New Study Predicts that Majority Of Physician Practices Will Lose Money On Their EHR Systems

Dark Daily writer Patricia Kirk shares Michigan University research that suggests there are opportunities for physicians to make more money using EMR. However, a major factor that would theoretically help them make this proposed “money” includes using ONLY THE NEW EMR, not the new EMR in conjunction with pre-existing methods. Hmmm, so why would someone buy something to replace something, and then keep using the old thing? Oh right, the government paid them to buy it. We almost forgot.

First, though, a related article from Med Page Today called “If Practices Don’t Change, EHRs Lose Money” by David Pittman says, “The average physician lost nearly $44,000 over 5 years implementing an electronic health record system, a large pilot study found, but the technology itself was just part of the reason.” The other reason that keeps popping up is that practices adopt the EMR (advertised of course as a time-saving, revolutionary tool, et cetera et cetera) but afterwards keep on handling medical records the same way they were before (generally on paper, though we don’t have a statistic in front of us to indicate the exact percentage of what we’ll call “reluctant adopters”). The problem with this effect is that all this EMR adoption wound up costing doctors money, not the other way around. In fact, 59% of practices achieved a negative 5-year ROI (even with Meaningful Use incentive). That’s not very good odds. The medical industry could have forgone the rushed-to-market EMRs, made to earn both private sector firms and doctor’s offices easy income from government policies. They may as well have played roulette with the investment. There would have been better ROI (and efficiency) if each practice had laid their money on Red (49% on average earning a 100% ROI, 51% earning a negative 100% ROI). According to a colleague of Pittman, Julia Adler-Milstein, PhD, of the University of Michigan in Ann Arbor, most practices lost money because they didn’t utilize any of the benefits of the EMR, including NOT “ditching paper medical records after adoption.” She re-articulates the main finding, about discontinuing paper records, saying, “The largest difference between practices with a positive return on investment and those with a negative return was the extent to which they used their EHRs to increase revenue, primarily by seeing more patients per day or by improved billing that resulted in fewer rejected claims and more accurate coding. Almost half of the practices did not realize savings in paper medical records because they continued to keep records on paper.”

That last statement was kind of elementary. Let’s rephrase it. Practices needed to buy something that would help them do their job better, and they would make more money. It’s frightening that such a qualified academic was needed to communicate this. Although, that sounds like a simple explanation of the medical industry adhering to free-market principles. A “radical” idea that’s being laughed off of our nation’s top med school campuses. But look, paying money to practices to use something that they have to buy from someone else does not work. It disrupts the nature of the free-market and in this case has resulted in a waste of money. Think about a goods business (not a service), pure and simple: make something that adds value, charge a price for it, use the profits to further improve or expand operations, and repeat as necessary. Of course, this oversimplified model runs into myriad complications, government intervention being a formidable one. But anything that OURIGHT CONTRADICTS the simple premise above should make people stop and think: why would a company be motivated to make the BEST product, if they know someone is GETTING PAID to buy it? And we know what a skeptic would say, that’s what MEANINGFUL USE is, rules to make sure the product (EMR in this case) adds value. But people, have we not all been to college? What do we do when we’re given a sheet revealing the exam topics? We study the sheet and nothing more. It’s human nature. The EMR marketplace looks more like our education system, where we’re competing for a reward and not positive results.

For now, let’s leave how we study off the table, instead focusing on what’s missing in the Meaningful Use equation—a market force rewarding innovation, and usefulness. As loose as we’ve been in our argument, if someone is buying something and not using it, we have to admit, the thing probably wasn’t very helpful to begin with.

There’s much more at stake with this issue, so do read Dark Daily’s complete article. We’ve bulleted out some highlights for quick perusal, though. Also, if you’re interested in following this EMR money pit, check out these related links*** (thanks to Dark Daily for collecting them).

GOOD NEWS
• Physician practices realizing a positive return on investment (ROI) increased revenue by more than $114,000 over the five-year period.

• 55% of practices reported a reduction in the cost of paper medical records after EHR adoption.

LUKEWARM NEWS
• Applying the federal EHR incentive, more than half of primary-care practices would achieve positive ROI, compared to only one-third of specialists.

BAD NEWS
• Just 27% of physician practices are expected to leverage the EHR to achieve this level of revenue growth.

• Only 14% of physicians will get an ROI after $44K Fed incentive

• 38% of practices with six or more physicians achieved a positive ROI, compared with 26% of practices with one or two physicians.

• 22% of practices reported the most common ongoing cost was additional hours of practice time.

• 10% of practices noted improved efficiency, allowing them to see more patients each day.

• 18% increased revenue through improved billing.

• Practices with a practice management system in place to help with billing functions before EHR adoption benefited less on average.

More Reading
“University of Michigan Study Predicts that Majority of Physician Practices Will Lose Money on their EHR Systems” | Dark Daily
“If Practices Don’t Change, EHRs Lose Money” | Med Page Today

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