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April 30, 2008
by Daphne Lawrence
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BCBSMA is sweetening the CPOE deal by providing greater financial incentives for adoption

Robert mandel, m.d.

Robert Mandel, M.D.

By 2012, Blue Cross Blue Shield of Massachusetts (BCBSMA) will require hospitals in the state to have a CPOE system in place in order to benefit from its incentive plan. While most agree that CPOE reduces medication errors and improves patient safety, the jury is still out on whether the BCBS decision will actually have any effect on implementation.

John halamka, m.d.

John Halamka, M.D.

To date, only 10 hospitals in the state (of the 72) have implemented CPOE, which requires doctors to enter every medical order, prescription, diagnostic test and blood work into a central database. “Not that many hospitals have implemented CPOE and very few have plans to,” says Dave Garets, president and CEO of Chicago-based HIMSS Analytics. “That's the big elephant in the room.”

According to BCBS, the CPOE initiative grew out of the results of a study by the New England Healthcare Initiative and the Massachusetts Technology Collaborative. It found that one in every 10 patients admitted to six Massachusetts community hospitals suffered serious and avoidable medication mistakes, and that CPOE could cut the medication error rate and save community hospitals millions of dollars by shortening the lengths of stays, reducing error rates and curtailing unnecessary drug tests and laboratory use.

“CPOE saves lives, saves money,” says Robert Mandel, M.D., vice president of Health Care Services at BCBSMA. “And we think it's so important for the care of our members that we're making it a requirement for hospitals in Massachusetts to have CPOE by 2012 if they want to participate in our incentive programs.”

According to Mandel, the CPOE incentive will mean real revenue increases for a hospital, in addition to the patient safety benefits. “We want to move away from reimbursing for quantity of volume and intensity, to paying for quality outcomes and efficiency,” says Mandel. “We've begun to increase the amount of money that's in our total compensation package to providers that's based on performance.”

Currently, 2 to 5 percent of a hospital's revenue from BCBSMA is captured in that incentive pool based on its performance, Mandel says. That's going to increase over time, and by 2012 it's possible that 10 percent of a hospital's revenue from BCBS would be captured in this performance pool — with CPOE as the threshold for participation.

In Massachusetts, the CPOE ROI is projected to be 26 months. “As the Massachusetts Tech Collaborative demonstrated, this is a project that has very easy ROI,” says John Halamka, M.D., CIO of Boston-based CareGroup Health System and Harvard Medical School (Boston). “In community hospitals especially, things like errors of omission and commission occur so frequently that this is going to pay for itself.”

And how much is that? According to Mandel, the cost is between $2 million and $3 million to implement CPOE in a mid-size, 300-bed community hospital.

Garets agrees. “The technology itself is not that expensive,” he says. “It's not the hardware and software, it's the change in management and getting to be proficient using the technology. This is hard stuff.”

Though the ROI is widely perceived as fairly quick and easy to recoup, a question many are asking is ‘Who's getting the benefit of that ROI?’ “Saying there's a 26 percent return on investment, you need to think, return on investment to whom?” says Garets. “Who's going through the pain of having to do this?” To Garets, it's the physicians that ultimately pay the price. “The dilemma is the one paying isn't the one getting the benefit.” Though, he adds, to be fair, physicians do benefit in that they're more assured their orders are going to be correct.

Getting a patient out of the hospital faster is a financial benefit to BCBSMA, and of course, a benefit to consumers because they'll be getting better care. “But will lower premiums be passed on to the patients?” Garets asks. He believes that won't happen. “The people who are benefiting are not the people who are getting hit up to buy systems — and not only buy them, but change the way they do business. And who's funding that?”

The question is, why have so few hospitals in the United States implemented CPOE? “You've got to face the reality," Garets says. "And the reality is that doing CPOE in a community hospital is hard.”

Halamka, a physician himself, agrees that the biggest challenge is the physicians, especially in the community hospitals. “At academic hospitals you have employees,” he says. “These are non-owned guys that may see patients at three different hospitals. You don't have a lot of authority over them.”


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You only have to read to Tip #1 to get to the root of the problem. When will we be able to examine "workflow" in light of the new tools, goals, and metrics available? This sacred cow, based on a paper paradigm, has barely evolved in centuries. If we can't pull the worflow apart and reassemble it unencumbered by the weight of "my workflow" jingoism, progress is going to be extremely slow (or non-existent) as the sacred cow keeps getting in the way.