Health systems wising up to smart card technology

Healthcare Purchasing News, May, 2001 by Julie E. Williamson

After more than a decade of discussion on the value of smart cards in the healthcare arena, some US health systems are finally moving forward with them. They're adopting the software technology to make more secure purchases, condense and store patients' medical information, and resolve claims in real time.

The Veterans Health Administration, in conjunction with the US Department of Defense, recently implemented a nationwide four-pilot healthcare smart card program. It makes the VA the healthcare industry's leader in electronic data capture, cashless procurement, and telemetry technology.

"Cards can play an important role in delivering healthcare solutions to patients, and can meet business needs with either low-technology or high-technology solutions," said Daniel L. Maloney, director of emerging technologies, Department of Veterans Affairs, VHA, Silver Spring, MD. "Both patient cards and healthcare provider cards need to be considered part of the system.

"A card can carry a visually and electronically readable identifier to speed patient information lookup in an automated system, which can lead to decreased paperwork, administrative costs, data entry errors, and better, faster delivery of services and benefits," Maloney continued.

The VA's four pilot projects include the following:

* Electronic purse technology that transfers cash value onto cards;

* Virtual private networking technology that allows selected users limited access to corporate resources from the Internet;

* Home health patient data storage; and

* A multi-application card for patient identification, data-sharing capabilities among agencies, and electronic purse options.

"Online applications, bar coding for medications, computerized record systems, telemedicine, and smart cards are all examples of VA developing information technology on part, and often ahead of the rest of the country," said Hershel W. Gober, VA acting secretary.

Exploring 'smarter' options

The VA isn't the only one recognizing the value of the microchip. West Virginia University in Morgantown, WV, is deploying smart cards at rural healthcare facilities across the state to aid and support telemedicine technology and applications.

"The technology is here and health systems are catching on to its benefits. I predict it'll become even more widely used now that security and privacy regulations are being imposed," said Michael Henderson, senior healthcare consultant for Tillinghast-Towers Perrin.

Celebration Health, encompassing an Orlando, FL, hospital and 11 others throughout Oklahoma City, is also using the technology for storing and securing real time patient medical information.

Smart cards were designed to increase the level of security of purchasing transactions and data capturing, and to make it easier to encode detailed information in a limited space. Because they come equipped with a bar-coded strip that contains condensed data much like a standard credit card, users can avoid typing -- and retyping -- information into the computer, thereby making online transactions more secure.

Buying hesitation

Although hospitals are beginning to adopt smart card technology for patient data storage, many still aren't as comfortable using it for purchasing routine medical and surgical supplies.

That may come as a surprise to some, particularly since the value of smart cards has been highlighted at healthcare materials management conferences for years.

"Smart cards were hyped up during healthcare conferences, but for the majority of purchasing folks, they just didn't seem like the most intelligent choice at the time," noted healthcare consultant Garry Guthry, MedPro Solutions, Miami.

The fact that several technology wizards found a way to fraudulently outsmart security-hyped smart cards certainly didn't help the cards' cause.

"If anything, it just made material managers want to keep conducting business as usual. They just didn't want to take a chance, particularly in a time when cost control and security measures were becoming an even bigger issue," Guthry added. Another drawback, he said, was that many facilities didn't want to give up their "payment cushion" by using technology that would pay for purchases instantaneously.

"Hospitals historically have been comfortable paying for purchases the old-fashioned way because they could hold onto their money a bit longer," Guthry noted. "Smart cards weren't the top choice because the funds would be deducted automatically at the time the order was placed."

Cashless supply chain?

Things are starting to change. Nowadays, growing numbers of material managers are using smart cards to make small-dollar, high-volume purchases, as well as keep track of capital equipment and service records.

Several years ago, St. Paul, MN-based HealthEast implemented a procurement card program to enable hospital executives and purchasing personnel to buy low-cost or emergency items. Incorporating smart card technology generated significant advantages, with "an estimated $18,000 annual savings in process improvements ranking high on the list," according to material management director Jim VanDreasek.