Monday, 26 October 2009 20:00

Keeping tabs

Taking the proper steps to protect some of the most critical information for how you conduct your business is paramount to its livelihood. There’s a lot at stake.

“There’s a 2005 statistic that says 70 percent of identity theft starts with an employee stealing personal data from their employer,” says Traci A. McGuire, director in the Litigation, Labor & Employee Relations and Health Care practices at Kegler, Brown, Hill & Ritter. “Although you want to be trusting of your employees, you also have to realize the far-reaching nature of technology and who has access to that information. You have to assume that once it’s out there on the Internet, it is available to the whole world.”

Smart Business learned more from McGuire about steps businesses should take to properly monitor their critical information.

What are the risks businesses face by not regulating employee access to information?

The No. 1 concern is that employees can steal confidential information and do a lot of damaging things with it. There are a number of cases where employees steal confidential information about, for example, a manufacturing process or something that would be of interest to a competitor. If they go to work for a competitor, they have information that’s going to be used against you.

An employer may have one view of what is confidential information. On the other hand, an employee’s job may be just one slice of how a company operates, yet that employee may have access to information he or she does not realize is confidential. An employee may think it’s appropriate to share information in an e-mail or on Facebook as part of a routine dialog, or even just in conversation. But the company views that as an egregious breach of sharing confidential information because of who their clients and customers are.

What can, and should, employers monitor?

Generally speaking, employers can monitor any kind of electronic media that they want, including an employee’s use of Facebook or Twitter, their cell phones, digital cameras, computers — so long as they create a realistic expectation of privacy or the lack thereof for the employee.

An employer needs to first focus in on what information is important to the company and what they really want to protect. They can write a policy as broad as they want, but that’s only good if that’s what they really need. You have to be practical and realistic about how employees actually use technology. Is it really realistic to think that you’re going to control and prohibit each employee from doing any online shopping at Christmas time or from checking Facebook during the day? And do you really want to have that level of control?

You need to identify first what information exists within the business and what employees have access to. Do all employees have access to trade secrets, client lists, customer lists, or billing practices? The policy you’re putting in place also needs to address the specifics of the technology that you want to monitor. Do you have a policy that restricts the use of company-provided cell phones to work-related things only? The more sophisticated a business is, the more thought needs to be devoted to that process. Employers need to consider whether they provide laptops that employees take home, or whether they have an external Web-based system that could be accessed from anywhere, even if it’s not on a company-provided computer. You need to be thorough when you think about all the ways employees can access a company’s information.

Once the employer determines the type of media that the company wants to monitor, they have to decide how to carry it out. How are you actually going to monitor it? What are you going to do if you find somebody has breached protocol? You need to have a policy in place that’s consistent and treats employees uniformly during that process. You can’t treat one employee better or differently than another employee when something unexpected happens because you could be looking at the possibility of some type of discriminatory treatment.

How should employers communicate their confidentiality policies?

Employers have to inform their employees and put them on notice of their privacy rights. You can’t just monitor things and not tell them and then try to crack down. That’s not really going to be helpful.

Typically these types of policies are written into the handbook. And certainly if you hire somebody new, you give them a handbook, allow them some time to read it and then you have them execute some type of document that acknowledges their receipt of the handbook. For ongoing employees, as technology changes, obviously it’s hard to keep up, so you want to update your handbook. The important part is to get the employee to acknowledge that they have received the information that is a supplement or update to the handbook, that they’ve had an opportunity to read it and they understand what it says. It is those documents that are going to be the key part to being able to enforce the policy down the road.

Traci A. McGuire is a director in the Litigation, Labor & Employee Relations and Health Care practices at Kegler, Brown, Hill & Ritter. Reach her at (614) 462-5408 or tmcguire@keglerbrown.com.

Published in Columbus
Friday, 25 September 2009 20:00

Surviving layoffs

Reductions in force are fraught with potential legal landmines. Even the most sensitive of employers can find themselves defending discrimination claims after a RIF. And any time that you have a difficult economic environment, you see a dramatic rise in employment-related claims.

“There are a number of issues that arise in different phases of a reduction in force,” says Larry Feheley, chair of the labor and employee relations area at Kegler, Brown, Hill & Ritter. “One of the important things is that employers allow enough time to plan and implement a RIF properly. It’s not something that you want to do like a financial fire drill.”

Smart Business spoke to Feheley about the legal implications surrounding a reduction in force and how to avoid liability.

What are the first steps when considering a RIF?

It’s important to identify what’s driving the reduction. Is it redundancies resulting from a merger? Is it a change in the business model? Or is it that decreasing revenues can’t support current expenses? The answers to those questions impact, first, whether alternatives to layoffs may be available and, secondly, the legal issues that you’re going to have to confront in the context of the RIF.

Part of planning the RIF appropriately involves the consideration of whether or not all the nonpersonnel costs have been eliminated. Owners may think they have to reduce their staff because they have to cut their personnel costs. But sometimes they don’t factor in the cost of the layoff itself. Obviously there’s severance pay, unemployment benefits, etc. But there are costs from employee morale or lawsuits or charges that you have to defend. Sometimes you lose good people and you’re not in a position to immediately pick back up when business turns around.

Some companies have tried mandatory furloughs, reduced salaries or wages, or reduced hour schedules. Each of these alternatives has its own separate, but frankly manageable, legal issues. Taking these steps before jumping into a dramatic layoff keeps the work force intact, but spreads the burden across a number of people in what is hopefully a temporary situation.

What are common mistakes employers make when approaching a RIF?

The most common mistake I see is that supervisors are allowed to select people for a layoff viscerally — through a gut feeling about whom the best employees are. The key is to develop defensible criteria on which to uniformly evaluate individuals in the workplace. The reference point of all of that is what the organization is going to look like after you’ve done the RIF. And, concomitantly, what the skills and abilities are that you’re going to need in this new business structure.

It’s important to set up criteria of what skills and capabilities you need, and then to evaluate current employees against those skills in a business-related way. Try to make it as objective as possible and stay away from things like ‘attitude’ and ‘teamwork’ and those kinds of subjective qualities that can often be seen as stereotypical.

All too often, the process isn’t documented. If there’s a challenge to a RIF, an employer is asked: ‘How did you select the people to be laid off and to be retained?’ In my 30 years of practice, I’ve found that judges, juries and civil rights commissions believe that in today’s world, if businesses make important decisions, they are written down and there’s documentation.

How should an employer go about implementing the RIF?

Determine how the news is going to be communicated to people. What will each employee be told? How will the process of people leaving their office be managed? There ought to be a prepared script or a plan.

A RIF is a traumatic event for the employees who survive. Their friends are gone; everyone is wondering who or what is going to be next. So without making promises that you can’t keep, you have to try to create a sense that the worst is over and you can work together and get through this to allay some of that fear and sadness.

You may also need to communicate either ahead of time or in the course of this with your key customers, investment partners or banks, maybe the media, depending on how prominent you are in the community, and perhaps some governmental unit.

What are some of the legal issues presented by RIFs?

It’s unlawful to select somebody to be laid off because of a legally protected characteristic or activity. The most common is the well-known litany of EEO protected classes: race, color, creed, sex, national origin, age, disability, veteran or military status. But it also includes the person who made a sexual harassment claim, the person who took FMLA leave, the whistleblower or the person who filed a workers’ compensation claim.

Depending on the size of the layoff, you may be required by the federal WARN law to give written notice 60 days in advance to the employees laid off. This often brings its own issues, because giving notice can cause a great deal of attrition, and you still have to somehow manage the business for 60 more days.

An employer offering severance or any other type of benefit to the departing employees may require a release or a waiver of claims in return. Under these circumstances, you want the employees to promise that they won’t sue the company in return for benefits that you’re giving them, but there are a number of hoops that you have to jump through to make sure that you do that validly. For example, there’s a federal law called the Older Workers Benefit Protection Act requiring that you include a number of specific things in the release agreement and that you give the affected employees a special notice that describes the contours of the RIF.

Published in Columbus

Companies often choose markets to enter based on an opportunity that presents itself. They might get an e-mail from a potential customer saying they’d like to buy their product and sell it in another country. While there’s nothing wrong with those opportunities, the question is: Are they the right opportunities in which to invest?

“It’s important to have a strategy in which you’ve studied markets that have the most potential and determined where you want to focus your efforts and, more importantly, your time and money,” says S. Martijn Steger, chair of the International Business?and Mediation practices?at Kegler, Brown, Hill & Ritter. “If you’re more focused you’ll be more likely to create a profitable operation, and less likely to overextend yourself.”

Smart Business learned more from Steger about how to spend your time and money wisely on a venture in an international market.

How can businesses identify opportunities in other markets and establish a presence?

When a client calls and says, ‘I met this great person at a trade show and she wants to distribute our products in all of Asia. Draft up an agreement for us,’ I would say, ‘I can do that. How does that fit your international strategy?’ Because that might be a great opportunity, and it might not. It depends on whether you can really devote the necessary resources to make that a successful venture.

If all you’re doing is making occasional sales in a market, and if that’s consistent with your strategy, then you probably don’t need a whole lot of firsthand knowledge of the market. You do have to be able to trust whomever you’re selling to that they’ll find the right customers, and that they’ll pay you when they buy products. If you’re not getting payment in advance or a letter of credit to secure the payment, then you have an accounts receivable risk in that country.

On the other hand, if you want to do a joint venture, buy an existing company or form your own company, you have an elevated need to have someone you know and trust in that market who can give you local knowledge and guidance. Also, having your project leader spend significant time in the country sends the strong signal to your partner that you’re committed. It’s critical not to take the human element out of business. Without that commitment, you have a higher risk that something goes wrong and you won’t know about it until it’s too late to fix it.

What are the pitfalls to look out for when entering another market?

Many companies assume that their intellectual property protection here will carry over to another country. As a general rule, you need to seek registration in that country, whether it’s a trademark or a patent. Also, you need to have the right agreements in place with whomever you’re working with to make sure that they’re also obligated to protect your trade secrets. And if you’re going to have employees in another country, make sure their employment agreements specify that anything they develop belongs to the company. Otherwise, in many countries, an employee developing intellectual property on the job has a claim to it.

Legal regimes in both developing and developed countries can be quite different from ours. For example, in most U.S. states, we have the concept of employment at will. We can fire employees for any reason, unless it’s discriminatory. That’s not true in many countries, where employees are entitled to severance at the time of the termination of contract. So reducing your work force in markets where the business hasn’t been as successful as you’d anticipated can be a very expensive proposition.

The tax laws can also be very different. One of the first things to analyze is what your tax exposure is going to be for the type of operation that you’ll have in that country.

What other challenges might businesses encounter?

If you’re going to strategically develop markets, your investments will be greater than for a comparable-sized domestic market. Travel takes longer and is more expensive; plus you’ve got to spend more time training in-country people.

As we draft contract provisions to capture the terms of the deal, normally we’re looking for balance so that both you and your in-country partner believe that it will be mutually beneficial. The value that they’re getting may not be completely equal because their investment may be smaller than yours, but it ought to be commensurate to their investment. Otherwise, resentment will grow, they might want to try to cut corners in order to compensate themselves in other ways and it will undermine a successful relationship.

What other advice can you provide to businesses establishing international operations?

Despite the ease of electronic communications with other countries, the timeline will be slower because of travel time and time zone differences. You will also face cultural differences. The work style may be slower than it is here. If you haven’t invested the time in that market and you’re asking for a major commitment from them early on, they could drag their feet because they haven’t yet been shown the respect that they expect before making their own investment.

When you establish your budgets and your expectations about how long things will take, those kinds of cultural disparities can make a difference. That will impact the time at which you can expect to start seeing profits from your work, and that then needs to be factored into realistic timelines.

S. Martijn Steger?is chair of the International Business?and Mediation practices?at Kegler, Brown, Hill & Ritter.?Reach him at msteger@keglerbrown.com?or (614) 462-5495.

Published in Columbus

It’s a fact: government-related policies affect businesses, from unions and health care to labor law and workers’ compensation. Rather than sit on the sidelines and deal with the outcomes of the decisions made by state and federal governments, it only makes sense that businesses should make efforts to make their opinions known to those who make the policies.

“There are thousands of different points of view from different interest groups, and public policy makers try to take those things into account,” says Elise Spriggs, a director and the chair of the Government & Legislative Affairs practice group at Kegler, Brown, Hill & Ritter. “The concern is if they’re not hearing from you then your issue may be forgotten or they might not be aware of it.”

It’s not only large corporations that can have an influence; any company can simply take part in the process. And for those with a greater stake in the outcomes of these decisions, hiring a representative provides the guidance needed to more effectively, and legally, develop relations with government entities.

Smart Business spoke with Spriggs to learn more about what companies can do to make their voices heard on the policies that impact their practices, employees and operations.

What types of companies should concern themselves with including a government relations and lobbying strategy in their business plan?

This should concern most companies that are impacted directly or indirectly by government regulation. This can include such issues as changes to workers’ compensation laws; business taxes; anything related to health care, whether it be in its delivery or employee benefits; environmental regulations; or proposals to regulate current business practices. We in Ohio have an unemployment compensation trust fund problem, in that we’re under-funding it. We’re not yet sure what the outcome of the decisions regarding this issue will be in the future, but it is likely to impact companies when they decide what those changes might be.

Government policy impacts a wide spectrum of businesses. That’s what makes government relations and lobbying so important; it’s basically advocating a point of view.

How might the upcoming elections affect budget disbursements?

As it relates specifically to state elections, the state of Ohio is looking at anywhere between a $4 billion and $8 billion budget deficit going into the next fiscal year, which will start in July 2011. I think the upcoming elections will impact how public policy makers think that they want to address those budget deficits, whether it be by increasing different revenue enhancements through fees or taxes, or if it’s through cuts, collective bargaining agreements or consolidation. The election will impact how public policy makers decide to proceed.

How can businesses lobby effectively?

The key to lobbying effectively is that it involves more than just trying to persuade legislators/government officials. Businesses need to analyze and recognize the impact that current regulations and statutes have on them or how things that are being introduced or offered may impact them. They need to understand how to effectively communicate their concerns. Companies need to start developing relationships with public policy makers, whether it’s on their own or by hiring a lobbyist to do that for them, in order to educate public policy makers on what impacts their business.

Are there certain restrictions companies should be aware of?

You need to be aware of campaign finance restrictions in general. Specifically, if you get some type of government contract, there are going to be even more restrictions that relate to you. When hiring a lobbyist, it’s part of his or her job to make sure that companies are aware and counsel them on what they can and cannot do related to contributions and/or gifts and how to go about advocating their case in a proper, legal fashion.

What are the issues that companies should concern themselves with today?

The biggest issues to impact businesses are changes to the unemployment compensation fund, changes to the workers’ compensation fund and any proposed changes to Ohio’s business taxes as a result of the upcoming budget shortfall. The state also needs to determine how it is going to implement federal health care reform and how it will impact the state and its citizens.

Elise Spriggs is a director and the chair of the Government & Legislative Affairs practice group at Kegler, Brown, Hill & Ritter. She also works in the firm’s Administrative Law and Gaming Law areas. Reach her at (614) 462-5451 or espriggs@keglerbrown.com.

Published in Columbus

Added to the complication of doing business abroad — tax structures, logistics, insurance, just to name a few — is the continuous need to monitor and guard your intellectual property in the fast-paced global marketplace.

Owners can lose sales due to IP infringements, suffer damage to their brands and goodwill, and lose revenue through missed licensing and product sale opportunities.

“One of the biggest changes we’ve seen over the last 10 years is that international IP issues have become relevant for smaller and mid-size enterprises,” says Steve Barsotti, a director at Kegler, Brown, Hill & Ritter. “It’s a function of globalization and removing some of the practical barriers for doing business abroad. Participating in foreign markets, whether by contracting with a foreign supplier or selling product overseas, raises the issue of IP protection abroad.”

Smart Business spoke with Barsotti about how businesses can protect their intellectual property in the global market.

How has international IP law changed in recent years?

There have been strides made primarily on the procedural front through international treaties and cooperation. However, while those mechanisms provide more efficient procedures for initiating the process, the actual grant of protection is still a territorial and country-specific process. In other words, there is no ‘global’ trademark or patent registration. As a result, the cost of seeking protection increases as the number of markets in which you seek protection increases.

What that means for a small or mid-size business is that they have to be very strategic in where and how they’re protecting their IP, because the registration process can be very expensive. You always have to weigh the costs and benefits in a particular market and determine on an evolving basis what your strategy should be.

How does the Internet play into international IP?

The Internet is not bound by territorial borders. There is only one Internet and it’s accessible from everywhere in the world. So in a very real sense, the marketplace has shrunk and that raises new issues. For example, you may discover through a simple Google search a potential conflicting use of a similar trademark somewhere else in the world; prior to the Internet, there would be very little likelihood that an issue would ever arise. Now, because e-commerce is easily transacted across borders, there can be a very real risk of potential confusion among customers shopping over the Web.

To protect your company’s presence and identity online, effective domain name protection is critical. That, of course, means maintaining and renewing key domains, but also potentially protecting similar or alternative domains. Equally as important is protecting your brand and trademarks through registration in critical overseas markets where your sales will justify the expense.

If you do encounter an issue with respect to domains, there are processes in place that make it simpler to enforce your rights internationally, and that’s largely because the process is managed by ICANN, a non-profit entity that manages the assignment and registration of domain names. Anybody who wants to register a domain has to sign up and play by those rules; so some of the barriers that you typically face in the traditional legal process across borders are removed.

How does a company go about protecting its IP in other countries?

First, a company should consult with counsel about the cost and benefit of registration in the markets where they are transacting business and their IP is exposed. If the business case justifies the cost of registration, then it should be pursued. Most companies don’t go from domestic sales to a worldwide footprint in a single step; it’s usually a staged process. I always encourage clients to keep asking themselves what they’ve done to protect their intellectual property in the markets where they’re potentially expanding and to have an evolving strategy that accounts for changes in the business plan. The most important thing is to not make decisions in the dark and rack up huge expenses that really aren’t going to produce material benefits.

Another critical aspect of protection is effective cross-border contracting, including strong contractual IP clauses that clearly delineate who owns the IP, and non-disclosure obligations where appropriate. Enforcement of those rights remains expensive and fraught with obstacles in many cases, but your leverage will be greater if contracts are thoughtfully drafted with IP considerations in mind.

What should a business do if it discovers its IP is being infringed upon in another country?

The first step is to talk to good business-minded counsel on the front end, because you need to be very strategic in the response. You have to assess what your rights are in that particular jurisdiction to determine whether you even have rights to enforce at all and where the pressure points may be for the infringer. If you do have rights to enforce, it’s necessary to consider the most practical way to achieve your compliance goal; often that starts and ends with a letter exchange. If you must resort to litigation, you need to decide whether it will be more effective to sue in the foreign jurisdiction or in the United States, which requires an analysis of many factors, including ultimate enforcement of any judgment that you are able to obtain.

At the end of the day, the best piece of advice is to conduct sufficient due diligence on your foreign business partners to ensure that you are working with organizations and individuals that you trust, and to be proactive in contracting and in consideration of IP registration in your key markets. That way, you can ideally avoid problems altogether, and if issues do arise, you will be positioned with the best possible leverage.

Steve Barsotti is a director at Kegler, Brown, Hill & Ritter, working in the firm’s business, intellectual property and international business practice areas. Reach him at (614) 462-5458 or sbarsotti@keglerbrown.com.

Published in Columbus

At the end of last year, it was assumed that Congress was going to effectively keep the 2009 estate tax rules in play and we would all know where we stood for 2010. But more than a quarter of the way through 2010, Congress has yet to even address the issue, leaving a number of estate and tax planning matters in question.

“There are tax opportunities and pitfalls that we’re faced with, and people need to address these issues today,” says Thomas J. Sigmund, a director with Kegler, Brown, Hill & Ritter. “They shouldn’t be sitting back waiting for Congress to do something.”

Smart Business discussed with Sigmund the importance of not missing out on planning opportunities in the midst of this complex environment.

What is the current status of estate tax law?

The status could be summarized as turmoil. Since the Economic Growth and Tax Relief Reconciliation Act of 2001, the estate tax law landscape changed considerably. The federal estate tax exemption increased from what was then $675,000 to $3.5 million in 2009. We all knew that, come 2010, we would have a repeal of estate taxes for one year with carry-over basis and then the regimen that we had in 2002 would come back into play in 2011, meaning that the exemption would drop down to $1 million, and many of the same rules we had before would apply, including stepped-up basis. However, everyone expected Congress to take action to reinstate estate taxes for 2010; no one thought we’d actually be faced with repeal for any period of time.

What is Congress debating?

There is speculation that, more likely than not, the 2009 rules will come into play retroactive to January 1, 2010. But let’s face it; we’ve had a lot of people die between Jan. 1 and today. If members of Congress were to try to reinstate the 2009 laws retroactively, they would be telling these estates that even though there were no estate taxes when the person died, there are now. They would likely face a constitutional challenge if they did that.

Congress is debating whether or not to allow Grantor Retained Annuity Trusts (GRATs) with terms that are less than 10 years. Normally, we utilize GRATs with two-year terms, rolling assets in and out of these GRATs to effectuate maximum wealth transfer without gift taxes.

They’re also talking about portability of exemptions between spouses and eliminating discount planning when putting assets into a family partnership.

I don’t think Congress is going to come back with a grandiose piece of legislation that covers all of those things. More than likely their first task is to deal with this repeal in 2010, and either fix it going forward or fix it retroactively. However, it is also possible in this political climate that Congress will do nothing in 2010 and just let the law play out.

What opportunities should people be taking advantage of now?

There are some great opportunities out there for the larger estates if they want to be aggressive.

Since there’s no generation-skipping transfer tax as we speak right now, a direct transfer of unlimited amounts to a grandchild will not be subject to this tax, albeit subject to gift taxes if the transfer exceeds $1 million.

If you transfer property in excess of $1 million to somebody this year, the tax rate is only 35 percent, which is a far cry from the estate tax rate that was in place in 2009, which was 45 percent. It’s a further far cry from the 55 percent that’s likely to be in place in 2011 if Congress doesn’t change the law. So there’s an opportunity to make some tax effective gifts this year. The risk is that Congress could reinstate generation-skipping transfer taxes retroactive to January 1, 2010 and reinstate the higher gift tax rate retroactively as well. However, for the most part, taxable gifts might still be a good plan to effectuate. If done properly, the taxpayer could actually straddle the fence waiting for what Congress does and make elections to effectuate or not effectuate a gift.

Finally, discounted gifts with use of family partnerships should be explored.

What pitfalls should people be aware of?

The worst-case scenario that we’ve seen is with clients in a second marriage who decide to leave the exemption amount to their children and the balance of their estate to the spouse. The thinking is that they won’t have to pay any estate taxes on the property that went to their children and on the property that was in the trust for the second spouse through a combination of using their exemption and the marital deduction. But if you look at that document today, depending on how it’s drafted, it could be interpreted to say that all their property is going to the children and nothing is to be left to the spouse. It may very well say, ‘Transfer to my children what can be transferred without any estate taxes being associated with the transfer,’ and in 2010 that would mean everything.

What should be done now?

Sit down with your tax adviser right now to revisit your documents and make sure they will work as you’ve intended them to, and make sure that your estate and your estate planning documents are in good order to maximize the tax savings that can potentially be had if death occurs in 2010. Even the administration of a decedent’s estate for the period of time that we have this repeal may have to be addressed differently.

Thomas J. Sigmund is a director with Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5462 or tsigmund@keglerbrown.com.

Published in Columbus
Saturday, 26 December 2009 19:00

Healthy advances

A component of the health care overhaul discussion includes a concerted effort on the part of the federal government to encourage the adoption of electronic health records and the exchange of health care information among providers, payers and throughout the health care field.

“Essentially, health information technology involves having those entities become interoperable thereby allowing for the exchange of health information regarding patients, the exchange of population health information that may be occurring in a particular area and allowing the entities involved to more effectively care for patients,” says Jeff Porter, co-chair of the Health Care Technology Practice at Kegler, Brown, Hill & Ritter.

A lot of people liken health information technology to the automation of banking that occurred with the introduction of the ATM.

Smart Business learned more from Porter about the role of health information technology in health care reform and the challenges involved in its adoption and active use.

Why should a company implement health care information technology?

To make health information more portable and accessible. For example, the government, through Medicare and Medicaid, provides grants to give reimbursements to physicians to adopt electronic health or medical records that would be maintained for patients within a physician’s office. Those physicians are required to use those records meaningfully. A meaningful use standard is currently being developed at the Department of Health and Human Services and Centers for Medicare and Medicaid Services.

There are many vendors out there right now who are trying to encourage consumers to, either through an insurance provider or on their own, utilize a personal health record. It involves recording information about their health conditions, including downloading information from devices — whether it be a glucometer or taking their blood pressure — as a way to engage the consumer and make them more responsible for their health.

Overarching everything else is the idea of health information exchange. The government is seeking to help states develop the ability to exchange health care information, not only within the state but also with the federal government. Take, for instance, what we’re seeing with H1N1. Getting information regarding the illness from a particular state to the federal authorities can help the government determine if they need more vaccines in a certain place, or find out if there’s a bigger outbreak in a particular area.

What are the advantages of health information technology?

There are many advantages, though it’s hard to quantify in monetary terms. One study concluded that, through the adoption of health information technology, we could expect to save $80 billion.

From a patient standpoint, the ultimate goal is to improve the quality of care that’s available. From the perspective of dealing with hospitals and providers from a monetary savings standpoint, what we’re looking at is reducing the amount of unnecessary testing and improving the ability of physicians, through e-prescribing, to prescribe medicines that are both effective and cost-effective for a consumer. You’re looking at trying to reduce waiting times, even in emergency rooms. Somebody with an electronic medical record will be able to be treated with increased efficiency.

What are the challenges of adopting broader health information technology?

The incentives that are out there for the adoption of electronic medical records only address Medicare and Medicaid providers. There are obviously going to be specialists out there that may not receive Medicare and Medicaid reimbursement, so the goal is to get everybody together in this process. That’s going to be one of the challenges.

Speaking from concerns about privacy and ownership of data, you’ve got a multitude of issues. The recent American Recovery and Reinvestment Act included the HITECH Act, which is essentially providing for the previously mentioned incentives for health information technology. It also addressed changes to HIPAA (Health Insurance Portability and Accountability Act), because originally HIPAA wasn’t really geared toward dealing with the issues that we might be seeing concerning the exchange of information.

Laboratories and facilities conducting testing on patients will also be impacted. The whole idea is to be as inclusive as possible with getting entities into an information exchange. There will be issues with state and federal law about who laboratories can release results to.

What can consumers and businesses expect going forward?

Health care costs are one of businesses’ major expenses for their employees. What we can expect from health information technology is greater efficiency, an emphasis on wellness programs and getting people involved in their own health care. Part of the meaningful use standards that the federal government is currently considering is an emphasis on doctors being able to consult with patients in new ways, whether it be through telemedicine or a system whereby patients can discuss matters with their doctors via secure e-mail. Another goal is to allow patients to be able to download information to a personal health record so that records can be more portable.

Speaking from the perspective of the legal industry, I think you’re going to see more and more issues arising with having to address agreements between providers. You’ll see disputes between the provider of an electronic health or medical record and the people who have purchased that record or program, disputes among people who are involved in health information exchange, as well as concerns about privacy involving HIPAA.

Jeff Porter is co-chair of the Health Care Technology Practice at Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5418 or jporter@keglerbrown.com.

Published in Columbus
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