs for monitoring personal health status and can support e-mail exchanges between patients and designated providers. Still other firms focus on the administrative side of health care, using secure communications channels to deliver a broad array of services required in a managed care environment, with an emphasis on linking different types of health care organizations. Offering include products for enrolling in and managing personal health care plans; information services and portals designed for consumers, providers, and physicians; systems for viewing laboratory and other clinical data; and methods for referring patients to specialists, ordering medications, and performing other clinical tasks.

The returns to health care organizations on investments in Internet-based applications are not yet clear, but the early evidence is encouraging. Kaiser-Permanente of Northern California, for example, reports that a pilot program to test a consumer-oriented Web site for 100,000 members reduced the number of visits to physicians' offices by 11 percent, reduced the number of calls to nurses by 46 percent, and allowed 14 percent of the patients to treat their illnesses at home. The result was not only significant cost savings for the organization but also improved consumer perceptions of Kaiser-Permanente and better understanding of health concerns. Partners Healthcare System, an integrated delivery organization based in Boston, reports that Internet-based systems reduced the time needed to return a radiology report to a health center from 72 hours to 4 hours. The organization expects to realize a 20 percent reduction in the cost of specialist dermatology by using telemedicine.

More study is required to fully evaluate the benefits of Internet-based applications in health care, but the evidence cited above offers hope for improvements in customer satisfaction and reductions in cost. Given the potential of the Internet and the economic and other pressures facing the health care industry, it would be reasonable to expect significant investment in Internet technologies and applications by more health care organizations.

Impediments to Adopting Internet Applications

Despite the promise of many Internet-based applications, health care organizations can be expected to encounter many obstacles as they attempt to apply these technologies to realize their strategic visions. They will face barriers to, and constraints on, organizational change, as well as uncertainty about the efficacy and effects of Internet-based applications. A resistance to change might come from denial of the need to change, the inability to manage change, uncertainties about the types of changes needed and how best to make them, mistaken assessments of optimal changes, and failures in executing changes. These issues are not unique to the adoption of the Internet and could arise in many other areas of organizational change, including those driven by other types of information technology.4 What makes Internet-driven change different is its magnitude and the high degree of uncertainty. Organizations that have difficulty making the necessary investments in, and managing, information technology in general will have even more difficulty adapting to the Internet.

Barriers to Change

Barriers to change can assume many forms, from characteristics of the marketplace to organizational capabilities. The discussion below classifies barriers into two broad categories: (1) external factors that define the environment in which an organization operates and (2) internal factors that define the ability to implement change. External factors are often difficult for an individual organization to address directly because they demand collective action. Internal barriers are easier to overcome but in many cases still present significant difficulties, even if the need for change is recognized as urgent.

External Barriers

External factors define the environment in which health care organizations operate and shape their ability to capitalize on the Internet. The barriers here assume many forms, including market forces, policies and standards, finances, and technology.

Market Forces. Changes in the health care marketplace—such as an aging population, escalating health care costs, and changes in consumer preferences—can have positive and negative effects on health care organizations and the viability of different Internet-based applications. Often the effects cannot be anticipated. For example, an aging population can be expected to create a growing demand for health services, a trend that could benefit local hospitals but could raise costs for MCOs, which would need to provide more care on a per capita basis. An aging population also could boost demand for Internet-mediated care, but at the same time as this would allow the patients to avoid travel, it would raise challenging interface considerations. To the extent that changes in the marketplace signify to organizations a need to change, they can be considered stimuli for transformation; to the extent that they work against organizations, they can be considered barriers.

Other market forces also affect the ability of health care organizations to adopt Internet technologies. Many health care organizations have seen shrinking operating margins over the last several years, along with a marked increase in regulatory compliance requirements (such as those related to the Health Insurance Portability and Accountability Act of 1996—see Chapter 5) and in competing programmatic needs (Glaser and Hsu, 1999). The lack of coherent business models at work in many of the new Internet-based health companies (, Healtheon/WebMD,, etc.), along with their lack of demonstrated strong financial returns, does little to persuade established health care organizations to aggressively shift to an Internet-based strategy.

Policies and Standards. State and federal laws and regulations, professional standards, and technical standards, which remain largely outside the exclusive control of the health care industry, are among the policy barriers that can impede health care organizations. These barriers can interfere with business opportunities enabled by the Internet, reducing the incentive to undertake initiatives that would benefit the nation's health care system and citizens' health. For example, policies on professional licensure can impede attempts to deliver health services across state lines using the Internet; regulations on data security and patient privacy can create disincentives for the transmission of information across public communication networks such as the Internet (these issues are addressed in greater detail in Chapter 5). Policies of third-party payers and health insurance companies on payment for medical services can also affect a care provider organization's incentives to develop new Internet applications. If services rendered cannot be reimbursed, the incentives for deploying capabilities are reduced. For HMOs the incentives may be different, because HMOs that reduce the costs of care can improve their profitability regardless of payment policies. As with market forces, changes in policy can serve either to motivate change or to constrain it.

Finances. Financial barriers arise from the complex and sometimes perverse mechanisms for funding health care. Care providers are often rewarded for treating disease rather than preventing it, a situation that can be expected to reduce interest in developing wellness-oriented Internet material. MCOs may exhibit a similar lack of interest in wellness activities if their subscribers are young and transient. Payment is often made for each visit to the care provider's office rather than for overall treatment of a particular health problem, with the result that a provider has little incentive to invest in Internet-based disease management capabilities. Moreover, providers generally cannot receive reimbursement for care provided at a distance using electronic communications technologies (i.e., telemedicine), even if such practice could reduce the cost of care (see Chapter 5). Insured consumers do not pay for the vast majority of their care and are constrained (by insurance companies) in their ability to find and engage their preferred source and form of care—choices the Internet could facilitate. In effect, Internet applications, while benefiting the patient and society, require investments by health care organizations without providing any balancing revenue. Furthermore, the economic anomaly whereby the consumer of care is not the purchaser of that care limits the consumer's ability to fully pursue the use of the Internet to support personal health.

Technology. Technology itself can be a barrier to change in organizations. Technological change is especially rapid in information technology, a supreme challenge for organizations that try to keep up with the pace of innovation while controlling costs. Significant technological changes can create major dislocations, rendering investments in existing technologies obsolete. Organizations cannot depreciate prior investments fast enough to keep up with the rate of change or shift their technical and human infrastructures rapidly enough without undermining organizational performance. This process of technological change is particularly challenging in a health care context, where there is a heightened need to demonstrate the efficacy of such change—a process that can be expensive, time-consuming, and difficult to do well—and the wide range of potential users involved—patients, physicians, nurses, administrators—all of whom may have different work flows and skills. Managers attempting to learn about the performance, maturity, and potential of new technologies are often confronted with exaggerated claims. The distillation of truth from an overload of information is an error-prone and inefficient process.

External barriers present a significant challenge to organizations. Some barriers, such as demographic trends and the complex and politicized decision-making processes in health care, are often out of the control of organizations, although they can take steps to anticipate and mitigate the effects. Policy barriers, in general, cannot be addressed effectively by individual organizations but require a coordinated and concerted effort by multiple players. Policy barriers can be addressed in a number of ways, as explained in Chapters 5 and 6 of this report.

Internal Barriers

Internal barriers can prevent organizations from recognizing the need to change and properly implementing the required changes. A lack of organizational self-awareness, responsiveness, and competency, and a reluctance to change—characteristics of organizational inertia—all impede attempts to implement necessary change. Inertia is associated with a large size, long history, and complicated internal hierarchies—characteristics of many health care organizations. Resilient organizations that overcome inertia have the capacity to revise their structure and function to effectively manage external forces; organizations characterized by inertia are less likely to do so.

An organization's ability to change is influenced by many factors, including its competence, sophistication, and history of action with other technologies. When basic operating principles must be reinterpreted, organizations require time to promulgate, implement, and assimilate the new standards, policies, and guidelines based on the new principles. The appropriate use of new technology often requires a degree of process and role redefinition not usually encountered in health care settings. It may pose threats to individual roles or positions, challenge the rationale of current business or clinical practices, demand rapid political mobilization, encounter user resistance, and require additional funding. Processes used in implementing new technologies, particularly if reliant on consensus, can slow the effort to adopt them. New forms of communication can require new interpretations of basic principles such as the core nature of an organization's services. Achieving consensus takes time, perhaps more time than is feasible given the rapid pace of technological advances.

Hesitancy to change may result from legitimate organizational concerns as well as organizational inertia. Organizations may be reluctant to adopt a new technology because it is a poor fit with the existing strategy or because they are in a market segment that does not reward innovation. In addition, change may be hindered by conflicts between the ability of management to maintain coherent integration throughout an enterprise and the need for rapid deployment of a new technology in a more localized setting, such as in a particular department or laboratory.

Internal barriers must be changed by individual organizations. At the very least, organizations need to be aware that these barriers exist and that their persistence will hinder the efficient and effective use of the Internet (and a wide range of other technologies and innovations). An organization should also be aware of the special problems associated with its market sector. Barriers actually encountered, and the degree to which a particular barrier is viewed as problematic, will vary among organizations. For example, clinics, particularly small group practices outside academic health science centers, lack the administrative and financial resources of larger organizations. They may face barriers to full Internet implementation as a result of reimbursement policies that prohibit cost recovery. Additionally, they may lack the organizational resilience to deliberate and manage the uncertainty inherent in investing in technologies such as electronic medical records or distributed information systems.

A hospital, on the other hand, may fail to capitalize on emerging technologies because its staff is not competent to understand how such technologies could benefit the hospital. Researchers whose collaborators once worked across the hall now must communicate in an up-to-the-minute fashion with investigators around the world and are hampered from doing so by the lack of common standards for reporting. Knowledge providers (e.g., libraries) face intellectual property and ownership considerations that are rapidly changing and for which existing rules no longer provide adequate guidance. Professionals (e.g., physicians and nurses) are both protected by and limited by state-based licensure requirements that protect their scope of practice but limit their ability to practice across state lines.

Uncertainties Surrounding Internet Strategies

Even if organizations can identify the need to embrace an Internet-based strategy and can overcome some of the internal and external barriers to doing so, their progress can be inhibited by considerable uncertainty about how best to proceed. Uncertainty could cause an organization to hesitate to pursue an Internet-based strategy and could result in suboptimal, deleterious, or unnecessarily turbulent or inefficient change. Health care organizations face uncertainty in four areas: organizational and industry structures for Internet-based care, internal policies and procedures to guide Internet use, technological capabilities of Internet-based systems, and human resource issues. For each type of uncertainty, examples of related issues and questions are presented below. The examples are not intended to be comprehensive but to illustrate the range and depth of the uncertainty surrounding organizational Internet-based health care strategies.

Organizational and Industry Structure

Organizations are experimenting with the use of the Internet to extend or alter current processes. Patients communicate with providers through e-mail. Telemedicine is offered as a means of increasing referrals from remote clinics. Some organizations offer medical content to providers for a subscription fee. Others attempt to connect a range of providers and payers in a region to improve the efficiency of care. Some pharmaceutical benefits companies may choose to ally themselves with online pharmacies, whereas others may open their own online pharmacies. As these examples demonstrate, the Internet has the potential to fundamentally alter the economics, organizational form, and interorganizational processes that define health care today. These new arrangements and relationships are complex and not well understood. Poor conception of new organizational forms and poor execution of a form place the transforming organization at risk. Faced with such risk, many organizations hesitate to engage in new forms. Others try different relationships between participants and different types of services until one or more successful models emerge.

The effectiveness of many new health care processes and initiatives is not clear. Will providing patient access to medical information improve the quality of care and patient satisfaction? Does telemedicine increase referrals? Will linking providers with retail pharmacies or pharmacy benefits managers improve medication compliance? Will health care organizations become, to a large degree, virtual? Their limited understanding of the business value of these initiatives causes organizations to be hesitant in carrying out Internet-enabled change. The examples below explore particular uncertainties in greater detail.

Example 1: Changes in Industry Structure. Internet investments and start-ups target industries with multiple distribution channels, large numbers of middlemen, and massive product selections (Fitzgibbons and Lee, 1999). Health care is such an industry; accordingly, a number of Internet-based start-ups, such as Healtheon, CareSoft, and, have entered the marketplace. The intent of these investments and start-ups is to significantly alter and improve the mechanisms by which health care is distributed, in some cases simplifying administrative transfers of information and in others creating new channels for the provision of health care and health information. It is not clear whether extensive use of the Internet will dramatically change the health care industry's structure, altering the relationships among consumers, care providers, managed care organizations, and insurers. At one extreme, the introduction of the Internet could so empower consumers that they force major changes in MCO operations that now tend to limit their choice of care providers and to direct provider-patient interactions. At the other extreme, the Internet could simply reinforce existing structural arrangements, perhaps making them more efficient.

Example 2: Separation of Content from Transaction. The Internet allows separating content acquisition (e.g., conducting research on vacation spots) from the execution of a transaction (e.g., booking a vacation). Consumers often use information gathered in one location to inform decisions made and transactions executed elsewhere. This practice is already occurring in health care as consumers find health-related information on the Internet and later present it to care providers to help guide decision making on diagnoses and needed tests, procedures, and medications. Similarly, discussions with care providers can lead consumers to order medical supplies or nonprescription drugs through an Internet-based service. The disaggregation of transaction and content, and the commoditization of both, may have profound impacts on the value proposition on which care providers have long based their existence. The ramifications are not well understood by the provider community (or most other communities facing similar changes in value propositions). Furthermore, health care providers do not understand how to take advantage of such a change or ensure that patients are not harmed by it.

Example 3: Alteration of Roles. The Internet is altering the traditional roles of and relationships among patient, primary care provider, local specialist, and tertiary hospital specialist. As consumers become better informed about health issues, they may pressure MCOs to relax restrictions on the pursuit of care directly from a specialist. Patients may also seek greater flexibility in selecting specialists who, although they may not be local, offer superior service and expertise. Such specialists would include radiologists, dermatologists, nutritionists, pharmacologists, and others with knowledge of particular medical domains. If this occurs, then existing referral patterns may be disrupted (or strengthened), and the definition of high-quality service and care may change. Patients may come to expect, as they have with many Internet-based services, 24-hour availability of certain service offerings that are customized to their needs. This trend, in turn, may reinforce the already growing roles of physicians' assistants and nurse-practitioners in the provision of care.

Example 4: Management of the Chronically Ill. The Internet may markedly improve the ability to manage and treat the chronically ill. Improvements can result from a range of Internet-based services, such as the translation of medical text into lay language, patient-moderated chat sessions, "ask-a-doctor" chat rooms, remote consultations, and remote monitoring of patient health data. The extent to which such improvements will occur is not clear; also unknown is the relative utility of various types of Internet-based services and content. In both cases, the answers will vary by disease and across cohorts of patients.

Example 5: Spot Market Purchase of Health Care. The Internet supports consumers seeking to make spot market purchases of books, airline tickets, and automobiles by providing information on sources, cost, availability, and quality for the item or service to be purchased. This trend has yet to become important in health care, but one can imagine consumers engaging in spot market purchases of medications, vitamins, and durable medical equipment. experience with this model could encourage consumers to pressure MCOs to allow spot market purchases of radiology procedures, simple surgical procedures, medical education, and routine checkups. Consumers in fee-for-service insurance plans might be able to enter this marketplace more quickly. A thriving spot market could reduce the cost of medical procedures by allowing rapid comparisons of services based on cost and quality. It is not clear at this time which—if any—elements of health care delivery would be amenable to spot market purchases, whether and to what degree consumers would be comfortable making them, or the degree to which such purchases would pose risks or improve care.

Internal Policies and Procedures

Effective management of clinical, administrative, and fiscal processes and activities requires policies and procedures. Internet use often creates a need for additional policies and procedures to guide and manage the technology and the new patterns of communication and processes it enables. For example, e-mail interchanges between patient and provider—which are becoming more common in the health care sector—require policies on the appropriate types of clinical conversation (e.g., e-mail should not be used to convey highly sensitive information unless one can ensure reader authentication).5 A provider, serving as a moderator of a disease-specific chat room, may inadvertently create a provider-patient relationship. The ease with which a Web page can be created by an employee may make it appear as if an organization is sponsoring or supporting the content when in fact it actually disagrees with it—if indeed it is even aware of it. As organizations grapple with the need for new management and medical policies and procedures, they will find little precedent for how to deal with these issues. Faced with a policy and procedure vacuum and an absence of models, organizations may hesitate to sanction Internet use because they are not sure they can manage it well enough.

Health care organizations would benefit if they could refer to reference models to assist them in developing policies and procedures. Reference models have been developed to guide other activities, such as general confidentiality and security practices unrelated to the Internet. These models include sample forms for consent and release of information, confidentiality policies, and chief security officer job descriptions. Other reference models have been developed to guide the use of e-mail between patients and care providers (Kane and Sands, 1998). The examples below explore some of the uncertainties surrounding Internet policies and procedures.

Example 1: Monitoring/Conducting Health-Related Chat Sessions, Bulletin Boards, and Forums. A number of health care organizations and consumer health Web sites have established chat rooms and forums for their members. Chat rooms and forums would appear to have clinical, service, and marketing value for a wide variety of users: the chronically ill, family members of patients with debilitating diseases, consumers interested in health care topics, and providers. Hosting such sessions, however, can raise a number of issues that the sponsoring organization and the moderator must address. For example, can the care providers who moderate them diagnose or suggest treatment in such forums? What types of liability does the sponsor assume for the quality of information, the behavior of the forum participants, or the outcome of a participant's efforts to seek care? How do providers and patients prevent the formation of inappropriate provider-patient relationships? What are the characteristics of a high-quality forum service?

Example 2: Assessing Trade-offs Between Security/Confidentiality and Access. Some providers and payers will extend their services to enable patients to access their personal clinical data over the Internet. A number of online health companies are already providing such a service. These services may offer information related to test results and suggestions for pursuing related health care (e.g., a test showing high cholesterol levels might elicit a recommendation to seek dietary counseling). Such access and the information it provides may improve care as well as patient perceptions of service quality. However, such access also poses security and confidentiality risks. How can organizations balance the technical and management mechanisms required to provide this access against the need to maintain acceptable security? Furthermore, as consumers are offered the opportunity to create and maintain their own health and medical records online, new issues arise regarding data availability and integrity. Data for these records will come from claims, electronic medical record systems, and provider questionnaires, and from the patients themselves. A patient's physician may have only a limited opportunity to review this record to assure its integrity and quality.

Example 3: Evaluating Content. A large number of Web sites (20,000 by some estimates) offer health information, algorithms for evaluating health risks and status, and tools for managing chronic diseases. This is a potential boon to consumers because the information is widely available; however, providers and consumers often find it difficult to evaluate the quality of information available on sites that provide such content. Health care organizations need to determine, among other matters, how they can help individuals distinguish reliable information dispensed by reputable sources from less reliable information, and how providers (especially physicians) can deal with the demands for untested treatments sometimes coming from individuals who perform their own Internet research.

Technological Capabilities

All industries are besieged by claims that Internet-based content, services, and applications can solve a wide range of problems that have plagued prior efforts to implement other information technologies. In health care, these problems include the difficulty of integrating a diverse, heterogeneous set of legacy systems; a lack of data standards; the complexity of medical practice; and complex, politicized health care organizational structures. It is not clear whether the traditional hurdles to implementation of complex clinical information systems, such as the electronic medical record, are significantly lowered by the use of the Internet and related technologies. For example, although the capability to provide access to a set of services, content, and applications through a wide array of workstations and other devices might reduce the support costs for an application, it is not clear that the aggregate cost of the application infrastructure is reduced.

It is highly likely that the use of the Internet and related technologies will ease some of the challenges that have plagued the implementation of information systems in health care over the years. It is also highly likely that some challenges will persist, unaffected by the presence of the Internet. Regardless of these uncertainties, new applications will be based on the Internet and related technologies, and legacy applications will be fitted with interfaces to the Internet. Inappropriate expectations of the Internet's ability to solve certain problems can cause the Internet's true contributions to be disregarded or organizational resources to be squandered. As they assess Internet-enabled applications—particularly those retaining the same labels as non-Internet applications (e.g., electronic medical records)—health care organizations will have limited resources with which to understand the value added by the Internet. The following examples illustrate some of the dilemmas that may arise.

Example 1: Cost of Applications. Many organizations assume that Internet applications will reduce hardware costs by allowing the use of networked computers (or ''thin clients") with less internal capability than traditional desktop computers but with access to shared information and applications stored on centralized Web servers. To assist with this transition, application service providers (ASPs) such as and QCSI are offering online access to a variety of computer programs. Unfortunately, few full cost comparisons have been made between ASP-delivered applications and those delivered with existing architectures. Moreover, there may be hidden costs in the transfer to an Internet-based infrastructure. For example, an Internet-based infrastructure introduces new security vulnerabilities that must be addressed, and the ability of organizations to benefit from the Internet will depend on other IT-related expenditures. Variations across institutions in the implementation of EMRs have a significant effect on an organization's capability to capitalize on the Internet in support of delivery of care, payment and administration of care, and research. Hospitals and insurance plans need to have networking infrastructure, electronic medical records, and clinical systems in place before they can develop more interesting Web applications. Elements of the infrastructure include operating systems, networks, information, and applications.

Example 2: Design Challenges. Clinical applications of the Internet pose complex design challenges. The applications must support comprehensive interactions in a manner that is intuitive, efficient, dependable, and fast and that clearly indicates the next set of options. Are there design situations and tasks for which the Internet, specifically the Web, is either ill suited on the one hand or well suited on the other? Are additional refinements needed to tailor Internet-based services to different user groups with different capabilities and needs? The enrolled clients of MCOs and HMOs may vary considerably in their socioeconomic status and educational levels, for example, and different capabilities may be needed to get them to use online services. The match between what health care organizations can do to better structure information access, and what clients require and can use, needs to be examined.

Example 3: Ease of Use. Individual human factors constrain Internet use in health care organizations. Applications must be easy to use and well integrated into the daily routines of users. The use of IT by health professionals is growing, but it is not uniform across regions (e.g., rural vs. urban areas), medical specialties, or practice types. Some applications have a long history (e.g., results reporting systems), yet it is not clear what factors facilitate the use of information technology by health care professionals or what types of organizational arrangements or financial incentives facilitate or impede the technology's use. Not enough is known about the barriers faced by care providers and consumers in using the Internet routinely in health-related activities. A substantial gap exists between a relatively small group of providers and consumers who actively use the Internet for any purpose and the much larger group that has not used it or cannot use it. Similarly, not much is known about the training requirements that Internet technologies will impose on provider organizations. Substantial innovation and development will be needed to train and prepare care providers. Training for clinical information systems has always been difficult and labor-intensive. Applications often have hundreds of important features that are difficult to teach to care providers who are impatient and pressed for time. Does the ubiquity of the Internet and Web ease the training burden?

Example 4: Systems Integration. Internet technologies are touted as a new answer to the challenges of integrating large numbers of diverse legacy information systems. However, it is not clear to what degree the technology can overcome difficulties such as the lack of data syntax and semantic standards, technology incompatibilities, and vendor unwillingness to participate actively in projects that integrate their systems with those of competitors.

Human Resource Needs

A significant organizational commitment to Internet-based applications requires information technology workers who are skilled in new technical areas such as HTML development, Internet security, and digital commerce. It may also result in unanticipated needs for expanded computing and information processing skills among the organization's information technology staff and other workers. For example, a patient at home whose workstation experiences problems while accessing an organization's Web site may call that organization's help desk for support (see Box 4.1). The organization can thus be confronted with potentially enormous and unanticipated support costs. Providers who enable their patients to send e-mail may discover the need to redirect office staff and nursing time to responding to e-mail and printing messages for filing with paper records.

Box Icon

BOX 4.1

Unanticipated Support Costs. The emergence of unexpected technical challenges is illustrated by the experiences of Kaiser-Permanente of Northern California with its consumer-oriented Web site. The (more...)

Health care organizations would benefit from information on the staffing levels and skills needed to develop, implement, and support Internet-based applications. Some experience has accumulated during early demonstrations and evaluations of electronic medical records. In addition, real-life experiences or lessons learned, in the form of case studies or conference presentations on new or more complex situations, would assist many organizations in planning for Internet use. The following examples suggest some of the staffing issues that may arise.

Example 1: Information Systems Staff. Internet-based applications are likely to present information systems staff with situations that are new or more complex than those they encountered with other technologies and applications. As more patients begin using its Internet-based offerings, an organization may be asked to provide workstation support to an increasingly broad and less-well-controlled user base. Troubleshooting problems on a network shared by multiple organizations can be difficult. Organizations may need to expand their staffs in traditional information systems categories, such as application developers and analysts, implementation and training, database and network technical issues, and support (e.g., for the help desk). They may also need to retrain existing workers to enhance their understanding of new Internet technologies and the ways in which they can be used in a health care environment.

Example 2: Process Support Staff. Management, medical and allied health personnel, and clerical staff will need to support new clinical, administrative, and financial processes. New processes may include triaging, responding to, and filing patient e-mail and responding to patient requests for appointments; managing Internet content updates and versions; developing Internet-based curricula and serving as teaching assistants to remote students; and managing telemedicine consultation setup and sessions. Additional staff may be needed to carry out these functions, and existing staff may need retraining.

Establishing Organizational Leadership for Information Technology

Health care organizations will not increase their commitment to Internet-based applications without strong leadership. Issues of vision and leadership are often crucial determinants of successful health care applications of information technology (IT) in general. Limited, narrowly focused applications may be implemented at a grassroots level in an organization and successfully applied, but when applications require complex interactions across—and potentially beyond—the organization, the skills and talents of individual participants must be augmented by strong institutional leadership and a shared vision of what the organization is trying to accomplish.

Until the 1980s, information systems managers for major corporations typically played a technical, service-oriented role. They brought technical computing and communications skills, plus management abilities, to the organization. In recent years, however, the strategic role of information systems has become clearer as corporations plan for the future, identify new business opportunities, and implement new practices for communicating with clients, distributing products, and managing inventories and finances. As a result, the technology managers are increasingly identified as key strategic leaders for the organizations—at least outside the health care industry. Their titles have generally evolved (typically to chief information officer (CIO) or vice president for information systems and technology) to reflect this central role. When their roles were considered technical rather than strategic, they often reported to the chief financial or administrative officer. Today, however, they more typically report to the chief executive officer (CEO) and participate actively in high-level strategic planning, priority setting, and decision making. In fact, Peter Drucker has suggested that information and supporting technology is becoming so central to strategy that the CEO of the future will be the CIO (Drucker, 1999).

Another important change has occurred during the past two decades. Originally the IT leader had little industry-specific expertise (e.g., a drug company CIO typically would lack a medical or pharmacology background). Their responsibilities were largely confined to managing large-scale technical installations and implementations, and the IT activities were viewed primarily as a cost center for the organization. It is now axiomatic in many industries, however, that the CIO has deep industry expertise. Ideally, It leaders "grow up" in that industry and combine domain training or expertise with education in, or an inclination toward, information systems. Rather than constituting a cost center, the IT functions overseen by the CIO are increasingly viewed as enablers of key business or strategic opportunities. Several studies across a range of industries have demonstrated a relationship between the effectiveness of an organization's application of IT and the presence of a senior, strategy oriented information systems executive (CHIME, 1998; Earl and Feeney, 1995; Kilbridge et al., 1998; McKenney et al., 1995; Ross et al., 1996; Sambamurthy, 1996). Effective use of the Internet is unlikely to be an exception.

In health care, the pre-1990 model lingers, with CIOs who often have limited experience in medical environments and a set of expectations and reporting structures that de-emphasize a strategic role and instead suggest a largely service and infrastructure orientation. This is true at all industry levels, from community-based hospitals to large biomedical research universities. The reporting level and professional background of the information strategy leader in an organization inevitably influence the attention that information management receives and can affect the types of initiatives undertaken. A CIO with a background in clinical medicine might place a higher priority on the establishment of EMRs and decision-support systems than would a CIO with a strictly technical background. This is not to suggest that every information strategy leader in health care needs to be clinically trained as well. What is critical is that the CIO function as a professional peer of the organization's senior leadership. this individual will require a deep understanding of the business and mission of the organization and a place at the table when strategic decisions are made.

Health organizations need to recognize the importance of IT management. Certainly there are important educational issues: health care leaders must be familiarized with the fundamental role that It needs to play in their organizations, and an expanded cadre of future CIOs must be produced who have a combination of technical and management skills as well as knowledge of the medical environment and its complex cultural constraints. The effective mobilization of the Internet for health care, and its use for highly leveraged applications and demonstration projects, will require an investment and commitment from medical organizations and visionary leadership from CEOs and other key managers who understand the strategic role of the technology and the return on investment that can be expected.


Although Internet use is embryonic across U.S. industry, its transforming potential can be seen in the existing Internet initiatives and experiences of health care and other organizations. Health care organizations and Internet-based suppliers of products and services are experimenting with different relationships between participants and different types of services, seeking to find business models that work. It is clear, however, that the Internet can advance the strategic interests of the health care industry. Nevertheless, health care organizations will confront many barriers to Internet use. As improved technologies become deployed in the Internet, organizations will be able to consider new applications, and new barriers are likely to arise.

Research in several areas could give health care organizations the confidence they need to move forward in using the Internet, First, research on Internet-induced changes in health care economics, organizational form, and interorganizational processes would provide guidance for organizations and patients, helping to ensure that the changes are effective and that they do not materially damage the health care system or harm the health of patients and consumers. Second model policies and procedures for the effective management of Internet-related clinical, administrative, and fiscal processes and activities would help organizations address these issues before they become problems. Third, an assessment of the Internet's capability to resolve (or not resolve) the health care system's persistent difficulties with implementing and managing older information technologies would provide guidance on the value added. Fourth, case studies of the staffing levels and skills needed to develop, implement, and support Internet-based applications could assist planning for Internet use. Poorly conceived or poorly executed change could have serious negative consequences for the nation's health care delivery system, health care organizations, and health care research and education, as well as for its citizens. All of this research is needed for developing information and guidance to promote a positive transformation of the health care industry.


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Other types of health organizations that are not directly involved in the provision of health care—such as educational institutions, insurers, and public health agencies—will face similar challenges, but they are not addressed specifically in the chapter.


The Organization for Economic Cooperation and Development (1999), for example, estimates that between 2000 and 2005, 60 percent of retail stock trading but only 20 percent of book sales and 7 percent of music sales will migrate to the Internet.


Similarly, online travel service companies, such as Travelocity and Expedia, have adapted airline reservation systems in ways that allow consumers to make purchases directly from airlines, eliminating the travel agency as an intermediary.


Security, scalability, human resources, and cost are common areas of uncertainty with new information systems.


The American Medical Informatics Association has developed a set of guidelines to help providers determine how to use e-mail for patient care (Kane and Sands, 1998).

Copyright © 2000, National Academy of Sciences.
Bookshelf ID: NBK44715


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