By David C. Kibbe and Brian Klepper

Nowhere has the Obama's administration's activities to unfreeze private markets been more dramatic than in the health IT products and services sector, especially for electronic health records (EHRs).

When the president was elected, the entry rules to this market were complex and expensive, safeguarded by an interlocking system of standards organizations and industry alliances that defended against innovation and new entrants.

In 2009, the Certification Commission for Health IT (CCHIT), the sole certifying organization, had approved fewer than 40 EHR products, a handful of which had cornered the small but lucrative market " about 20 percent of physicians and fewer than 10 percent of hospitals. Pricing for these vendors' ambulatory products could be as high as $50,000 per physician the first year, with 15-20 percent annual maintenance fees subsequently. Hospital EHR contracts routinely ran into the tens of millions of dollars during the first years of implementation.

Contrast this with early 2011, after administration of certification rules had been transferred to the Office of the National Coordinator for Health IT (ONC) inside the Department of Health and Human Services (HHS). Now more than 200 EHR technology products have passed ONC certification, and can be used by physicians and hospitals participating in the incentive programs that reward "meaningful use" of EHR technology. Three-quarters of these are complete EHRs and/or EHR "modules" for the ambulatory care space, nearlyfour times the number of EHRs certified under the old regime.

Many newly-certified ambulatory EHRs are Web-based and sold by subscription, with minimal up-front costs. Industry pricing is now nearly an order of magnitude less than before, with fees in the $150-$400 per physician per month range. A couple of these products are ad-supported, and free of any fees. A handful has been designed to run on mobile devices.

None of this could have happened without the Obama administration's intervention, which included coordinated actions by the staffs at ONC, the Centers for Medicare and Medicaid Services (CMS), the National Institute of Standards and Technology (NIST), and the White House IT team.

The 2008-09 health IT market environment " low penetration and sales, expensive products, predominance of older client-server architectures, extensive barriers to entry " was at odds with the administration's goal of rapid EHR adoption, considered necessary to both improve quality and lower costs of care. They set about to change the market with a series of deft moves.

How They Did It
First, they overturned the industry "˜voluntary' EHR certification process, replacing it with one based on internationally accepted procedures. This established a competitive landscape where private companies " transparently credentialed by the government " would compete on price and service.

They increased the number of ONC accredited certifying and testing bodies (ACTB), creating competition where once there was a bottleneck. There are now six organizations doing certification and testing.

They endorsed a modular approach to EHR technology design, specifically permitting EHR modules to be certified under the new certification and testing regime. Modularity, among other things, makes it easier for developers to focus on a particular set of functions " e.g. e-prescription or quality reporting " and bring those products to market more quickly.

They insisted on health data exchange standards that included the market-tested Continuity of Care Record (CCR) standard that emphasizes XML and simplicity, in addition to the Continuity of Care Document (CCD) from the Health Level 7 standards organization for transporting clinical content.

They funded research that explicitly seeks to move the market towards innovative approaches developed outside health care, including the establishment of a plug-and-play "medical app store," based on the Apple iPhone/iPad App Store.

They collaborated in the writing of the PCAST (President's Council of Advisors on Science and Technology) recommendations, including a "universal health data exchange language" in XML that would accelerate the pace of interoperability among EHR technologies.

And they initiated the Direct Project to create the protocols and specifications necessary for simple, secure, and affordable e-mail exchange between doctors, and between doctors and patients. This approach will dramatically advance the number of physicians capable of meeting meaningful use requirements for health data exchange.

The administration's intervention in the health IT market has been lightning fast, in large part because it's policy imperative came from Congress and the timeline in the Health IT for Economic and Clinical Health (HITECH) portion of the American Recovery and Reinvestment Act (ARRA) of 2009. It also owes much of its speed to the liberal amounts of money that Congress approved, some of which ONC/CMS has been able to spend right away.

It's important to note that the administration did not choose to take over the health IT market, for example, by requiring all doctors to use a particular brand of EHR owned by the government. Instead, the Obama team chose to unfreeze the health IT market, to improve its dynamics and its offerings.

Brian Klepper, PhD is a healthcare analyst and managing principal of Healthcare Performance Inc. David Kibbe, MD and MBA, is senior advisor to the American Academy of Family Physician. His commentary reflects his own opinion and not that of AAFP. This blog, portions of which are published here, first appeared in Health Affairs.