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Four Things You Should Know About Deloitte’s “Evergreen” EHR Program

Posted on February 20, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Recently, consulting giant Deloitte announced a new program, named “Evergreen,” designed to cut down the cost of implementing and operating hospital EHRs. Unfortunately, much of the Evergreen coverage in the health IT trade press was vague or downright wrong, as it suggested that Deloitte was actually going into the EHR business itself. The key point Deloitte sought to make — that it could implement and operate EHRs for 20% to 30% less than hospitals — did come across, but the rest was a bit jumbled.

Having spoken to Mitch Morris, global healthcare leader for Deloitte Consulting LLP, I can clarify much of what was confusing about the Evergreen announcement and subsequent coverage.  Here’s some key points I took away from my chat with Morris:

  • Evergreen is a suite of services, not a product:  Though some HIT editors seem to have been confused by this, Evergreen isn’t an EHR offering itself.  It’s a set of EHR implementation and operation services provided by Deloitte Consultants. Evergreen also includes a financing scheme allowing hospitals and health systems to obtain a new EHR by making a series of equal payments to Deloitte over five to seven years. (“It’s like leasing a car,” Morris noted.) This allows hospitals to get into the EHR without making an enormous upfront capital investment over the first 18 months.
  • Evergreen is only offered in tandem with an Epic purchase:  The Evergreen program arose from what Deloitte learned after doing a great deal of work with Epic EHRs, including the famous multi-billion install at Kaiser Permanente and an extensive rollout for large hospital system Catholic Health Initiatives. So at the outset, the program is only available to hospitals that want to go with Epic.  Deloitte is considering other EHR vendors for Evergreen partnership but has made no decisions as to which it might add to the program.
  • Both onshore and offshore services are available through Evergreen:  One might assume that Deloitte is offering lower implementation and operation costs by offshoring all of the work.  Not so, Morris says. While Deloitte does offer services based in India and Ireland, it also taps U.S. operations as needed. Clients can go with offshore labor, onshore labor or a mix of services drawing on both.
  • This is a new application services management offering for Deloitte:  While the consulting giant has been managing Oracle and SAP installations for clients for some time, managing EHR platforms is a new part of its business, Morris notes.

According to Morris, Deloitte expects Evergreen customers to include not only health systems and hospitals that want to switch EHRs system-wide, but also those which have done some acquisitions and want to put all of their facilities on the same platform. “It’s expensive for a health system to maintain two or three brands, but they often can’t afford the upfront capital costs of putting every hospital on the same EHR,” he said. “We smooth out the costs so they can just make a payment every month.”

This could certainly be a big score for Epic, which is likely to scoop up more of the EHR-switching systems if Deloitte helps the systems cope with the costs. And Deloitte is likely to get many takers. Let’s see, though, whether it can actually follow through on the savings it promises. That could change the EHR game as we know it.

Hospitals Put Off RCM Upgrades Due To #ICD10, #MU Focus

Posted on December 29, 2014 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

If you look closely at the financial news coming out of the hospital business lately, you’ll hear the anguished screams of revenue cycle managers whose infrastructure just isn’t up to the task of coping with collections in today’s world. Though members of the RCM department — and outside pundits — have done their best to draw attention to this issue, signs suggest that getting better systems put in has been a surprisingly tough sell. This is true despite a fair amount of evidence from recent hospital financial disasters that focusing on an EMR at the expense of revenue cycle management can be quite destructive.

And a new study underscores the point. According to a recent Black Book survey of chief financial officers, revenue cycle upgrades at U.S. hospitals have taken a backseat to meeting the looming October 2015 ICD-10 deadline, as well as capturing Meaningful Use incentives. Meanwhile, progress on upgrades to revenue cycle management platforms has been agonizingly slow.

According to the Black Book survey, two thirds of hospitals contacted by researchers in 2012 said that they plan to replace their existing revenue cycle management platform with a comprehensive solution. But when contacted this year, two-thirds of those hospitals still hadn’t done the upgrade. (One is forced to wonder whether these hospitals were foolish enough to think the upgrade wasn’t important, or simply too overextended to stick with their plans.)

Sadly, despite the risks associated with ignoring the RCM upgrade issue, a lot of small hospitals seem determined to do so. Fifty-one percent of under 250 bed hospitals are planning to delay RCM system improvements until after the ICD-10 deadline passes in 2015, Black Book found.

The CFOs surveyed by Black Book feel they’re running out of time to make RCM upgrades. In fact, 83% of the CFOs from hospitals with less than 250 beds expect their RCM platforms to become obsolete within two years if not replaced or upgraded, as they’re rightfully convinced that most payers will move to value-based reimbursement. And 95% of those worried about obsolescence said that failing to upgrade or replace the platform might cost them their jobs, reports Healthcare Finance News.

Unfortunately for both the hospitals and the CFOs, firing the messenger won’t solve the problem. By the time laggard hospitals make their RCM upgrades, they’re going to have a hard time catching up with the industry.

If they wait that long, it seems unlikely that these hospitals will have time to choose, test and implement RCM platform upgrades, much less implement new systems, much before early 2017, and even that may be an aggressive prediction. They risk going into a downward spiral in which they can’t afford to buy the RCM platform they really need because, well, the current RCM platform stinks. Not only that, the ones that are still engaged in mega dollar EMR implementations may not be able to afford to support those either.

Admittedly, it’s not as though hospitals can blithely ignore ICD-10 or Meaningful Use. But letting the revenue cycle management infrastructure go for so long seems like a recipe for disaster.

Another Health System’s Finances Weighed Down By Epic Investment

Posted on December 26, 2014 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

While Memphis-based Baptist Memorial Health Care Corp. may intend to be “the high-quality and low-cost provider” in its region, spending $200 million on an EMR purchase has got to make that a bit more, shall we say, challenging.

While health systems nationwide are struggling with issues not of their own making, such as some states’ decision not to expand Medicaid, it appears that Baptist Memorial’s financial troubles have at least some relationship to the size of its 2012 investment in an Epic EMR platform.

Baptist, which let 112 workers go in September, has seen Standard & Poor’s lower its long-term rating on the health system’s bond debt twice since mid-2013.  Through June, the system’s losses totaled $124 million, according to S&P.

Baptist employs 15,000 workers at 14 hospitals located across the mid-south of the US, so the staffing cuts clearly don’t constitute a mass layoffs. What’s more, the layoffs are concentrated corporate services, Baptist reports, suggesting that the chain is being careful not to gut its clinical services infrastructure. In other words, I’m not suggesting that Baptist is completely falling apart, Epic investment or no.

But the health system’s financial health has deteriorated significantly over the past few years. After all, back in 2009, S&P gave Baptist Memorial a long-term ‘AA’ rating, based on its strong liquidity and low debt levels; history of positive excess income and good cash flow; and solid and stable market share in his total surface area, with favorable growth in metropolitan Memphis.

However, at this point Baptist is clearly struggling, so much so that is taking the extraordinary step of cutting the salaries of top executives in the system by 22% to 23%. That includes cutting the salary of health system CEO Jason Little. But this is clearly a symbolic gesture, as executive pay cuts can’t dent multimillion dollar operating revenue shortfalls.

So what will help Baptist improve its financial health? In public statements,  Baptist CEO Little has said that the hospitals’ length of stay has been excessive for the compensation that they get from payers, and that fixing this is his key focus. This problem, of course, is only likely to get worse as value-based reimbursement becomes the rule, so that strategy seems to make sense.

But Baptist is also going to have to live with its IT spending decisions, and it seems obvious that they’ve had long-term repercussions. I don’t think any outsider can say whether Baptist should have bought the Epic system, or how much it should have spent, but the investment has clearly been a strain.

Investor Wants to Take Down Epic

Posted on October 13, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I recently came across a really interesting comment from Chamath Palihapitiya, a venture capitalist (made his money working at Facebook), who commented on the healthcare industry and how he wanted to invest in a startup company that would take down Facebook. I embedded the full video below. His comments about EHR and Epic start at about 52:38 or you can click here to see it.

Here’s a great quote for those who can’t watch the video:

“Somebody has to go after the electronic medical record market in a really big way. Let’s go and take down this company call Epic which is this massive, old conglomerate. It’s like the IBM of healthcare.”

After saying this, he talks about how he and other VC investors like John Doerr could call people from Obama (for meaningful use stage 3) to Mayo Clinic to help a startup company try and take down Epic. He even asserts that he’d call Mayo Clinic and suggest that they should rip out Epic and go with this startup company.

Everyone reading this blog know that it won’t be nearly this simple to convince any hospital that’s on Epic to leave it behind. I agree with Chamath that it will happen at some point, but it won’t be nearly as easy as what he describes. Chamath also suggested that it might take $100 million and you might fail, but what a way to fail.

It certainly provides an interesting view into the way these venture capitalists and many startup companies approach a problem. However, I take a more nuance and practical approach of how I think that Epic will be disrupted. I think that it will require a mix of a new technology paired with a dynamic CIO that’s friends with the hospital IT leadership. You need that mix of amazing technology with insider credibility or it won’t be a success. Plus, you’re not going to go straight in and take out Epic. You’re going to start with a hospital department and create something amazing. Then, that will make the rest of the hospital jealous and you’ll expand from there until you can replace Epic. That’s how I see it playing out, but it likely won’t happen until after the MU dollars are spent.

Chamath’s comments were also interesting, because it shows that he doesn’t know the healthcare market very well. First, he said that meaningful use was part of ACA, but meaningful use is part of ARRA (the HITECH Act) and not ACA. This is a common error by many and doesn’t really impact the points he made. Second, he said that Epic is a big conglomerate. Epic is the farthest thing from a conglomerate that you can find. Has Epic ever acquired any company or technology? Cerner, McKesson, GE, etc could be called conglomerates, but Epic is not. Again, a subtle thing, but shows Chamath’s depth of understanding in the industry. It makes sense though. He isn’t an expert in healthcare IT. He’s an expert in seeing market opportunities. No doubt, disrupting Epic and Cerner would make for a massive company.

HFMA’s ANI Conference in Las Vegas

Posted on June 4, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I’ve been gearing up for the big HFMA ANI (HFMA National Institute) conference happening in Las Vegas June 22-25. This conference is largely focused at hospital CFOs, but all of the solutions being offered are now leveraging some form of technology. So, I certainly have a learning curve when talking to many at the conference, but it’s a great place to see where hospitals really plan to spend their money.

I think this will be my third time attending the event and it’s quite the experience. While not as large as the enormous HIMSS annual conference, the booths are just as big and I think that more cash flows at ANI than at HIMSS.

I like to describe it this way. All of the deals being talked about at ANI are a question of whether the organization can save them $5 million or $100 million. In fact, a lot of the contract discussions at ANI have some form of performance metric in order for the vendor to get paid. It makes for a really unique experience.

You can see from the keynote speakers that they’re heavy on leadership. I always enjoy a professional leadership speaker, so I’ll do what I can to cover them. Plus, I’ve never heard Atul Gawande, MD in person and so that should be interesting.

My schedule at ANI is really filling up, but if you’re planning to attend I’d love to meet up if we can. We can at least hang out together at one of the evening receptions or parties. I always love to meet readers and learn from them.

Hospitals Need to Diversify – What’s It Mean for EHR?

Posted on May 27, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

In a recent article on Health CXO, they made the following comment:

In the report “Building Value: Investments Aimed at New Priorities Create Opportunities for Not-For-Profit Hospitals,” experts at the New York-based financial firm note that the decline in inpatient volumes seen over the past several quarters is no fluke but rather a long-term trend driven by health reform. This means that hospitals that want to remain successful need to look beyond just inpatient services and become full-service health systems that are able to follow the patients to the lower cost and frequently higher value outpatient setting. [emphasis added]

This trend is definitely worth noting. We’ve discussed the acquisition of outpatient clinics a number of times, but never the trend of declining inpatient volumes. The article suggests that the key to viability for a hospital will be to diversify into outpatient services. I’m not sure all hospitals want to become full-service health systems and so it will be interesting to see how this plays out.

Assuming this trend continues, I’ll be interested to see what this means for a hospital’s EHR strategy. Will they go with the one big EHR across their hospital and ambulatory environment? If you look at these recently posted EHR market share statistics, you can see that this method is happening a lot. As the deals get larger, I think we’ll see push back against moving to one unified EHR software. That presents an interesting opportunity for what Alan Portela and Airstrip are doing. Not to mention the need for a private HIE.

Epic Implementation Problems Lead To Lower Hospital Credit Rating

Posted on November 7, 2013 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

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.

EHRs Can Generate Meaningful Return On Investment

Posted on September 27, 2013 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

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?

Hospital IT Investment Shoots Up

Posted on August 26, 2013 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

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.

Hospitals’ Bankruptcy Fueled By EMR Complications

Posted on June 7, 2013 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 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. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

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.