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EMR Investment Can Mangle Hospital Credit Rating

As we all know, EMRs are huge investment for hospitals, albeit a necessary one by most standards.  The thing is, can they afford their EMR?  At least in the following case, the answer seems to have been with a resounding “no.”

As we reported earlier, Winston-Salem, N.C.-based Wake Forest Baptist Medical Center went through terrible troubles with both implementation and collections when it installed an Epic EMR system.

In the wake of the fiasco, during which the hospital reported a loss of $56.6 million in operation costs for fiscal 2013, the facility and was slapped with a downgraded credit rating From Standard & Poor’s Ratings Services (from “AA-” to “A+”).  Wake Forest leaders attributed the loss largely to the cost of the EMR installation.

It’s little wonder Wake Forest struggled, and moreover, somewhat surprising that more hospitals aren’t seeing major financial troubles in the wake of their EMR rollout.  After all, as S&P’s Kevin Holloran points out, healthcare IT expenses now account for 25 percent 35 percent of the hospital capital project budget, and Meaningful Use requirements a major contributor to this.

Now, it is worth noting that Wake Forest’s financial troubles came in part due to billing concerns that were only part of the overall implementation picture.  Hospitals that manage to go out their EMR without directly harming cash flow should do far less damage than Wake Forest’s implementation.

But the bottom line is this: when Meaningful Use incentive payments are no longer there to cushion the blow, will hospitals really be able to afford their extremely pricey EMRs?  Will they be able to afford to support them, in a market where health IT recruitment is excruciatingly tough?  And given that EMRs are inevitably married to billing, will Accounts Receivable problems pop up later in the game and endanger hospitals’ credit rating?  My guess is that 2014 will see more hospital performance belly flops courtesy of their EMR.

January 13, 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.

Expense Growth vs Revenue Growth in Hospitals

I recently interviewed Alan Kravitz, Founder and CEO of Medsys, and he offered an insight into the challenges hospitals face that I hadn’t heard before. Here’s what he said:

Expense growth is expanding faster than revenue growth for the first time in healthcare.

This is really interesting to consider when you think about the billions of dollars that are being spent on EHR software. Although, I don’t think it’s the EHR expense that’s the issue. Sure, it’s now a part of the cost of running every hospital. Plus, we could certainly argue over whether it’s worth the cost and whether the EHR is overpriced. However, there’s something much more challenging at play.

When you think about the political landscape for healthcare, all you hear about is the rising costs of healthcare. You also hear other things like the huge percentage of GDP that come from healthcare and how we spend so much more money than other nations around the world. With all of these things, there’s a huge drive to stop paying so much for healthcare.

When you look at this trend from a hospital perspective, all you hear is that they’re going to be paying us less for doing the same thing (and some might argue for doing more). With this in mind, Alan’s quote above makes more sense. A hospital’s revenue growth is declining and that’s by design. I’m not sure most organizations are ready for this change.

We’ve long heard about the potential of EHR to lower costs. Considering the pressures hospitals face today, we could really benefit from EHR living up to its potential. If not, I’m not sure where hospitals are going to cut.

January 2, 2014 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently 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.

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.

Many Hospital Executives Expect Big Health IT Investments This Year

Surprise, surprise.  A new report from the Premier healthcare alliance finds that many hospital executives will make their largest capital investments in IT this year.

To prepare the report, known as the spring 2013 Economic Outlook, Premier spoke with 530 survey respondents, most of whom were hospital leaders.  Survey respondents also included materials and practice area managers, reports iHealthBeat.

Roughly 43 percent of respondents said that their health organization’s biggest capital investment over the next year would be in health IT, a jump of 21 percent from two years ago.  Offering a hint on where the money may be going, the report also found that 32 percent of respondents can’t currently share data across the continuum of care.

Other clues as to where the spending is going come from the study’s topline finding, which predicts a big shift from inpatient to outpatient care.

According to Premier, only 35 percent of respondents are expecting to see an increase in inpatient spending this year as compared to 2012, down 30 percent from predictions made last year. Meanwhile, 69 percent of respondents said they expect to see an increase in 2013 outpatient volume compared to last year.

Some additional intelligence from the report:

* 22 percent of respondents are in an ACO, and 55 percent plan to be by the end of next year

* 27 percent don’t have plans to pursue the ACO model, and may look to bundled payment, care management fees or pay for  performance options

*  29 percent said overutilization of products and services and 22 percent said lack of clinical coordination were the biggest drivers of healthcare costs

* 48 percent said reimbursement cuts had the biggest impact on their health systems

* 40 percent said capital spending would increase over the next 12 months as compared with the previous year

* Almost 37 percent project a capital spending decrease

May 8, 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.

Healthcare Big Data Trends Leading To Analytics Spending

Ready to exploit big data? So are your competitors, and they’re preparing to spend big bucks in areas where they’ve historically been weak, such as predictive analytics and data discovery, reports  HealthcareITNews.

Technology vendor Lavastorm Analytics recently surveyed more than 600 technology professionals in healtlhcare and other industries about their IT investment plans for this ear.

Right now, researchers found, three-quarters of respondents still routinely use Excel for self-service analytics processes, and 35 percent use the R programming language.  Of the remaining 24 self-service analytics tools listed by the survey, 17 of them were used by less than 10 percent of the audience. In other words, once you get past R and Excel for analytics, there’s little agreement as to what works best.

But the coming months should bring some big changes in this landscape, Lavastorm’s research suggests. As the desire to exploit big data grows, providers are planning investments that will allow them to exploit it. Nearly 60 percent of respondents plan to increase their investments in areas where their capacity is limited.

Those areas include gleaning insights from data (25 percent), accessing data (22 percent) and having the ability to integrate and manipulate data (19 percent), HealthcareITNews says.

To meet those goals, providers intend to invest in predictive analytics (51 percent), big data (35 percent), dashboards (32 percent), reporting (31 percent) and data exploration and discovery (30 percent). At the same time, 27 percent said that they’d invest in advanced visualization tools and 24 percent self-service analytics tools for business users.

All this being said, my hunch that providers probably aren’t particularly sure where they’re headed with this technology yet.  I’d like to have seen Lavastorm ask which clinical or business goals, specifically, they hoped to meet by making these investments, wouldn’t you?

March 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.

HIMSS: Hospitals Achieving Meaningful Use Milestones

Hospitals are making good progress toward achieving Meaningful Use milestones, a new study by HIMSS suggests.

HIMSS, which surveyed 298 healthcare CIOs between December and February, found that 66 percent had already qualified for Meaningful Use stage 1, while another 4 percent expected to do so before the end of 2012, Information Week reports.

Meanwhile, 75 percent of respondents said they expect to attest for stage 2 in 2014, which  as readers probably know is the first year of stage two attestations.

Given the ambitions noted by the CIOs, it’s not surprising to learn that 66 percent of them said they thought their budgets would definitely or probably increase this year.  Of the remainder, 15 percent said their budgets would remain level, and 8 percent expected to see a decrease.

Last year, achieving Meaningful Use was the hospital CIOs’ top business objective, named by 24 percent of respondents, but this year, it fell to 15 percent. This year, the top health IT business objective has switched over to survival, with 21 percent saying their key goal was to sustain the financial viability of their organizations.  This was followed closely by improving patient care, which came in at 19 percent.

Still, Meaningful  Use will obviously stay top of mind for the CIOs, who may be better prepared than last year but still have much to handle.

After all, they expect to make serious money on achieving MU goals, HIMSS concluded. The survey found that about 30 percent of hospital CIOs expected an ROI of up to $2 million on stage 1, another 23 percent a return of $2 million to $3 million, and 16 percent expected ROI of $4 million to $5 million.

March 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.

How Danish Leaders Are Choosing Their EMR

This is something you don’t see every day. Courtesy of my always-on-top-of-things colleague John, here’s a look at the process by which Danish government authorities are selecting an EMR for the Capital Region of Denmark.

As the TBKConsult blog notes, this is a big decision. The authorities expect to spend 135 million euros on the EMR, which will have 40,000 IT users and need to support up to 12,000 clinical and administrative users at 17 hospitals and 54 other healthcare institutions simultaneously. Once installed, the system will support a region serving 2.5 million patients.

Once chosen, the EMR will be implemented with a pilot in the Capital region and eventually, by the end of 2016, rolled out throughout Eastern Denmark.

The selection process has already narrowed down the list of possibilities to five prequalified vendors: Systematic, Epic, Cerner, Cambio and Siemens.  None of the vendors have submitted official proposals yet.

What’s interesting about this isn’t the shortlist, but the means by which the authorities have decided to narrow the list down. Here’s their list of fourteen criteria by which TBKConsult expects them to do so:

  • Installed base and references
  • Clinical reputation
  • HIMSS/EMRAM level 6/7 certifications (Electronic Medical Record Adoption Model)
  • Fit for purpose – clinical processes
  • Fit for purpose – PAS
  • Fit for purpose – external integration
  • Software scalability – current installed base
  • Software scalability (SIG test)
  • Software maintainability (SIG test)
  • Price/Performance
  • Implementation capability
  • Product strategy and influence
  • Political preference
  • Staff perks and community participation

TBK Consult has also ranked the importance of each of these criteria, assigning the most weight to “Fit for purpose-clinical processes” (25 percent), “Fit for purpose-PAS” (15 percent) and “Fit for purpose-external integration” (15 percent). They rated “Implementation capability” at 10 percent and most of the rest of the criteria at 5 percent.

By their weights and ranking, vendor Cambio comes in first, Systematic second, Epic third, Cerner fourth and Siemens fifth. Intriguing. I wonder how close TBK will be when the actual results are announced?

February 19, 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.

DoD, VA Plan To Streamline EMR Integration Effort

The Department of Defense and VA have decided to change the way they integrate their two EMRs, in an effort they say will lower the cost and speed the pace of interoperating.  The new approach is expected to offer at least partial functionality by 2014, rather than forcing the two agencies to wait until 2017, reports FederalNewsRadio.com.

Rather than sticking to their current course, which involves a massive effort to integrate their respective EMRs into a single system, health IT leaders will attempt to make more short term  progress.

To date, the DoD and VA have been working on common requirements and data standards and developing a shared enterprise service bus, all in the service of creating a single system. Agency leaders had estimated that the existing project would cost $4 billion.

The new plan, while keeping the larger goal of integrating by 2017, will include efforts to use existing solutions to get to interoperability quickly. Leaders expect their new direction to be considerably cheaper.

By the end of this year, the two departments will begin sharing a common UI, with the rollout beginning in seven DoD and VA wounded warrior polytrauma centers. Then, by  2014, the VA and DoD expect to be exchanging seven types of critical data, including lab results, clinical notes and allergies. The VA and DoD will accomplish this by standardizing the day their systems currently use, the VA’s chief information officer told FederalNewsRadio.com.

Another key component of the two agencies’ efforts is establishing a common system for identity management.  The identity management system is drawing on the massive Defense Manpower Data Center storehouse of personnel informaton operated by the DoD.

February 12, 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.

Level the Playing Field with RACs as They Enter Practice Settings

Lori-Brocato-Healthport
Lori Brocato is Director of Audit at HealthPort. With more than 15 years in health care technology, Lori serves as HealthPort’s resident government and third party audit expert, sharing educational information and best practices with health care facilities via Webinars, media interviews and industry articles. Additionally, she is the AudaPro product manager for HealthPort and authors her own blog, Audit Insights, on the HealthPort website. Lori is also a monthly contributor for RACMonitor, an online knowledge source for healthcare providers. She is RAC certified by the Medicare RAC summit and a member of HIMSS and HFMA.

In my most recent blog post here, I presented some helpful hints for reducing the impact of typical RAC audits. In a nutshell, I emphasized that moving toward a centralized, more fully automated, paper-free environment would soften the blow of the ever-increasing administrative burden of audits. Maximizing technology, I concluded, will bolster efficiency and enhance organization, the traditional keystones of corporate success.

But now, to complicate matters, RACs have widened their nets. Nearly all hospitals have deepened their relationships with physician practices, and the RACs have taken notice. Hospitals must now be vigilant of audit activity surrounding the physician practices and take appropriate steps to mitigate the interruptions and expense wrought by additional inquiries.

RACs Make First Move into Practices

Two RACs have already promised upcoming reviews focused at physician practices and medical groups. RACs have also promised to expand E/M coding, the most likely source of overbilling or duplicate billing as hospitals accustom themselves to working in concert with these new business partners. Additionally, RACs now often request physical copies of medical records. In the past, automated reviews based on data analysis of claims an remittance information were the norm. To make matters worse, long-standing, regional health plan auditors are also getting in on the action, requesting and reviewing patient records.

Obviously, RACs have made some game-changing enhancements to their efforts to locate and retrieve billing errors and overcharges.

Here are four ways hospitals can level the playing field with RACs as it relates to their owned or affiliated physician practices and medical groups; minimizing the impact these inquiries have on staff and budgets.

Knowledge is Power –Provide your physician practices with access to RAC managers, historical program information and revenue impact reports. Inform them of key RAC targets for medical groups and deliver real, practical tips on how to mitigate risk.

It’s a Team Effort – Interview each practice administrator to identify and track all RAC activity and record requests. Explain the importance of centralization and incorporate practice administrators into the organization’s overall audit program.

Connect the Dots — Create a specific workflow or use database and tracking technology that follows a specific process to manage audit requests across both inpatient and outpatient settings; including physician groups and medical practices.  Open the lines of communication with practice administrators to ensure all RAC requests are properly communicated, logged and processed.

Learn from Mistakes — Conduct internal audits and track and review the results regularly. Take educational action based on findings. And finally, use data from internal audits and key reports to validate that any and all vulnerability are identified and fixed.

Audits are disruptive and a real threat to your revenue, and they are growing in frequency. The trend towards stronger hospital-physician relationships enforces the need for hospitals to take action, bring physicians into their centralized RAC strategy, and ensure everyone’s revenue is protected.

February 5, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently 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.

What Would It Take To Get More Hospitals On VistA?

Recently, we shared the story of of a California community hospital that decided to bypass big vendors like Cerner and Epic and go for a VistA installation instead. While Oroville Hospital ended up spending $10 million on its VistA implementation, that turned out to be about half of what it would have spent on Cerner and its big-vendor cousins. Then, to boot, Oroville got a $5 million Meaningful Use payout.

Yes, without a doubt, Oroville had a different experience when it went with VistA than it would have if it hired on Epic and had armies of be-suited consultants descend onto its campus. Any open source project faces the risk that the fervor and volunteer labor that makes up the backbone of its ongoing development efforts.

But given how much flexibility hospitals get out of the deal, and how much they save, it seems to me that you’d still expect to see more VistA projects being mounted.  What would it take? Here’s a few ideas:

*  Get a CCHIT-certified VistA product out there:  Right now, hospitals don’t have such a choice. The only reason Oroville got its instance certified was thanks to special help from World VistA.

* Have more happy talk stories on how VistA can really work appear in serious business publications like Forbes:   Arguably, peer pressure is a major reason hospitals stick to a short list of popular solutions.  More coverage of VistA successes in major pubs creates its own buzz which may encourage IT leaders to reconsider their existing plans.

* VistA consulting firms need to become more common:  Right new there are a few firms, like Medsphere, that will walk hospitals through the VistA installation process. But what if, say, Accenture had a division devoted to VistA support?

There’s not a lot you can do if a hospital CEO is determined to buy Epic or Meditech or Cerner. But if they want to consider VistA, there’s a lot the industry could do to help.

January 22, 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.