The adoption of electronic health record systems is not being driven by a return on investment in hospitals and physician practices, Pat Wise, vice president of Healthcare Information Systems at the Healthcare Information Management and Systems Society, said, Healthcare IT News reports.

Wise said that although ROI could be measured as a result of adopting EHRs, many health facilities that do not use EHRs do not seem to recognize their importance.

“There is a real business case to be made for [EHRs], but the word has not gotten out,” Wise said, adding, “More organizations need to know that [EHRs] are a better business practice.”

She cited examples, such as Evanston Northwestern Healthcare in Chicago, which had a $2.5 million increase in revenue because of improved charge capture from its EHR system. In addition, North Fulton Family Medicine in Georgia has saved $775,000 in transcription costs after adopting EHRs in 1998, and it also saves $275,000 annually because of the system.

Wise added that most health facilities have adopted EHRs to improve patient care and workflow management, and surveys indicate that “a large percentage of physician practices that don’t have [EHRs] have no intention of implementing them in the near future,” she said (Pizzi, Healthcare IT News, 6/27).

Article: http://www.ihealthbeat.org

6/11/07 Richard Pizzi www.healthitnews.com

Not all electronic medical records vendors will benefit equally from the recent Internal Revenue Service ruling allowing not-for-profit hospitals to provide healthcare information technology to physicians, according to a recent report by analysts at Leerink Swann & Company.

George Hill and Bret Jones of Leerink Swann’s Health Care Equity Research team wrote the report for investors in the wake of the May 11 IRS memorandum. They believe that vendors that currently have a high profile position in the national EMR market are best positioned to capitalize on the “potential influx of spending from not-for-profit hospitals,” but that the ruling could actually harm smaller, regional vendors.

The recent IRS ruling was important because it declared that a not-for-profit hospital’s purchase of an EMR system for a physician would not be considered an “impermissible private benefit,” according to the terms of the exemption to the Stark Anti-trust laws provided by CMS, and would not put a hospital’s tax-exempt status at risk.

In their report, Hill and Jones anticipate that the number of hospitals planning to assist physicians with the purchase of an EMR system may be greater than previously thought.

The Leerink Swann analysts contend that some regions, particularly urban areas, could see a “heightening competitive environment” as hospitals offer financial assistance to physicians for EMR purchases in order to attract more referrals for surgeries and other hospital-based procedures.

While hospital spending on EMRs for physicians is likely to increase, Hill and Jones suggest that contract signings with vendors may not spike in the immediate future. Hospital systems are generally conservative, they say, and their longer cycle capital budgeting process probably means that contract awards are several quarters away.

The analysts point out that the relaxation of the Stark Law may have some negative effects on ambulatory EMR vendors. In the near term, physician practices might choose to delay the purchase of EMR systems, “in the hopes that some local hospital will pick up a large portion of the tab for the costs” of a new EMR.

Hill and Jones also claim that competition for the large hospital-physician contracts that the Stark relaxation allows could lead to increased price competition and discounting among EMR vendors. If so, this could result in “lower net pricing and potentially lower levels of profitability for EMR software vendors.”

While the analysts suggest that many companies that offer an ambulatory EMR package will benefit from the IRS ruling, not all vendors will realize financial rewards.

The Leerink Swann report predicts that hospitals may be willing to be interoperable with a few outpatient EMR systems, but by no means all. If this proves to be true, it could act as a barrier to entry for smaller vendors in the ambulatory market.

“A hospital could choose to work with its inpatient vendor, another 3-4 outpatient [EMR] systems vendors, and then all other smaller vendors could essentially be locked out of that regional market as RHIOs are developed,” Hill and Jones warn in the report.

This possibility unnerves many smaller EMR vendors, says Don Schoen, CEO of Des Moines, Iowa-based MediNotes.

“Hospitals need to allow physician practices – particularly smaller practices – to make choices about which product they want to use in the office,” Schoen said. “This ruling can be a good thing, but it’s very dangerous for a hospital to push for only one specific product in every physician office in a community.”

Article: http://www.healthcareitnews.com/

June 05, 2007

The threat of Medicare physician payment cuts would prohibit physicians from investing in health IT, according to Cecil Wilson, chair of the American Medical Association board, United Press International reports.

The Sustainable Growth Rate formula, which determines how much Medicare pays physicians for services, calls for a 10% cut in 2008. Congress for the past five years has stepped in to overrule the formula but so far this year no bill to do so has been introduced.

If the rate reduction goes through, about one in three physicians will decrease the number of Medicare patients they accept, and more than 25% of doctors will stop accepting Medicare patients altogether, according to an AMA survey of almost 9,000 physicians.

The payment cuts also will affect patients who are not Medicare beneficiaries, Wilson said. If physicians cannot invest in technology, such as electronic health records, they will have difficulty measuring, and thus improving, the quality of care they provide, according to UPI.

AMA said Congress should reverse the cuts and add a 1.7% increase to reflect rising practice costs for doctors. Congress in the short term should finance the reimbursement increase by eliminating the 12% gap between what the government pays for patients in traditional Medicare and the higher rate paid to Medicare Advantage plans, Wilson said. In the long term, Congress should eliminate the Sustainable Growth Rate and begin tying physician reimbursements to increased medical costs, he said (Pierce, United Press International, 6/4).

Article here: http://www.ihealthbeat.org/

By: Joseph Conn / HITS staff writer

Story posted: May 17, 2007 – 9:54 am EDT

Initial reactions to the long-awaited decision last week by the Internal Revenue Service to join HHS and the CMS in clearing a path for hospitals to subsidize healthcare information technology systems to affiliated physicians were overwhelmingly positive.

But in the passing of a few days and with sober reflection, not everyone sees the new IRS policy as an unalloyed good thing.

Healthcare lawyer Andrew Blustein, a partner with Garfunkel, Wild & Travis, Great Neck, N.Y., while joining the early voices saying the IRS ruling is “wonderful news,” also urged caution. “It’s a major step forward, but people need to realize there are some additions (in the ruling) that may not fit their particular program.”

HHS and the CMS last summer issued safe harbors to the federal anti-kickback law and exceptions to Stark laws prohibiting inducements for referrals in separate documents totaling more than 70 pages. Hospitals can qualify for the HHS and CMS dispensations by providing under specific conditions subsidized electronic medical-records systems and support to physician practices.

After the HHS and CMS rulings, attention turned almost immediately to the IRS. Not-for-profit hospitals were cautioned by their lawyers that IT contributions to for-profit organizations such as physician practices, though legal under the new Stark and anti-kickback modifications, could still jeopardize hospitals’ tax-exempt status.

By November 2006, the American Hospital Association sent a letter to Lois Lerner, director of the exempt organizations division at the IRS, asking for a broad ruling favoring the IT subsidies. Lerner’s response came last Friday in a two-page “field directive” memo she sent to two department directors under her division.

It said: “We will not treat the benefits a hospital provides to its medical staff physicians as impermissible private benefit or inurement in violation of section 501(c)(3) of the code if the benefits fall within the range of health IT items and services that are permissible under the HHS EHR regulations and the hospital operates in the manner described below.”

The IRS conditions were:

• Hospitals must enter into health IT subsidy agreements with physicians receiving IT items and services.
• Hospitals and physicians must comply with HHS rules.
• “The health IT subsidy arrangements provide that, to the extent permitted by law, the hospital may access all of the electronic medical records created by a physician using the health IT items and services subsidized by the hospital.”
• “The hospital ensures that the health IT items and services are available to all of its medical staff physicians.”
• “The hospital provides the same level of subsidy to all of its medical staff physicians or varies the level of subsidy by applying criteria related to meeting the healthcare needs of the community.”

The key provisions of the HHS and CMS policies dovetailed, but the IRS memo outlines some unique features, according to Blustein.

Complete article here: http://www.modernhealthcare.com/

By Nancy Ferris Published on May 14, 2007 Government Health IT

A long-awaited Internal Revenue Service memo has made it clear that nonprofit hospitals can give e-health records software and support services to their staff doctors without jeopardizing their tax-exempt status.

The May 11 memo was welcomed by health IT advocates, who had expressed concern that uncertainty about how the IRS might rule was inhibiting hospitals from including the doctors’ offices in their medical records networks.

The IRS memo cites Department of Health and Human Services regulations that created exemptions from anti-kickback and physician self-referral laws. Those regulations, which became final in August 2006, were intended to encourage hospitals to share their systems with doctors who practice at the hospitals.

The alignment between the IRS and HHS actions prompted Scott Wallace, president and chief information officer of the National Alliance for Health IT, to call the memo “absolutely as good as anyone could have hoped for.” He predicted it would encourage more doctors to use EHR systems. Once hospitals install such system for their internal operations, “the incremental cost of adding a physician is fairly low,” Wallace said.

“The AHA is pleased that the IRS moved quickly in responding to hospitals’ request for guidance on this important issue,” said Lawrence Hughes, regulatory counsel of the American Hospital Association.

According to the AHA, nearly 3,000 of the nation’s 4,936 community hospitals are nonprofit organizations.

The memo from Lois Lerner, the IRS’ director of exempt organizations, notes that some hospitals believe their medical staff physicians need financial incentives to use EHR software that would exchange information with hospital systems.

Wallace said such arrangements are likely to help especially with small medical practices, which have a much lower rate of EHR usage than larger practices.

Article: http://www.govhealthit.com, also see the HHS EHR Regulation here

To learn more about the ruling:

- read this Health Data Management item
- read the IRS ruling (.pdf)

By: Joseph Conn / HITS staff writer Modern Healthcare Online

The American Health Information Community on Tuesday sent back for revision a list of recommendations by its work group on electronic health records aimed at boosting EHR adoption, including a controversial incentive proposal that would reward doctors who have EHRs and penalize those who do not.

David Brailer, co-chairman of the AHIC, a public-private policy healthcare information technology policy advisory panel created by HHS Secretary Mike Leavitt in 2005, asked fellow AHIC member and EHR work group co-leader Lillee Smith Gelinas to take the recommendations and tweak their language and have them checked by lawyers.

Finally, Brailer advised Gelinas, vice president of clinical performance at group purchasing organization VHA, that the EHR work group should “have some forum with an open hearing so we can have more debate” on the proposals.

The six proposals were:

• Leverage federal purchasing power by having the government, through its contracts with health plans and other payers, support widespread adoption of IT standards and “foster the use of pay-for-performance programs for physicians that include structural measures to incent the adoption and effective utilization of certified EHRs.”
• The pay-for-performance schemes should use “reliable, standardized and validated tools which are currently available to assess structural measures as defined by the Medicare Payment Advisory Commission, such as the NCQA’s Physician Practice Connections or the CMS’ publicly available Office System Survey.”
• HHS should continue to support the physician IT training programs now under way called Doctor’s Office Quality-Information Technology University, or DOQ-IT U.
• HHS should work with the federally funded Certification Commission for Healthcare Information Technology, which tests and certifies EHR systems, “to obtain medico-legal counsel to assure that its functional criteria include documentation, security and other approaches that will mitigate malpractice risk.”
• “Similarly, HHS should meet with medical malpractice insurers “to encourage premium reductions for those physicians who have adopted certified EHRs.”
• “HHS should develop a schedule for implementing differential reimbursement to Medicare physicians for use or nonuse of EHRs. While we would defer to departmental expertise, we note that this might be achieved by paying full Medicare rates and marketbasket updates (and possibly an EHR premium) to physicians using certified EHRs, while physicians using paper-based records are paid at discounted rates achieved by nonqualification for full marketbasket updates or other measures.”

Full article here: http://www.modernhealthcare.com

April 23, 2007

Reps. Charles Gonzalez (D-Texas) and Phil Gingrey (R-Ga.) on Thursday introduced a bill that would give grants, loans and tax incentives to small physician-practices to help offset the costs of health IT systems, Health IT Strategist reports.

Under the bill, Medicare would provide payment incentives that could be used by physician practices with 10 or fewer full-time employees to purchase health IT infrastructure tools, such as electronic health record systems, evidence-based clinical decision support tools and secure e-mail.

HHS also could include additional incentives for evaluation and care management services, payments for structured e-mail consultations and any other necessary communication methods, Health IT Strategist reports.

The amount of reimbursement would be based on certain factors, including the type and price of equipment and how it will be used, according to the bill. Grants and loans also would be subject to the discretion of the HHS secretary.

The bill also would change the tax code to increase deductions for purchasing qualified health IT tools for physician practices qualifying under the IRS’ broad definition of a small business. Physicians also could use the deduction for equipment that they started using at the beginning of 2007, Health IT Strategist reports (DoBias, Health IT Strategist, 4/20).

Source: http://www.ihealthbeat.org/

Cultural and cost issues continue to impede adoption of electronic medical records systems, but new approaches may provide relief.

Thomas Hoffman March 26, 2007 (Computerworld) — The new electronic medical records system at Harbin Clinic has the strong support of its CEO, board of directors and chief medical officer. Its technology can improve patient outcomes while saving physicians money. But cultural issues, including resistance from some of Harbin’s physicians, have stretched the implementation from two and a half years to four.

Welcome to the world of EMR, where the best technology and the best intentions come smack up against the inertia of human nature.

Advocates of EMR contend that melding these systems with the work processes of physicians, nurses and administrators can dramatically improve the quality of patient care and cut waste out of health care costs. For instance, by using an EMR system, a doctor can view a patient’s entire medical history, use a rules-based engine to pinpoint potentially harmful drug interactions and receive suggestions for new tests and medications.

Studies have shown that the use of EMR systems can help reduce medical errors, including misdiagnoses and unintentionally harmful prescriptions, leading to fewer accidental patient deaths.

But to date, EMR adoption has been a big challenge in the health care industry. Rome, Ga.-based Harbin Clinic is a case in point. Georgia’s largest privately owned, multispecialty medical clinic has 135 physicians spread out across 20 locations in northwest Georgia and northeast Alabama. With 33 different medical specialties under its roof, ranging from endocrinology to ophthalmology, Harbin has had a tough time getting various specialists to adapt their work processes to accommodate the EMR system from Chicago-based Allscripts LLC that it’s installing. Indeed, the cultural and work process differences among these specialists has made the EMR implementation “more difficult than I would have imagined,” says Harbin CIO Tom Fricks.

However, primary care physicians at the clinic immediately embraced the EMR system, since they found it easier and cheaper to key in patient information than to pay a third party to transcribe dictation, says Fricks. But high-end specialists, such as cardiologists, have been considerably more resistant to learning and using the Allscripts TouchWorks EMR system, says Fricks. Cardiologists “don’t want aggravation in their lives,” he explains.

Despite strong support of the EMR system from Harbin’s CEO, the board of directors and its chief medical officer (who happens to be a cardiologist), the project has dragged on.

Read full article here: www.computerworld.com

Group practice leaders responding to the 17th annual Modern Healthcare/Modern Physician Survey of Executive Opinions on Key Information Technology Issues are looking to spend more on healthcare IT in the near term than they are currently spending, but how much more is widely variable.

This story initially appeared in this week’s edition of Modern Physician.

Article: www.modernhealthcare.com

Relaxed regulations may spark largesse, but when it comes to I.T. donations, nothing is really free. By Beckie Kelly Schuerenberg, Senior Editor Health Data Management 02/01/2007

There’s usually a huge disparity between the use of I.T. in hospitals and physician practices. But the Bush administration is betting that recent revisions to federal law will help change that.Last August, the Department of Health and Human Services published two final rules designed to ease restrictions on hospitals and other entities donating information technology to physicians and group practices.