Inside IT

Keith J. Figlioli
Bill Spooner

As Congress struggles with finding ways to reduce U.S. national debt levels that are reaching crisis proportions, it should not lose sight of the long-term implications of budget cuts-particularly in the area of healthcare IT.

The government has appropriated $36 billion in incentives for providers that demonstrate meaningful use of electronic health records (EHRs). These funds were allocated to advance the adoption of EHRs, health information exchanges (HIEs), and integrated healthcare IT systems.

Providers are well on the road to implementing integrated healthcare IT. In January 2011, the national coordinator for the Office of Healthcare IT reported findings of two separate surveys that 81 percent of hospitals and 41 percent of office-based physicians then planned to implement and become meaningful users of certified EHR technology. The Congressional Budget Office has projected that EHR adoption and meaningful use would save the government more than $12 billion. And a report by the RAND Corporation cites the potential for additional savings through efficiencies in several areas, including length of stay, nursing time, transcription and medical records, and lab tests, as well as savings related to improvements in quality of care, care coordination, and reductions in medical errors and duplicative care.
In other words, a healthcare IT investment can be expected to produce sizable returns in the form of reduced government spending later.

For both hospitals and the government, the investment in healthcare IT initiatives is considerable, and unavoidable: Hospitals will be financially penalized if they do not adopt EHR systems by 2015. Data from the Premier healthcare alliance estimates that small hospitals will spend between $1 million and $15 million to fully implement EHRs, and larger healthcare systems will spend between $75 million and $250 million-or more (Premier HIT Collaborative Improvement Survey, April 2011).

Cutting the nation's HIT investments now would have a chilling effect on these implementation efforts.

Potential Impact of Cuts in IT

According to the latest analysis by the Medicare Payment Advisory Commission, total Medicare margins in 2009 equated to 25.2 percent, which means hospitals do not have access to the investment capital that would be needed to pay for healthcare IT on their own.

Moreover, significant annual reductions to Medicare payments have been imposed for both inpatient and outpatient hospital services, and these cuts deepen through 2019. Beginning in FY12, hospital payment reductions will be compounded by a "productivity" reduction, and an additional $3 billion will be cut in 2012 as a result of documentation and coding adjustments. With such a bleak financial outlook, multimillion dollar investments in technology and care redesign processes must be offset to continue the adoption and meaningful use of EHRs and other healthcare IT resources.

Healthcare IT implementation projects generally are multiyear efforts, requiring a long-term planning and budgeting process to be successful. Most hospitals began their implementation efforts with the fair assumption that some of the costs would be recouped with funding established by law more than three years ago. Making cuts in healthcare IT funding now, particularly with millions already invested by providers, would greatly compromise the goal of healthcare IT: to support new models of care delivery.

Accountable care organizations, for instance, will need to rely heavily on IT systems to facilitate a range of new operating activities in health care. To appropriately take responsibility for a population, providers need a complete look at care. Integrating data from inpatient and outpatient settings will help providers produce actionable information around quality and cost-improvement opportunities. Such information can be used for clinical decision support at the point of care, health status analytics, predictive modeling for care interventions, and outcomes measurement. Even for hospitals that are not currently moving toward accountable care, healthcare IT greatly supports and automates new quality requirements as part of health reform, including new policies that will measure physician performance, readmission rates, and delivery of evidence-based care.

Long-Range View Needed for IT

Although there is broad bipartisan support for healthcare IT implementation efforts as well as the new and improved care innovations that healthcare IT supports, there doesn't seem to be much acknowledgement that hospitals can't afford to absorb another mandate for change without some corresponding financial relief.

Repealing this vital program or rescinding funds dedicated to helping hospitals and physicians adopt EHRs and become meaningful users of them would present serious problems, not only for healthcare providers, but also for millions of patients who would be the primary beneficiaries of EHR adoption and integrated healthcare IT systems.

Recognizing that nothing occurs in a vacuum, we need to step back and ask what will happen to health care in our communities if fiscal pressures on hospitals continue to mount. Policymakers would be a penny wise and a pound foolish if they were to cut funding for healthcare IT in the near term without recognizing the long-term costs if hospitals fail to implement technologies that will enhance efficiency and deliver future savings. As hospitals move toward making significant transformations to our healthcare system, it is critical for Congress to recognize that now is not the time for additional cuts in healthcare IT if hospitals are to continue to invest in improvements leading to better patient care.

Keith J. Figlioli is senior vice president, healthcare informatics, Premier healthcare alliance, Charlotte, N.C. (

Bill Spooner is senior vice president and CIO, Sharp HealthCare, San Diego ( 

Publication Date: Tuesday, May 01, 2012

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