Electronic Medical & Health Record Implementation. Is the Time Now? January 2007

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1 January 2007 & Health Record President and Chief Executive Officer

2 - There has never been more emphasis or focus on electronic medical records (EMRs) and now electronic health records (EHRs), than there is now for group practices and healthcare organizations of all sizes. EMRs have now converted into EHRs, based on the rising need commonly referred to as interoperability. In other words, EMR utilization was primarily limited to a particular practice; however, EHR is interoperable among particular practices, hospitals and other providers. This may sound like another round of Community Health Information Networks (CHINs), but still, national legislative discussions, payer programs like pay-for-performance, Medicare initiatives focused on quality of outcomes, and growing regional and local coalitions ensure EMRs and EHRs are top-of-mind for every physician in the country. While most would agree that the introduction of technology in the clinical setting opens up many interesting possibilities for driving the use of data and improving efficiency, the majority of group practices today do not utilize EMRs or EHRs. Regardless, the message is clear technology will play an increasing role in the daily expectations around the patient encounter at all levels. This paper discusses general benefits linked to EMR/EHR technology, common EMR/EHR adoption inhibitors, as well as creative strategies to bypass these inhibitors to realize the benefits of a successful implementation of these useful and valuable tools. What are Common Benefits to Implementing EMR/EHR Technology? In general, just like any technology, EMR/EHR benefits can be categorized into cost savings/control and revenue-enhancement opportunities. Here are some common views of the benefits to implementing an EMR or EHR within a medical practice: Cost Savings/Control Staff Productivity Chart access and availability Results access and availability Decreased chart pulls Decreased paperwork to patients Workflow optimization through electronic tools Inbound and outbound electronic document management Electronic referrals management Provider Productivity Chart access and availability Results access and availability Inbound prescription management Outbound prescription management Automated review and electronic signature of clinical data Practice Overhead Reduction in overtime Reduction or elimination of transcription costs Elimination of paper supplies and paper-based services Reduction in clerical-support needs Reduction or elimination of storage space 1

3 Revenue Growth Improved documentation supporting revenue cycle management activities Increased contract-negotiation power via outcome data to support revenue cycle management data Participation in clinical trials Ability to analyze discrete data to empower delivery of new or more profitable services The Cost Savings/Control and Revenue Growth lists are by no means representative of the benefits that every practice will receive as a result of EMR implementation, but rather a listing of the more common opportunities. Given These Potential Benefits, Why Isn t Everyone Automating Their Clinical Data? HIPAA, interfacing capabilities, legal issues and competition continue to hamper the necessary agreements required to enter into the EMR/EHR world. We expect these overriding challenges, in addition to the expected high cost and fragmentation of the marketplace, to continue to slow the adoption of EMR/EHR in private-practice settings. Several key observations that serve as the basis for this opinion include: Pricing pressure on medical groups continues and is expected to continue to exist in the future - Is the provider going to be paid more and faster for using technology sufficient enough to pay for the investment? The size of physician groups is increasing, but the market remains very fragmented Hospitals face challenges independent of their affiliated physician communities due to crude quality measurements The federal government has unsuccessfully attempted to provide the necessary vehicles to fund, operate and legislate an EHR integrated delivery system Evidence of the lack of data security has arisen recently from very large groups - The Department of Veterans Affairs (VA) suffered two data theft incidents in 2006, the first in May when identities and disability information on 26.5 million veterans was stolen, and the other in August when information on 16,000 veterans, including claims information was stolen Physicians are becoming worried about who is looking at their data and the decisions they are making on behalf of their patients What is the Future of EMR/EHR? We believe that a digitized, portable, patient-centric medical record will be a solid component of the future healthcare delivery system. The key questions are when and who will pay for the technology. With HRA/HSA accounts and reduced-fee schedules, it is doubtful that privatepractice physician groups will have the funds to see patients, invest in medical technology and invest in EMR/EHR technology that might not increase payments on a per RVU or CPT code basis. Patients are unlikely to change physicians on adoption of EMR. 2

4 What is the Current Status of EMRs and EHRs? According to Health Information Technology in the United States: The Information Base for Progress, a report by the Robert Wood Johnson Foundation and the federal government's National Coordinator for Health Information Technology: Less than 10 percent of physicians fully utilize information technology Only 25 percent of physicians use some form of EHR today, which is unchanged from years prior There is no standard definition of what an EHR is and what adoption means Additionally, The 2006 Physicians Practice Technology Survey: Piecing IT Together, published in the September edition of Physicians Practice, provides the following insights (Note: The sample size was 365 practices, evenly split among primary care and medical specialty practices, 75 percent of which had fewer than five providers.): Finding: The number of responding physicians who have implemented an EMR has dropped from 40 percent to approximately 35 percent from 2005 to This might result from practice consolidation within the reporting groups, hospitals redefining their physician relationships within their community, and like practices seeking large practice economies-of-scale with operating and capital expenses - There appears to be confusion in the marketplace on what EMR functionality is and should be, which is decelerating purchasing decisions Finding: The number of practices that do not plan to adopt an EMR has increased from 20 percent to approximately 25 percent in a year - There are worries that a digitized EMR will aid in a practice s compliance review, as well as CMS and other agencies, leading to easier and more adverse compliance reviews - Being a middle adopter to technology is not a bad strategy depending on market and practice conditions - Revenue pressures continue to depress funding sources for practices Finding: More than 85 percent of practices that have implemented an EMR indicate more efficient workflow - There is no doubt medical practices are drowning in paper and a digitized medical chart will enable practices to be more efficient in the future - Reaching efficiency with an EMR adoption requires a complete review of financial and clinical processes to mimic one another; adjusting the EMR to meet your current practice flow will impede any efficiency and cash flow to the practice 3

5 Finding: More than 50 percent of practices do not use an electronic coding system - There continues to be turmoil over coding within the industry that recedes based on the specialization of a medical practice and tenure of its physicians - This low percentage may validate a partial implementation of various EMR modules within a practice Finding: More than 51 percent of practices laid-off staff after the implementation of an EMR, while 32 percent kept staffing levels the same; only 6 percent of practices indicated an increase in staff to manage the new EMR technology - From our customer base and various software providers, each provider averages four to six FTE support staff to operate the practice; many of the manual clerical functions today are eliminated by a successful EMR implementation - However, an EMR will generally add additional FTE support within or outside the practice as the IT technology, disaster support and interface requirements are usually not housed within a practice - Providers must manage the difficult change from a manual process to an electronic process whereby costs will increase within the transition period Finding: There was a wide disparity in the per-provider software-license cost, from more than 50 percent of respondents at $500 per physician, to 22 percent with more than $6,000 per physician Finding: More than 58 percent of respondents indicated a 30-day installation process with more than 15 percent indicating the installation process is not complete; additionally, more than 50 percent of respondents indicated the selection process to take at most a month - These facts indicate that the definition in feature functionality of various EMRs is a broad chasm - A 30-day installation process does not appear to be sufficient to implement the simplest core elements of an EMR being (a) automated charge capture and (b) digitized medical chart - Like the definition of an EMR, the definition of go live is a deep and broad chasm that can burn money - From our review, the software appears to be the least expensive part of the process; the best money invested is in the installation, training and go-live process, however, this go-live money has a short half-life due to the complexity of the installation process and experience level of the vendor staff Finding: More than 78 percent of respondents indicated they are not using a voice recognition system - Voice recognition technology continues to improve, however, complex medical terminology represents a hurdle that can be overcome with a large amount of practice; with a 30-day installation cycle, it is doubtful a voice recognition system can be effective 4

6 Finding: EMR ROI is a mixed bag; 55 percent of respondents reported a positive ROI, while 45 percent indicated no ROI - ROI is a broad term that indicates the practice is making more money on a per unit or RVU basis - It is early, but there is little evidence to date that a practice using an EMR makes more money on a per CPT code or RVU basis, or more net distributable income to the physician - Practices that are not performing on a revenue cycle basis should reap some lift in revenue by getting more of their charges into the practice management system; however, why invest in technology application to fix a simple management issue? - Many of the EMR vendors are branding their technology with a practice management or revenue cycle component, as these expensive applications will not sell without higher per unit or RVU revenue; however, we have not seen these vendors hang around to determine whether or not the technology increases per unit or RVU revenue - ROI must be greater than the elimination of paper medical charts Finding: More than 60 percent of respondents indicated their practice management system was not doing everything they wanted with more than 61 percent indicating the deficiency was in reporting - It is estimated that more than 500 practice management systems exist today - There is no silver bullet with one system that can do everything to optimize the revenue cycle of the practice - Additionally, the revenue cycle of the practice must change to meet the capabilities of the system versus the opposite; new technology allows one to make the same mistakes much faster and more complex; have you ever heard of a bad practice management installation? - Today, there are huge volumes of reports being produced without a key question that needs an answer; too much time is spent on producing reports versus analysis MedSynergies Position We believe that EMR/EHR will become a core technology that will allow a medical practice to meet the needs of its patients within the communities they serve. However, early adoption of technology can be painful and can scar future initiatives whereby the cost of non-compliance may be high. Additionally, time only increases the beneficial nature of technology in terms of lowered costs, better vendor experience and proven feature functionality. We continue to review and look for various cost-effective and proven methods to provide an entrance into the digital medical record age. Despite considerable resources devoted to the evaluation of integration of EMR and digital chart solutions, we have not found the application that meets the test during the implementation phase. However, we continue to look for new technology applications in this arena to enable our customers to continue to optimize their revenue cycle as well as their clinical cycle. 5

7 We look forward to providing additional information as it becomes available; meanwhile, here are some recommendations. Recommendations for Navigating the EMR or EHR Decision Process First, it is critical that any practice looking into the possibilities of EMR implementation focus its attention on strategic planning for the organization prior to engaging product-specific solutions. Create a Vision for the Future State Clearly define what the future state of clinical automation will look like for your practice in terms that everyone within the practice can envision. This will help center your decision-making on key execution steps, metrics for understanding benefit, and risk analysis/mitigation planning necessary to ensure successful implementation. Focus on Core Process The key to introducing any technology into the practice is to understand the technology is not a magic answer in and of itself. Understanding current needs as they relate to the introduction of EMR or EHR and using the technology to support a well-thought out process will drive additional value. Understand the Relationship to Revenue Cycle Process and Tools The reality of the situation is that, while EMR will continue to play a role in the revenue cycle, by itself it is not a technology today that will guarantee revenue cycle excellence. Attention to the revenue cycle should not be discounted in the evaluation or implementation of the EMR. In fact, the overall implementation of the EMR should be factored in a way that maintains and enhances revenue cycle performance. Incremental Based on practice need and resources, more than likely, a phased approach to the implementation of an EMR or EHR will net the greatest buy-in, adoption across the medical staff, and the best chances at showing a return on investment through quantifiable benefits. Using this methodology, medical staff can be transitioned from their current paper-based clinical workflow to the vision of automated clinical workflow that will produce the long-term benefits in the practice described previously. For example, a practice today that does not have any clinical automation will likely benefit greatly by taking the first step of implementing an EMR module that will focus on the digitizing of current clinical documents and the electronic workflow associated with these documents. This step allows for the introduction of technology to the medical staff without radical change in their encounter experience, while enabling a gradual shift away from reliance on the paper chart. Summary There is no doubt that the U.S. healthcare system will evolve toward interoperable EHR/EMRs to provide better care. The funding, HIPAA, Stark, cost burden, fragmentation of the marketplace, technology interfaces and pricing pressures will hinder its rapid adoption; however, all parties agree that the status quo must change. With such agreement, there will be many failed and successful attempts at this process. 6

8 A key element upon selection will be how to manage the broad and deep impact of the installation and transition of an EHR/EMR while maintaining cash flow to fund the practice operation. Practice management bandwidth is the missing asset in the process. Because of this potential for complexity, it may be difficult for even a technology-savvy organization to clearly distill a vision for its future state. If one s organization is having this type of difficulty, a key first step would be aligning with a recognized, trusted business partner. The implementation of solutions within a medical organization should bring the intended benefit, not become a lost or sunk investment. An organization rich in vision and process planning, which is ready and willing to apply detailed analysis that encompasses both clinical and financial needs is poised for success. The inventory of EHR vendors approved by the Certification Commission for Healthcare Technology (CCHIT) is available online at: 7

9 President and Chief Executive Officer John Thomas has been with MedSynergies since its inception in 1996, when he began as senior vice president and managing director of development. While at MedSynergies, Mr. Thomas has held positions such as senior vice president and chief financial officer, and has been a member of the board of directors since Prior to joining MedSynergies, Mr. Thomas was the vice president of the newly formed HealthCare Finance Group for Bank One. He was also the assistant vice president for Texas Commerce Bank, where he focused on hospitals, emerging healthcare markets, core finance and revenue. About Now serving 1,000 healthcare providers in 23 states, MedSynergies provides revenue cycle services and integrates leading software programs into the daily operations of healthcare organizations. Founded in 1996, MedSynergies serves physicians in hospitals, specialty medical groups, ambulatory surgical centers, rehabilitation centers, and independent practice associations (IPAs). Based in Irving, Texas, the company has regional offices across the United States. For more information on MedSynergies, please visit Mr. Thomas is a national speaker on topics such as revenue cycle management, billing and collections processes and capitalization, raising funds, bank debt, turnaround and high/low debt revenue. Mr. Thomas received his Master of Business Administration, with honors, from the University of Texas Graduate School of Business. While at the University of Texas, he focused on finance and management and was selected as the Sword Scholar and received the Dean s Academic Award. Mr. Thomas received his Bachelor of Arts from the University of Arkansas Corporate Drive Third Floor Irving, Texas Copyright 2007 No reproduction, in whole or part, without written permission.