9 Encourage a Community Based Model for EHR adoption

9. Encourage a community based model where one institution purchases EHR capability then sells it or leases it to private physicians.

This is my most controversial reason for slowing down the EHR adoption. It flies in the face of what the industry and government want to do. This is their thinking. Just take the numbers first; there are about 700,000 private practice physicians out in the real world and only 25% or less have full functioning EMR’s. One of the major reasons is cost. How are they supposed to pay for the EMR? What is the Return on Investment? Let’s do a little math. Let’s say that the efficiency a primary care physician receives from the EMR allows him to see two more patients per day. (Some physicians will tell you they will see less with an EMR.) Based on my experience over the past 10 years, two additional patients per day is not unreasonable. They might net an additional $35 for those two patients when their expenses are taken out. There are 21 working days in a month and if you allow for one month of vacation you end up with an additional $8,820 per year or $35 times 21 which is $735 per month times 11 months. Most experts state that information technology systems need to be refreshed every three years because of technology changes. Thus, $8,085 over three years is $24,255. Again, current data suggest that installing a new EMR system will cost $40,000 to $60,000 per physician. There you have it in a nutshell. Most primary physicians cannot see how they can get their return on investment and as a result adoption has been very slow. Thus, the single reason for non adoption is the primary care physician does not see additional value for their money. Thus, we have to use ASP or pay as you go software as service approaches or community based models to reduce the cost so that Physicians can support these systems because in the end the community and the government benefit more from these systems than do the doctors. (This is how the physician thinks)

Now, here is my thinking. First, of the 700,000 private practice physicians approximately 300,000 are specialists (Cardiologist, Pulmonologist, Oncologist, etc.). They do not net $35 for two additional patients; they net closer to $350 or more for two additional patients. That is ten times more than a Primary Care physician and the cost per doctor to install an EMR stays the same; thus, they can make money putting in these systems. Second, what health care institutions are based in the community and able to purchase large volumes? If you said hospitals, you would be correct. Hospitals are feudal systems. They are almost like large malls. Each department has its own budget, own leadership, and make its own decisions. It is not unusual for a hospital to have multiple health care information systems that do similar things but for different people and very few of these systems talk to one another. Furthermore, I have not gone to one hospital yet that has been overstaffed as it relates to Information Technology support personnel. Many of them are outsourcing to reduce the cost. How are they going to provide a complete integrated EMR and business solution to hundreds of physicians all of whom are independent and want the system set up uniquely for their practice? They are going to try to do it as simply and cheaply as they can regardless of whether it works for all the physicians or not. They are most concerned with the physicians that provide them referrals into the hospital. Third, many physicians may have relationships with multiple hospitals. If they choose one over the other what does that mean for their patient care, the ability to use hospital facilities, and the like? The complexities in hospital settings and thinking through choosing a health care solution for multiple specialties and primary care programs are enormous. The hospital has an agenda that goes beyond individual practices. Hospitals are trying to fill their beds. They are looking for partners who are going to fill their beds. The government recently changed the Stark Law. The Stark Law was developed to reduce the ability for institutions like hospitals to provide incentives to physicians so that they send patients to their hospital (it has some other rules as well and other goals but this is the one we are concerned about here). The changes allow the hospital to provide money to purchase software and services to help physicians embrace Information Technology (It is called a “safe harbor” in legal terms.). However, to everyone’s dismay hospitals are not taking advantage of this new “Safe Harbor” because they find it better to control the whole show and are purchasing physician practices themselves. There is more economic gain for both the physicians and the hospital if the hospital purchases the physician practice because under the rules hospitals get paid more than a physician office for the same service. So, if the hospital purchases the physician practice, the physician can do the same work on the same patient in the same office and get up to 20% more for doing it. Everyone wins (sort of, but that’s another blog for the future). Think of the hospital like a battleship and a private practice like a water ski boat. Hospitals takes longer to select products, have more variables to consider, have more people that need to make the decision, and take much longer to prepare, test and deploy products. If you plan to get adoption in 10 years, it won’t be via a hospital solution. We have customers that are owned by hospitals and on average it costs us 25 – 30% more to support them which will ultimately mean the cost for our goods and services will be higher for them and they are 6 months to 2 years behind our other customers in keeping up with upgrades because of the systems and requirements put on these customers by the hospital owner. There is no way you can get wholesale and quick implementation of EMR’s via large institutions. Practices are quicker to make a decision, they know what they want, they are the most familiar with their needs and 50% of a successful implementation requires understanding and supporting the workflow of the individual practice being converted to an electronic medical record. This knowledge goes into selecting a product. If some Hospital CIO and team are making this decision, they typically do it with a very select committee of “favored providers” (the one’s that send them the most patients).