Lawrence Memorial Hospital has joined a group of Kansas City health-care providers to form a new medical records system that should better protect patients’ private information and cut down on administrative costs.

LMH has teamed with seven other hospitals and insurance companies in the Kansas City area in an effort to comply with a new federal regulation aimed at preventing patients’ private medical information from falling into the wrong hands.

The legislation, called the Health Insurance Portability and Accountability Act, requires hospitals and insurance companies to install the necessary computer equipment to transfer medical and billing records securely over the Internet.

Tom Pagano, vice president of information technology for LMH, said the idea behind the new group, called the Kansas City Regional Electronic Exchange, is for hospitals and insurance companies to jointly purchase the necessary technology.

The companies would set up a center in the Kansas City area that would house all the equipment and process all the electronic medical records, which are frequently sent back and forth between hospitals and insurance providers.

“We realized we were all going to have to do the same things, purchase the same type of equipment, so we started discussing whether there were ways we could work together to save some money,” Pagano said.

It will cost the group approximately $1 million to create the new system. Pagano said LMH would pay a portion of that cost, but the amount hasn’t been determined. He said he expected the hospital to save anywhere from 10 percent to 30 percent of what it would’ve paid if it had created the system on its own.

Pagano said the savings was good news for patients because it would help keep their medical costs down. But he said the better news may be that the new system will create new safeguards for protecting sensitive medical information.

Pagano said the health-care industry hadn’t had problems with medical records falling into the wrong hands. Rather, he said, the new law is aimed at preventing problems before they happen.

“We have a lot more medical records traveling over the Internet than we ever used to, and that just created the natural question of how are we going to protect them,” Pagano said.

Pagano said patients also should benefit from the new system by having better access to their medical records. He said as more Kansas City-area health-care companies joined the exchange, it should become easier for consumers to get a copy of their complete medical history.

Currently, Pagano said, about the only way for a consumer to get his medical history is to request it from each doctor he has visited. With the new system, a patient should be able to call the exchange’s center and receive all his medical records.

“There seems to be an increasing desire for people to see and understand their medical history, and this potentially down the road could be a way to make that happen,” Pagano said.

Members of the group are scheduled to formally approve the idea for the exchange later this month. Pagano said it likely would be operating by fall 2003.