Law Students

Why HITECH is Disrupting Healthcare?

You don't really need a crystal ball to pontificate as to why HITECH has been so disruptive. All you need is to be an educated observer of past disruption cycles in other industries (i.e. mainframe computing, print media, search, social media, etc.). The pattern repeats itself. Healthcare is not all that different, except for the fact that it is the last of the great American oligopolies.

While healthcare may not meet the academic definition of oligopoly, it certainly possesses many characteristics that would qualify it as such. The industry has no shortage of sellers (i.e. providers) but it does have a small number of players that control the market (i.e. the insurance companies), and therefore control the industry.

Why has healthcare reform been a fight to the death? It's clear that the incumbents prefer nothing more than the status quo and they have the money, and the reach, to fight the fight; billions of greenbacks are at stake and these "boys" ain't going down without a fight. But what has that got to do with HITECH? Directly, not much, and the proof is that HITECH has gotten little or no mention in the debate. The players, the commentators, and the industry stakeholders see the two as completely separate issues, and they are partly right.

However, here's the kicker, disruption almost always happens when the incumbents are caught asleep at the wheel (e.g. IBM in computing, Microsoft in search, almost everyone in tech regarding social media, the entire print media regarding the Internet, etc.). In short, real disruption comes from left field and takes the conventional wisdom completely by surprise. That is, until some start-up changes the rules of the game and becomes dominant (or appears dominant, since the rest becomes a self fulfilling prophecy).

Even when incumbents are on guard for this type of disruption, the Innovator's Dilemma prevents them from reacting fast enough to prevent the rules from changing, or to profit from said changes. Their legacy success gets in the way. HITECH created an environment that forced providers, and the vendors that service them, to start thinking about change. It loosened up the structural impediments that had become ossified in the healthcare industry over the last 150 years.

Sure, the old system was arguably phenomenally successful in its time. It produced the best educated and most qualified providers in the world. But it has been showing signs of aging for well over 30 years now, sans any meaningful reaction at all to a changing marketplace. Why? Because there was no profit based reason to change. HITECH provided regulatory reasons to consider change. The Internet, and the enabling technologies that underpin it, provided patients (and providers) a platform wherein they could demand change (i.e. refusing to be bystanders in a service so critically important to them and their families). The tech industry began to smell money.

In aggregate, all of these forces began to align, and the result is that change is coming to healthcare. The exact form it will take cannot be predicted, but this perfect storm of forces can no longer be resisted. Part of that change is the need for a dramatically improved privacy and security environment. The new healthcare system simply can not function without it.

To stay current on the HITECH Act and its quickly changing regulatory scheme visit the HIPAA Survival Guide website and/or sign up for Digital Business Law Group's free monthly compliance newsletter. Also, check out a FREE EHR Checklist and a FREE Online