Jonathan Bush: Wiring up doctors by Brian Dumaine @FortuneMagazine January 17, 2012, 10:44 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The Athenahealth CEO explains how to make physicians more efficient. Despite all the talk in Washington about trimming health care costs, the reality is that only a tiny fraction of doctors today use money-saving infotech. Most still hand-scribble their notes, which can lead to costly mistakes. There is hope. New data systems that link patient records, testing labs, pharmacies, and insurers are hitting the market. Jonathan Bush, the founder and CEO of Athenahealth ATHN , provides such cloud-based services. Revenues at the Watertown, Mass., company are growing 33% a year, and its stock was up 65% in 2011. Bush, a first cousin to President George W., spoke with Fortune’s Brian Dumaine about the future of high-tech health care. Are we making progress on containing health care costs? Not really. The U.S. spends an amount equal to 300% of India’s GNP on health care, and India’s population is three times ours. A billion Indians buying missiles, guns, schools, food, cars — everything! The same amount buys 300 million Americans only health care. We need new ways to cut costs. Where will the innovation come from? Historically, investment in health care infotech has been microscopic. Last year U.S. venture capitalists invested only $410 million in health care infotech, and that was a record high. That’s compared with $30 billion for social media and other forms of infotech. But about 40 startups besides Athena, such as Watermark, Alere ALR , and Itriage, are now tackling health care. Where’s the money being spent? The 5% of the U.S. population that dies each year consumes about a third of our total health care costs. Another 5% has chronic diseases, and they take another third. The 90% of the population that’s healthy consumes the last third. Tremendous cost savings are to be had by treating chronic diseases differently. How can technology help? Take a company called Watermark that has an attachment you stick in your iPhone slot. A diabetic can prick his finger on it, and it then sends blood sugar levels to the cloud. If the levels get too high, your doctor is alerted and can intervene early. This will save lots of costly trips to the emergency room. What about making doctors more efficient? When a doctor gives you a blood test, what happens? A technician manually types information into a blood-test machine, which is impossibly unreliable. What Athena is doing is printing a bar code onto the blood vial. The technician will be able to scan it, and the patient’s information will be sent to the testing lab, the doctor, the doctor’s billing department, and the insurer. There’s labor saving on the technician and a massive reduction in medical malpractice due to typos. Also, a doctor will be able to look at an e-reader with the patient’s history on it. If anything has changed — his blood history, his imaging results, his prescriptions — that info will be, say, shaking on the screen, helping the doctor to immediately focus on the real problem. Sounds sensible. Why haven’t we done this already? The challenge is, someone has to pay for the technology, and it’s illegal for a pharmacy or a testing lab to pay a doctor for sending information electronically — it’s considered a kickback. We’re working with Congress to change that. Five years from now, how automated are we going to be? Only about 1% of doctors have these closed-loop systems we’ve described here. I think that number can reach 20% to 30% by mid-decade. This article is from the January 16, 2012 issue of Fortune.