McKesson's E-Health Gambit

McKesson Corp., which traces its roots back to the 1800s, when it delivered supplies to hospitals by horse and buggy, is the United States' largest distributor of medical supplies. Now the company, which racked up $80.5 billion in sales last year, is selling more software and IT gear as well. The shift mirrors a larger one taking place in the health-care industry, which is in the early stages of a makeover from a paper-based market to a digital one.

Digital images are replacing paper and film, Pure says.

"This will be a decade of dramatic transformation," says Pam Pure, an executive VP at McKesson who's also president of its provider technologies division, which sells IT products and services. Pure says the health-care industry will be reinvented over the next eight years--that paper-based records and processes will be replaced by electronic ones, and automated systems will reduce costs and improve patient safety. "There's lots of work and challenges ahead," she says.

President Bush last year set a goal for most Americans to possess electronic medical records by 2014. The effort is being led by national health IT coordinator Dr. David Brailer, who's pushing health-care executives and lawmakers toward digital records, computerized drug-ordering systems for doctors, and other technology the administration says can save money and lives.

According to the Institute of Medicine, part of the government's National Academies for science and technology, between 44,000 and 98,000 Americans a year suffer serious complications or die because of medical mistakes that could be prevented through better technology. And in a report this month, the Department of Health and Hu- man Services said health-care companies spend between $17 billion and $42 billion a year on IT. Brailer estimates that electronic health records alone could save at least 7.5% of costs annually--and perhaps as much as 30%.

Among McKesson's innovations that could further cut costs and improve care: software that lets doctors prescribe drugs via a computerized order-entry system, robots that can package drugs in hospital pharmacies, and wireless bedside bar-code readers that let nurses scan codes on medication and patients' wristbands to verify that the correct drugs get administered at the proper times, and via the right "route"--pill, intravenous, or injection. McKesson's medication inventory-management systems can alert a hospital that it's time to reorder drugs. And McKesson runs a Web portal that lets doctors check on patients' status, as well as order lab tests and arrange for medication delivery to patients' homes or offices. In April, doctors logged on 1.7 million times.

Meanwhile, McKesson's document-imaging systems can help hospitals eliminate records departments that store mountains of paper files. One customer that's benefiting from more automation is Concord Hospital, a 295-bed, $450 million-a-year facility in Concord, N.H. Concord expects to complete an E-records project with McKesson this summer, says Deane Morrison, CIO of Concord Hospital and Capital Region Health, the health-care provider that operates the hospital. Once the project--which involves scanning and digitizing hundreds of thousands of pages--is complete, "there will be multiple [electronic] access points" to medical records files, eliminating the need for doctors and others "to wait for the paper," Morrison says.

McKesson also last year completed a nine-month-long medical-imaging system project that saved Concord's film X-rays as digital files. Concord also uses McKesson's bedside bar-code system, which Morrison says has cut drug-distribution errors by more than 90%.

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