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Source: Forbes.com Forbes.com

Big Tech Fights High Health Costs

Published: 21 Dec 2009 21:19:52 PST

BURLINGAME, Calif. -- Craig Barrett spent three decades at chip giant Intel and retired as chairman in May 2009. He saw Intel's health care costs spiral during his tenure. Now he sits on the board of Dossia, a nonprofit aimed at helping corporations reduce the amount they spend on health care. He spoke with Forbes Technology Editor Kerry Dolan about how rising health care costs are a competitive disadvantage and how employees can take charge of their own health information.

Forbes: Why have you shifted from purely an IT focus at Intel to an IT health focus?

Craig Barrett: There are really two reasons for getting interested in health care. One is it's the last industry that hasn't really adopted IT to modernize itself. It's still kind of operating in the 19th century: face-to-face office visits, handwritten records. Every other industry has fully embraced IT and become more efficient, more effective, more cost effective and delivering better service to the customer. Health care has sat off to the side. So from an IT perspective, that's one reason.

From an employer perspective, health care costs have been going up much faster than inflation. So health care becomes an increasingly bigger part of the cost of doing business. A company like Intel pays $10,000 or $11,000 per year per employee in a self-insured health care model. So you have to recognize that impact on the cost of doing business. It's a natural gravitation to look at IT and health care and what you can do to modernize the system.

So tell us about Dossia.

I'm a director for Dossia [a nonprofit consortium]. Dossia really started when about 10 companies got together and said, "Hey, health care costs are getting so large we need to do something." The fundamental place to start if you're going to bring IT into health care is personal health records.

We all have seen doctors across the country, and been vaccinated by different people. Nobody has his or her total health record. To try to pry health records out of a place like Palo Alto Clinic, or Stanford, or Mayo, it takes weeks to get your health records. If you really want your employees engaged in taking care of their health, managing their health care, you have to give them that ability, and that's the personal health record.

So Dossia was created as an employer-provided personal health record to the employees at that company. Basically a service given to the employee: a personal, private, portable health record. We create the architecture, the repository for the information, but the employee owns it. The employer has no way to get access to that information.

The employee can choose who to share it with, what to share if they're going to share it with a doctor. You don't have to share the whole thing. But here is a safe repository for the employee's health information. You architect it as you would any one of these programs. You have a safe vault for the information; you have an open interface at the bottom such that it can be auto-populated by information from pharmacies, from doctors, from clinics. So the information can find its way automatically into the system.

There's an open interface at the top that the employee can put different applications on. If you want an application because you're a diabetic and you want to manage diabetes or you want to manage a heart issue, or you just want to manage your wellness program or you want to manage the financial parts, what you need is an application that sits on your database.

Companies like Intel, AT&T, Pitney-Bowes and Wal-Mart are the founding members. We provide the health information system, the place to put your information. We work with everyone to have it auto-populate at the bottom. We provide the open interface or API at the top so that third-party applications can sit on that. And the employee benefits. We think this is the first step you have to do to get employees managing their own health care. Give them the information, and then let them manage their health.

What's the incentive for the pharmacies, the doctors and the insurance companies to enable the auto-population of data?

Well, there are a couple of incentives. First of all, the companies I mention are all big companies and we are self-insured. So we can go to the administrators of our insurance programs, the Cigna or the Blues or UnitedHealthCare, whoever it is, and say, "Uh, would you like our business? If you like our business, then you will provide this capability." So that's one incentive.

The other incentive is, obviously as well, that the individual owns their health information, and has to have access to it. Congress has decided that you as an individual own your health information. It's not the property of your doctor; it's not the property of your insurance company. But you have a right to that information.

Do you have a personal connection to health care in addition to your Intel connection to this?

I used to go to the Palo Alto Medical Clinic for my annual exams and such, and I moved. I now go to the Mayo Clinic in Scottsdale, Ariz. I had to go through the issue of getting my information transferred. It took six or eight weeks to get the file Xeroxed, mailed, and then I'm never sure if it really got assimilated at the other end. That's the sort of thing that you ought to be able to just say, "Transmit my information," and type an address, and click and go, and it's gone.

For me the real challenge is having managed a large company and seeing the cost and the impact on the company, and then the impact on competitiveness. If you do the simple mathematics, we spend $2.5 trillion a year in the U.S. on health care. We have about 300 million people. That's about $8,000 a year per person, if it were spread like mayonnaise. But it's not, it's lumpy. Most of the cost goes for elderly people and for chronic illness.

Just thinking in averages for a minute: $8,000 a year for a family of four is $32,000. If a company like Intel wants to hire an engineer in India or China, $32,000 is more than the fully loaded cost of that engineer, and that's just the health care cost in the United States.

Anyone who says this is not a competitiveness issue is crazy. They haven't looked at the numbers. They haven't managed a company. They're looking at it in some abstract way. But if you just take the average numbers, it's a huge competitive impact to the U.S. to spent $2.5 trillion, or 17% of its GDP, on health care.

If you put it that way then Intel has a greater incentive to hire more people in India than it does in the U.S., if it can, as health care costs increase.

That's the competitiveness part of it. You've seen the movement of jobs out of the U.S. on the basis of just labor cost or on the basis of availability of educated professionals. Health care is just another driving force to do that same thing.

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