Canada scandal illustrates perils of health IT stimulus

The scandal involves charges of influence peddling regarding the 2007 award of a health IT contract to Pixalere Healthcare, now called Web Med Technology, for wireless diagnostic software. Money is still being paid despite accusations of fraud and double-billing.

This is a scandal because Canada runs a single-payer health system through provinces like British Columbia. Thus money paid to vendors is "taxpayer money." Accusations have immediate political ramifications.

The U.S. mostly runs a private health care system, and arrangements between vendors and customers are proprietary to those businesses. But that may change thanks to the Obama stimulus, and $19.2 billion in funding under its HITECH Act provisions.

Call it the law of unintended consequences. Many private acts, done in the normal course of business, become matters of criminal interest when public money is involved. A commission becomes a kickback, a sales dinner a bribe.

Health IT vendors and their customers, both hospitals and doctors, are now depending on HITECH money to fund their future deals. While most of the focus has been on defining when "meaningful use" opens the government cash register, few have recognized the possible perils of taking government money.

One of those perils is public scrutiny of private contracts. Is the industry ready for this? More to the point, are the industries ready for this, because both buyers and sellers will face scrutiny.

Companies that fail to win bids now have every incentive to blow the whistle on the winners, holding up contracts for months or years. Doctors who resent health IT for its burdens and audit trails now have an incentive to become whistleblowers, heroic defenders of the public purse instead of mere Luddites.

It's going to be an interesting couple of years.