Practice changes needed to recoup cost of technology adoption, study finds

March 4, 2013

Physician offices that move to electronic health record systems but don’t make additional changes in the practice to enhance revenue and cut costs for services no longer needed stand to lose money, according to new research.

Physician offices that move to electronic health record (EHR) systems but don’t make additional changes in the practice to enhance revenue and cut costs for services no longer needed stand to lose money, a University of Michigan researcher and her colleagues found. And a $44,000 federal incentive to encourage conversion to EHRs may not be enough to prevent losses, particularly for small practices, they add.

In an article published in the March issue of Health Affairs, Julia Adler-Milstein, PhD, assistant professor in the University of Michigan School of Information and School of Public Health, reported on a study of 49 community practices in a large EHR pilot program. She found that the average physician lost $43,743 over 5 years, and only 27% of practices showed a positive return on investment.

Physicians have expressed reluctance to adopt electronic systems out of concern about the impact on their bottom line, the authors write. 

“What our research shows is that a substantial fraction of physicians who adopt these systems don’t make the additional changes in the practice that they need to recoup the cost of adoption,” Adler-Milstein said. The largest difference between those that lost money and those with a positive return on investment was whether or they used the new system to increase revenue. Offices that experienced a positive return saw more patients or improved billing to achieve fewer rejected claims and higher reimbursement from insurance companies.

Adler-Milstein and colleagues from the University of Rochester and Brigham and Women’s Hospital collected survey data from practices participating in the Massachusetts eHealth Collaborative to project 5-year returns on investment from EHRs. The collaborative, established in 2004 by the American College of Physicians and the Massachusetts Medical Society, was charged with facilitating adoption of EHRs in three diverse communities and assessing the impact on health care cost and quality.  

Widespread EHR adoption is the central goal of the Health Information Technology for Economic and Clinical Health (HITECH) Act provisions within the 2009 American Recovery and Reinvestment Act. Physicians serving Medicare patients that move to an electronic system are eligible for an incentive of up to $44,000. Adler-Milstein says incentives were deemed necessary to help address physicians’ concerns that they would bear the cost of implementing EHRs but not reap the benefits from the higher-quality, lower-cost care they enable. 

The study found, however, that the incentive only resulted in an additional 14 percent of practices achieving a positive return on investment, Adler-Milstein writes.  

“The incentive helps, but in a very uneven way,” she says, explaining that it would result in the vast majority of large practices achieving a positive return but would do little to help the smaller practices. 

“Given the fact that small practices had much lower rates of EHR adoption at the outset of the incentive program, if I were a policy maker, this points to a real concern about the effectiveness of the incentive program,” she says. “It really highlights the drawback of a one-size-fits-all approach.” 

 

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