A bored clerk faxes over dozens of patient records to a toll-free number at a government health agency. Routine, right? Unfortunately, no.

The clerk typed too hurriedly, and blasted the fax to the wrong number, violating the medical privacy of scores of the sick and infirm.

That frightening scenario actually happened recently in Tennessee and Indiana, and it apparently occurs quite frequently, all across the country. "Faxed records can be grabbed off the shelf, read by anyone and easily lost or misplaced," says Mark Seward, a data-security expert who works with hospitals.

Mistakes in transmitting records are just one of the reasons many doctors and hospitals are endorsing the transition to electronic medical records. These records would be protected by sophisticated privacy programs with encryption and other security measures. Hospitals, doctors, and insurance companies—as well as patients—would have access to them online, all the time.

Questions remain about the clinical efficacy of e-health records, however. Critics wonder just how going electronic will improve patient care, and this skepticism is why just 1.5 percent of hospitals have a comprehensive e-health records network today, according to a recent study in The New England Journal of Medicine.

The feds allocated $19.2 billion in incentives to promote the adoption of e-health records, as part of the controversial economic stimulus. The monies come from the Health Information Technology for Economic and Clinical Health Act (HITECH Act), and the Obama administration is dreaming big, hoping to subsidize hospitals and make them "paperless" by 2015.

But that, too, is a worry for many regular folks, who don’t want the government to operate these medical records networks. "I definitely think electronic health records courtesy of the government are scary. These are the same folks who are unable to link their antiquated databases, FBI and CIA, or successfully upgrade air traffic control systems," says Chicagoan Donna Rook, the mother of a college student and a former sales manager for a major computer company. Too much government intervention in health records could lead to a disaster, she mused. "Can you say Amtrak?"

Bill O’Reilly and former House Speaker Newt Gingrich recently debated electronic health records on the Fox News Channel, and the issue of patient privacy was a key concern. After all, credit card numbers are frequently pirated online, and spread across the globe. Social security numbers too.

With the latest security measures, computing experts say, e-health records are not only safe, they will reduce medical costs too, if properly deployed. A network operated in Minnesota by Covisint, a division of Compuware, requires patient consent every time a medical record is transmitted electronically. "There's no one-time opt-in," says Brett Furst, vice president of healthcare for the company. "We check the licensing of the physician and obtain the patient’s consent every time a record is requested. This could be a national model."

Approximately $2 trillion dollars is spent annually on healthcare in the U.S., Furst reckons, and perhaps as much as 30 percent of that is wasteful. A patient can go see their primary care physician and have a basic test. That patient may then get a referral and be sent to a specialist, who will conduct the same test, yet again. If the medical records were kept electronically, Furst says, all that would be needed would be the patient’s permission to obtain the earlier test results. A redundant, second test would be unnecessary.

"There’s a lot of concern about the public option," says Furst. "But with technology advances, you don’t need the public option to save money."

Seward, director of product management at LogLogic, notes that even if the data network is compromised by a rogue, the hospital’s IT staff can track the breach, and find the perpetrator. "In comparison it is difficult to track paper records," he says.

Computer industry firms are developing innovative interfaces for healthcare systems, "dashboards" that extract and display all of a diabetes patient’s relevant data, or all of a heart disease patient’s pertinent reports, so physicians can access them easily at the point of care. "The real value of electronic medical records is that you can deliver better care than with paper records," says Gary Zegiestowsky, CEO of Informatics Corp. of America, a firm founded in partnership with Vanderbilt University medical center to provide e-health services in the mid-south.

Though only a small percentage of hospitals have comprehensive e-health records networks now, a much larger percentage of them are in the process of implementing the systems, and will likely be up and running in the next two or three years, says Zegiestowsky. A seminar at the American Society of Clinical Oncology is discussing e-health records in cancer hospitals, for example.

Most interestingly, says Nancy Fisher, president and CEO of Data Distributing, a developer of networks for hospitals, with 2,000 clients across the U.S., it is the government hospitals that are tackling this challenge first. "The Veteran’s Administration and hospitals run by the Pentagon are the most advanced in terms of their usage of e-health records now."

That’s changing rapidly, experts tell Fox News. "The Facebook generation is now coming of age," says Furst. "They don’t want to sit there while the doctor fiddles with red, yellow or green coded folders. Ten years from now, they will expect this information at the point of care."