Big Money for Manufacturers of Digital Medical Record Systems

Posted on Feb 20, 2013

jfcherry (CC BY-SA 2.0)

Companies that lobbied for legislation promoting the digitization of medical records are reaping a reward of $19 billion in government money for technology that critics call “mediocre.”

Supporters of the switch say the new record systems ease the prescription process. Others contend they can be difficult to use, cannot share patient information with other systems, and sometimes add hours of work to physicians’ load.

The clear beneficiaries of the government’s investment—which came about as part of a piece of health records legislation included in the 2009 stimulus bill—are the companies that lobbied for it.

“Executives at smaller records companies say the legislation cemented the established companies’ leading positions in the field, making it difficult for others to break into the business and innovate,” The New York Times reports. “Until the 2009 legislation, growth at the leading records firms was steady; since then, it has been explosive. Annual sales growth at Cerner, for instance, has doubled to 20 percent from 10 percent.”

—Posted by Alexander Reed Kelly.

The New York Times:

While proponents say new record-keeping technologies will one day reduce costs and improve care, profits and sales are soaring now across the records industry. At Allscripts, annual sales have more than doubled from $548 million in 2009 to an estimated $1.44 billion last year, partly reflecting daring acquisitions made on the bet that the legislation would be a boon for the industry. At the Cerner Corporation of Kansas City, Mo., sales rose 60 percent during that period. With money pouring in, top executives are enjoying Wall Street-style paydays.

None of that would have happened without the health records legislation that was included in the 2009 economic stimulus bill — and the lobbying that helped produce it. Along the way, the records industry made hundreds of thousands of dollars of political contributions to both Democrats and Republicans. In some cases, the ties went deeper. Glen E. Tullman, until recently the chief executive of Allscripts, was health technology adviser to the 2008 Obama campaign. As C.E.O. of Allscripts, he visited the White House no fewer than seven times after President Obama took office in 2009, according to White House records.

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