Investing in IT

Granted, a few million dollars are coming your way to implement electronic health records. But it’s no windfall. It’s an investment … in better care

President Obama wants to give you money. That’s right. Give you money. How many times do supply chain executives hear that? The deal is, the money’s not going into your IDN’s bank account. Rather, you’ll be expected to spend it on implementing electronic health records. Nor is it coming in one big check. Instead, it will probably be tacked onto your IDN’s Medicare payments. Still, it’s all good. Once implemented, your electronic records should help your IDN improve patient care and safety, and result in efficiencies that could save you money in the long run.

The Journal of Healthcare Contracting recently spoke with Erica Drazen, managing director of CSC’s Emerging Practices group, to try to clear up some of the questions surrounding the $36 billion that the Obama Administration has earmarked for implementation of electronic health records. How much of that will your facility get? When? And what’s expected on your part?

Based in Falls Church, Va., CSC is a publicly traded consulting, systems integration and outsourcing company, with 2008 revenues exceeding $17 billion.

Journal of Healthcare Contracting: What is your understanding of the Obama Administration’s goals and expectations with regard to healthcare information technology?

Erica Drazen: The Administration clearly believes that healthcare IT – particularly electronic health records and health information exchange – is critical to reforming our healthcare system, both in terms of improving quality and access, and reducing costs. They’re expecting that this investment will pay off in better access to care, safer care, and savings. The EHR [electronic health record] yields local benefits immediately. But if you only keep it locally, you haven’t done a whole lot better than if you had those records on paper. That’s why exchanging information among providers is important. After all, the most expensive people to care for are people with multiple chronic diseases, and they see lots of doctors and providers.

JHC: Are the Administration’s expectations justified?

Drazen: There’s lots of evidence that we would have better access and better care [with implementation of EHRs]. I think the question about saving money is still to be answered. But there is evidence that safe care is cheaper care, and that a lot of unnecessary care is delivered due to duplication of services, because of the lack of access to information. [Clinicians] don’t always know what others have done. And down the road, there could be savings [by virtue of] research being conducted more quickly, and from the ability to look at the health status of populations and then intervene if necessary. Our whole system is currently based on people coming in for care and providers giving it. But for chronic care management, which will be our challenge in the future, you worry about the people who don’t come in for care. How do you find them? With EHR for everybody, you can see who’s getting care and who isn’t.

JHC: How much money has the Administration earmarked for implementation of electronic health records?

Drazen: The number has changed. Originally the Administration estimated that $31 billion would be needed to get 90 percent of physician practices and 70 percent of hospitals to achieve “meaningful use” of EHRs. At that time, they expected that $15 to $20 billion in savings could be realized from that. Now the number is $36 billion in investment, with the same $15 to $20 billion in savings. So the net is about $19 billion. The Administration expects to invest $36 billion to get back somewhere between $15 and $20 billion in savings.

JHC: When do they expect the payback?

Drazen: Some benefits would come immediately. But until we have complete electronic records and sharing of information, it will take a while to accrue those benefits.

JHC: How do you think “meaningful use” is defined?

Drazen: Right now, the term hasn’t actually been defined. But realizing the expected benefits from hospital EHRs will require computerized physician order entry, nursing documentation of the patient’s care, closed-loop medication management, robust clinical decision support and the ability to share information. Getting the expected value from ambulatory EHRs will require computerized physician order entry with decision support, e-prescribing, visit documentation, support for disease management and the ability to share information such as the patient’s problem list and medication list.

JHC: Who would be the primary beneficiaries of the savings?

Drazen: The savings that come from decreasing duplicate tasks and from preventing harm that then must be corrected – requiring additional time, energy and length of stay – will accrue primarily to payers. If you keep a diabetic patient out of the hospital, you provide less hospital care; that would mean the hospital is [seeing] fewer admissions and receiving less reimbursement. But it’s the right thing to do. And given the increase in chronic disease and multiple chronic diseases, demand for care is going to go through the roof anyway, and [providers] probably won’t see a decrease in demand at all. Instead, the implementation of EHR will help solve the problem of not enough capacity in our healthcare system.

JHC: Of the $36 billion to be directed to healthcare, how much will go to hospitals?

Drazen: We’ve heard slightly less than half will go to doctors, slightly more than half to hospitals. We calculate that a typical 300-or-so-bed hospital will get about $6 million. But some of our IDN clients, with all their facilities and their own physicians and affiliated practices, will be into the $60 to $100 million range in terms of what they would get.

JHC: Is $36 billion enough money to allow all the nation’s hospitals and physicians to implement electronic health records?

Drazen: The cost of implementing EHR for a large integrated delivery network can range from $40 million to $60 million to $80 million to $100 million. Would the stimulus package cover that if the IDN were starting from zero? Probably not. But a lot of providers have invested over the years, and they have base capabilities already in place. I do believe that for all of them, [the stimulus money] is a significant return.

JHC: Will providers have to jump through any hoops in order to get the money? And who will be the dispenser of the funds?

Drazen: The money will be made available through an increase in payment for Medicare and Medicaid. Exactly how it will happen has not been determined. But judging from similar programs in the past, the government will probably create a billing code [in which the hospital can indicate], “I treated this patient with a certified EHR.”

JHC: So if providers won’t get money upfront to buy an EHR, how will they come up with the money to do so? Do you think vendors of electronic health systems will make credit easily available?

Drazen: Clearly, there’s a need for upfront money. But there’s also a need for implementing these systems. Every hospital knows they have to do this. It’s on their list. Plus, many have been building them over time. Some are there already, though not a lot. Presumably, given the potential return, they should find it easy to make the upfront investment. And states can apply to the federal government to set up grant and loan programs. Any grants will probably go to sole community providers or individual primary care doctors. But the loans could be guaranteed at the state level, and I think we’ll see some of that going on.

JHC: To what extent must a hospital’s or hospital system’s electronic system be connected to those of other providers, such as physicians, reference labs, nursing homes or home care agencies, in order for EHRs to be most effective? Who will pay for that connection?

Drazen: The bill does call for use of systems that have the capability for health information exchange. It doesn’t say you have to exchange health information; it says you have to have the capability of exchanging information. That makes sense, because you need two parties to exchange information. Again, all of us want to engage in health information exchange. Some providers are doing it now. Some vendors facilitate the exchange of information between physicians and hospitals, physicians and patients, etc. And there are some regional health information organizations [that facilitate information exchange]. In Massachusetts, the New England Health Exchange Network has built a network to connect hospitals, physician practices and payers. They are expanding [their capabilities] to include the exchange of clinical information. And there are examples in other states.

JHC: Why do you need a network? Why can’t everybody just communicate to whomever they want?

Drazen: If every hospital were to connect to every payer, it would be very expensive. The same principle applies to physicians. They don’t necessarily exchange information with just one hospital, but to multiple hospitals and specialists as well. Primary care doctors and specialists exchange information. And primary care physicians deal with multiple specialists, and specialists deal with multiple primary care doctors, and they don’t necessarily overlap. What’s more, if you don’t have complete information, it doesn’t help a lot. If you know 70 percent of the drugs a patient is on, that could be misleading, because you don’t know the other 30 percent. That’s why it “takes a village” to make this work.

JHC: What lessons have early EMR adopters learned that can be passed on to others?

Drazen: A few things. The first is that the hardware and software costs are a small part of the total cost of implementing an EHR, either in the hospital or physician practice. Some say it’s 25 percent, some say 30 percent. Successful implementation almost always requires design or redesign of the core processes in your organization. That’s an art.

Ideally, you want to have done it multiple times, but you … will likely only do it once. So [providers] need to bring in outside expertise, that is, people who have done it before, who know how to get a system to do what [they] want it to do. It’s a huge transformational process, which is why [they] have to start now.

Second, one of the huge advantages of these systems is that they provide decision support. Standard order sets for community-acquired pneumonia would be one example. They make doing the right thing the easiest thing to do. They incorporate rules and alerts that would tell [the physician] that the drug being prescribed may interact with what the patient is eating, or that the lab test being ordered has already been completed. Most hospitals lack any logical group to build this decision support and maintain it.

Third, clinical leadership is essential. But that’s challenging to find in the community hospital, where the doctors are private economic entities who volunteer to serve on hospital committees. The level of work required to install an EHR can’t be done on a volunteer basis. So you need enthusiastic clinical leadership. You need an evangelist.

Success has come when people adopt EHR and evangelize it as the right thing to do. It can lead to safer care and fewer mistakes. You don’t want to sell EHR because of the stimulus money coming in. Instead, people need to be motivated by the prospect of better patient care.