Healthcare Reform: Promoting Efficiency in Information Systems and Improving Service

December 20 (Tuesday) 2005

Healthcare reform is becoming a major policy issue for Japan. Behind the debate about healthcare lie the simultaneous rise of medical costs and the continuing rapid ageing of society. National healthcare costs for the 2003 financial year were over 31.53 trillion yen, and as this figure only includes those costs covered by insurance, it is estimated that total costs-including medical expenditure at the patient's own expense, and various other fees-could in fact be much higher than the country's general-account tax revenue of 44 trillion yen (in FY 2005). In order to curb these accelerating healthcare costs, the government has made efforts toward curbing costs, as I touched upon in the Tuesday, November 11 article in this section.

In regard to healthcare management, the prime minister and the Council on Economic and Fiscal Policy have emphasized the necessity of interlocking macroeconomic indicators with the containment of rising healthcare costs. Healthcare practitioners on the ground and the Ministry of Health, Labor and Welfare rebutted this, however, arguing that it is impossible to interlock macroeconomic indicators, and that management of increasing healthcare costs would best be served by a diversified approach on the basis of costs for a majority of healthcare items. Eventually, a compromise was agreed upon that stipulated the management of the total sum of healthcare costs for a target number of years.

Last time I discussed the importance of a framework for microeconomic incentives such as the rational behavior of healthcare practitioners, medical institutions, pharmaceutical makers, and patients as a way to put constraints on healthcare expenses. This time I would like to explore the containment of healthcare expenses from another important perspective.

The idea I wish to emphasize this time is the improvement of the content of healthcare services and the reduction of costs by making full use of IT and digitization in healthcare and thereby raising the efficiency of healthcare delivery systems. In Japan's current healthcare environment, the use of IT and digitization in healthcare is being promoted as part of the Action Plan for the Informatization of Healthcare and other government plans. However, there are many defects and issues with these plans, such as the redundancy of informatization between organizations, and a lack of on-site control over the meaning of informatization; in some cases, healthcare information itself was not established before the introduction of IT. Solving these problems through the appropriate use of informatization also serves to improve the content of healthcare services, and is connected with the reduction of total costs. Three examples of how this can be achieved are illustrated below:

(1)Integrating Healthcare Information with IT Systems
Though the government is currently promoting the informatization of health and medical information, this policy is being pursued without sufficient cooperation between departments in the government. This has led to overlapping investment and other redundant costs, as well as a lack of improvement in the quality of services. The Ministry of Health, Labor and Welfare, for example, has promoted the informatization of medical systems in such diverse fields as countermeasures for lifestyle-related diseases, strengthening insurers' capabilities through integrating and restructuring local insurance providers, separating the government health insurance system from the Social Insurance Agency, promoting computerized, online receipts, verifying the qualifications of insured persons, and verifying the qualifications of physicians, among others. All of these have been pursued haphazardly by various departments, however, and lack coordination. The promotion of IT allows information to be shared across various organizations, and thus should lead to improved quality in services for citizens and a simultaneous decrease in management costs; the fact that this has not occurred illustrates the need for true integration of IT.

(2)Transferring Administrative Operations for Local Healthcare to Local Governments
The current healthcare reform plan aims to transfer as many aspects of administrative operations for healthcare as possible to local governments, and thereby establish comprehensive and self-contained systems at the local level. However, before the implementation of IT was pursued in this way, fundamental questions such as what kind of services should be provided to local residents, and what kind of mechanisms are the most appropriate for doing so, were not dealt with sufficiently. As a result, there are many regions with no clear vision for what their appropriate system architecture should be. Before the promotion of IT at the local level, it is imperative to verify the exact content of services and the structure of their provision, and to design an IT system that can provide these services with optimal efficiency.

(3)Improving Information in the Specialized Diseases Field (e.g. cancer)
Insufficient surveying and information storage in the field of pathology for many types of diseases puts patients in grave danger. The most conspicuous example of this is that of cancer research. A host of vital questions have not been sufficiently documented-such as what kinds of cancer require which kind of treatment and in what stages should this be conducted, as well as what kind of medical facilities recommend which kinds of treatment, and furthermore whether or not such treatments have any effect at all-and the accumulation and storage of such information is also behind. As a result, patients who suffer from life-threatening cancer are faced with an urgent problem. The establishment of a system for the rapid surveying, storage, and provision of vital information in fields such as cancer research is vital.

The above cases illustrate the lack of understanding and the deficiency of information itself within the present workings of the vertically divided administration and health services. As made evident in these examples, it is imperative to understand the kinds of medical services that people require, the kinds of organizations and mechanisms necessary to provide these services, and the kinds of information systems that can efficiently manage them. In order for the current healthcare reforms to succeed in raising the quality of medical services and in reducing medical costs, accurate understanding of these fundamental issues of medical information, and the urgent engagement and solution of these issues, is critical.