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ALSO Health insurers move online

In this story: Insurance database updates can be painful Purchase antidote on the Net Greatest concern is cost RELATED STORIES, SITES

March 31, 1999
Web posted at: 9:36 p.m. EST (0236 GMT)

by Todd Woody

(IDG) -- When online health-care pioneer Healtheon went public this year, Wall Street responded enthusiastically to its ambitious plan to connect doctors, hospitals and insurers over the Internet. A competitor, WebMD (which has a content relationship with cnn.com), expects a similar reception. But doctors will be a harder sell. For a sober diagnosis of the promise and pitfalls of moving health care online, schedule an appointment at San Francisco's Bay West Family Health Care Medical Group.

With the flu season in full swing, the waiting room is packed one recent morning at Bay West, a busy seven-doctor practice in the city's Mission district. Bay West sees about 130 people a day, each patient generating a paper file that eventually ends up in a backroom billing office.

"We'll sit on these for at least four weeks before submitting the claims," says Bay West administrator Kevin Sullivan, pointing to a stack of patient files that date back to December. He pulls out a file and logs on to a computer to show why. The patient's insurance card indicates coverage since February 1998. But the patient still doesn't appear on a database maintained by Brown & Toland, a management group for some 2,400 California doctors. That's because the insurer uses a patient- identification system incompatible with the commercial database used by Brown & Toland. At the best of times, it can take two months for a patient's new insurance to be confirmed by the database. "It's crazy," Sullivan says.

Insurance database updates can be painful

And it gets worse. When Sullivan enters another patient's name into the computer, the database shows insurance that was canceled back in October 1997 as current. "I bet we're still getting paid," he says, picking up a computer printout of the monthly fees Bay West receives for each patient enrolled in a health-maintenance organization. Sure enough, Brown & Toland continues to pay Bay West for the patient's defunct insurance.

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Database screwups have more serious implications than bungled bookkeeping. "I can tell you horror stories where we believed we were patients' doctors when we weren't," says Bay West physician Barbara Bishop.

Just a few weeks ago, one of Bishop's patients needed emergency gallstone surgery. As the operation was being scheduled, Bishop discovered the patient actually had not been insured under Brown & Toland for more than six months. The out-of-date database, however, showed her coverage as valid. "It was a nightmare," Bishop says. "We were running around trying to sort out her insurance and get her a doctor."

The Internet provides a potential fix. "It's amazing that people's lives have depended on this system," says Charles Saunders, VP and medical director at Healtheon, the Santa Clara, Calif., startup founded by Netscape Chairman Jim Clark.

Purchase antidote on the Net

Healtheon and Brown & Toland promise an antidote to the costly paper chase that inflates health-care costs and eats away at physicians' incomes. Brown & Toland contracted with Healtheon to develop an online system that will instantly confirm a patient's insurance, make referrals and submit claims at one Web site.

"Anything that can minimize paper and streamline the process would be great," says Sullivan, who has applied to participate in the rollout of the Healtheon system called Racer, which stands for Referrals, Authorization, Claims, Eligibility and Reporting.

The technological hurdles to moving Brown & Toland online are formidable. Bay West, for instance, uses several different proprietary computer systems to check insurance, make referrals, manage cases and obtain lab test results. Other Brown & Toland practices may use other versions of those programs, or entirely different ones. Integrating these functions into one Web site that all doctors' offices can use is no small task. Healtheon's Saunders says Racer is the most complicated project the company has undertaken.

Technology isn't the only obstacle to moving doctors onto the Web. Internet-shy physicians and their staffs' ingrained habits don't always mesh with the solutions devised by engineers. And not every doctor's office uses the same business practices. Family practitioners, with their heavy patient loads and high overhead, face different economic challenges than oncologists and cardiologists.

At Bay West, Sullivan signs on to a computer near a suite of examining rooms. The same proprietary service used to confirm patients' insurance also can be used to make electronic referrals to specialists. It can be used that way, but it's not. Instead, Bay West staffers fill in paper forms and fax them to Brown & Toland's administrative office. A Brown & Toland employee then enters the information into the same database available to the Bay West staff and faxes back the approval. Sullivan shrugs. "It's very hard to get people to change the way they've been doing things."

Bay West, for example, subscribes to expensive medical journals, even though free Web sites like Medscape offer access to the latest research and publications. One problem: The practice's only Internet connection is in Sullivan's office. Bishop logs on from home, using Physicians Online to research medical journals and visit sites dedicated to holistic medicine. But persuading other doctors to take advantage of the Net isn't easy. "Just getting them to use a new phone system was a major ordeal," Sullivan says.

"Physicians, who are notorious for not liking change, will take some time to get used to this method of communicating," says Brown & Toland CEO Michael Abel. "One of the biggest challenges is to educate the office staff. We're finding that physicians' offices are not necessary staffed with computer-comfortable individuals."

Greatest concern is cost

Sullivan's greatest concern about moving Bay West to the Net is cost. Brown & Toland has not announced Racer's pricing. But Sullivan fears that if the physicians organization charges a fee for each authorization or referral, the price will be prohibitive for practices like Bay West, which have large patient rosters. "We should be first to go to the Internet, but we may be the last," he says. The payoff of using the Internet may be higher for well-heeled specialists like the California Pacific Cardiovascular Medical Group, a 10-doctor practice near San Francisco's posh Pacific Heights district. Like other specialists, cardiologists typically earn a fee for service and maintain lighter patient loads. General practitioners, on the other hand, receive a nominal monthly payment for each managed-care patient regardless of the time or effort expended on medical care.

Michael Erhard, administrator of California Pacific Cardiovascular, says managed care nonetheless has taken its toll, partly because some of the practice's doctors also provide primary care and get the same small fees as family practitioners. So when Healtheon came calling, Erhard signed his unit up for the Racer pilot project. After four months, the practice offers a preview of the wired future.

The paper deluge that afflicts Bay West appears more under control at California Pacific Cardiovascular's hushed offices. When a patient approaches the reception desk, a medical assistant goes to the Racer Web site to instantly confirm his insurance and eligibility for treatment. If the patient's family practitioner is on Racer, that doctor makes the referral online to California Pacific Cardiovascular and eligibility is confirmed by the time the patient walks in the office door. Normally, a patient might wait weeks while referrals are faxed back and forth between the doctor, Brown & Toland and the specialist.

"It cuts down on a lot of paper; it cuts down on a lot of time. The information is more live," Erhard says. "Of course, you have a lot of prima donna physicians who won't type in a referral and would rather give the job to an assistant who writes down the information and then enters it into Racer."

The pilot program originally was to roll out last August, but Racer's complexity delayed the debut until November. "What they didn't do initially was take it out to a practice and ask, 'What makes sense?'" Erhard says.

Erhard says he's pleased with Racer but disappointed that it is limited so far to insurance authorization and referrals. "Unfortunately this is where it begins and ends," he says. Claims still must be processed separately for offices that use certain software programs. Other offices already can file claims from the Racer Web site.

Still, Brown & Toland CEO Abel acknowledges that it must move fast to incorporate other features into Racer, such as the ability to retrieve laboratory test results over the Internet. "I think in general we are very pleased. We also realize that the physicians want more. I would like to deploy faster and have some of these extras added to it."

Brown & Toland hopes to have 300 physicians online by year's end. Like Bay West's Sullivan, Erhard says price will determine whether doctors adopt Racer. As a participant in the pilot program, California Pacific Cardiovascular receives free access to the service for a year.

Practices like California Pacific Cardiovascular are taking other steps to bring medicine into the electronic age. Examining rooms feature computer terminals linked to an electronic medical-records systems. Ideally, patients' electronic records, part of a proprietary system, would be integrated into Racer so that a doctor can send a patient's medical history at the same time she makes a referral.

Meanwhile, the practice's doctors are starting to use the Net for research. Or more accurately, they've begun to ask Erhard to log on for them.

But increasingly, cost and convenience aren't the only factors driving doctors online. Patients themselves are growing Internet savvy and less tolerant of the medical profession's technological backwardness. "Patients go online and bring you articles from the medical journals," says Bay West's Barbara Bishop. "You have to go online to keep up with them."