Executive Interview

The criteria for electronic health record (EHR) incentive payments are complex, and hospitals that want to participate should plan carefully. In any EHR implementation, physician leadership is critical, says Gordon Edwards, CFO at Gundersen Lutheran Health System in La Crosse, Wis. Speaking from experience, he says CFOs should ensure that a detailed project plan with the critical steps is developed. Edwards recently provided insight for hfm on the role of finance in an EHR incentive payment project.

hfm: What steps should hospitals take to evaluate their readiness for the EHR incentive payments? Is there a specific financial analysis CFOs should perform to determine organizational costs compared with the incentive payments being offered?

Edwards: The EHR incentive payments will not cover all of the cost of implementing and maintaining an EHR. The decision to implement an EHR should be driven by other criteria and organizational goals rather than by the incentive payments. A clinical EHR that is integrated with the revenue cycle will significantly change the workflows within a provider setting. If used properly, the EHR can improve quality, drive operational efficiencies, and enhance revenue-just like the adoption of any other technology within the organization.

Regarding the financial analysis of implementing an EHR, the EHR incentive payments are part of the benefit, but the greater benefits come from improved operating efficiencies, revenue collections, customer/patient satisfaction, and clinical outcomes. Having clear expected performance improvement targets at the onset of the project is imperative to achieving the benefits of an EHR. The EHR incentive payments cover some of the cost of implementing the system, giving providers time to adjust their practices such that the greater benefits will be realized when the incentives expire and the costs of operating the system continue.

hfm: What other key stakeholders should be involved?

Edwards: This is a clinical project, not an IT- or finance-driven project. Although there are many stakeholders, including IT, finance, quality, human resources, and others, without clinical leadership, achieving the meaningful use criteria for the EHR incentives will be difficult. It is important to find a role for everyone in the organization in implementing an EHR.

hfm: What role should finance play in this initiative?

Edwards: As with any project, CFOs should ensure that the project team has developed a plan with the critical steps. They need to understand the Medicare program and their state's Medicaid program. Qualification under the Medicaid program may be easier than it is under Medicare in the first year. CFOs also should identify which aspects of the organization's operation qualify to participate under the program.

In addition, CFOs need to understand the current status of their organization's EHR. Not all EHR systems are certified (thus qualifying for the incentive payments), so CFOs should ensure that their organization's particular version will qualify. More important, they should know what the EHR vendor will provide in terms of reporting and upgrades in the future (and at what cost) to meet the requirements.

If the organization employs physicians, there is a need to assess the qualifications of all the physicians (or eligible providers) and determine whether they should participate in EHR incentive payments under Medicare or Medicaid.

The incentive payments are based on achieving specific results, not on implementing an EHR. Identifying the key measures in which the organization is not achieving the specific outcomes is the first step in targeting which workflows need to be redesigned. Sorting out the logistics of registration and filing is also necessary.

Evaluating which year of the program the organization wants to qualify in is important when forecasting the resources necessary to achieve the increasing expectations of performance (for example, Stage 2, which has not yet been published). Failure to meet the subsequent criteria will result in a lost year of incentive payments. Finance should determine when and how the incentive payments should be incorporated into the organization's forecast. The incentive program is complex, so having a detailed project plan designed solely around meeting the qualifications of the program is important.

hfm: What lessons have you learned from your experiences in this area?

Edwards: There are a number of lessons learned about implementing an EHR. First, clinical involvement is key. This is not an IT project. Second, physician leadership is critical. Third, having clear organizational objectives of benefits is imperative to achieving those benefits. Fourth, don't underestimate the change management aspect of the project, both at implementation and ongoing. Fifth, ensure good forecasting of impacts on cash flows, expenses, revenues, and capital. And finally, reporting of information (financial, clinical, or otherwise) is always challenging.

In terms of lessons learned about the EHR incentive payments, the project will take more time than you would like. Even after you implement a certified EHR, you may not have the information you need to qualify for incentive payments. Obtaining information about current performance on the core measures is more difficult than you would expect. Until you know where you are starting, you can't predict when you might achieve the desired outcomes. You need to build the right team to lead the project.

Learn More!

Don't miss Gordon Edwards at HFMA's ANI: The Healthcare Finance Conference, June 26-29, in Orlando, Fla. Information: www.hfmaconference.org.



Gordon T. Edwards CFO Gundersen Lutheran Health System La Crosse, Wis.


Publication Date: Monday, May 02, 2011

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