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Epic Implementation Problems Lead To Lower Hospital Credit Rating

Of late, stories have begun to crop up about troubled Epic implementations and the financial problems that these shaky implementations can cause. In fact, we’re aware of at least one Epic investment which may have led to the departure of a CIO from a Maine hospital.

Now, we’re told that a troubled Epic implementation has led to the lowering of a hospital’s credit rating. Standard & Poor’s has lowered Winston-Salem, NC-based Wake Forest Baptist Medical Center’s debt from AA- to A+, primarily due to the problems Wake Forest has had in rolling out Epic, according to Becker’s Hospital Review.

According to a statement from Wake Forest, the EMR implementation had a bigger impact on the hospital’s finances and operations than it had anticipated, leading to poorer overall fiscal performance than expected for 2013. Earlier this year, the CIO for Wake Forest resigned in the wake of the Epic debacle.

Wake Forest spent about $13.3 million to bring Epic on board, and roughly $8 million on Epic-related expenses, but that doesn’t seem to have been the main reason the install caused financial problems. We know from a report in the Winston-Salem Journal that since the Epic rollout, the hospital said that it had lost $26.6 million in margin due to volume disruption caused by Epic-related problems.

The Epic implementation wasn’t the only reason for the downgrade. It came partly due to cuts in NIH research funding, lower volume growth, a lower provider tax and sequestration cuts, according to hospital CFO and vice president for finance Edward Chadwick. But clearly, the disruptions caused by the Epic install have been major.

S&P did show Wake Forest some mercy, changing its financial outlook from “negative” to “stable.”  The agency is predicting that the hospital should rebound financially in 2014 as the disruptive effect of the Epic install decreases.

November 7, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

EHRs Can Generate Meaningful Return On Investment

Well-implemented EMRs can certainly generate Meaningful Use incentive payoffs, but that’s far from the only way that they can help a practice generate return on their EHR investment.

According to “Return on Investment in EHRs,” a whitepaper sponsored by GBS, HP, Intel and Nextgen, properly implemented EHRs can do a great deal to generate ROI for medical practice above and beyond qualifying them for MU payoffs.

The paper notes that many practices have achieved a return on investment in their EHRs without receiving external incentives. As it points out, a Health Affairs study from 2005 found that while initial EHR costs averaged $44,000 per full-time equivalent, and ongoing costs averaged $8,500 per provider per year, the average practice paid for EHR costs in 2.5 years and generated a profit after that.

Eleven of the 14 practices studied by Health Affairs had “tightly integrated” EHR and practice management systems, a factor the paper contends was highly relevant to their success with their EHR implementation. Not only did providers use the EHR for common tasks, almost all used it to help with billing. Ten of the practices no longer pull paper charts at all, the study noted.

EHRs also improve efficiency and productivity in the following ways, the paper argues:

* More appropriate coding: Properly-designed EHRs help physicians with coding by displaying the appropriate code based on the documentation entered during a patient encounter. This avoids costly undercoding.

* Greater efficiency: The use of point-and-click templates lessens and in some cases eliminates transcription costs, which can be up to 11 percent of collections.

* Reduction in soft costs: Fully-enabled EHRs also remove many “soft costs” that practices occur, such as the time it takes to call in prescriptions. Also, once doctors learn how to use the EHR, they can complete most of the notes during or between patient visits, leaving them with time to either see more patients or go home earlier.

It’s great to think that medical practices can generate ROI on their EHR investment, but given that the sponsors of this paper have their own agenda, I’m not taking everything they say at face value. What do you think, readers? Have you seen situations in which practice EHRs generate significant ROI independently of what they take in in Meaningful Use dollars?

September 27, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Hospital IT Investment Shoots Up

Struggling to keep up with the demands of Meaningful Use and ICD-10, hospitals are investing a disproportionate amount of money in health IT, according to a story appearing in Healthcare IT News.

It’s not that hospitals have been on an overall spending spree. Capital investment for medical equipment overall (including non-IT technology) dropped from 30.4 percent to 27 percent in 2013, while medical equipment costs fell from 44.5 percent to 13.8 percent, according to Advisory Board Company figures.

But capital spending per bed for IT grew 62 percent between 2010 and 2011, while total capital spending grew only 2.6 percent, according to Chantal Worzala, director of policy at the American Hospital Association, who spoke with the publication.

What makes these big-dollar investments particularly galling is that CIOs aren’t sure whether all of this IT spending is going to produce a return on investment, according to Healthcare IT News. According to a January 2013 survey by Beacon Partners of more than 200 hospital CIOs, only 40 percent of them measure ROI on EMRs implemened, and even less (36 percent) are confident that their ROI calculations are accurate.

That being said, many CIOs have taken the position that ROI is less important than “strategy enablement,” according to Jim Adams, executive director of research and insights at the Advisory Board Company, who spoke with the magazine.

One key purpose for making these investments is to make sure they have the right infrastructure in place to shift from fee-for-service to accountable care, Adams said. Added IT infrastructure is being  used to prepare to manage the greater financial risk hospitals will be facing under ACO-type models, he suggested.  And at least some of these dollars are being spent on EMR optimization which can help meet that goal.

Another major area of spending within health IT is data security, including mobile device management software to support BYOD, data loss prevention tools and encryption software, HIN reports.

We should know pretty soon whether hospitals made the right IT bets, as the forces pushing them to spend are cresting. But if they find that they need to rethink their strategy, let’s hope they didn’t bet the farm on what they have;  as my colleague John points out, there’s a myth floating around out there that the more expensive an EMR is, the better it is.

August 26, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Hospitals’ Bankruptcy Fueled By EMR Complications

In theory, after they get through their growing pains, hospitals should be able to leverage EMRs and new billing systems to improve their financial condition.  In the following case, however, the installation of these new technologies seem to have been the straw that broke the camel’s back.

A group of New York hospitals is $200 million in the red, and owes debts to about 3,000 creditors, a fact which came out in the hospitals’ recent bankruptcy filing. Sound Shore Medical Center of New Rochelle, Mount Vernon Hospital and five related entities have only $159.6 million in assets, according to the Healthcare Renewal blog.

Rather than go out of business completely, the hospitals have found a savior in Montefiore Medical Center, which is offering to buy the group for $54 million plus furniture and equipment.

What’s interesting here isn’t another sad hospital bankruptcy, which are all too common these days, but the reasons for the hospitals’ unfortunate financial condition.

One cause is financial bleeding which began way back in 2006, when the hospitals began seeing falling patient volume and a negative change in their case mix.  In recent times the hospitals have been seeing “significant” losses, negative cash book balances and bills  paid more than 225 days late, the blog notes.

All of that being said, the real kiss of death seems to have come in 2011, when the hospital did an EMR and billing system conversion.  Rather than helping matters, the conversion “caused major delays in billing and cash collection that still haven’t been fully solved” two years later.

I didn’t write this story up to trash EMRs or billing system  upgrades, of course. But it is worth noting that EMR installations aren’t just an expense, they’re a threat to a hospital’s financial well-being if things don’t go well.

June 7, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Do We Need To Allow Hospitals To Donate EMRs?

Today I was looking through my Twitter inbox and found this complaint, by @lee_ritz:

EMR systems are putting private physician groups out of business–we can’t afford to compete with the big hospital groups.

Certainly, it’s hard to argue that some EMRs can put a big strain ( as much as $50K+ per doctor) on medical practices . And for those in low-margin specialties like primary care, perhaps that could be the death-blow financially. But are we at a point where we need to somehow pay for EMRs for small practices above and beyond Meaningful Use incentives?

One way to address this problem comes straight from the loving arms of the American Hospital Association.

Right now, the HHS Office of the Inspector General has proposed a rule which would extend the EMR safe harbor  – allowing hospitals to donate EMRs and health IT to practices and not face a kickback investigation – from the end of this year until December 31, 2106.  Looked at one way, that’s a pretty good offer, as it and gives both hospitals and medical practices the change to get those donated EMRs in place and situated while both sides iron out Meaningful Use issues.

The AHA is arguing that safe harbor protections should be made  permanent. Its executives argue that the safe harbor is a valuable tool for getting health IT into the hands of rural physicians; that with the donations, hospitals can provide the tech support, training and maintenance medical practices need to use EMRs properly; and that hospitals can donate EMRs to physicians across entire areas, ensuring interoperability.

The AHA also notes that not all providers are eligible for Meaningful Use incentives, and that new physicians, presumably needing hospital help to get their EMRs rolling, will begin to practice after the deadline has passed. And on top of all of this, the AHA letter to the OIG states, changes in interoperable technologies will require new donations going forward if doctors and hospitals are to stay connected.

Is this the solution to the problem of making sure cash-strapped smaller practices can afford to have powerful EMR technologies that connect with hospitals and peers?  It’s hard to say, but I do think there’s some merit to at least extending the protections further and keeping a close eye on what happens.

In this day and age, when getting EMRs into medical practices is such a key federal objective, it does seem to me that the hospitals deserve a generous turn at bat.  After all, the money has to some from somewhere.

May 28, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Again, With More Gusto: Could Meaningful Use Incentives Be Slashed?

As readers of this publication know, your editor has previously held forth on the issue of whether Meaningful Use incentive funds could be cut in the current rush to snip budgets.

With the sequester seemingly moving forward, though, and continued budget-cutting fights underway, it seems a good time to address the matter again.  So I’ll plow on, partly in response to a nicely-detailed editorial by Tom Sullivan, editor of Government Health IT.

In his editorial, Sullivan notes that 40 percent of its readers expect health IT’s bipartsan support to continue, while 25 percent argue that opposition to health IT spending is brewing on the Hill. (Another 36 percent of his readers argued that health IT momentum would continue whether or not government keeps on doling out incentive funds.)

But are his readers right about the political climate?  To get more insight, Sullivan speaks to some authorities on the subject of health IT spending, including Scott Lundstrom, group vice president of consultancy for IDC’s Health Insights Unit.

In his comments, Lundstrom points out that while there’s probably enough support for health IT capabilities — notably improved processes and quality and controlling healthcare costs — there’s a catch.  He suggests that funds from HITECH which pay for the incentives, $10 billion of which still haven’t been disbursed, are a tempting target for budget shrinkers, possibly under the mantle of clawing back stimulus funding.

Lundstrom’s on to something there. Given that the stimulus was not a bipartisan project, it does seem to me that health IT fans may finally have something to worry about. That’s especially true given the letter four congressmen wrote to HHS in September arguing for a halt in Meaningful Use disbursements until better interoperability was achieved.

I’m not a political junkie and have no access to Capitol Hill chatter on this subject. But as a supporter of Meaningful Use payouts generally — if not every detail of their execution — I’m troubled by Lundstrom’s analysis, as I do think the lack of progress on  interoperability to date gives MU foes a toehold.

Cutbacks on EMR incentives would probably do little to stop the automation of hospitals.  But I think it’s fairly clear that market momentum would not push the reluctant small group practices which are still health IT challenged to pick up costly, confusing, hard to use EMRs without some reward for their efforts.  It’s that sector we should be worrying about if the budget cutters’ eye turns to that $10 million incentive reserve.

March 15, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Accenture: Five Questions Hospital Boards Should Ask Before EMR Buys

As we’ve noted in the past, hospitals are on not only an EMR buying binge, they’re doing a lot of switching from one EMR to another. Check out these stats from Accenture:

Accenture research shows that 4 to 4.5 percent of hospitals plan to make an EMR buying decision each year. This
could exceed 110+ EMR contracts or 200 to 250 hospitals per year. This trend is expected to continue well into the
future. In fact, in 2012, 50 percent of EMR deals [were] replacements, up from 30 percent in 2011, according to KLAS Research.

Whether your hospital is a switcher, a late adopter or  planning some kind of EMR upgrade, it’s making a decision of grave importance. So what are some of the key considerations boards should bear in mind? Here’s Accenture’s list of five key questions boards should keep front and center as they consider (more)  big EMR investments and plan for the future:

*  Does your current system offer enough functionality to meet up and coming Meaningful Use requirements, such as the ability to make patient family health histories and imaging results available? Does your current or contemplated EMR vendor have plans in place to keep up with future requirements/changes?

*  Is the EMR vendor’s development strategy in line with your strategy? “Boards should ask of the EMR vendor: do they have adequate resources…to help complete the business roadmap on time and successfully?” Accenture asks. And just as importantly: “Can the vendor help ensure that future product functions are strategically aligned to the healthcare [system's] key initatives?”

* Is your hospital currently on track to meet ICD-10 adoption and Meaningful Use Stage 2 requirements?  Is your vendor going to be able to help support you in these efforts as your hospital works to meet these multiple goals, or does it lack the resources to do so?

* If we decide to switch EMRs, do we have the internal resources needed to support such a bandwidth-sucking effort? Given competition for healthcare IT labor today, will you have the ability to hire on additional resources if needed? And while you’re at it, is your C-level and IT leadership solid enough to make such a treacherous journey?

* Can your hospital afford to switch EMRs, bearing in mind not only direct costs such as licensing, implementation and new technical support, but also ongoing support costs in the neighborhood of 20 percent per year?

To answer these questions, Accenture recommends you conduct an independent analysis of EMR vendors (presumably, rather than relying on analyst firms or peer feedback exclusively).  This sounds like a very good idea to me.

January 24, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

A Hospital Chooses VistA EMR Over The Giants

Here’s a story out of the pages of Forbes which should make open source advocates happy. In it, we hear the tale of a northern California hospital which decided to buck corporate trends and go with VistA rather than pay for a big-ticket EMR from a vendor giant.

Three years ago, at the outset of its EMR search, Oroville Hospital was going down the same path as most of peers. But the CEO wasn’t terribly happy with that path. While the 153-bed hospital had shortlisted giants like Cerner, McKesson and Meditech as possible candidates, chief executive Robert Wentz was worried about the sky-high cost, disruption and — as a smaller facility — lack of clout with vendors, Forbes reports.

Shunning conventional choices, Wentz decided to take a risk on VistA. Not only did he go with the less-conservative choice, he decided not to partner with companies like Medsphere that help hospitals integrate and develop VistA to meet their needs. Instead, he chose to work with independent VistA experts (a rogue crew with day jobs of their own) rather than be tied to a particular vendor.

To coordinate the project, Wentz worked with the non-profit WorldVistA and Vista Expertise Network, both of which embrace hundreds of programmers with VistA smarts. Wentz worked with programmers from the two groups, not only to build  out the hospital’s EMR but also to develop additional add-ons such as an e-prescribing package. WorldVistA CIO helped Oroville get its package certified for Meaningful Use, which brought in $5 million.

Now, three years into the project, Oroville has spent about $10 million on its EMR, about one-half of what it expected to spend on the giant EMR-makers’ software.

Now, it’s worth bearing in mind that Wentz and his IT team had to be more flexible than they would have if an army of consultants from Cerner or Epic had run the show. (I love the part in the Forbes story where a programmer told Wentz he had to end the call so he could make a trip to Costco. Classic.)  But Oroville seems to have reaped the benefits.  I wonder if this story will lead to more VistA adoption…

January 15, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Do Epic Customers Have EMR Stockholm Syndrome?

John’s Note: I guess Anne didn’t see my post about the EMR Stockholm Syndrome. I think she adds to the discussion with this post though.

According to a recent piece appearing  in KevinMD.com,  by next year an astonishing 40 percent the U.S. population will have their medical data stored in an Epic system. Heaven only knows how many billions of dollars of IT capital outlay that represents. What we can safely guess is that not a single customer making up that list failed to make painful sacrifices to bring Epic on board.

Having spent so much and worked so hard to get Epic up and running, you’d expect to hear at least some complaints from hospital C-suites about the ordeal of it all.  And despite its popularity, you’d expect far more hospitals to blanch at the, uh, epic price tag on an Epic install and say “no  thanks.” But instead, you see hospital leader after hospital leader speaking glowingly about Epic and choosing it over competitors time and time again.

As author Paul Levy notes  (himself the former CEO of Beth Israel Deaconess Medical Center), Epic isn’t just expensive. It’s also something of a pain to work with:

*  Epic has  made a policy of not being interoperable with other EMRs, scuttling HIE plans that have become increasingly important to hospital business plans

* Epic decides when system upgrades are needed and changes to the EMR are needed

What Paul doesn’t mention, but is worth considering as well, is that Epic only gets installed if you work with teams of its relatively green staff members, hotshot types in their twenties who may be very smart are definitely on the arrogant side if reports I’ve heard are true.

So, if hospitals are still singing Epic’s praises after all of this stress and expense and letting a vendor dictate important aspects of its development roadmap, is the industry suffering from Stockholm Syndrome (a feeling of bonding with people who have captured you)? As Levy sees it, the answer seems to be yes.  What do you think?

December 12, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Hospitals Behind On EMR ROI Measurements

Buying an EMR is one of biggest investments a hospital IT department is likely to make. To date, however, few hospitals are planning for and implementing EMR ROI measures early in the game, according to a new study from Beacon Partners.

Beacon interviewed more than 300 healthcare leaders about the clinical system performance measures they used for their EMR, as well as the resulting ROI.  What researchers found out was that most respondents weren’t happy with their organization’s attempts to measure the ROI on their EMR spend — and that many hospitals aren’t directly measuring ROI at all.

According to healthcare leaders who spoke with Beacon, quality management and IT departments, rather than financial executives,  generally institute EMR performance measures. All told, 40 percent of respondents said that they were using performance measures, but only 36 percent were satisfied with the extent to which the data was being used to measure the value EMRs brought to their organization, Beacon reports.

The problem may spring from a lack of planning. According to Beacon’s respondents, less than half (48 percent) of performance measures are determined during planning.  In fact, 32 percent of providers said that performance measures were implemented in at least one patient care area post-EMR implementation.  Fifty-one percent of respondents said that they would have preferred to implement clinical system performance measures earlier than they had done so.

It’s hard to tell what would deter these healthcare execs —  mostly leaders with community hospitals — from demanding more results from their EMR investment. My best guess, though, is that adhering to Meaningful Use guidelines has taken up all of their bandwidth, and that CFOs have been mollified by the promise of incentive payments from the feds.

As the Beacon study suggests, though, healthcare leaders aren’t satisfied with this state of affairs. Vendors, expect to get more searching questions about ROI measurement over the next year or two.

October 26, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.