Abstract
Although the Health Information Technology for Economic and Clinical Health (HITECH) Act has accelerated electronic health record (EHR) adoption since its passage, clinician satisfaction with EHRs remains low, and the association of HITECH with health care information technology (IT) entrepreneurship has remained largely unstudied. To determine whether the passage of the HITECH Act was associated with an increase in key measures of health care IT entrepreneurship. This economic evaluation of venture capital (VC) activity in the US from 2000 to 2019 examined funding trends in health care IT, EHR-related companies, and all VC investments before and after the passage of HITECH. A difference-in-differences analysis compared investments in health care IT companies with those of companies in 3 categories: general health care (non-IT), IT (non-health care), and all US VC transactions. Data were analyzed from September 2018 to August 2019. Venture capital funding received by US companies before and after the HITECH Act. Venture capital investment in health care IT companies and the proportion of those investments going to seed-stage companies, a proxy for very early-stage entrepreneurship and innovation. The data included 70 982 investments, of which 9425 (13.3%) were seed stage, 10 706 (15.1%) were early stage, and 50 851 (71.6%) were growth stage. After passage of the HITECH Act, investment in both health care IT companies and EHR-related companies increased at a rate much faster (13.0% and 11.4%, respectively) than VC as a whole (6.9%). In addition, the proportion of investments going to seed-stage health care IT companies increased compared with both overall VC investments and non-IT health care investments. Health care IT companies saw increased probabilities of transactions being seed-stage of 5.1% (SE, 2.2%; 95% CI, 0.8% to 9.3%; P = .02) compared with the entire sample of VC transactions and 13.6% (SE, 1.9%; 95% CI, 9.9% to 17.2%; P < .001) compared with non-IT health care VC transactions. Health care IT had essentially 0 increased probability of a transaction being seed stage compared with IT companies outside health care (-0.8% probability; SE, 2.4%; 95% CI, -5.4% to 3.9%; P = .75). Although widespread clinician dissatisfaction with EHR systems remains a challenge, the HITECH Act's incentive program may have catalyzed early-stage entrepreneurship in health care IT, suggesting an important role for incentives in promoting innovation.
Highlights
In February 2009, as part of the American Reinvestment and Recovery Act— known as the Obama administration’s economic stimulus package—the US Congress passed the Health Information Technology for Economic and Clinical Health (HITECH) Act
After passage of the HITECH Act, investment in both health care information technology (IT) companies and electronic health record (EHR)-related companies increased at a rate much faster (13.0% and 11.4%, respectively) than venture capital (VC) as a whole (6.9%)
To look for evidence of entrepreneurial finance flowing into the health IT sector, we examined the distribution of venture capital (VC) financing transactions, which typically are investments in young, privately held companies,[21] for health care IT and EHR-related companies before and after the HITECH Act’s passage
Summary
In February 2009, as part of the American Reinvestment and Recovery Act— known as the Obama administration’s economic stimulus package—the US Congress passed the Health Information Technology for Economic and Clinical Health (HITECH) Act. To qualify for subsidy payments, eligible professionals and hospitals were required to certify that they met standards of the Meaningful Use program for EHR systems. Meaningful Use originally comprised 3 stages, each of which required meeting increasingly comprehensive EHR adoption standards, as defined by the Centers for Medicare & Medicaid Services and the Office of the National Coordinator for Health IT, to qualify for incentive payments. Meaningful Use stage 1 set preliminary standards for the electronic recording and reporting of clinical information, requiring eligible clinicians to satisfy a set of 15 core objectives. Centers for Medicare & Medicaid Services and Office of the National Coordinator for Health IT sought to align the program with the National Quality Strategy.[2] Stage 3 further increased these requirements and refined the Meaningful Use standards to focus on the improvement of health outcomes. The Meaningful Use program has since been replaced by the Promoting Interoperability program.[2]
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