Doctors in Small and Midsize Business Should Have Electronic Health Records (EHR)

When the Vioxx recall hit in late September 2004, it was almost a yawner for Peter Basch. "It took us two or three minutes to figure out which of our patients were on it," says Basch, who is part of an eight-doctor practice in Washington, D.C. That two to three minutes was how much time it took to structure and execute a search for the practice’s electronic records database.

Basch says that the Vioxx recall was a noncrisis for his practice largely because he and the other doctors have been using electronic health records (EHRs) for the past nine years. In fact, the first major drug recall occurred the same year Basch’s practice started using EHRs. In September 1997, the Food and Drug Administration warned doctors against prescribing fenfluramine and phentermine (Fen-Phen) together as appetite suppressants. At that time, Basch’s practice needed about 30 minutes to find all of its patients who were taking the diet pills. Basch, though, doesn’t even think that quick-search capability is the best reason to use electronic health records. Instead, he points to not having to write out prescriptions.

One of his patients was on more than 15 medications and would never get them refilled. He had to write them all out for her twice a year. "That was incredibly painful," he says. "When I could do it in a couple of clicks, I was able to smile at her and say, ’Anything else?’"

Basch is a great white-coated hope for much of the medical industry—a doctor in a small practice who is using electronic health records and believes in them, he says, "with almost religious fervor." But such faith is sparse among doctors. Basch estimates that EHRs are used by no more than 15 percent of the 800 doctors employed by MedStar Health, the seven-hospital corporation that owns his practice. And so far only 14 percent of all the physicians in the United States have invested in EHRs, according to a 2005 survey by the Medical Group Management Association.

Many physicians say they simply don’t see the financial upside for their practices, and some are concerned about retaining the confidentiality of patient information. (For more on health privacy concerns, read "The Electronic Bogeyman" on Page 68.)

"How do you convince a practice to spend between $20,000 and $40,000 a physician and decrease productivity and disrupt the practice for a year to make the change to these systems?" Basch asks. "That’s a tough argument to make in the current environment."

The Argument for E-Medicine

Nonetheless, health insurers, hospitals, and state and federal agencies are determined to make that argument succeed, if only because of the potential of EHRs to improve the quality of health care and reduce its costs. A Rand Corp. study published in Health Affairs in the fall of 2005 estimated that the broad use of EHRs would cut $81 billion from operating costs. That same study estimated that if most hospitals used EHRs, it would eliminate 200,000 mistaken drug prescriptions a year, saving $1 billion. Then there are the countless hours that patients and staff spend filling out forms, and then finding them—one study estimates that doctors can’t find the records needed for 30 percent to 40 percent of their patient visits.

The effort to accelerate the rate at which the hundreds of thousands of physicians in small practices who don’t use electronic health records (roughly 75 percent of them) adopt such systems is proceeding on several fronts. The U.S. government has four major standards efforts under way to provide guidance for electronic data exchange by doctors, hospitals and insurers. Congress is also considering relaxing elements of the Federal Medicare and Medicaid Anti-Kickback laws and the Federal Anti-Referral Law so that hospitals might help doctors in their regions adopt electronic health record systems. (For more on the national health records initiative, read "What Happened to Do No Harm?" on Page 42.)

The physicians and IT executives who have taken the lead in implementing EHRs say there is a strong business case for investing in these systems. In interviews with CIO, these early adopters provide a number of valuable tips for how to make the business case to doctors in small and midsize practices and help them over the implementation hump. With national, state and local initiatives starting this year, they say, the momentum for widespread EHR adoption is building.

"It’s happening very fast now. The funding to do it isn’t there yet, there are cultural barriers, legislative barriers and privacy barriers—but there is now a national effort to overcome all of these barriers," says John Halamka, CIO of the $1.2 billion CareGroup, a system of hospitals and practitioners that includes Beth Israel Deaconess.

Pay for Performance

The dynamite needed to break through these barriers, Halamka and others believe, will be pay-for-performance programs, a fundamental shift in the way insurers reward doctors for treating patients. Such programs are designed to reward doctors not only for seeing patients but for how they do on measures such as managing patients with chronic conditions like diabetes, or screening them for preventable problems like colon cancer. The pay-for-performance model would also reward doctors on qualitative measures like patient satisfaction.

Such incentives work best when tracked by electronic health records. Thus, pay-for-performance bonuses give physicians a clear incentive to adopt EHRs. Halamka says the reason he’ll have all 3,000 of his group’s physicians using electronic health records is because CareGroup’s contract with Blue Cross Blue Shield came up for renewal last year, and it now includes a pay-for-performance component. He says that as other insurers’ contracts come up for renewal, they’ll put in the same incentives.

Pay-for-performance programs will start to counter the impediments that work against doctors investing in electronic health records, predicts Micky Tripathi, president and CEO of the Massachusetts eHealth Collaborative. The Collaborative is using a $50 million donation from Blue Cross Blue Shield of Massachusetts to link the hospitals and doctors in three Massachusetts communities on electronic health systems. It is the most ambitious pay-for-performance plan currently under way and is being watched closely, in large part because it puts all of the doctors in one area on systems and builds a health information exchange to connect them and the area’s hospitals.

Patrick Barbier, a 62-year-old solo family practitioner in Newburyport, Mass., will be one of the very first doctors on the Collaborative system. He applied to be in the pilot because he thinks his patients will benefit from the consistency of care they’ll be able to get when he’s on vacation or off duty, because their records will be accessible to covering doctors. He also thinks e-prescription and lab systems will reduce his paperwork burden. "That will be a very good thing for me," Barbier says.

Wanted: Better Incentives

But others argue that physicians need to be given better incentives before they move toward wide-scale deployment of these systems. Jeffrey W. Rose, CEO of HealthAlliant, a nonprofit adviser to regional health information organizations, says that none of the pay-for-performance pilots currently under way offer enough payment to overcome the obstacles. "Ninety-plus percent of the benefits [of EHRs] accrue to others—insurers, hospitals and government entities," he says. "We expect physicians to make the investment even though others get the benefit."

Because of this cost/benefit dynamic, Rose and other physicians think that insurers and state and federal governments should put up more money for EHRs. For example, the American College of Physicians, which represents specialists in internal medicine, wants to see either low-cost loans or outright grants for physicians who plan to implement EHRs. Rose says that research on one of their large-scale projects showed that EHRs created $125 million in annual savings for medication management and another $100 million in diagnostics management. It also showed that 95 percent of the savings went to self-insured employers and commercial and government health-care plans. "They expect doctors to pay for this, and it just isn’t fair," he adds.

But Dolores Mitchell, executive director of the Massachusetts Group Insurance Commission, disagrees. Mitchell has implemented a pilot program that tracks how individual physicians do on specific quality-of-care measurements so patients in the state-funded plan can see how their physicians perform; these physician profiles, which are culled from EHRs, could eventually be used in a pay-for-performance system. "There’s a lot of push from doctors to say [we] should put up the money [for EHRs]. Well, think of everything else that goes into a doctor’s office—if they put an MRI in their office, they don’t ask me to pay for it. This is what it costs to be a modern, efficient, safe practice—it’s a cost of doing business. You deal with that in two ways: You charge more money, and I believe the tax laws of this country still allow you to write it off as tax deduction."

Mitchell says doctors worry about system obsolescence, the overall cost of implementation and the changes in the way practices work. She’s sympathetic to a point but hopeful that the pilot projects will show doctors that EHRs "only hurt for a minute."

The hurt actually lasts for more like three months, Basch tells doctors at MedStar Health, where he is medical director of e-health. Basch is helping to roll out EHRs from GE Physician Office to the roughly 800 doctors employed by MedStar Health, which had $2.7 billion in revenue and more than 1 million outpatient visits in its last fiscal year.

Basch says that the up-front costs are between $15,000 to $20,000 per physician, about 40 percent of which is the cost of hardware, including flat-screen monitors and networking equipment. He is nearing completion of a two-year rollout to 100 physicians, starting with practices that volunteered. Basch expects a variety of returns over the long run, including reduced medical errors, cost savings and improved quality of care. While large organizations like MedStar are well-positioned to gain benefits from EHRs, smaller practices that have adopted the systems find they can also get great returns.

Automatic Savings

Deborah Milburn, administrator at Dublin Primary Care, an eight-doctor practice in Colorado Springs, Colo., says it cost her practice about $12,000 per doctor to install an EHR from Amicore. That included updating hardware and giving doctors tablet PCs to carry around. "Where are these estimates of $20,000 to $40,000 per physician coming from?" Milburn wonders.

Dublin Primary Care generates $5 million or so in revenue a year, exactly the sort of practice that is supposed to be least able to afford to implement electronic health records. Milburn doesn’t understand why. The practice decided back in 2002 to install an EHR system as a way to eliminate expenses like transcription costs, while giving more consistent treatment to patients.

Three years after turning it on, the system has done more than break even. Dublin Primary Care spends $10,000 a month less than it did in 2002, even figuring in $13,000 a month in IT costs. That’s after three years of cost increases, staff raises and the like. Those savings have come from eliminating transcription costs, which were running at more than $6,000 a month in 2001, plus drops in costs for things like printing. But the biggest savings has come from decreased staff—Dublin has gone from 53 full-time staff to 38, without a drop in patients.

Milburn says that when Vioxx was recalled, she didn’t even have to do a search; her vendor (Amicore) sent her software that executed the necessary queries. She also notes that the annual back-to-school headache of pulling immunization records is now relatively painless.

Another doctor who is on his second implementation of an EHR system says that both times it has paid for itself within the first year of use, and he doesn’t understand why physicians aren’t rushing to implement them. "It’s astounding to those of us who’ve been to the mountaintop and seen the glory of them," says Joel Diamond of Diamond Fera and Associates in Harmerville, Pa.

Diamond says that in his first practice, a seven-doctor group with four locations, it cost $80,000 to implement an electronic health records system from Misys. But the elimination of transcription costs and 2.5 full-time positions in the first year covered the cost of the system. The practice also got so much better at coding and reimbursements that one of its payers audited it (the practice passed the audit with flying colors).

When Diamond and one of his partners left to form a new practice, they put in an EHR from the get-go. They knew it would work, and they also expect to see pay-for-performance start to make it even more worthwhile to their bottom line. Under the pay-for-performance model, "people will lose money without an electronic medical records system," Diamond says. "There is no way to track your data without one."

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