Hospitals Will Be More Motivated by Stimulus Package Penalties

rninformatics, DNP, RN · Apr 23, 2009

From iHealthBeat, April 23, 2009

Hospitals' electronic health record implementation efforts will be affected more by the federal funding they could lose than the federal incentive pay they could receive under the federal stimulus package, according to a new PricewaterhouseCoopers Health Research Institute report, Healthcare IT News reports.

The report, titled "Rock and a Hard Place: An Analysis of the $36 Billion Impact From Health IT Stimulus Funding," states that while the federal government could provide $33 billion in incentive payments to encourage health care providers to implement meaningful EHR systems by 2015, the funding will not adequately compensate hospitals for the costs of implementing the systems.

The researchers argue that the threat of losing Medicare reimbursements for not meeting the federal government's health IT goals could be a stronger motivator.

PwC estimates that the average 500-bed hospital could receive up to $6.1 million in federal funding for using a government-certified EHR system. However, that hospital could lose $3.2 million or more in Medicare funding -- depending on volume -- if it does not use a meaningful EHR system by 2015.

"The stick, even more than the carrot, makes a fiscally compelling argument for adopting electronic health records," Daniel Garrett -- managing director of PwC's health industries technology practice -- said.

He added, "It's a small carrot compared to the amount of resources it will take to deploy this technology over the next five years. If an organization wants to have an enterprise-wide EHR up and running by 2011, they've got to start now. The incentives eventually go away, and the stick will only get bigger."

Hospitals Struggle To Find Funding

According to the report, hospitals are struggling to find the funding to implement EHR systems because the economic recession has depleted capital resources and forced hospitals to make cuts to their IT budgets.

A March PwC survey of 100 hospital CIOs found that 82% of hospitals already have cut their IT spending budgets by an average of 10%, while 10% have cut their budgets by more than 30%.

Two-thirds of the CIOs surveyed said they anticipate making additional cuts in IT spending by the end of the year.

Sixty-four percent of CIOs surveyed said it is impossible to weigh the demand for health IT with the need to cut costs, and half of the CIOs who oversee hospitals with at least 500 beds said federal funding is "crucial" to EHR implementation, according to the survey (Wicklund, Healthcare IT News, 4/16).

For the PwH report see:

http://www.pwc.com/extweb/pwcpublications.nsf/docid/5B8EC567858F37BA8525759A0003FE5A