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The Electronic Medical Record (EMR) Stimulus Fiasco: Part 2

Posted May 03 2009 10:37pm

Stanley Feld M.D.,FACP,MACE

President Obama is counting on electronic health records (EMR) to help modernize the nation’s dysfunctional health care system, improve the quality of care and reduce its cost. He should understand the real costs of an EMR. The cost of disruption of the work flow, the issue of incompatibility and connectivity with other EMRs, and the costs of maintenance, service and software upgrades are all important barriers not taken into account in his stimulus package. If President Obama must think that throwing money at the conversion to electronic medical records (EMR) is going to work, he is wrong. He is using the wrong route.

“His stimulus package will provide $19 billion over the next two years to promote the adoption and use of health information technology, and he has pledged to spend some $50 billion in all over five years.”

Both hospitals and physicians offices have been slow to adopt EMR’s. Most physicians would love to have EMR’s to decrease paperwork and medical errors. However, many practices have legacy EMR systems that do not provide functionality necessary. These practices are struggling with the notion to reinvest in a new EMR as their reimbursement is decreasing, cost flow is ebbing, and physician income is decreasing

“PwC estimates that the average three-physician practice can expect to invest between $173,750 and $296,000 over two years to purchase and maintain an EHR system. “

A three man ophthalmology practice was quoted $65,000 per physician plus service and maintenance. The final figure was $95,000 per physician. The EMR is fairly functional. It would not qualify for a rebate from the stimulus package.

The physicians initially complained about the disruption in their work flow. After three months they started to accommodate to the change in work flow. Now they feel they need an upgrade to add functionality. The physicians are now concerned about the maintenance and service charge per year.

“Individual physicians, not practices, can receive up to a total of $44,000 each for adopting certified EHRs.”

President Obama’s subsidy is helpful but many physicians still cannot afford the upfront cost.

“Hospital systems main impediment is money. Many hospitals simply do not have the capital to buy systems that can cost $20 million to $200 million, especially when so many are struggling to remain solvent. Hospitals also worry about high maintenance costs, an uncertain payoff on their investment, and a lack of staff with adequate technical expertise.”

There is a perverse outcome to installation of an EMR. Physicians and hospital systems may realize some return on their EHR investment. The primary returns on the physicians’ and hospital systems’ investment is expected to mostly accrue to private and public payers.

“The federal government estimates that the conversion to digital records will save $12 billion in healthcare spending over 10 years.”

The federal government saving twelve billion dollars over 10 years is a small return on a $50 billion dollar investment. The investment risk is compounded by the uncertainty of implementation of a fully functional EMR.

The survey also found that:

  • 82% of hospital CIOs have already cut IT spending budgets in 2009 by an average of 10%, with one in 10 making more drastic cuts of greater than 30%.
  • 66% of CIOs say they expect to be asked to make further cuts in IT spending before the end of 2009.

It is not difficult to understand that hospitals want to cut costs. They are reporting cash flow and profit margin problems. The government cannot afford Medicare and Medicaid in its present form. President Obama’s plan is to expand both Medicare and Medicaid while decreasing patient coverage and provider reimbursement. Premiums for Medicare and deductibles have been increasing steadily.

  • 64% of CIOs agreed that it is impossible to balance demand with the need to cut costs.
  • One-half of CIOs with more than 500 beds say that federal funding is "crucial" to their ability to implement EHRs.

The stimulus formula for subsidizing hospital systems is a function of the hospital system’s volume of Medicare and Medicaid patients. With government reimbursement decreasing, hospital systems are reinventing themselves to attract paying customers. They are developing high productivity profit centers such as back centers, cardiovascular centers, and gastric bypass centers. Hospital systems “lose money” on acute illnesses. Hospital systems are trying to move away from their dependence of Medicare and Medicaid patients.

It should be obvious that President Obama’s EMR stimulus plan has not been well thought out.

The American Medical Association seems to be on the right track. It is clear to me that someone is listening to me.

“The American Medical Association is developing a Web-based service offering doctors electronic prescribing, up-to-date reference material and other resources.

The idea is to make it easier for physicians to adopt technology President Obama is promoting for health care reform, to streamline their workload, and improve patient care.”

“Doctors will be able to use it to access numerous electronic medical services, including the latest science on diseases, and electronic health records, said Dr. Joseph Heyman, chairman of the AMA's board.”

http://news.yahoo.com/s/ap/20090422/ap_on_bi_ge/us_med_ama_electronic_health_1

There are no details available yet. It is encouraging that the AMA is trying to be proactive.

President Obama, this is not rocket science. If you put a totally functioning electronic medical record in the cloud in the next few months, the most it should cost the government (taxpayer) is about 5 billion dollars.

The software could be serviced and upgraded at no cost to the providers of healthcare services. The taxpayers return on the dollar would be at least three times that amount in the first year if the providers paid by the click. Payment by the click would not be a burden to physicians or hospital systems.

Physicians and hospital systems would instantly have a fully functioning EMR. The government could use the same business plan credit card companies use. It could even set up an auto pay system.

President Obama, I hope you read this and arrive at an "ah ha" moment and change the route you are taking to convert medicine to an electronic information system.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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