David A. Hampshire, managing director of the U.S. Health Care Delivery Business Unit at Falls Church, Va.-based CSC was the lead author of a report entitled “Treatment Plan: Hospitals Respond to the Economic Crisis," released earlier this month. It surveyed 54 hospital and health system executives and found a mixed bag of responses to questions around the current operating environment for investment in capital projects: 74 percent of respondents said their organizations are already making changes to their capital planning, 37.7 percent are delaying or deferring IT projects that are already underway and 54.7 percent are delaying or deferring planned IT projects. Hampshire recently spoke with Healthcare Informatics senior contributing editor Mark Hagland regarding the results.
Mark Hagland: What is your overall reaction to what you learned from the CIOs and other executives whom you surveyed?
David Hampshire: I’ve been in the industry 30 years. It confirms what I would expect to happen, and that is that the county health systems’ volumes are way up, while in contrast, the volumes at many of the nation’s premier hospitals with elective procedures and admissions are down. And that’s a function of two things—one is the continuing layoffs and rising unemployment, and second, the credit crisis and people’s investments. As a result of both of those situations, healthcare consumers are curtailing anything elective. And that is the first time in my career where this has happened. And it’s really a perfect storm between the credit side and the employment side.
MH: A lot of the increase in volume for the public hospitals is Medicaid or uncompensated care, though, right?
DH: Correct. And we expect emergency room visits to increase as well, as people wait longer for care, and then access care at the last possible moment.
MH: So hospital organizations are delaying IT projects?
DH: Most organizations are going tactical. And if you’re looking to economize with IT projects, you can either accelerate or slow down; you reduce the intensity and take longer to do that. Tactically, we are advising our clients to really have a lens towards asking three questions with regard to any IT project: is it a regulatory requirement; is it a reimbursement requirement; and, is there clear ROI? Those are the three criteria we’re advising them to look at.
MH: Where does investment in core EMR/EHR and other core clinical information systems fit into those criteria?
DH: It fits strongly into both the regulatory and reimbursement requirement criteria. Take for example CMS’ rule, issued in August 2007, and which became effective on October 1 of this year, which will deny payment for certain hospital-acquired infections or conditions. Unless documentation and coding for all conditions present on admission (POA) are planned for and addressed in a systematic way, individual patients who come into the hospital with one of these conditions that remains undocumented will risk lower reimbursement under the rule. For the average 250-bed hospital with 35 percent of its reimbursement coming from Medicare patient care, that could amount to $5 million in lost reimbursement per year. That’s a significant amount of cash. In our opinion, that regulatory change is probably the most dramatic change since the introduction of DRGs.
MH: So investing in an EMR does have a strong reimbursement and regulatory rationale?
DH: Yes. You’ll be impacted very negatively if your reimbursement is lowered for repeated POA problems. Meanwhile, on another front, we’re continuing to see too many media events where unfortunate events have happened in hospitals and patients have died. Clearly, the potential financial impact on hospitals arising out of the negative publicity coming out of those events is considerable. What’s more, as more and more hospitals participate in pay-for-performance programs, EMR implementation will be essential to such participation.
MH: So you’d say they have to go forward with EMR implementation, then?
DH: Yes. There is the potential for significant return on investment involved. There are opportunities to put measurement in place — baseline processes — to make sure a hospital organization becomes more cost-efficient as a result. Better quality does not necessarily mean higher costs.
MH: So you’d have hospital organizations implement data analysis and business intelligence tools in also?
DH: Yes, but first, we’d make sure they had the tools and documentation in place on present-on-admission, and that stops that siphoning off the back end. And when you do put in clinical systems, you do impact the revenue cycle. There are clearly opportunities to drive more cash faster and more efficiently.