David C. Kibbe and Brian Klepper
First posted 7/06/11 on Kaiser Health News
2011 will be a disappointing year for the Centers for Medicare and Medicaid Services and the Office of the National Coordinator’s electronic health record incentive programs. We predict that few doctors and hospitals will meet the objectives set for the “meaningful use” of certified EHR technology. Meaningful use is, of course, the term that describes the objectives and measures providers and hospitals must meet in order to receive financial bonuses authorized by Congress in the HITECH portions of the economic stimulus bill of 2009. David Blumenthal, the former national coordinator, had hoped large numbers of doctors and hospitals would adopt EHRs starting in 2011, the first year bonuses are available. But, in reality, by the end of the year the percentage of physicians using EHRs won’t likely rise much above the current 20 to 25 percent rate.
This isn’t necessarily a bad thing. This year and, to a lesser extent, 2012, could be for “cleaning house.” Many older, costly and difficult-to-implement legacy EHRs will be replaced by less expensive, more agile systems that have been developed specifically for meaningful use and are deliverable in the cloud as Software-as-a-Service. Transitions like these take time, but the dynamics are foreseeable.
Consider this example: We know a seven-physician family medicine practice that has used an EHR since 2005. Though their current system includes many features and functions that are outside the scope of the meaningful use objectives and measures, it also is missing some key attributes. These include the ability to collect, analyze and report clinical quality measures; as well as engage patients and facilitate interoperable data exchange. Also, because the product is hosted in the practice’s own data center, it is staffed by a full time IT professional, which makes it expensive to maintain.
And this brings to light one of the main dynamics in play: money. The cost of updating the software licenses to meet the first round of meaningful use objectives will knock the practice back $104,000. This price tag doesn’t include the expense of the related hardware upgrades that will be necessary for the updated system nor training costs. In addition, the practice may need to add the vendor’s “patient site” for another $25,000 per year. Taken together, these upgrade costs wipe out the entire $18,000-per-physician EHR incentive bonus possible should all seven of the physicians achieve meaningful use certification by the end of 2011.
But it gets worse. The practice will find that the delivery and installation of the new software cannot be guaranteed before the effective cut-off date of October 1. If that deadline is missed, the physicians can’t complete a 90-day period of continuous meaningful use before the year’s end. So, the practice will likely need to postpone this part of the process until 2012. But at that point, the physicians will already have spent nearly 40 percent of their Medicare EHR bonus.
Contrast this with another small group practice that plans to adopt a Web-based, already certified EHR that works with tablets. They will indeed face the expense of digitizing records and other start up costs, but they will not face the degree of complexity. Here’s how their transition could play out: The doctors will purchase the system and start using it in late 2011, but will not attempt the 90-day meaningful use period until the first or second quarter of 2012. The EHR will cost about $250 per doctor per month. Add to this the cost of the laptops and/or tablets, as well as additional training, which should be minimal because the product is relatively simple, designed around the meaningful use objectives and measures. Upgrades are included in the subscription price. The practice calculates that the total cost of the new EHR technology per physician will be approximately $6,000, which will leave them a “profit” of $12,000 per doctor should they qualify for meaningful use in 2012, and a net boost of approximately $25,000 per physician during the five years of the Medicare EHR incentive program.
Why doesn’t the first practice simply start over with a newer generation of EHR technology? It almost certainly will, eventually. But for now the “switching costs” seem overwhelmingly high. The biggest one involves moving data from the older system to the new one. This task is often complicated because the databases aren’t interoperable. The only recourse is to begin from scratch and type the old data into the new EHR. Painful and costly, this discourages many doctors from even considering a switch to newer products.
Both early and recent EHR adopters have reason to delay completing meaningful use until 2012 or 2013. The common themes are the time the process will take and the costs that will result. For example, the early adopters’ feature-rich legacy systems were not designed for meaningful use, and will need significant upgrades. Meanwhile, the later adopters won’t be able to just buy a system that allows them to achieve meaningful use. They’ll need to convert from paper to electronic records, and that will take a little time.
Breaking out of this situation is going to take time. We have described before how actions taken by the Office of the National Coordinator, CMS, the National Institute of Standards and Technology and the White House “unfroze” the EHR technology market, primarily by redefining its features and functions with this new set of objectives and measures. Because it opened up the market to hundreds of innovative new EHR products, it will eventually make EHR adoption and ownership by providers easier and more affordable.
So 2011 isn’t big in the way some thought it would be. But it is creating real, lasting, positive change, and we think that’s just fine.
David C. Kibbe, MD, MBA , is senior advisor to the American Academy of Family Physicians and an industry advisor on Health IT. Brian Klepper, PhD , is a health care analyst, editor of Care & Cost and chief development officer of onsite clinic firm, WeCare TLC, LLC .