Pam Arlotto

Demonstrating meaningful use of electronic health records is critical in an environment of outcome-based payment and healthcare reform. CFOs will be vital to this initiative.

At a Glance

There are seven strategies healthcare organizations should adopt to prepare for implementation of the Health Information Technology for Economic and Clinical Health Act (HITECH):

  • Build HITECH awareness  
  • Invest in a transformation infrastructure  
  • Build clinical informatics expertise  
  • Develop a business intelligence strategy  
  • Invest in physician business services infrastructure  
  • Explore a medical trading area health information exchange  
  • Design an e-strategy for engaging patients  

Recent announcements by commercial insurers place preparing for the Health Information Technology for Economic and Clinical Health Act (HITECH) at center stage in health system financial strategy.

Following the lead of Medicare and Medicaid, commercial payers have stated they will develop pay-for-performance programs that base payment to providers in part on whether they demonstrate meaningful use of electronic health records (EHRs). An essential component of outcomes-based payment and overall reform strategies, demonstration of meaningful use of EHRs by healthcare organizations has become larger than qualifying for stimulus dollars.

Stage 1 of demonstrating meaningful use focuses on early-stage adoption of EHRs and point-of-care transaction systems needed to support care delivery processes and documentation of quality measures within hospitals and physician practices. Later stages will emphasize structuring codified data, exchanging the data across provider sites, and creating a patient-centered community care record. Once collected, the data can be extracted from the electronic record, aggregated and analyzed using business intelligence tools. From there, knowledgeable clinicians and healthcare executives will use the information to transform care delivery practices. Clinical systems and the revenue cycle will be inextricably linked as Medicare, Medicaid, and commercial payers shift to value-based payment models.

In many organizations, the CIO is the point person for HITECH readiness. Given the long-term implications of meaningful use of EHRs on revenue, however, it is critical that the CFO also understand and participate in HITECH readiness. Although healthcare organizations have IT implementation capabilities, most will have to build the organizational capacity for clinical transformation. Traditional cost-cutting strategies will no longer be sufficient. Skills and infrastructure must be created to convert the data into useful information, redesign care delivery processes, and improve performance and outcomes.

There are seven strategies that providers can undertake to improve their organizations' HITECH readiness, each of which includes a set of critical questions every CFO should ask.

Strategy No. 1: Build HITECH Awareness, Establish a Clear Vision, and Lead from the Top

Historically, the focus of healthcare organization boards, CEOs, and medical staff leadership has been on strategies to grow market share, develop service lines, and build new facilities. As the healthcare industry shifts from transaction-based to outcomes-driven payment, this focus will need to shift. Traditional strategies and investments may have to be put on the back burner and replaced with investments in quality improvement and IT. In a recent study of hospital board chairs, fewer than half rated quality improvement as one of the top two priorities of their boards, and a minority reported receiving board training in quality improvement (Harvard School of Public Health, 2009).

CIOs provide essential management of HITECH, yet many of the meaningful use requirements fall outside their authority. Members of the C-suite, including CFOs, usually embrace the need for HITECH readiness, but most view getting an organization to that point as an IT project. Readiness assessments conducted in the past year indicate that only one out of every four CEOs is leading the integration of the clinical, financial, legal, and advocacy decisions necessary for HITECH readiness.

Critical questions to assess an organization's HITECH readiness include the following:

  • Has the organization provided education to its board, medical staff, and C-suite regarding meaningful use and its relationship to reform?
  • Have enterprise strategic plans and IT strategic plans been updated based on HITECH requirements? For example, does the organization's physician alignment and clinical integration strategy incorporate distinct plans for meaningful use?
  • Is the CEO uniting leadership of disparate quality improvement, IT, and clinical integration initiatives?
  • Has the organization quantified gaps in organizational capacity and readiness?
  • Who owns HITECH at the organization? Is it solely the responsibility of the CIO, or are others involved?
  • Does the board have dedicated quality and technology committees?
  • What is the CFO's role in creating a multiyear budget for achieving HITECH readiness, designing metrics, designing incentives for physician participation, and tracking costs and expected ROI?

Strategy No. 2: Invest in a Transformation (Innovation) Infrastructure 

As the Centers for Medicare & Medicaid Services (CMS) unveils its Center for Innovation, provider business and clinical care models will be challenged, putting more pressure on hospital margins. Accountable care organizations, patient-centered medical homes, chronic care networks, and other models should be tested and deployed at the local level. Although initial changes will focus on redesign processes within enterprises, longer-term efforts will drive transformation and innovation across sites of care and entire communities. Leaders with titles such as chief innovation officer, vice president of clinical transformation, and chief medical informatics officer will play increasingly important roles in this reinvention of the healthcare system.

View Exhibit 1


Critical questions for readiness assessment include the following:

  • Has the organization identified a leader for HITECH transformation?
  • Does the organization have a transformation governance structure in place? 
  • Has the organization developed incentives for physician participation?
  • Has the organization established methodologies for change management, process redesign, project management, developing an evidence library, and more?
  • Has the provider disseminated those methodologies across the organization, and does it have a clear approach for tracking, managing, and facilitating organizational change?

Strategy No. 3: Build Clinical Informatics Expertise

The journey to fully realized meaningful use of EHRs will require new skills and capabilities, including the organizational capacity to:

  • Implement EHRs
  • Use them to care for patients
  • Understand the new relationship between reimbursement, quality improvement, and the use of the clinical systems
  • Optimize the systems and the information stored within them
  • Leverage this information

Success along the journey to demonstrating meaningful use of EHRs will include the ability to analyze aggregated data, collaborate across provider sites to redesign care processes, improve the outcomes of key populations, and ultimately, manage new reimbursement protocols. Although many organizations have nursing informatics capabilities, new skill sets will have to be introduced, and new positions may be added, including those of medical informaticists, data mining experts, and clinical decision support analysts. Benchmarking of organizations with high levels of EHR adoption indicates that more than one-third of technology resources are clinical, and that resources added for computerized provider order entry implementation are needed for ongoing maintenance of the informatics infrastructure.

Critical readiness assessment questions include the following:

  • Do leaders understand the journey toward HITECH readiness?
  • Has the organization benchmarked resource requirements against health systems that are further down the adoption/optimization path?
  • Does the organization have a multidisciplinary clinical informatics team, including the expertise of nurses, physicians, pharmacists, and health information management?
  • Does the clinical informatics team report to the organization's transformation executive?

Strategy No. 4: Develop a Business Intelligence Strategy

Establishing meaningful use adds to complex reporting requirements from agencies such as the Joint Commission, the Agency for Healthcare Research and Quality, and CMS, and for performance measurement systems such as the Healthcare Effectiveness Data and Information Set, Hospital Consumer Assessment of Healthcare Providers and Systems, and others. Yet for most providers, reporting is based on manual abstraction methods. Many IT vendor systems for extracting, aggregating, and reporting quality measures are immature. To manage the growing cost associated with these new requirements, hospitals and physicians should collaborate to examine the information against the latest evidence, define standards of care, and integrate the information into practice. Clinical decision support tools will provide real-time alerts and guidelines. A business intelligence strategy for collecting, managing, analyzing, and applying the information to create new knowledge will be essential.

Critical readiness assessment questions include the following:

  • Which clinical decision support rule will the organization deploy? To which quality metric does this rule apply (e.g., emergency department throughput, stroke, venous thromboembolism prophylaxis)?
  • Does the organization understand its vendor's business intelligence strategy and applications?
  • Has the organization begun to design extraction processes for key measures, and is it shifting the role of "abstractors" to help do so?
  • Has the organization consolidated metrics required by all agencies (e.g., Joint Commission, CMS)?
  • Is the organization collecting metrics across sites of care (e.g., inpatient, ambulatory)?

Strategy No. 5: Invest in Physician Business Services Infrastructure

Physician alignment and clinical integration strategies are top of mind for most healthcare executives. As reimbursement tightens and regulatory requirements increase, physicians will look for established networks, group practices, or employment options. Once these are in place, request for EHR support is often the next step.

Health systems with strong clinical integration structures are organizing an array of physician business services. Managed as separate business entities, these services often include revenue management, human resource management, practice management, credentialing and EHR deployment, and operations support. Hospitals without such structures should create them or align with organizations with structures in place. HITECH regional extension centers and some states are providing support to physicians who care for uninsured and underserved patient populations.

Critical readiness assessment questions include the following:

  • Does the organization understand the level of EHR adoption by its physicians? Does the organization know what systems physician offices have in place? What are the barriers to adoption?
  • Will the hospital extend EHR services to practices, and to what extent (Employed physicians? Community physicians? Referral physicians?)?
  • What will the scope of assistance be (Education? Selection? Operation?)?
  • What resources are available from regional extension centers, state designated entities, and other healthcare systems?

Strategy No. 6: Explore a Medical Trading Area Health Information Exchange (HIE)

Stage 1 of the meaningful use final rule requires providers to "perform at least one test of the EHR's capacity to electronically exchange information" during 2011 and 2012. More robust requirements for an HIE will be phased in as part of Stage 2 requirements. Many HIEs and regional health information organizations have failed because they have focused on the technology rather than on a distinct value proposition, were funded by grants rather than sustainable business models, or did not have adequate provider commitment. In many parts of the country, the state-designated entities funded by the Office of the National Coordinator have been slow to get off the ground.

View Exhibit 2  


Ultimately, for an HIE to be successful, information must follow the patient. Committed providers in defined medical trading areas (MTAs)-the natural market, within which most referrals, hospitalizations, and other flows of both patients and patient information typically occur-have a higher likelihood of success. With meaningful use Stage 2 on the horizon, now is the time for CEOs, CFOs, CIOs, and chief medical officers from key MTA provider organizations to understand the HIE business case and lessons learned, evaluate collaboration opportunities within their MTA, and examine funding requirements for early stage business planning and deployment.

Critical readiness assessment questions include the following:

  • Do key executives understand HIE value, industry lessons learned, and best practices?
  • What is the HIE environment in the organization's state, region, and community? Can leaders define the organization's MTA?
  • Are key providers and other stakeholders at the table?
  • Have leaders for the organization seen a business plan for governance, technology, privacy/security, and sustainability?

Strategy No. 7: Design an e-Strategy for Engaging Patients

An objective of Stage 1 of demonstrating meaningful use is for patients to have electronic access to their own health information. Stage 2 will likely build on this foundation. As patients become more technologically savvy, the potential to enable self-health management through electronic systems will increase substantially. From administrative tasks such as online bill payment and scheduling, to use of personal health records to manage chronic diseases and participate in clinical decision making, to remote monitoring and e-health encounters, the very nature of the patient-provider relationship will change.

The benefits of patient engagement through technology are widely documented, and innovators have demonstrated a variety of approaches, including:

  • Health-system-based patient portals
  • Aggregated data from multiple providers
  • Links between physicians and patients
  • Specialized tools targeting specialized needs, such as diabetes care or medication management
  • Expanded functionality around administrative information

Several lessons have been learned from these demonstrations, including that physician promotion is key to securing high patient adoption, physician acceptance requires an up-front plan and investment, success occurs incrementally, security is a concern for both physicians and patients, and patients with chronic conditions are the most likely candidates for patient engagement strategies.

Critical readiness assessment questions include the following:

  • What are potential pilots?
  • How will clinicians be asked to educate patients regarding access/security of information?
  • Have processes for opt-out/in been designed?
  • What are the organization's chronic health management strategies? Could they become e-strategies?
  • Does the organization have a long-term plan for personal health records?

The Importance of a Collaborative Approach to Readiness

New strategies are necessary to prepare for HITECH and the long-term reimbursement implications of healthcare reform. CFOs should join today with the CIO and other executives to build the operational capacity needed for clinical transformation.

Pam Arlotto is president and CEO, Maestro Strategies, LLC, Atlanta, and a member of HFMA's Georgia Chapter (

Publication Date: Monday, November 01, 2010

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