Fitch: EMR Incentives Improved For-Profit Hospital Income

Posted on May 8, 2012 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or

Folks, anyone who reads these pages regularly will note that I’m not a huge Meaningful Use fan, in part because the payback just doesn’t seem adequate.  After all, getting $11-odd million in incentive bucks may be great, but not so much if you’re laying out $30 million to $50 million for a system like Epic.

Well, it’s nice to be reminded that those incentives do serve some purpose. MU incentive payments apparently did some nice things for the financial health of for-profit hospitals last year, according to financial analyst firm Fitch Ratings. Fitch calculates that MU payments boost for-profit hospitals earnings by about $400 million last year.

Fitch concluded that incentives gave the hospitals a collective $396 million boost in earnings before interest, taxes, depreciation and amortization (the much-beloved EBITDA), along with a total boost in cash from operations of about $440 million.

While this is nice, it’s not exactly a flaming news story, given that a single large hospital might see revenues in the billions for a single year, so while nobody hates a $400 million boost, it’s not a huge windfall for the 1,000-odd for-profit hospitals in the U.S. And we’re talking  largely about gains to very large investor-owned chains like HCA and Community Health Systems.

What’s even nicer is that this year and next year, hospitals are likely to see larger Meaningful Use incentive payments, according to Fitch.  My bet is that hospitals still won’t come close to breaking even, but MU momentum does seem to be turning in the for-profits’ favor.