Written by Lou Sommi

Remember the stimulus money? The mega-large sums the U.S. government used to jump-start the economic engine? Automating healthcare was one of the top funding targets. A year and a half later the structure has come together and a flurry of activity is underway to take advantage of financial incentives made available through the federal government to automate healthcare.

It started officially in February 2009 when the Health Information Technology for Economic & Clinical Health Act (HITECH) was enacted as part of the American Recovery and Reinvestment Act (ARRA).

The HITECH Act has the very broad goals of promoting the adoption and "meaningful use" of health information technology and strengthening the enforcement of HIPAA rules that ensure the privacy and security of the electronic transmission of health information.

In July 2010 the final rules were released regarding incentives for physicians who achieve performance standards with EHR technology. Physicians are eligible to receive up to $44K-$63k each for the implementation and usage of EHR. These incentive payments begin in 2011 and will be paid out over 5 years. In fact, 75% of incentives are front-loaded, or payable in the first 2 years, with only $14k paid in years 3-5.

Before the final rules were released, determining how to demonstrate "meaningful use" of EHR technology was a challenge. The only thing we knew for sure was that the federal government was not going to send a check in the hope doctors would get away from dictation and paper files.

The rules are still not black and white but do offer a better guide for compliance. In general, the adoption of Electronic Health Records (EHR) systems and processes must demonstrate improvements in the areas of service quality, safety, and efficiency of healthcare services. They must engage patients and families to improve care coordination and generally improve public health.

Most medical practices and small hospitals will hire a certified consultant to guide them through the process at a cost of about $25-$35K. To give consultants and healthcare providers more structure, a program has been established by the department of Health and Human Services that approves which EHR systems can be sold to doctors, hospitals, and other healthcare providers. The program provides testing procedures - 45 in total - for evaluation of EHR system components, including system encryption, reporting, and authorized access management.

Hospitals are a focal point of healthcare delivery. The HITECH Act will force them to upgrade their IT systems, installing EHR systems and computerized physician-order entry (CPOE) systems. The upgrades will affect up to 80% of current hospital IT applications.

The impact of implementing EHR in a hospital setting is a bit more complex than in a medical practice. A hospital has to take into consideration the hard costs of setting up and managing the systems, the government incentives, and a range of savings associated with improved operations.

The entire operation becomes more efficient when doctors and staff can quickly share medical records and when hospital resources like radiology equipment or medical specialists are managed more transparently. Following are some estimates of the "soft" cost savings associated with EHR in a hospital:

• Reducing the number of adverse drug events = $8K to $15K per bed per year.


• Optimizing the use of labor = $20K per bed/year improvement.


• Managing the revenue cycle - Roughly 0.4% of hospital services go unbilled = over $4K per bed per year.

Then there's perhaps the most important long term benefit of an EHR - improvement of the healthcare outcome. The patient experience improves when precise guidelines for medically authorized tests and procedures are followed. Unnecessary treatments are reduced and the risk of adverse drug reactions and medical error are lower. CPOE systems require physicians, nurse practitioners, and other specialists to follow a menu of defined procedures when requesting services, tests, or drugs for patients. These clinical-decision-support (CDS) tools give physicians best-practice guidelines for medical procedures.

For the management team and board of directors, it comes down to a return on investment. To launch an EHR the average start-up cost per bed is $80K-$100K. When you combine the federal government incentives of about $17K per bed with the cost savings described above, the ROI is typically 2 to 4 years, according to a McKinsey report.

For EHR consultants an added layer of expertise is required to consider automation outside the medical facility (hospital or medical practice). Electronic health information about patients must be shared across different health care settings, by being embedded in network-connected enterprise-wide information systems. Think about how much information are involved - demographic information, medical history, medication and allergies, immunization status, laboratory test results, radiology images, and billing information.

It's important for service providers and the consultants who guide them to also consider the efficiency and security of the wide area networks and virtual private networks that connect hospitals to medical practices, specialists to hospitals, medical practices to insurance companies, suppliers to hospitals, patients to physicians and so on. This is where a consultant will tap the experience and know-how of a network service provider like Cavalier.

Cavalier has developed a high level of expertise in delivering secure, converged private network solutions, data back-up and remote access solutions for the healthcare industry. We partner with healthcare clients in a range of size and specialties. Working side-by-side with financial officers, senior technology officers and chief executives we have helped clients implement medical image libraries with real-time access by remote physicians, design systems to transport patient records to multiple data centers, communicate with suppliers to replenish pharmaceutical inventories and enable medical practioners to administer care by video conference to patients at home.

To hear more about the types of solutions we've designed for the healthcare industry and how we can help you enhance patient care and improve practice efficiencies, contact us at 877-240-1527.