Report questions stimulus bill health IT money

Our President has been saying that electronic medical records will be one of the major ways to reduce healthcare costs, unfortunately this article points out why many medical offices will not upgrade to the electronic records.

By ERICA WERNER, Associated Press Writer

Tuesday, March 10, 2009(03-10) 06:19 PDT WASHINGTON, (AP) --

Billions of stimulus dollars meant to spur doctors to switch to electronic record-keeping may not be enough to do the job, a private consulting firm said Monday.

The stimulus bill that President Barack Obama signed last month contained $19 billion for health information technology, including $17 billion for incentives and penalties to encourage doctors and hospitals to abandon paper record-keeping and go high-tech beginning in 2011.

But particularly for doctors in small practices, the high cost of installing electronic records systems could outweigh the incentives and penalties for failing to comply, the new analysis said.

The study by Avalere Health, an information company serving government and the health care industry, said as many as half these doctors might decide they are better off financially with the status quo.

"How rapidly will physician offices make these investments, particularly those smaller offices with less capital?" said Jon Glaudemans, a senior vice president at Avalere.

"Frankly if the choice is between continuing health insurance for your staff and buying a new IT system that gets paid back over five years, that's going to challenge an office manager or administrator anywhere in the country."

A Health and Human Services Department spokeswoman cited a Congressional Budget Office estimate that 90 percent of doctors would be using health IT by 2019 thanks to the stimulus bill.

"The investments are designed to help make new systems more affordable for doctors and were never intended to wholly subsidize the adoption of this technology," Jenny Backus said. "As the market for health IT expands, the costs for these systems will come down."

Using government cost estimates, Avalere researchers found that it would cost about $124,000 for a single doctor or small practice to upgrade to electronic health records over the five year period from 2011-2015 when the stimulus bill offers incentives to do so.

But the total incentive payments a doctor could get over that time period only add up to $44,000.

In 2015, penalties start to kick in for doctors who haven't switched to electronic record-keeping. But in one scenario mapped by Avalere, the starting penalty would be $5,100 a year — far less than how much it would cost to install and maintain an electronic health system.

Add in the shaky economy, the uncertain outlook for a health care overhaul, and the government's failure to define, so far, what kind of electronic health systems will be deemed acceptable. Together they make switching to electronic record-keeping a leap of faith for some doctors, the analysis said.

The expense of making the switch is compounded by the fact that many systems now available can't communicate with each other so that if a small doctors' office upgrades to electronic records, the benefits are limited.

The ultimate goal is for systems to be "interoperable" so that a patient's records can be shared among doctors' offices, but the rules to make that happen remain largely unwritten.

It's unclear how quickly the Obama administration will begin putting forward rules outlining how doctors and hospitals can qualify for the money. The director of the Office of National Coordinator for Health IT will be responsible for much of the rule-making but that person has not been appointed.