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Has HITECH Hijacked Stark?

August 31, 2009
by Daphne Lawrence
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Now that physicians can get reimbursed for EMRs directly from the government, CIOs are reexamining their Stark strategy

In the more than a year since the Stark reforms, the world of health IT, particularly financing, has shifted dramatically. The relaxation of the Stark laws in 2007 allowed hospitals to subsidize the purchase of EMRs for their physicians, and some began to use those incentives as part of a broad strategy to link physician offices to hospitals for the exchange of patient information.
Geoff brown

Geoff Brown

But now that HITECH is promising to pay $44,000 directly to physician practices for EMR purchases, are CIOs still interested in cutting checks to the formerly cash-strapped doctors? Beyond that, some doctors see no need to pursue Stark, jumping at the chance to go their own HITECH way free from the hospital's influence or control. Has HITECH blown up Stark?

“I think it has not blown it up, it has positioned us,” says Geoff Brown, senior vice president and CIO of Inova Health System, a not-for-profit system based in Northern Virginia that includes hospitals, emergency departments and urgent care centers. “We want to connect the surrounding community and Stark was an interim strategy to accelerate the adoption process.”

Brown says he is still focusing on getting ready, willing and able practices on board, but has a long way to go. “We're finding out that they still need us,” he says. According to Brown, in the year since Inova began taking advantage of Stark, close to 150 physicians have connected to the hospital with an EMR. “But we have 3,100 physicians in our system.”

Indeed, a mere 4 percent of physicians report having a fully functional EMR in place, according to a study recently released by the New England Journal of Medicine entitled, “Electronic Health Records in Ambulatory Care - A National Survey of Physicians.” EMR adoption among physician practices is low, and so far, many say, Stark has not had the intended effect in driving up the numbers. Hospitals numbers are low, too.

“Only 15 to 20 percent of hospitals nationally have taken advantage of Stark because they just had too much on their plate,” says Pam Arlotto, president and CEO of Atlanta-based Maestro Strategies, a consulting group. With new definitions of meaningful use that include connecting to physicians, Arlotto says that's going to change. “If you peel the onion away and look at the legislation, it's going to be more important that hospitals have an integration strategy with their physicians,” she says. “Some hospitals are moving to get their docs connected quickly because they see it as a competitive edge.”

Chris Harding, president and CEO of Concordant (North Chelmsford, Mass.), agrees that change is coming, but says so far hospitals are slow to take advantage of Stark. “The new legislation has added incentives and created tremendous awareness and visibility,” he says. “We do see change, but we don't see it flipping the cart upside down.” He believes many hospitals will use Stark incentives to move even faster on connecting their physicians. “We've seen clients that had some of their planning work done and shelved it, but now they say they can move sooner,” he says. “But we don't see practices going renegade.”

For the physician practices, one main reason for maintaining ties to the hospital comes down to finance.

That's because HITECH will not reimburse physician practices for an EMR until 2011 - and in any case, it will not cover ongoing support. “We see the practices looking at the $44,000 skeptically,” says Harding. “Our clients ask, ‘Will the check show up next week?’ And we have to tell them that's not how it works.” And that turns out to be more financial risk than many practices are willing to accept. “We've heard them say, ‘I'd rather the hospital takes care of this for me.’”

Though some vendors, such as U.K.-based GE (and some state foundations as well), have committed to financing software for practices in anticipation of the funds, Harding says he believes funding is only one reason physicians reach out to hospitals for an EMR. “The real power comes when you're part of a larger network,” he says.

Brown agrees that the number of independent practices will be smaller in the future. “We think that we'll probably have a few more physicians going out on their own, but we think there will still be a larger block that will want to be positioned with many of their peers,” he says. Brown says he expects, at most, an additional 10 percent will decline the hospital's plan. “Stark is still in place, and we're not going to stop offering that,” he says. “Physicians will want to be part of this larger group of physicians that are working with Inova.”

But though most agree that the effort to get practices connected to the hospital will continue, some CIOs say HITECH is changing their strategy in other ways.

“We talked about that at the senior management team meeting,” says Linda Reed, R.N., vice president and CIO of Atlantic Health, a multi-hospital system in Morris Plains, N.J. Reed's Stark strategy had included paying about 85 percent (the maximum) of the cost of an EMR for her physician practices, beginning with primary care physicians. “Just as we're getting ready to roll that out, along comes HITECH,” she says. Reed says she and her C-suite decided to reassess where they were going. “I said to my boss, ‘Let's just sit a little and see what happens.’”