Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

President Bush on Aug. 22 issued an executive order directing agencies that administer or support most health insurance programs to implement “interoperable” technology standards when acquiring or upgrading equipment.

The order also requires that agencies provide clear quality measurements and pricing information. Finally, agencies must create incentive programs to improve health care, such as providing financial rewards to doctors and patients who adopt recommended practices.

Contractors hoping to do business with federal agencies must adopt the same policies.

Collectively, the agencies cover health care for some 125 million individuals. Department of Health and Human Services Secretary Mike Leavitt said the move would create a huge market incentive for health IT without regulating the entire industry.

When powerful customers refuse to do business with health care providers and vendors that do not foster health IT and other standards, he said, “the market begins to organize itself” to improve care and boost efficiency. Alluding to the order earlier this month, Leavitt urged large employers and state governments to follow the federal example.

Agencies must comply by January 1, 2007. However, exactly how the order will be implemented is unclear.

Most likely, enforcement will require health care providers to show good-faith efforts, says Gregg Malkary, founder SpyGlass Consulting Group, a health IT consultancy. “I’m not sure how much can be done in so short a time frame. In [the health care] industry, they’ve spent a decade trying to get consensus standards.”

However, if the order does change the technology that health providers and insurers buy, its effects will spread through the entire market. “Once the government starts to demonstrate that they can pull this off, we’ll see the other hospitals start to adopt similar standards,” said Malkary.

The federal government last year awarded millions of dollars in grants earmarked for establishing health IT and measurement standards. However, the order issued this month does not specify standards or standards-setting bodies.

Earlier this year, the Agency for Healthcare Research and Quality released definitions and other tools with an eye to standardizing measurements across different health care providers. The order states that quality measurements will be established by “multi-stakeholder entities identified by the Secretary [of Health and Human Services] or by another agency.”

Last month, the Certification Commission for Health Information Technology, or CCHIT, released a list of approved technology products based on standards the group had developed with the government’s blessing. However, CCHIT focused on the functions that EHR (electronic health record) systems should provide, saying that additional requirements such as interoperability would be established later.

“The big question to date [for interoperability] has been what standards are there and whose standards are they going to use,” said James Morrow, a practicing physician who also heads the committee on EHR certification with the Healthcare Information and Management Systems Society, an industry group. Even so, the order could move the health industry in the right direction. “We have to answer this question of how to communicate one to another in a seamless fashion before people get on board in large numbers.”

Check out’s for the latest news, views and analysis of technology’s impact on health care.