An EMR for Free?

Have you ever been offered a pair of “free” tickets in exchange for subscribing to a concert series? Likely, you enjoyed the concert, but the real price tag - the entire series - was quite a bit higher than you initially wanted to pay. In the end, the concert wasn’t free at all, was it?

Something comparable happened to Sumir Saghal, an internist and geriatrician in New York City. Saghal and his two colleagues are among 200 New York physicians with large Medicaid practices who took advantage of a “free” EMR from the city’s Department of Health and Mental Hygiene. Since December 2007, when Saghal’s Bronx practice starting using the eClinicalWorks software, the internist has surmounted the steepest part of the EMR learning curve, and he’s proud of his now-paperless practice. An advocate of quality improvement, he’s not concerned about the fact that he has to share his clinical data with the city, which will give him feedback and perhaps issue a public report card on his performance.

But the EMR turned out to be far from free.

Yes, the Department of Health footed the software bill of $12,000 per physician, and it’s even paying for two years of support from eClinicalWorks. But Saghal’s four-physician practice had to pay $4,000 per provider for technical assistance from the city. In addition, the group had to purchase several extra computers, including a server, as well as the services of a technical consultant to install the system.

The hardware bill alone totaled about $45,000. And the grand total invested in the “free” EMR? At least $60,000, Saghal says.

That doesn’t include the costs of lowered productivity (that can last up to six months), as well as ongoing support for the computer system.

So while the initial price of the EMR was considerably lower than what the practice would have had to pay on its own, all those necessary accoutrements represent a large investment. Indeed, EMR software represents only 15 percent to 25 percent of the true cost of ownership. “There’s no such thing as free,” says Erica Drazen, managing partner, emerging practices at CSC Consulting in Boston.

But won’t practices recoup the initial outlay through increased efficiency? Maybe, maybe not. Saghal isn’t completely sure he and his colleagues will, although he’s hoping to get more pay-for-performance payments from health plans.

Perhaps you’re among the many physicians nationwide who are hoping to obtain discounted or free EMRs from the government, insurance companies, hospitals, or commercial vendors. Indeed, the recently passed American Recovery and Reinvestment Act of 2009 commits $19 billion toward bolstering efforts to digitize healthcare. Specifically, physicians who can show “meaningful use” of a “certified” electronic medical record will get up to $44,000 each from Medicare over a five-year period beginning in 2011. (Incentives are also available through Medicaid.) After 2014, if you aren’t using a certified EMR, the government will dock a small but increasing percentage of your Medicare payments.

Another new possibility is the offer that Wal-Mart is making to physicians. The giant retailer is teaming its Sam’s Club division with Dell Computers and eClinicalWorks, a leading software vendor, to offer a package deal on EMRs that it says will cost about $25,000 for the first physician in a practice and $10,000 for each additional doctor. Yearly maintenance and support fees will run about $4,000 to $6,500 per physician.

What follows are descriptions of some of the other deals you can get on EMRs. Bear in mind that every one of them comes with strings attached, entails major costs, and may or may not suit your practice. So if you see something out there that looks good, look again - hard - before you leap. Here’s how to see your way clearly to the real deal.

Where the deals are

The most likely source of discounted EMRs in the future may be your local hospital. As a result of several government rule changes in the past three years, hospitals are now allowed to give private-practice doctors up to 85 percent of the cost of EMR software and training, while practices must cover the costs of hardware, installation, and technical support. Depending on their interpretation of IRS regulations, hospitals may send 1099 forms, which would require physicians to pay tax on the value of the donations.

Still, the arrangement can be valuable to you in other ways, notes Laura Jantos, a principal with ECG Consulting in Seattle. Hospitals can negotiate hardware discounts, serve as intermediaries with EMR vendors, and most importantly, help physicians navigate past the inevitable technical bumps and glitches inherent in complex system implementations. But bear these two facts in mind:

• You’re likely to get only one or two choices.

• The healthcare system may want to use your patient data for quality improvement.

A growing number of hospitals are in the early stages of donating EMRs to community doctors, but they’re still very rare, Drazen says. Many hospitals are preoccupied with wiring themselves or rolling out EMRs to their employed physicians, she notes.

Case in point: Community Health Network, a five-hospital system in Indianapolis, is now installing a GE Centricity EMR in the offices of its 175 employed primary-care physicians. But, except for some private practices managed by its management services organization, says Community Health Network CEO William Corley, the system won’t donate EMRs to any area doctors until after it installs a new enterprise EMR in its hospitals this year. Meanwhile, he notes, the hospital plans to provide a Centricity “EMR lite” to non-employed specialists so they can receive lab results and communicate online with the employed doctors.

Similarly, St. Luke’s Health System in Kansas City is rolling out EMRs to its own medical group and offering the RelayHealth secure messaging system to community doctors. Debe Gash, St. Luke’s CIO, sees hospital gifts to private practices as the exception. It’s tough for them to find the money, she says, “given the reimbursement climate and low operating margins.”

But how much will they pay?

Healthcare systems that are donating EMRs often pay the maximum allowable 85 percent of the software cost. But that still leaves a big investment for you.

Consider Memorial Hermann Health Network Providers, an IPA affiliated with Memorial Hermann Hospital in Houston. Using hospital funds, the IPA plans to help up to 1,300 of its member physicians - all of whom have agreed to participate in a “clinical integration program” - to buy the eClinicalWorks EMR. Scott Fenn, CEO of the network, says that 132 doctors are already implementing or using the EMR, and he expects 400 to be up and running within three years. Other discounts also may be available to early adopters of the eClinicalWorks EMR.

The IPA, which hosts the program itself and provides technical support, starts with a needs assessment of each practice. While doctors select their own hardware and get discounts through the IPA, they’re told what the minimum computer requirements are. Some practices have felt taken aback by the equipment cost, which averages $5,000 to $7,000 for a soloist, Fenn says.

Because the hospital cannot legally pay for ongoing support, the cost is bundled into the monthly fee of $325 per physician, plus $75 for eClinicalWorks’ practice management component, if a practice chooses to include that. So, participating doctors are paying up to $400 a month.

Plastic surgeon William Riley Jr. of Sugar Land, Texas, an EMR adopter, feels that’s a reasonable charge. And it’s not atypical for hospital-provided EMRs.

The Butler Health System in Butler, Pa., is charging private-practice doctors $500 a month for hosting and supporting an Allscripts EMR. It’s paying 85 percent of the cost for the software, which is also being rolled out to its 30 employed physicians.

The hospital decided to offer only one product because it believed that would be the best way to improve community health, says Mike Bush, Butler’s vice president and chief strategic officer. He also points out that the system wanted to provide an EMR to doctors before one of its competitors did, and that physician job candidates are increasingly demanding that the hospital give them an EMR.

Payer subsidies

Health plans, like hospitals, are still rather timorous about subsidizing EMRs for doctors. Most of the technology donations from payers have been e-prescribing programs, which promise a faster and surer bang for the buck via increased generic and in-formulary prescriptions.

Yet there are exceptions. Nine percent of health plans include incentives for EMR adoption in their pay-for-performance programs, and some plans provide other kinds of incentives. Here are a few of these programs:

• Blue Cross and Blue Shield of Massachusetts offers a maximum incentive of $1 per member per month to doctors who meet its goals for preventive and chronic care, generic prescribing, and health IT adoption;

• The seven plans that belong to the Integrated Healthcare Association P4P program in California have paid groups substantial rewards for EMR adoption, as well as quality improvement;

• Another Blues plan, the Hawaii Medical Service Association, has reportedly earmarked $20 million to subsidize EMRs and $30 million for hospital quality and safety programs. By the end of 2008 it had paid out almost $10 million to more than 470 physicians;

• The Rhode Island Blues has provided $5,000 per physician, plus performance incentives, to 80 primary-care doctors who’ve adopted EMRs, according to chief medical officer Augustine Manocchia. It has also supplied about $1.4 million to EHRRI (Electronic Health Record of Rhode Island), a collaboration of five Rhode Island-based physician organizations that have joined forces to adopt and use a single EMR product by physician practices in the state. Additionally, it provided funds to two large primary-care practices for 160 of their physicians to adopt EMRs. Last year, BCBSRI announced that it would give primary-care physicians who implement EMRs and are using the EMR's capabilities to promote patient safety an extra 5 percent raise on top of other fee increases. In July 2009, the primary care fee schedule will be raised another 5 percent for EMR users.

Uncle Sam and health IT

The Bush Administration started promoting health IT in 2004. A couple of years ago, CMS had its quality improvement organizations in every state help a limited number of small practices choose and acquire EMRs. And in a three-year pilot program launched by the Department of Health and Human Services last year, 1,200 small- and medium-sized practices in 12 markets are being given incentives for acquiring EMRs. The Obama Administration is continuing to push health technology by including health IT in the economic stimulus package, as mentioned earlier. Since Jan. 1, 2009, CMS has also been paying a 2 percent bonus to physicians who prescribe electronically, using either a certified EMR or standalone e-prescribing software. That incentive can contribute several thousand dollars per doctor per year toward covering the cost of an EMR.

In 2005, CMS released a modified version of the Department of Veterans Affairs’ VistA EMR for use in private practices. Known as VistA Office, the open-source program is being marketed by several small vendors, but up to now has had few takers. Why? Because physicians find it difficult to customize and expensive to support. As a result, this “free” EMR costs as much as a medium-priced commercial product.

EMR, Google style

Besides VistA Office, there are several so-called “free” EMRs available in the commercial space. The most publicized is the product of San Francisco-based Practice Fusion, which will charge you just $50 a month, relying on targeted ads to finance its remotely served EMR.

Ryan Howard, CEO of Practice Fusion, says that the ads, provided by Google and other marketers, don’t pop up in the electronic record. “The messaging is non-intrusive, it’s completely private, and doctors don’t have to click on it if they don’t want to.” Howard denies reports that his company is selling de-identified data to payers, researchers, and pharma companies, but adds, “We reserve the right to.” He claims 13,000 doctors have signed up for the software since it was launched in October 2007.

Certified? Maybe, maybe not

Neither Practice Fusion nor other “on-the-house” EMRs have been certified by the Certification Commission for Health Information Technology (CCHIT), as all EMRs subsidized by hospitals must be. So it’s difficult to determine how their functionality, security, and interoperability compare with those of other CCHIT-certified EMRs.

Meanwhile, a couple of certified EMR makers are putting out stripped-down versions of their products at a reduced price. E-MDs is readying a “lite” version of its CCHIT-certified EMR that will sport a significantly reduced price than its certified version. Spring Medical Systems is selling its SpringCharts Essentials network version EMR starting at $1,600 - half the price of its certified product. To get the full EMR, company president Jack Smyth explains, physicians merely need to pay for an activation key to turn on the other features.

This modular approach makes sense if you’re leery of tackling all of an EMR’s facets at once, says Randall Oates, president of SOAPware, whose company makes one of the more popular low-cost EMRs. “As vendors, we really need to be focused on transition tools,” he says. “This big-bang approach, where you try to put in a centralized, complex system, is showing a failure rate of around 30 percent. Our philosophy is to introduce the functionality at the rate a practice can adopt it.”

Ken Terry is a New Jersey-based freelance writer and the author of the book “Rx for Health Care Reform.” He can be reached at physicianspractice@cmpmedica.com.

This article originally appeared in the June 2008 issue of Physicians Practice.