Health Information Technology Stimulus Requires Careful Planning

Stimulus act funds give priority to reimbursing doctors and hospitals that use electronic health records.

by / April 1, 2009

State and local government health organizations hoping to benefit from the federal stimulus funds will have to plan health information technology (HIT) implementations carefully to get the greatest benefits from the funds.

While most agree that electronic health records (EHRs) can improve care, reduce medical errors and reduce health-care costs, adoption has stalled in recent years because the investment required is steep and the financial return isn't as clear-cut as other investments.

"Even if it makes you more efficient, it's a tall hill to climb when you compare it against the competing opportunities for investing and adopting technology that are well reimbursed," said Mark Leavitt, chair of the Certification Commission for Healthcare Information Technology (CCHIT), a nonprofit aimed at accelerating interoperable HIT adoption by creating a HIT certification process.

Providers are faced with investment possibilities that allow physicians and hospitals to charge for each use or procedure associated with that investment, he said. For example, if a hospital invests in a CT scanner, it will charge patients or insurance providers every time it's used.

"So obviously, if you're a doctor or a hospital, where are you going to invest your spare capital, where you get reimbursed or where you get nothing?"

The stimulus package will change that for many providers. However, doctors and hospitals covered by the stimulus will need to get their ducks in a row rather quickly if they haven't already started a deployment. Reimbursement amounts are significantly higher for those who adopt electronic health records within the first two years of the program, 2011-2012. And providers will have to shop for, purchase, deploy and demonstrate "meaningful use," which the secretary of the U.S. Department of Health and Human Services is expected to give guidance on in the coming months.

"If you don't have anything now, the process of shopping alone will probably take several months," according to Marc Holland, program director of health provider research with Health Industry Insights, an IDC company. For hospitals, he put the amount of time needed for preparation before a deployment at 12 to 24 months at the least.

Meanwhile, he said, demand on vendors will be a significant issue. "The line at the bakery is going to go out the door," he said. "The ability for vendors to accommodate this swell is going to be somewhat problematic."

Up-Front Costs
Another challenge for providers is that they must front the cost for their deployment, something that may be difficult for government organizations to do during the tough economic climate. However, other programs can help providers get their deployments started.

The stimulus provides for loan programs in which payments on the loan would be deferred for one year.

"Assuming banks, states, credit unions or other lending agencies decide to become authorized lenders under this program, physicians will have the opportunity to float a loan and not begin to pay it back for a year, which should cover the acquisition, contract-signing and implementation in virtually all cases for physician practices," said Holland.

Other incentive programs offered by insurance companies may also help with up-front costs.

CCHIT's Leavitt says he doesn't see the handful of insurers that offer EHR incentive programs backing off as a result of the stimulus because the stimulus incentives are being offered to Medicare and Medicaid providers. Other insurance companies who cater to the rest of the insured population have an interest in seeing providers benefit from better efficiency and reduced medical errors too. "They want the doctors that see those kinds of patients to deliver more efficient, safer care too," he said. Some malpractice insurers also offer discounts to providers who have EHR systems in place.