Are You Aboard the EHR Revolution?

By Stephen C. Spain, MD, FAAFP, CPC

Health care providers are facing significant changes in the years ahead, and the adoption of the electronic health record (EHR) is one change that many providers have yet to embrace. For large practices and institutions, the move to electronic records is a “no-brainer.” The need to share information and patients within a group mandates that patient information be accessed easily and evaluated among members of the provider group. Unfortunately, the benefits are not as clear cut for small practices. Solo and two provider groups represent about one-third of all medical providers in the United States, and so it is important to address EHR concerns for this subset of health care providers.

Because the adoption of the EHR is a difficult decision for small practices, it should not be undertaken lightly. Several factors, besides the obvious incurred expenses, will affect the final decision. Despite the costs and difficulties associated with moving to the EHR, most providers should be anticipating the conversion. Depending on circumstances, however, certain practices may wish to forgo the EHR.

How Long Do You Plan on Sticking Around?

One of the first considerations is the age of the provider—or, more precisely, how long the provider intends to keep practicing. Moving to an EHR system is an arduous and labor-intensive process for even the most computer-literate providers. Making that commitment may not be in the best interest of a doctor who is only five or 10 years from retirement. Given that these older providers often are less adept with computers, the move to the EHR may be more stressful and result in greater productivity loss than for their younger colleagues. For many doctors at the threshold of retirement, the financial incentives simply will not justify the emotional toll and the disruption to their practice routine.

Conversely, for those providers with 10 or more practicing years in their future, the arguments in favor of adopting the EHR are strong. Those advantages include tracking of disease markers, measuring practice benchmarks, improved legibility, portable information that is shared easily, electronic prescribing, drug interaction information, and allergy alerts. All Medicare and Medicaid providers for whom retirement is not in the foreseeable future should strongly consider embracing an EHR. That decision should be made in the next two years, to take full advantage of available government subsidies.

The electronic revolution is clearly the way to the future of medicine, and for many younger providers, it makes little sense to delay reaping the benefits derived from the EHR. The expenses and disruptions currently associated with EHR adoption are improving with each new generation of software.

Make a Calculated Decision

Cost is a frequently cited reason for not entering the EHR arena. To help providers make this move, the American Recovery and Reinvestment Act of 2009 (ARRA) has provided cash incentives to defray costs associated with adopting EHR technology. These incentives are only for health care providers who receive a significant percentage of their income from participation in Medicare and/or Medicaid.

ARRA stimulus payments, although not likely to offset completely the costs associated with the transition, certainly will make the process more affordable. Depending on a provider’s Medicare/Medicaid practice mix, subsidies of $44,000 (Medicare) to $63,000 (Medicaid) are available (but not both). These subsidies are paid out over four to six years, and likely will not offset the total purchase price of an EHR system with the first incentive installment. Many EHR vendors are structuring their pricing creatively, to help customers minimize the initial negative cash flow. There are a growing number of web-based EHR alternatives that are priced as a monthly service, thereby minimizing the need for a large, initial cash outlay, as well.

EHR adoption also will avoid the looming penalties for non compliance, which could be substantial over a long career. ARRA establishes penalties for Medicare and Medicaid providers who do not adopt the EHR, beginning as a 1 percent Medicare or Medicaid payment reduction in 2015 and reaching a maximum of 3 percent in 2017. To add insult to injury, a penalty for not using electronic prescribing, a common EHR feature, begins in 2012, and reaches a maximum of 2 percent in 2014.

To illustrate the effect of these penalties, consider a practice that generates $500,000 in annual revenues, of which 30 percent of the total comes from Medicare or Medicaid. In this case, $150,000 could be subjected to penalties, for an annual loss in 2017 of 5 percent, or $7,500.

As the penalties are phased in, for the 10-year period from 2011 to 2020, a non adopter, using our example practice, would be fined about $47,000 for the decade (the “net expense’). An adopter paying $8,500 annually for his or her system would pay $85,000 over that same decade. Subtract the government incentive of $44,000 from the EHR expense, and the adopter has a net expense of $41,000—$6,000 less than the penalty the non-adopter in our example would pay.

The numbers change as individual circumstances change, so every practice struggling with an EHR decision should scrutinize its bottom line, weigh the financial incentives and penalties, and plan accordingly. For example, an adopting provider who qualifies for the Medicaid (rather than Medicare) incentive could qualify for $63,750—which over our decade-long example nets about $25,000 more than the non-adopter.

Purchase options and payment methods for EHR systems vary widely, and the level of incentive funds available will differ greatly between practices (several vendors have online calculators that allow site visitors to input their specific practice information to see what their incentive could be). The actual cash outlay for a given system also may vary widely from the examples above. Likewise, penalties will vary widely because of the differences in each practice’s level of Medicare and Medicaid revenue.

Where Does Your Practice Stand?

Our country is in the midst of a health care revolution that will have far reaching effects upon all aspects of medical care. Change is at the heart of every revolution, including our present health care overhaul. The EHR is an integral part of these challenges that now confront providers. While every participant cannot be expected to embrace the changes that are forthcoming, certainly each can, and should, evaluate and plan for these changes. Preparing for this revolution is a vital step in protecting the viability of small practices, as well as the livelihood of these health care providers.

 

Stephen Spain, M.D., has been engaged in the full-time practice of family medicine for over 25 years. In 1998 he founded Doc-U-Chart, a practice management consulting firm specializing in medical documentation. Dr. Spain can be reached at sspain@docuchart.com.

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