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A Hospital CFO Perspective on EHR Expense

The past couple days I’ve been able to enjoy a couple days sitting down with hospital CFO’s at HFMA’s ANI conference in Las Vegas. I think this is the third time I’ve attended the event and it’s always a really interesting conference since hospital CFOs have a great financial perspective into the running of a hospital.

While at the big dinner celebration they had last night at the event, I asked a hospital CFO what she thought of the event and what she’d learned. She responded:

The sessions really helped me feel good about the small investments we’ve been making in population health and analytics. I think were going in the right direction.

Then she added this after thought that was telling:

Not to mention justifying the insane amount of money we’re spending on our EHR.

I think we’ve done a really poor job of explaining why the EHR is worth the investment. Let’s be honest though. Most of the EHR implementations haven’t been about leveraging the EHR to improve the organization. They’ve been focused on the meaningful use regulatory requirements, getting the EHR incentive money, and avoiding the EHR penalties.

Going forward we’re going to have to shift our thinking. We’re going to have to do a much better job justifying the EHR expense by showing the benefits an EHR provides a hospital organization.

June 25, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 14 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

Hospitals Don’t Prepare For Full Costs of EMR Installs

A new study published in Medical News Today concludes that UK hospitals aren’t always taking into account the full costs of implementing new EMRs, and as a result, are not receiving the full benefits of these systems.

The study, which was published in the Journal of the American Medical Informatics Association, evaluated the implementation of three EMRs — iSOFT’s Lorenzo Regional Care, Cerner’s Millenium and CSE’s RIO — across 12 diverse healthcare organizations in three regions of the UK and at different stages of implementing the systems.

Researchers also conducted 41 semi structured interviews with 36 hospital staff, members of the respective implementation teams, and those spearheading the implementation at a national level.

The research team found four overarching cost categories associated with implementing EMR system: infrastructure, personnel, facilities and other (such as training materials).

As might be expected, the hospitals involved spent their EMR budget in significantly different ways. For example some hospitals spend big on testing the software, while others spent large sums training clinicians and administrative staff to use the new system.

The hospitals also made significantly different decisions when it came to hiring new staff to cover for those who were in training. One hospital spent over $1.1 million to provide covering staff, while another spent no money at all to cover from for staff and training.

When all was said and done, hospitals were most likely to cut back on training and implementation costs. Meanwhile, hospitals were also likely to under budget for factors such as the need to back fill staff to the lost productivity, and the need to test the system due to inadequate vendor testing.

February 17, 2014 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.

Stages, Rankings, and Other Vanity Metrics

It seems like we’re always getting bombarded with the latest and greatest list of hospitals and EHR vendors being ranked, classified or sorted into the various levels of IT adoption. The most famous are probably the HIMSS stages, KLAS rankings, and Most Wired Hospitals. While I’m like most of you and can’t resist glancing at them, every time I do I wonder what value those rankings and classifications really have when it comes to Health IT adoption.

In the startup world there’s a term that’s very popular called vanity metrics. I believe it was first made popular by Eric Ries in this post. The idea is simple. Organizations (and the press that cover them) love to publish big numbers for an organization, but do those metrics really have any meaning?

When I look at the various stages and ranking systems out there in healthcare IT, I wonder if they’re all just vanity metrics. The press loves to put a number on something or to classify an organization versus another one. However, does the stage or ranking really say anything about what really matters to a healthcare organization?

I haven’t done any specific research on things like the quality of care or the financial qualities of organizations across these stages and rankings. Maybe organizations that rank higher or have achieved a higher stage actually do provide better care and have better financials. Although, no doubt that research would have to also inspect the causal relationship between rankings and these results. However, I wonder if these rankings and classifications are really just vanity metrics.

I wonder if there are other metrics we could use to evaluate a healthcare organization. I think the results of such metrics would find every institution wanting in some areas and excelling in others. Stages and rankings don’t take this into account. However, I believe it’s the reality at every institution.

This actually reminds me of Farzad Mostashari’s comments about Healthcare’s Inability to “Step on a Scale” Today. As Farzad asserts, healthcare can’t “step on a scale” today and know how they’re doing. This is partially because the “scales” we’re using today aren’t measuring the right metrics. It’s like the scale is telling us that we’re 5’9″ and so we’re concluding we’re overweight. Although I expect that many might argue that the scale is blank and we’re concluding whatever we want to conclude.

I’d love to hear what metrics you think a healthcare organization should be measuring. Let’s hear your thoughts in the comments.

November 18, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 14 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

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.

Wisconsin Prepares For Statewide HIE

The state of Wisconsin is gearing up to kick off a statewide HIE network that would embrace hospitals, clinics, nursing homes and other care facilities, according to a piece appearing in the Milwaukee Journal Sentinel.

The network, known as the Wisconsin Statewide Health Information Network (WISHIN), is a private nonprofit organization. It expects to add several hospitals to its network this year, and most of the state’s major health systems have committed to participating over time. The health systems and other providers who participate in WISHIN will pay an annual subscription fee based on their size.

WISHIN expects to make a wide variety of information available securely to providers, including problem lists, prescriptions, radiology reports, physician notes and test results, the newspaper notes.

WISHIN will replace the Milwaukee area’s Wisconsin Health Information Exchange, a network which was formed in 2008 and included 13 hospitals in the area. The WHIE was shut down after the region’s health systems decided that being part of a statewide network would be more efficient than relying on a local organization.

WISHIN was created in December 2010, funded by the American Recovery and Reinvestment Act of 2009. Initial planning for the network was done by a body overseen by the state’s Department of Health.

Since then, WISHIN brought in Medicity Inc. to handle the design of the network. Medicity, which is owned by Aetna, is building HIEs in several states.

In kicking off its network, WISHIN is joining a rapidly-growing community of hospitals who have embraced HIEs. In fact, a recent study appearing in the journal Health Affairs concluded that health data exchanges between hospitals and other healthcare providers have climbed 41 percent between 2008 and 2012.

And WISHIN is one of a growing number of statewide efforts. For example, New Jersey’s State Department of Health just awarded $1.57 million to a coalition of HIE group to help them kick off a statewide HIE there.

What’s not clear, from the description of either HIE, is how they’re going to sustain their efforts over the medium and long term;  subscription-model based HIEs have failed in the past and, unless something new is afoot, are likely to fail again.  Let’s see if the ROI is enough to satisfy hospitals and providers this time around.

September 3, 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.

Only 40% of Hospital CIO’s measure ROI on Their EMR Implementations

Today, I stumbled upon this fascinating tweet about hospital EMR ROI. It’s from @dbtech_Ras:

Unfortunately the tweet doesn’t contain the source of their information, but the idea of EMR ROI is a very interesting and important topic. Should a hospital CIO be tracking the ROI of their EMR implementation? Are most hospital CIO’s tracking EMR ROI?

I would imagine many hospital CIOs aren’t tracking EMR ROI, because they see EMR as a necessary requirement of being a hospital today. Do they track the ROI of cleaning supplies? No. They just realize they need them and they try to manage the cost of the supplies as best they can. I think many are treating EMR in this same manner. They see EMR as a necessity regardless of ROI.

The interesting thing is that there are actually a lot of ways to measure an ROI for EMR software. None of them are perfect and they certainly leave out all the intangibles and long term benefits of EMR. For example, how do you measure an ROI on legibility of charts? That’s tough. It’s also hard to predict how having your charts electronic will enable you to be a better hospital 5-10 years from now. Not to mention if reimbursement eventually will require an EMR. Things like this will happen I’m sure.

With those disclaimers, you still can calculate an ROI. The low hanging fruit is the EHR incentive money and the future EHR penalties for not having an EHR. These add up to really large numbers for hospitals. You can also look at productivity before and after the EHR. Of course, depending on how you implement the EMR, this could actually be a cost of EHR as opposed to a benefit. Either way it should be calculated in the ROI. There are many more.

From what I’ve seen everyone sees the future of physician documentation is going to be in an EMR. Just because the move to EMR is inevitable doesn’t mean you shouldn’t still keep focused on the ROI you can receive from it.

Is your hospital tracking your EHR ROI?

August 21, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 14 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

EMR Analytics Reduce Cardiac Readmissions

A new study has concluded that EMRs can help reduce hospital readmissions of high-risk heart failure patients, according to a report in Modern Healthcare.

The study, which appeared in BMJ Quality & Safety, looked at more than 1,700 adult inpatients who had been diagnosed with heart failure, myocardial infarction and pneumonia over a two-year period at Dallas-based Parkland Memorial Hospital.

Researchers first used an EMR-based software package to sort high-risk from low-risk heart failure patients. The EMR analytics software drew on 29 clinical, social and behavioral factors within 24 hours of a patient’s admission for heart failure.

Using this tool, researchers were able to cut readmission rates for the studied patients by from 26.2 percent to 21.2 percent, according to EHR Intelligence. Not only that, hospitals were able to shift resources to patients at highest risk while they were still in the hospital.

As we who work in and around health IT know, reducing readmissions through better data analysis is something of an obvious move.  EMR users may not yet have the predictive analytics in place to make this happen, but I think solutions will be coming to the marketplace, and soon.

That being said, it could be a while before such solutions reach their full potential. After all, predicting patient needs is more likely to work if hospitals and health systems integrated EMRs with community medical practices, and we all know how challenging this is still.

Perhaps the work of building robust predictive analytics systems can begin in earnest in situations where the hospital owns the medical practice and both use the same system. But even in those cases, hospitals will still be treating patients seen by community practices outside of their organization.

Bottom line, this study is an interesting look at the possibilities of mining EMR data for direct patient care improvement. Let’s see how many more projects of this kind hit the news this year.

August 6, 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.

Paper to EMR is Much Easier to Justify Than EMR to EMR

When I was last in DC at the Healthcare Forum, I heard hospital CIO Bill RiegerStep Out” and talk about some of the challenges he faces as a hospital CIO. One of the things he said in his talk really rang true to me and is going to become an increasingly important topic in healthcare.

His comment: The ROI from Paper to EMR is Much Easier to Justify than EMR to EMR

This is a powerful and challenging thing to consider. I’m sure those at Epic, Cerner, Meditech, etc are licking their chops knowing that it will take a hospital CIO with special leadership skills to overcome this challenge. Yes, from their perspective they have some incredible customer lock in. However, Bill went on to describe that it’s not impossible to lead such an effort. In fact, his hospital was switching EMR software shortly after I heard him speak.

The biggest challenge with this idea isn’t that there’s no ROI to switch from one EMR to another EMR. There can be a significant ROI, but most hospital CIOs are afraid to make such a call. They’re afraid to really dig in deeply to find out what a new EMR might mean for their hospitals. Sometimes this is because they were the one who implemented the first EMR. Other times it’s they’re too risk averse to take on such a challenging project. It’s often easier to sweep thing under the rug than it is to pull up the rug and really see what’s going on under the covers.

I’m of course not suggesting that switching EMR software is always the right decision either. One of the first lessons I learned out of college was that change doesn’t always mean better. In fact, a change can make things worse.

I do believe that continuous improvement leads to beautiful results. Too many in healthcare IT are satisfied with status quo. If we’re going to continuously improve, one area we can start is to dig deeply into the ROI of going from electronic to electronic.

May 30, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 14 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.