A pair of new working papers offer a comprehensive overview of the role of health IT in the financialization of the health care industry. Behind the electronic health records, data analytics, and financial management systems that healthcare organizations and providers depend on are Silicon Valley and Wall Street investors, IT vendors, and data mining firms that own, operate, and control health IT – and have made billions in the process.

The new Financialization through Health IT papers (Part I: Lessons from Electronic Health Systems and Part II: From Electronic Health Systems to AI) provide systematic evidence of what has gone wrong in health IT implementation to date – a cautionary note that should guide federal policies and curb the current exuberance for embedding AI and machine learning applications into flawed platforms that are failing to adequately protect the privacy and security of patient health records.

The papers – written by Cornell University professor Rosemary Batt and Eileen Appelbaum, the co-director of the Center for Economic and Policy Research (CEPR) – argue that much of this technology has proven to be extraordinarily profitable for investors and IT vendors, but it has not yielded similar benefits for patients, hospitals, and health care providers, who often absorb the costs of these unproven health IT systems.

While increased efficiency and reduced costs were the selling points for adopting these technologies, the evidence so far suggests that these benefits have been elusive. Instead, considerable evidence shows that these health IT systems have frustrated medical professionals — leading to burnout and high quit rates – while hospitals and physician practices have spent millions retrofitting or upgrading flawed systems.

“Some five decades since electronic health records were first introduced, and almost twenty years since the federal government subsidized their adoption, many systems today still lack ‘interoperability’ – the ability of information to flow across different IT vendor systems – despite the legal requirement to do so,” notes Cornell professor Rosemary Batt. “Federal rules provide little or no oversight or enforcement of adequate standards.”

For three decades, federal policies encouraged – and then required – a shift to electronic health record systems. While well intentioned, federal rules have failed to provide adequate safeguards for patient information privacy and security. The reports explain how electronic health systems now provide platforms to layer on data analytics and financial management tools in ‘end-to-end’ systems that expose patients’ health records to hundreds even thousands of viewers – often without clear ‘need to know’ and without patients’ or providers’ knowledge.

“Patients’ privacy rights advocates have long sounded the alarm that federal laws have not provided needed protections against the invasion of patients’ privacy,” said CEPR co-director Eileen Appelbaum. “Now, the valuable information in these centralized systems has made them the most lucrative targets for cyber attacks of any industry – with the health records of over 200 million Americans exposed in 2024 alone.”

In the meantime, Wall Street and Silicon Valley investors report they are banking on making millions more by experimenting with unproven AI and machine learning systems that will be embedded in electronic health records and financial management systems. “The unregulated integration of AI tools into these systems will make it even harder to protect patients’ rights,” notes Appelbaum.

The authors argue that the federal government is once again behind in setting safeguards for the adoption of new health IT. The lessons from 30 years of attempts to set adequate standards for information sharing, or interoperability, in electronic health systems – as detailed in these reports – should provide a cautionary warning for regulators to act quickly this time and rein in the unregulated financial activities of venture capital, private equity, and Big Tech firms.

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