President Obama’s ambitious $30 billion subsidy program to encourage doctors and hospitals to use electronic health records may be “effectively dead,” as doctors and hospitals flee the program.

The 2009 electronic health records law was heavily promoted by President Obama as a precursor to Obamacare.

He offered financial incentives to medical providers to encourage them to get off paper and use electronic systems for real-time sharing of health information.

Reformers promised there would many benefits once the program was in place. Most importantly, doctors and hospitals would receive nearly instantaneous medical profiles of their patients.

Five years after the law's enactment, a large number of the nation’s doctors and hospitals are beginning to bail out of the program.

“We have been pondering the question of whether the government EHR program is effectively dead,” three Wells Fargo securities analysts asked in a proprietary report they prepared on Sept. 24 for investors in healthcare tech firms.

“Almost half of providers may drop out during" the current stage of the program, they concluded. The Washington Examiner obtained a copy of the report.

The Wells Fargo report appeared to confirm an analysis last March in which the U.S. Government Accountability Office, the nonpartisan oversight arm of Congress, pointed to what it said was "a substantial percentage" of doctors who were dropping out rather than reinvesting in the new EHR systems.

A major stumbling block is that rival electronic records systems cannot exchange information with each other, according to a wide range of IT analysts.

The federal law originally required all health IT software programs to share electronic health records, a concept known as "interoperability." The federal usability standard to share records was called "meaningful use."

But under pressure from some large health IT vendors who resisted interoperability, the government watered down the "meaningful use" rules.

The weaker definition meant Washington certified new computer systems even if they could not exchange information with providers operating on other platforms.

After spending up to $30,000 per doctor for the new software, physicians across the country faced painful options: Reinvest hundreds of thousands of dollars in a new system, or drop out of the program.

Federal statistics show how few doctors actually participate in the system. This year 29,598 doctors enjoy "some interoperability," according to Peter Ashkenaz, the acting public affairs officer at the federal Office of the National Coordinator for Health Information Technology, called ONC.

But the Henry J. Kaiser Foundation, a healthcare foundation, counts 893,851 professionally active physicians in the United States.

Effective EHR usage is little better among hospitals. Azhkenaz told the Examiner that 931 hospitals currently have "some interoperability."

But there are 5,723 hospitals from coast to coast, according to the American Hospital Association.

“If using the system effectively is so onerous, I’m not surprised that providers are doing a calculation about whether the incentive program is worth the pain point,” Carol Robinson told the Examiner.

Robinson is a health IT consultant and former co-chairman of the federal ONC task force on interoperability, which completed its mission this month.

Dr. Jacob Reider, the government's ONC deputy director, conceded in an interview that his agency’s certification standards did not explicitly require full or universal interoperability.

“I would agree current certification standards did not explicitly say all of the things that need to happen in order for systems to be ‘plug and play' interoperable," he told the Examiner.

"We have agreement the systems are sub-optimal, they are not ideal, they are not perfect,” Reider said.

That answer didn't sit well with many followers of the medical IT world.

“HHS has awarded tens of billions of dollars in contracts in an ongoing effort to facilitate interoperability with little to show for their investment,” said Rep. Phil Gingrey.

Gingrey is a Georgia Republican, a practicing physician and a member of the House Energy and Commerce subcommittee on health. “This is unacceptable,” he said.

Dan Haley, vice president and general counsel of Athenahealth, a Massachusetts-based health IT company, said, “it’s ludicrous that in the second decade of the 21st century you have technologies certified for ‘meaningful use’ that cannot talk to each other.”

“If 'meaningful use' was to mean anything," Haley said, "it should have meant the ability to share information across platforms. And it did not."

Athenahealth, which hosts health records in a cloud-based system, is one of the major electronic health records providers certified under the subsidy program.

Trouble occurred early in the government program when many firms sold the closed proprietary software, making it difficult for customers to easily switch to another competitor. Their customers were "locked in" to the software program.

“If you have interoperability, you no longer have ‘lock in’ which is one of your best tools as an EHR vendor to keep your client base," explained Michael Freidberg, a senior scientist at Rand Corp. who conducted a 2013 survey of doctor satisfaction.

“Let’s say you switched from Vendor A to Vendor B,” said Friedberg. “What ‘lock-in’ means is that you just can’t import that information very easily. In fact, you may not be able to import it at all.”

Thus the costs to doctors for switching vendors would be financially prohibitive. “You may have to retype medical records completely or abandon all the charts you’ve done over the last couple of years,” the Rand scientist said.

Friedberg said the situation is so dysfunctional today that doctors have reverted to faxing paper records again.

“The main way doctors are talking to each other on the same EHR in the same exact institution, they’re communicating by fax,” he lamented.

Joel White, executive director of Health IT Now, a coalition of health IT users, told the Examiner in an interview, “The process has been a race to the bottom. The process is broken.”

Obama inaugurated the EHR program in 2009 with passage of his Health Information Technology for Economic and Clinical Health Act, called HITECH.

He originally sought $50 billion in subsidies tucked away in the $789 billion economic stimulus program that year. But the Democratic Congress pared it down to $30 billion.

A 2013 Rand report on interoperability problems said the Obama administration “set a low bar for interoperability” and attributed it to pressure from large IT vendors.

“This [interoperability] problem might have been avoided if the federal government had pressed the issue when ‘meaningful use’ standards were being drafted,” the Rand researchers said. “Instead, interoperability standards were watered down.”

“Advocates of interoperability were disappointed,” the Rand scientists concluded. “In their view, dropping the requirement for functional health information exchanges eliminated the industry’s incentive to develop interoperability,” they stated.

An elite group of scientists called JASON, who work with the Mitre Corp. and were commissioned by HHS, warned government officials at an Oct. 15 governmental meeting in Washington that the interoperability problem was real.

“The current lack of interoperability for EHRs is a major impediment to the effective exchange of health information,” the JASON scientists reported to the group.

JASON told the federal IT group an entirely new network had to be built that was "open" or "public" if medical providers were to enjoy universal interoperability. They did not propose who would build such a new network or who would pay for it.

Bob Robke, vice president for the nation's largest health IT company, called Cerner Network, said his company did not oppose interoperability, but said the standards need to be updated, which could take years.

“To make universal interoperability happen, we need to have very clear standards. The standards we use today are 15 years old," Robke said.

"Then [we have to] figure out a network of choice for clients, so healthcare providers can do this just once, and try to figure out how to connect with all their different stakeholders independently."