Category Archives: EHR Regulations

Study: EHR System Efficiencies Can Cover the Cost of Adoption

July 13, 2007 iHeathbeat

Electronic health record systems in less than two years after adoption can create enough cost reductions to pay for the cost of the systems, according to a study published in the July issue of the Journal of the American College of Surgeons, HealthDay News/Forbes reports.

David Krusch, the author of the study, and his colleagues at the University of Rochester analyzed the return on investment of EHR systems at five ambulatory offices representing 28 health care providers. The study compared the costs of tasks — such as pulling patient charts, creating new charts, filling time, support staff salary and data transcription — in the third quarter of 2005 to costs in Q3 2003 when the EHR system was not instituted.

Using EHRs reduced costs by almost $394,000 annually, and nearly two-thirds of the savings were associated with reducing the amount of time for manually pulling charts, the study found. The EHR system in the first year cost $484,577 to install and manage, which means the hospital recouped its investment in the system within the first 16 months.

The system after the first year cost about $114,000 annually to operate, which means a yearly savings of more than $279,500, or almost $10,000 per provider using the system, the researchers found.

“Health care providers most frequently cite cost as a primary obstacle to adopting an [EHR] system. And, until this point, evidence supporting a positive return on investment for [EHR] technologies has been largely anecdotal,” Krusch said (HealthDay News/Forbes, 7/12).



Experts: US electronic health records still a way off

By: Grant Gross 7/06/2007

U.S. President George Bush’s administration gets high marks for its vision in pushing electronic health records, but the U.S. is far from implementing a national health IT system, according to an author of a government report released Thursday.

Although the U.S. could see significant benefits from more use of IT in the health-care industry, including fewer deaths from medical errors, more work needs to be done to create standards for electronic health records and other health IT initiatives, said David Powner, director of IT management issues for the U.S. Government Accountability Office (GAO).

The U.S. government still faces an “enormous challenge” in getting electronic health records to patients, Powner told the U.S. House Committee on Government Reform.

Asked to grade the Bush-created office of the National Coordinator for Health Information Technology, Powner gave the office an “A” for leadership and vision but an incomplete grade for implementation. In January 2004, Bush called for the U.S. health-care industry to embrace electronic health records, with the records available to all U.S. residents by 2014.

Powner’s report to the committee called for the Bush administration and the U.S. Department of Health and Human Services to push for health IT standards that don’t yet exist. “Otherwise, the health care industry will continue to be plagued with incompatible systems that are incapable of exchanging key data that is critical to delivering care and responding to public health emergencies,” Powner wrote.

The Bush administration is working toward setting standards, said Dr. David Brailer, the national coordinator for health IT in the U.S. Department of Health and Human Services. Next week, Brailer’s office will announce a federal government partner to harmonize health IT standards, he said.

In addition to standards, the cost of implementing electronic health records, and a lack of technical expertise, is holding up adoption at many small health-care facilities, Brailer told the committee. While existing research has sent “mixed signals” on the ability of electronic health records to cut costs, health IT can “save lives, improve care and improve efficiency in our health system,” he said.

Part of his office’s job is to convince health-care providers and patients of health IT’s benefits, Brailer added. Some health-care providers have been slow to adopt electronic health records because they’re paid per patient visit, and they aren’t paying the bills, he said. “It is against the financial interest of many providers to improve quality or to improve efficiency, because we pay by volume, and greater efficiency and quality, by definition, reduce volume,” he said.

Committee member Jon Porter, a Nevada Republican, said he plans to introduce legislation in the next couple of weeks that will require electronic health records for people using U.S. government health insurance coverage. With about 9.5 million members on the federal health plan, the requirement would push adoption to the private sector as well, Porter said.

Porter repeated concerns that the lack of electronic health records is adding to medical errors. “We are so far behind in our technology, we are costing lives of many Americans,” he said.

In 1999, the Institute of Medicine, a nonprofit health analysis organization, issued a study saying between 44,000 and 98,000 U.S. residents die each year due to medical errors.

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Certification Group Finalizes Criteria for Inpatient EHRs

The Certification Commission for Healthcare IT on Thursday published on its Web site the final certification criteria for the first round of testing inpatient electronic health record systems, Health Data Management reports (Health Data Management, 6/28).

Vendor applications will be accepted from Aug. 1 to Aug. 14 for testing and certification of inpatient computerized physician order entry and electronic medication-administration systems. The test results are expected to be announced in late October, and certification lasts for three years.

The cost of certification testing and a first-year maintenance fee totals $34,000, and an annual maintenance fee of $5,800 will be charged for the remaining two years, Health IT Strategist reports (Conn, Health IT Strategist, 6/28).


In related news, CCHIT through July will accept applications for six positions on its 21-member board of commissioners. The positions will represent:

  • Ambulatory care providers;
  • Consumers;
  • Health information exchanges;
  • Informatics experts;
  • Public health agencies; and
  • Safety-net providers (Health Data Management, 6/28).


Proposed standards aim to add legal clout to EHRs

ANN ARBOR, MI – Healthcare IT standards organization HL7 has released a functional profile for the Legal Electronic Health Record System.

A 30-day public comment period runs from June 18 – July 18.  Balloting will occur later this year at a date to be announced.

The profile represents a significant boost for the adoption of electronic records, says Don Mon, vice president of practice leadership with the American Health Information Association and co-chair of HL7’s EHR Technical Committee.

“It goes back to the whole issue of having a legal record,” Mon said. When organizations switch to an EHR, they have to define it as a legal record for business purposes,” he said. “The benefit of this profile is that it points out within the EHR what the functionalities should be.”

The legal profile is based on HL7’s EHR System Functional Model standard adopted in February.

“An EHR system must be able to create, maintain, and manage records within a framework of ever-changing jurisdictional rules, regulations, and laws that are intended to assure electronic records are valid, accurate, and trustworthy,” HL7 officials said in a news release. “Because legal validity is at stake for all uses of electronic records as admissible business records, including admissibility as medical records, the Legal EHR is of primary importance to healthcare operations and to interoperability.”

“The Legal EHR System Functional Profile strengthens the EHR System Functional Model standard,” said Michelle Dougherty, director of practice leadership at AHIMA, and co-facilitator in the development of the legal profile. “It identifies the functionality within an EHR System that helps organizations maintain a legally sound health record.”

Mon said the legal profile will benefit both providers and vendors and will help them talk to one another about functionality.

The profile will also help healthcare organizations reduce costs associated with inefficiencies caused by redundant paper and electronic health records, he said. Without a legal definition for electronic records, organizations would be apt to rely on paper records as the legal record – prompting dual record keeping in many cases.

“The financial benefit is to the organization to the extent it will help reduce their paper,” Mon said.


IRS Memo on IT Donations to Docs Raises Patient Privacy Concerns

Reprinted from the June 2007 issue of REPORT ON PATIENT PRIVACY, the industry’s most practical source of news on HIPAA patient privacy provisions.Hospitals may donate health information technology (HIT) to physicians without fear of jeopardizing their tax-exempt status, the IRS recently announced. But the agency’s insistence that physicians grant hospitals full access to their medical records if they accept HIT assistance has privacy officials and experts scratching their heads.

Last month, the IRS released an internal memorandum in response to a November 2006 request for guidance from the American Hospital Association (AHA). AHA said hospitals were “poised to implement HIT sharing with physicians” but were worried about whether doing so would threaten their tax exemption.

Hospitals already had what they considered to be a partial go-ahead to donate HIT. To spur the adoption of HIT, including electronic health records and e-prescribing technology, Congress included a provision in the 2003 Medicare reform law requiring HHS to write rules that would provide a safe harbor under the anti-kickback statute and provide an exception under the physician self-referral statute for hospitals that wanted to share HIT.

AHA Fears Policy May Be Altered

HHS released such rules in August 2006, but AHA said nonprofit hospitals needed the IRS to weigh in on the issue before they felt comfortable going ahead with HIT sharing. A survey of chief information officers conducted this spring revealed that a majority did not plan to make such donations, out of fear that the rules, issued when Republicans controlled Congress, could be altered now that Democrats are the majority. Rep. Pete Stark (D-Calif.), in particular, has stated his opposition to the HHS rules.

AHA’s letter seeking clarification was sent to Lois Lerner, the IRS’s director of exempt organizations. AHA says non-profit should be allowed to make IT donations without tax consequences. “The HHS regulations permit hospital and health care systems to provide software and other health IT and support services (but not hardware) to physicians for the purpose of promoting health by improving patient safety, and the efficiency and effectiveness of care,” the letter states.

The memo that the IRS released on May 11 was written by Lerner, addressed to her staff and posted on the IRS’s Web site under the topic “Electronic Health Records Directive.” The IRS described the memo as a “directive for cases on hospitals that help physicians acquire electronic health records.”

“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 Regulation and the hospital operates in the manner described below,” Lerner writes in the memo.

The rub for privacy experts comes from the phrase “the manner described below.” The memo goes on to state that following the HHS rules is not enough. Hospitals that want to share HIT will enter into “Health IT Subsidy Arrangements” or agreements, Lerner writes.

“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 memo states.

In addition, the hospital must:

  • Ensure that the Health IT Items and Services are available to all of its medical staff physicians; and
  • Provide the same level of subsidy to all of its medical staff physicians or vary the level of subsidy by applying criteria related to meeting the health care needs of the community.

These requirements do not apply to for-profit hospitals.

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Not everyone benefits from IRS ruling, analysts say

6/11/07 Richard Pizzi

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.”



Government Technology: Miracle Cure?

Jun 1, 2007, By Shane Peterson

It was just a few years back that open source software started sneaking into technology departments.

Not much was known about the software, and CIOs, long accustomed to buying established software packages written and supported by well known vendors, were leery of software produced by a nebulous affiliation of programmers scattered across the globe.

Talk about a reversal of fortune: These days, open source software is downright fashionable. CIOs know it, and public- and private-sector enterprises of all types gladly run open source applications in server rooms and on front-line staff workstations.

History seems to be repeating itself, except now the world of medicine is the stage.

Slow Going
Health-care costs put a heavy strain on federal, state and local government budgets. Medicare and Medicaid especially wolf down huge sums of money.

The federal government is the nation’s largest purchaser of health care, according to the president’s 2008 budget, accounting for approximately one-third of U.S. health-care spending.

States, too, spend considerably on health care. In Texas, for example, health and human services funding consumed 34 percent of the state’s total budget for the 2004-2005 budget year, according to Texas Medicaid in Perspective, Sixth Edition, a report released in January 2007 by the Texas Health and Human Services Commission.

To help trim health-care costs, the Office of the National Coordinator for Health IT was created in 2004 to jump-start health IT activities in the federal government, and between the federal government and the private sector.

“Health IT” is a loose term for efforts to modernize the U.S. health-care system’s methods for collecting, using and sharing patient information and other medical data. Federal officials and industry experts have long recognized that the medical sector has not fully experienced the technology revolution that’s hit other sectors of the U.S. economy.

Observers cite the fragmented nature of medical information systems as the primary reason the medical sector runs at the rear of the technology-adoption pack. Physicians’ information systems don’t talk to hospitals’ systems, which don’t talk to clinics’ systems, which don’t talk to pharmacists’ systems.

Each of these segments uses its own version of a patient’s health record, and a significant goal of health IT is creating the technology infrastructure to support one electronic health record (EHR) per patient that any hospital, clinic, physician or pharmacist can access when providing health-care services to that patient.

Regional health information organizations (RHIOs) and health information exchanges (HIEs) sprouted to start the difficult work of creating information systems to link hospitals, clinics and physicians within clearly defined geographic regions.

The terms RHIO and HIE are often used interchangeably, and the two entities perform the same function, according to the Healthcare Information and Management Systems Society (HIMSS), a health-care industry membership organization focused on coordinating health IT use in the U.S.

There are less than 14 RHIOs currently funded and/or operational in the United States, according to the HIMSS HIT Dashboard, while there are approximately 137 HIEs, though the majority of these lack funding or are stuck at the conceptual stage.

Open Source Medicine
Other interested parties also launched their own projects to stimulate health IT, but these efforts seek to extend open source applications and technologies to the world of medicine.

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