For Doctors, Blocked Internet Artery

After mounting major efforts to foster electronic commerce and connect schools and libraries to the Internet, the federal government is falling short on another ambitious cyberspace goal: using the Net to improve rural medical care.

A 2-year-old, $400-million federal program aimed at helping the nation’s 22,000 rural medical facilities get high-speed Internet access did not award any money last year because of bureaucratic delays. And as of July 6, just $289,424 had been distributed to 68 of 452 applicants--less than one-fifth of the annual $1.4-million cost of administering the program.

Likewise, the federal Health Care Financing Administration, which runs the government’s giant Medicare insurance program, has thwarted high-tech medicine on the Internet by “severely limiting the services that are covered,” said Sen. Kent Conrad (D-N.D.).

And laws restricting the practice of medicine across state lines have prevented many physicians from offering their services--via the Internet--to the sick and infirm in other regions.

Internet-based health care, or telemedicine--along with electronic commerce, entertainment and education--once was touted as one of the Internet’s most compelling applications.

Proponents envisioned medical facilities in remote areas transmitting live video of patients over high-speed Internet lines to big-city hospitals, where medical specialists could treat patients. Neither doctor nor patient would have to travel long distances.

The government’s top booster of the technology, Vice President Al Gore, told an audience at Louisiana State University in 1997 that various government initiatives would help medical providers “harness these new technologies” to break down “the walls of isolation for the one in four Americans who live in rural areas.”

A telemedicine program at LSU now serves about 2,000 patients annually throughout the state. Rural Louisiana facilities with high-speed Internet access can transmit X-ray film to LSU for evaluation by its radiology experts or conduct a real-time video examination of injured patients online. But the progress has mostly come through state and private support.

By contrast, federal policy missteps and red tape continue to pose significant obstacles to telemedicine’s exploiting the stunning growth and influence of the Internet, according to the congressional General Accounting Office, some members of Congress and industry critics.

While more than a dozen federal agencies, from the National Aeronautics and Space Administration to the Agriculture Department, have programs aimed at fostering the development of telemedicine, “no government-wide strategy exists to ensure that the maximum benefits are gained from numerous federal telemedicine efforts,” the GAO said in a 2-year-old report that the agency said still applies.

“The expansion of telemedicine,” the agency added, “is hampered by legal and regulatory, financial, technical and cultural barriers facing health care providers.”

“Physicians really gain a lot using video over the Internet. The technology is there and the hardware costs keep coming down,” said Richard Ferrans, chief of telemedicine for LSU’s health sciences centers and an expert in the field. “What’s really needed now is some federal support.”

Robert Waters, head of the Washington-based Center for Telemedicine Law, said that state legislatures are redrawing a patchwork of laws restricting the practice of medicine across state lines. The California Legislature, he said, recently extended the state’s Medicaid program to cover more telemedicine procedures.

The wheels of the federal bureaucracy are grinding more slowly. The rural health care program provides a case study of how well-intentioned federal efforts can go awry.

Congress authorized the program in 1996 as part of landmark legislation deregulating the telecommunications industry. The nonprofit Universal Service Administrative Co. was charged with administering the program under the supervision of the Federal Communications Commission.

The awarding of money to beneficiaries, however, never accelerated beyond a crawl.

About 3,000 of 22,000 rural health care facilities initially contacted by the government expressed interest in the program, which covers the additional costs of Internet hookups in remote areas. The funds actually go to telephone carriers offering high-speed Internet access, not to rural health care facilities.

About 600 rural medical facilities filed formal applications. Good Samaritan Health System, based in Kearney, Neb., sent its form to Universal Service in May 1998 in hopes of securing Internet lines for 10 hospitals in rural Nebraska.

Instead, in March 1999, said Donna Hammack, director of grants and special projects for Good Samaritan, “we got a letter saying we qualified for zero amount.” She said that Good Samaritan was disqualified because it chose AT&T; Corp.’s high-speed Internet access service.

The reason: FCC regulations limit health care facilities to carriers authorized by state utility officials, which generally means regional and local phone companies.

“I guess we had bad luck,” Hammack said. “We didn’t know anything about that.”

The FCC initially set up three quasi-private corporations to administer the health project as well as a companion Internet wiring effort for schools and libraries. But the commission had to scrap that arrangement after the GAO ruled in 1997 that it lacked the authority to create the corporations.

A reconstituted Universal Service Administrative Co. was deemed legally acceptable, but it quickly attracted criticism for its massive spending. Mel Blackwood, its vice president for external affairs, defended the company’s high administrative costs as an inevitable part of setting up a new enterprise.

“You are always going to see a spike in the beginning when you have to hire people, incur Web site design [costs] and other expenses,” Blackwood said.

But in a report to the FCC in March, Universal Service officials acknowledged that their administrative costs were too large for a program that was serving only a few hundred medical facilities. “Reductions in administrative costs are necessary to bring program costs in line with program demand,” the report said.’

Lee Bailey, the $143,000-a-year president of Universal’s rural health care division, was forced to resign, according to sources close to the company. Bailey, a former Commerce Department official, could not be reached for comment.

He was praised by Cheryl Parrino, Universal’s chief executive officer, for his “commitment and leadership.” Others were not so charitable.

“In my more than 20 years in Washington, I’ve never seen a program as badly run as this,” said John Linkous, executive director of the American Telemedicine Assn. “This program has been a total disaster.”

Universal’s performance has left hundreds of rural health care facilities in the digital dark ages--using the same slow dial-up Internet connections available to ordinary home computer users.

Universal has proposed to the FCC that it streamline its application forms, simplify the calculation of benefits and try harder to attract rural health care facilities to the program. But some of those who have applied unsuccessfully for help said that they may seek out non-government sources for financial help.

“I know of quite a few facilities that don’t plan to reapply,” said Neil Neuberger, a Virginia telemedicine consultant.