New Stimulus Incentives Raise Serious Health Information Technology Implementation Concerns
Contact: Lindsey Spindle, 202.207.1337,
Washington, DC – A new Avalere review of the healthcare information technology (HIT) provisions in the recently passed stimulus bill suggests that new financial incentives will still leave many physicians in small practices facing significant up-front HIT implementation costs. Absent a leap-of-faith that new HIT will increase their efficiency, up to half of physicians (those practicing solo or in small groups) may perceive themselves better off financially by forgoing the HIT investment, and instead paying a penalty for non-compliance.
Using electronic health record (EHR) adoption costs published by the Agency for Healthcare Research and Quality (AHRQ), Avalere researchers found that a solo or small group physician practice will spend an estimated $124,000 over the five year period of 2011-2015 to adopt EHRs, and will receive up to $44,000 in federal incentive payments. The resulting financial deficit would be $70,000, or an average of $14,000 a year. This represents about 8% of this physician’s annual Medicare receipts, contrasted with the legislation’s provisions to impose an $8,500 penalty on non-adopters.
According to The New England Journal of Medicine, over 50% of physician practices consist of 1-3 doctors. In 2005, AHRQ found that the average EHR implementation cost per physician was $32,606, but noted for smaller practices that could rise to $37,204 per physician. On top of those costs, AHRQ estimates a monthly $1,500 upkeep and training cost
“These new incentives are intended to motivate doctors to adopt EHRs, yet for many physicians, the level of the incentive may not reflect current financial realities,” said Jon Glaudemans, a senior vice president at Avalere Health. “Given this gap, EHR adoption will still require a significant investment by small physician practices. In today’s economic climate, many physicians will struggle with this calculus.”
Proponents of health information technology are heralding the Obama administration’s recent $19 billion investment in this arena, noting its ability to stimulate innovation and eventually generate cost-savings through improved care coordination and reduced medical errors. Central to the stimulus bill’s HIT strategy is an incentive fund to be paid to physicians in return for the purchase and “meaningful” adoption of EHRs.
“The new Administration has critical design and definitional decisions to make over the coming months, and providers have a short window in which to engage,” said Glaudemans. “Rapid clarification of eligibility criteria relative to ‘meaningful use,’ and timely articulation of technology and interoperability standards are crucial next steps for the new administration as it seeks a way to encourage HIT adoption strategies by physicians, hospitals, technology vendors, and other HIT stakeholders. Absent this guidance, even the most enthusiastic provider may defer HIT investments indefinitely, given the cost of implementation and the relatively modest subsidy levels.”View a snapshot of Avalere’s analysis here.
Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere's experts span 170 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information.
Learn more at www.avalerehealth.net.
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