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Accenture

Germany is driving a unified view of patient information across the country, which will ultimatelyreduce costs and improve overall patient service.

Germany follows the Bismarck model of healthcare based on contributions both by employees and employers to a partially duplicated health insurance system. There are two parallel health insurance systems. Statutory health insurance funds (once called sickness funds) have a market share of 85 percent. They are nonprofit and are organized by geographical region, trade and company. They have different contribution levels, but all are required to cover a broad range of benefits. In 1994, Germany created a program that forced statutory health insurance funds with wealthier members to contribute a portion of their payroll revenues to a national pool, which then distributes it to the poorer ones.

The majority of Germans have incomes under $40,000 per year and are obliged to take statutory health insurance. For the wealthy, private health insurance can be purchased and offers more extensive coverage, but this is not automatically an advantage. Only 15 percent of Germans are fully insured by private insurance companies. Private insurers also offer additional coverage services (e.g., single bed in hospitals, dental care, etc.) for members of statutory health insurance funds.

The German government does not “own” payers or providers; however, it has legislative authority to regulate healthcare. The German provider sector consists mainly of hospitals, hospital chains and physicians in competition to deliver care to citizens. Over 75 percent of hospitals are owned by public institutions and are nonprofit — with about two-thirds owned by cities or states but not the federal government (the federal government only owns army hospitals). The last third are nonprofit hospitals owned by churches or other social organizations. Twenty-five percent are private hospital chains; this share has increased steeply, having comprised only 10 percent five years ago.

Doctors employed by these hospital organizations are public service employees. General practitioners, however, are required to join regional associations, which pay them from regional funds. These associations have administrative responsibilities and negotiate with payer organizations on behalf of physicians.

Services rendered by general practitioners are paid by patients’ insurance companies. Prices are regulated, so that competition is determined by the services offered and the quality of those services, rather than price. There are also associations of regional insurance carriers that work collectively to negotiate with provider organizations for general terms of pricing and volumes of service.

The result is a country where almost all citizens have health insurance and there are virtually no shortfalls of service, such as waiting lists for difficult operations or people lacking needed care. Furthermore quality of medical services is good and meets qualified standards of Organization for Economic Cooperation and Development countries.

Challenges: Setting the Stage for E-Health in Germany

The German healthcare system is not without problems. As more and more Germans demand high levels of health services, there is a growing need to increase efficiency of distribution. In addition, citizens have little control over the medical services they receive and what they pay for these services. The result is continued pressure on insurers and a growing consensus that Germany needs to limit and manage the services paid by administrative bodies, and shift the burden to citizens.

The German government wants people to pay a larger portion of discretionary care costs and is also pressuring providers to become more efficient in managing healthcare. However, because the German healthcare system is decentralized, there is no one origin of patient data, so redundancy is a huge problem.

The lack of centralization is hurting e-health initiatives. In the United Kingdom, the centralized National Health Service has the authority to define exactly what will happen during a given timeframe. This helps create a blueprint for infrastructure and a business case for the whole system. In Germany, however, this blueprint is missing because no group has taken ownership in absence of final responsibility.

The result is that e-health in Germany will be built incrementally. To date the only application focus has been around e-prescriptions. This application involves routing a prescription electronically from the doctor’s office via the patient to the pharmacy and then through the pharmacy’s back office, making the process fully automated. There is no actual plan for additional applications and the financial consequences for the entire EHR operating model have not been adequately addressed.

Overcapacity challenges German hospitals. The average hospital stay in Germany is 10 days — significantly higher than other Western European countries or the United States. Capacity will continue to be a problem, as it is widely expected that only 2,000 of the 2,800 German hospitals in operation last year will survive this decade. This is likely to lead to pressure to reduce hospital stays and stays will further be reduced by primary care services shifting to ambulatory forms.

Another problem is the lack of cooperation between the primary sector and hospitals. Physicians tend to work independently, without knowledge of each other or patients in common. This creates layers of redundancy, duplicate diagnoses and multiple therapies. German physicians are trying in vain to introduce evidence-based medicine; however, this type of cooperation will not be possible until a collaboration platform is established.

The statutory health insurance system has also come under pressure during the last decade. As the government tries to cut the cost of healthcare, co-payments for medical treatments have been increasing and are likely to increase further in the future. According to “OECD Health Data 2003,” Germany’s health spending was at 10.7 percent of the GDP, which is considerably lower than that found in the U.S., but still a high percentage of the GDP.

The Introduction of e-Health in Germany

The German e-health initiative was founded to meet some of the challenges to the current system and is similar to what is already occurring in other European countries. The German government is driving e-health through the introduction of a new health card, which is supposed to allow easy access to patient records and other data for anyone involved in a patient’s care. At the beginning of 2003, German Chancellor Gerhard Schroeder stated that electronic healthcare cards (eHCCs), also referred to as e-patient cards, for patients and EHRs would be a priority of his administration and would be achieved by 2006.

The Federal Ministry of Health and Social Security responded to Schroeder’s call for action by assembling a group of technology companies with the “bIT4health” project to implement eHCCs. Responsibility for the rollout falls to the individual health insurances for their members; they are supposed to roll out in 2006 and 2007. The new system will be designed to provide an electronic key to the cross-institutional, cooperative efforts of Germany’s 80 million patients, doctors, dentists, hospitals and pharmacies, as well as the related infrastructure. The card alone, however, is not enough to pave the way for a true, national EHR.

Financing Mechanisms

The financial dimensions of the German e-health initiative are substantial. IT infrastructure and rollout costs for the e-health and professional cards alone are estimated at €1 billion to €1.7 billion. Although no figures are yet available to estimate the cost of funding the necessary applications to tie electronic systems together or the cost of operations, training or compatibility investments into IT systems, estimates are in excess of €10 billion.

So who will pay for this massive undertaking? Germans believe the costs of e-health will be borne mostly by insurers, who supposedly will save money by eliminating manual processing and redundancy. An example of how this might work can be seen in current specifications for Germany’s e-prescription system, which eliminates the paper trail for prescriptions. The multiple steps involved in getting prescriptions from doctors to patients to pharmacies will be dramatically reduced. Since these processing costs have historically been paid by insurers through reimbursement, insurance companies stand to benefit most from streamlined e-prescribing if they are able to adjust their reimbursement accordingly.

Providers may also pay for the evolving EHR, but in an indirect way. A new law recently introduced in Germany reduces providers’ bills by 1 percent if the providers do not participate in an integrated care model. This has motivated hospitals and entrepreneurial physicians to explore different contract models to reduce redundancy costs and increase cooperation between general practitioners and specialists such as oncologists, orthopedists and cardiologists. The money withheld from nonparticipating physicians is then used to fund organized forms of cooperation. It is expected that these funds will someday fund EHR initiatives to encourage electronic collaboration.

Current State

The only part of a German EHR that has been defined so far is infrastructure to support the e-health card initiative. The basic application definitions for eHCCs, which drive centralized patient data, have been created and infrastructure requirements such as new terminals, hardware and card readers have been defined but not yet implemented.

E-prescription, the first “killer app” of the e-health system, has been defined to some extent; specifications have already been written with RFPs currently out to create a cost benefit analysis for the entire project. It is widely expected that within a year, the first infrastructure project will begin and application packages will be awarded to winning vendors shortly thereafter.

In Germany, some precursors to electronic data exchange are already in place. For example, the government currently requires all hospitals to send bills and commercial transactions electronically to insurers. For hospitals to be reimbursed, they must transmit data electronically. Most hospitals in Germany also have modern ERP systems and many are currently introducing electronic medical records, at least internally. Of all the players involved in Germany’s e-health initiatives, hospitals are probably the furthest ahead with some sort of clinical information system in place.

Although hospitals are ahead of the game, minor players within the healthcare system will require the necessary infrastructure upgrades to drive EHR initiatives forward. For example, on the primary care side, there is less existing infrastructure; physician associations claim only 75 percent of all Germany’s general practitioners have Internet access.

eMDLetter will probably be the second application to be created once e-prescribing is implemented. eMDLetter will be Germany’s first stab at an electronic medical record, creating a standardized messaging system to transmit information electronically between providers. This will provide an easier way to share patient information and will serve as a prototype for an electronic health record.

A similar application project is currently in the works in Scandinavia in which standardized email systems are being used to securely communicate medical information. This system, however, does not use the type of central data repository required for an EHR. It simply allows information to be easily read and understood by medical record applications through a standardized interface. eMDLetter, like other applications, requires full implementation of the e-health card before it can be introduced.

Barriers to Implementation

There are several barriers to overcome before Germany can introduce a national EHR. One of the biggest is the lack of a complete blueprint, specifically in the areas of applications and functionality for the whole platform.Without a clear vision, the project will be extremely difficult to manage.

In addition, buy-in must be obtained from physicians, which may be difficult due to the current reimbursement structure. Because physicians are currently reimbursed by regional associations instead of directly by insurance companies, insurers do not necessarily know which physicians provide the most profitable or efficient health services. Implementing e-health will add transparency to the process, allowing insurers to examine physicians’ bills and prescriptions. German physicians are not accustomed to this level of scrutiny and are therefore resisting the introduction of electronic processing. They are also reluctant to help pay for a system that is seen as initially offering the biggest benefits to insurance companies. Physicians will need to be sold on efficiency gains to overcome their current resistance to change.

The work being accomplished around e-prescribing illustrates many of the barriers to EHR implementation in Germany. The infrastructure for e-prescribing will come first because it is fairly easy to implement; however, because the application landscape has not been defined, the business case for infrastructure is missing. Critics of the proposed e-prescribing system question how infrastructure can be built if there is no plan yet for specific functionality. There is also ambiguity about the process for implementing e-prescription and when it will occur. The exact delivery timeline is shaky because it will follow infrastructure, which can only occur after e-health cards are in place.

One way of addressing the issue of infrastructure is to actually build infrastructure that can accommodate multiple applications; however, this is time-consuming and expensive. Because no one organization has ownership on a strategic or operational level, there is no project management platform in a professional sense, so problems such as missed deadlines and spiraling budgets are bound to occur.

Germany’s e-health initiatives may also be delayed because current integration is growing from the bottom up. A new law was enacted last year to deregulate the healthcare system and make it easier for corporations, hospitals, insurers and practitioners to conduct business in a regional, contractual way. This caused many healthcare groups to investigate ways to organize medical processes regionally, supported by IT and powered by investment funds offered by the government. The result has been a myriad of applications that are beneficial to regional groups but lack the required standardization or scalability to comply with the future architectural needs of an integrated EHR.

Next Steps

Healthcare reform is expected to once again become a hot topic, most likely by late 2006. Optimistic experts believe that by rising in importance, many of the barriers discussed here will be addressed, if not resolved. Also by that time, many European countries, such as Austria, will have introduced e-health. Germany will want to keep pace with the other countries and will spend considerable effort to resolve any outstanding issues in making e-health a priority. However, it must be noted that large governmental technology projects of the last years have suffered difficulties; for example, TollCollect (traffic control), Hercules (armed forces IT) and digital police radio. These projects have damaged German political credibility and have cost billions of tax funds, reducing the appetite for repetition by the political elite.

The next steps for a German national EHR are clear. The rollout of Germany’s health professional card (eHPC) is expected in 2005 or 2006, so every physician, nurse and healthcare professional will have the necessary keys and standardized identification tools to access patient health records. Then, in 2006 or 2007, the e-patient card will follow. The first applications will probably occur regionally, and will be developed and tested in integrated care models in pilot projects around Germany. Those that are successful might well develop to building blocks of a national EHR that enables cooperation between hospitals, general practitioners, insurers and pharmacies.

The problem is getting started. Because most of the European Union features standardized infrastructure and German infrastructure targets are ambitious in terms of functionality, Germany will lag behind most of Western Europe, including France, the U.K., Netherlands and other countries with centralized healthcare governance.

The application landscape is bound to be rich as competitors race to build solutions that are compatible with Germany’s EHR, with many worldwide, global players already waiting to see how it will evolve, including Microsoft, IBM, SAP, Siemens, Deutsche Telekom and large global players in the smart card business.

Once implemented, the German system may be the best in the world. Functionalities like electronic health cards, double access rights for patients and health professionals and other features make Germany’s infrastructure more ambitious than most other national solutions. Since the German health system has builtin competition, Darwinistic evolution of successful applications may lead to stronger final results than the central governmental authorities could have planned. So over the long term, trade-offs of decentralistic governance may well be judged differently than they are today.

Summary

The German healthcare system faces a host of challenges. Tying together disparate patient data and streamlining processing are problems that can be solved through technology. The real challenge lies in uniting German healthcare players to create an action plan for a national EHR. The current drive to introduce eHCCs will create a partial framework and e-prescribing will present an opportunity to learn lessons for future application development. The greater issue, however, is how to champion a project of this scale and diversity without centralized management. The world will be watching with keen interest.