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Report: EHR Installs Carry Significant Financial Risks for Hospitals

July 28, 2017
by Heather Landi
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Implementing new electronic medical record (EMR) systems carries tremendous financial risk and hospitals run the risk of incurring operating losses, lower patient volumes and receivables write-offs if there are problems with adoption of a new EMR system, according to an analysis by Moody’s Investor Services published in a report this week.

However, barring other credit pressures, the disruptions are frequently temporary, if well managed, the analysts stated.

The analysts also noted that if the electronic health record (EHR) installs are combined with unanticipated liquidity or operating pressures, the disruptions can lead to both short-term and prolonged margin contraction and negatively affect credit quality.

For the report, Moody’s analysts Jennifer Barr, Daniel Steingart, vice president, senior analyst and Lisa Goldstein, associate managing director, examined 39 hospitals and found that most hospitals that have recently executed EMR and revenue cycle installations navigated the financial challenges effectively, with performance metrics largely returning to pre-install levels on year later. Most of these hospitals and health systems, with annual revenues ranging from $170 million to $3.8 billion, completed the EMR installation all at once, commonly referred to as the “big bang” approach, rather than staged over a number of months or years.

The analysts found that EMR conversions and upgrades can have a significant impact on hospital operations, but they are usually limited to a one-year decline in cash flow and liquidity. The periods immediately preceding and following an EMR conversion typically create the greatest amount credit stress, the magnitude and discreetness of which will factor into any credit deterioration, the analysts wrote.

Analyzing the 39 hospitals that have recently invested in major EMR and revenue cycle system conversions, the analysts found that increased expenses and slower patient volumes contributed to a median 10.1 percent decline in absolute operating cash flow and 6.1 percent reduction in days cash on hand in the install year. However, many hospitals returned to pre-install levels within a year as implementation costs dissipated and revenue cycle processes stabilized.

Further, the analysts found that strong risk management can thwart a major financial disruption and limit credit deterioration. “Hospitals are managing EMR and billing system transitions by establishing lines of credit and other liquidity sources while engaging their board through committees to oversee projects. Health systems that experience financial problems, such as receivable write-downs or declines in liquidity, face credit deterioration,” the analysts wrote in the report.

Additionally, the analysts noted that investments in EMR and other information technology (IT) systems will continue, while cybersecurity becomes a vital focus. “As IT investments represent a growing portion of hospital budgets, an increasing amount will be allotted to guarding confidential patient data, which make hospitals a prime target for cyberattacks and ransomware events,” the analysts wrote.

The Moody’s report specifically refers to Wake Forest Baptist in Winston-Salem, North Carolina and Chicago-based Presence Health and as examples of EMR conversions resulted in margin deterioration and credit downgrades. Using Presence Health as an example, the analysts noted that deep and prolonged financial and operational hurdles or material decline in liquidity can heighten credit concerns.

With regard to Wake Forest Baptist, the analysts wrote that the health system’s financial performance has since rebounded, contributing to a revision of the outlook to positive from stable in October 2016.

In the case of Presence Health, the hospital experienced significant write-offs in the years that followed EMR and revenue cycle conversions by the legacy health systems which had merged to form Presence, prompting immediate risks of a covenant violation under more restrictive private placement debt. “Presence's management responded to a looming covenant breach by securing a bridge loan to refund the private placement debt and establishing a revolving line of credit to provide further liquidity relief,” the analysts wrote.

Hospitals can take steps to mitigate financial and liquidity difficulties stemming from EMR conversions, and, with a sound strategy, can limit the scope and scale of disruption, according to the analysts.

The report noted that hospitals will continue to invest in EMRs, aiming to improve patient safety, boost clinical quality and provide decision support. “Hospitals and health systems that enter into risk-bearing agreements with payors, or establish their own risk-bearing insurance products, will need sophisticated data analytics generated by EMR systems to manage care, costs and ultimately predict the healthcare needs of the population they serve. IT will also continue to be a selling point in physician recruitment and retention, as new data reporting will be required by Medicare for professional reimbursement,” the analysts wrote.

And, cybersecurity will become a vital management focus, as cyberattacks are a critical threat to hospitals and may lead to disruptions in patient care. The report notes the recent incident in the UK when hospitals experienced a widespread attack that halted clinical operations, leading to patient diversions and the cancellation of services. “In other cases, hospitals may be subject to ransomware extortion. In a rare admission of an attack, Hollywood Presbyterian Medical Center in Hollywood, CA acknowledged paying ransom after an attack in 2016. We expect cybersecurity to be a primary focus of hospital management teams and their boards, with annual capital and operating budgets allotting appropriate levels of expenditures to protect patient data and testing vulnerabilities,” the analysts wrote.

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Research: Physician Burnout is a Public Health Crisis; Improving EHR Usability is Critical

January 18, 2019
by Heather Landi, Associate Editor
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Physician burnout is a public health crisis and addressing the problem requires improving electronic health record (EHR) standards with a strong focus on usability and open application programming interfaces (APIs), according to a new report from leading healthcare researchers.

The report is a “call to action,” the researchers wrote, “to begin to turn the tide before the consequences grow still more severe.” The researchers also recommend “systemic and institutional reforms” that are critical to mitigating the prevalence of burnout.

The result of collaboration between researchers with the Massachusetts Medical Society, the Massachusetts Health and Hospital Association, the Harvard T. H. Chan School of Public Health, and the Harvard Global Health Institute, the report's aim is to inform and enable physicians and health care leaders to assess the magnitude of the challenge presented by physician burnout in their work and organizations, and to take appropriate measures to address the challenge, the researchers say.

The report also offers recommended actions for healthcare leaders to take, which the researchers acknowledge are not exhaustive, but “represent short-, medium-, and long-term interventions with the potential for significant impact as standalone interventions.”

The authors of the report include Ashish K. Jha, M.D., the K.T. Li Professor of International Health at the Harvard T. H. Chan School of Public Health, and director of the Harvard Global Health Institute; Andrew Iliff, lead writer and program manager, Harvard Global Health Institute; Alain Chaoui, M.D., president of the Massachusetts Medical Society; Steven Defossez, M.D., vice president, clinical integration, Massachusetts Health and Hospital Association; Maryanne Bombaugh, M.D., president-elect, Massachusetts Medical Society; and Yael Miller, director, practice solutions and medical economics, Massachusetts Medical Society.

In a 2018 survey conducted by Merritt-Hawkins, 78 percent of physicians surveyed said they experience some symptoms of professional burnout. Burnout is a syndrome involving one or more of emotional exhaustion, depersonalization and diminished sense of personal accomplishment. Physicians experiencing burnout are more likely than their peers to reduce their work hours or exit their profession, according to the report.

By 2025, the U.S. Department of Health and Human Services predicts that there will be a nationwide shortage of nearly 90,000 physicians, many driven away from medicine or out of practice because of the effects of burnout.  Further complicating matters is the cost an employer must incur to recruit and replace a physician, estimated at between $500,000-$1,000.000. 

“The growth in poorly designed digital health records and quality metrics has required that physicians spend more and more time on tasks that don’t directly benefit patients, contributing to a growing epidemic of physician burnout,” Dr. Jha, a VA physician and Harvard faculty member, said in a statement in a press release accompanying the report. “There is simply no way to achieve the goal of improving healthcare while those on the front lines – our physicians – are experiencing an epidemic of burnout due to the conflicting demands of their work. We need to identify and share innovative best practices to support doctors in fulfilling their mission to care for patients.”

The beginning of the physician burnout crisis can be traced back to several events, according to the researchers, including the “meaningful use” of electronic health records, “which transformed the practice of many physicians, and was mandated as part of the 2009 American Reinvestment and Recovery Act.” Going back further, the 1999 publication of the Institute of Medicine’s “To Err is Human” highlighted the prevalence of medical errors, brought new attention to quality improvement and the value of physician reporting and accountability, the report states.

The researchers note that the primary impact of burnout is on physicians’ mental health, “but it is clear that one can’t have a high performing health care system if physicians working within it are not well. Therefore, the true impact of burnout is the impact it will have on the health and well-being of the American public,” the researchers wrote.

The researchers note, “If we do not immediately take effective steps to reduce burnout, not only will physicians’ work experience continue to worsen, but also the negative consequences for health care provision across the board will be severe.”

And, while individual physicians can take steps to better cope with work stress and hold at bay the symptoms of burnout, “meaningful steps to address the crisis and its root causes must be taken at a systemic and institutional level,” the researchers wrote.

According to the researchers, the primary drivers of physician burnout are structural features of current medical practice. “Only structural solutions — those that better align the work of physicians with their mission — will have significant and durable impact,” the researchers wrote in the report.

To that end, the researchers’ immediate recommendation is for healthcare institutions to improve access to and expand health services for physicians, including mental health services.

In the medium term, technology can play a large role. Addressing physician burnout will require “significant” changes to the usability of EHRs, the researchers wrote, including reform of certification standards by the federal government; improved interoperability; the use of application programming interfaces (APIs) by vendors; dramatically increased physician engagement in the design, implementation and customization of EHRs; and an ongoing commitment to reducing the burden of documentation and measurement placed on physicians by payers and health care organizations.

New EHR standards from the Office of the National Coordinator for Health IT (ONC) that address the usability and workflow concerns of physicians are long overdue, the researchers state. One promising solution would be to permit software developers to develop a range of apps that can operate with most, if not all, certified EHR systems, according to the report. The 21st Century Cures Act of 2016 mandates the use of open APIs, which standardize programming interactions, allowing third parties to develop apps that can work with any EHR with “no special effort.” There already have been efforts on this front, such as Epic’s “App Orchard,” the researchers note, but more work remains to be done.

To expedite this critical process of improvement, the report recommends physicians, practices, and larger health care delivery organizations, when seeking to purchase or renew contracts for health IT, adopt common RFP language specifying and requiring inclusion of a uniform health care API.

The researchers also say that artificial intelligence (AI) can play a promising role as AI technologies can support clinical documentation and quality measurement activities.

Long term, healthcare institutions need to appoint executive-level chief wellness officers who will be tasked with studying and assessing physician burnout. Chief wellness officers also can consult physicians to design, implement and continually improve interventions to reduce burnout, the researchers wrote.

“The fundamental challenge issued in this report is to health care institutions of all sizes to take action on physician burnout. The three recommendations advanced here should all be implemented as a matter of urgency and will yield benefits in the short, medium, and long term,” Jha and the research team wrote.

 

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GAO Report: Patient Matching Efforts Can Be Significantly Improved

January 17, 2019
by Rajiv Leventhal, Managing Editor
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The report did conclude that no single effort would solve the challenge of patient record matching

There is a lot that can be done—such as implementing common standards for recording demographic data—to improve patient matching, according to a new Government Accountability Office (GAO) report that closely examined the issue.

The 21st Century Cures Act included a provision for GAO to study patient record matching, and in this report, GAO describes (1) stakeholders' patient record matching approaches and related challenges; and (2) efforts to improve patient record matching identified by stakeholders.

The 37 stakeholders that GAO interviewed, including representatives from physician practices and hospitals, described their approaches for matching patients' records—comparing patient information in different health records to determine if the records refer to the same patient.

The respondents explained that when exchanging health information with other providers, they match patients' medical records using demographic information, such as the patient's name, date of birth, or sex. This record matching can be done manually or automatically. For example, several provider representatives said that they rely on software that automatically matches records based on the records' demographic information when receiving medical records electronically.

Stakeholders further said that software can also identify potential matches, which staff then manually review to determine whether the records correspond to the same patient. They said that inaccurate, incomplete, or inconsistently formatted demographic information in patients' records can pose challenges to accurate matching. For example, records don't always contain correct information (e.g., a patient may provide a nickname rather than a legal name) and that health IT systems and providers use different formats for key information such as names that contain hyphens.

Those who GAO interviewed identified recent or ongoing efforts to improve the data and methods used in patient record matching, such as the following:

  • ·         Several stakeholders told GAO they worked to improve the consistency with which they format demographic data in their electronic health records (EHR). In 2017, 23 providers in Texas implemented standards for how staff record patients' names, addresses, and other data. Representatives from three hospitals said this increased their ability to match patients' medical records automatically. For example, one hospital's representatives said they had seen a significant decrease in the need to manually review records that do not match automatically.
  • ·         Stakeholders also described efforts to assess and improve the effectiveness of methods used to match patient records. For example, in 2017 the Office of the National Coordinator for Health Information Technology (ONC) hosted a competition for participants to create an algorithm that most accurately matched patient records. ONC selected six winning submissions and plans to report on their analysis of the competition's data.

Those who were interviewed said more could be done to improve patient record matching, and identified several efforts that could improve matching. For example, some said that implementing common standards for recording demographic data; sharing best practices and other resources; and developing a public-private collaboration effort could each improve matching.

Stakeholders' views varied on the roles ONC and others should play in these efforts and the extent to which the efforts would improve matching. For example, some said that ONC could require demographic data standards as part of its responsibility for certifying EHR systems, while other stakeholders said that ONC could facilitate the voluntary adoption of such standards. Multiple stakeholders emphasized that no single effort would solve the challenge of patient record matching.

To this end, a recent report from the Pew Charitable Trusts outlined several key themes related to patient matching, while also suggesting recommendations to improve matching and the infrastructure needed for more robust progress in the medium and long term.

Related Insights For: EHR

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Montana Senator to VA CIO: “EHR Modernization Cannot Fail”

January 14, 2019
by Rajiv Leventhal, Managing Editor
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Senate VA (Department of Veterans Affairs) Committee Ranking Member Jon Tester has urged new VA CIO James Gfrerer to avoid past failures as he helps to move forward the department’s EHR (electronic health record) modernization project.

Gfrerer, an ex-marine and former executive director at Ernst & Young, was recently confirmed by the Senate to serve as assistant secretary of information and technology and CIO (chief information officer) at the Department of Veterans Affairs.

One of Gfrerer’s top tasks will be helping to update hospitals’ infrastructures as the VA continues to work on replacing the department’s 40-year-old legacy EHR system, called VistA, by adopting the same platform as the U.S. Department of Defense (DoD), a Cerner EHR system. That contract was finally signed last May and the implementation project is scheduled to span over 10 years.

In a letter to Gfrerer, Tester, a Montana senator, noted that while many of the responsibilities for the implementation of VA’s new EHR fall to the recently created Office of Electronic Health Record Management, the CIO’s role “is critical to ensure that we do not repeat the mistakes of the past.”

The office that Gfrerer now leads, VA’s Office of Information and Technology, will still be in charge of managing infrastructure needs for both the patient care facilities that have received the EHR upgrades and those that have not, Tester stated. “This task will require significant resources and robust oversight as VA manages a decade-long rollout,” he said.

Tester further wrote, “EHR modernization cannot be allowed to fail, and your leadership is essential if VA is to ultimately achieve a truly interoperable health record for veterans.”

In regard to “past failures,” it’s possible that Tester is referring to media reports that have outlined some of the significant issues that the DoD has had with its own Cerner rollouts. In reports throughout 2018, the initial feedback on the four military site EHR rollouts has been less than ideal. A Politico report first detailed the first stage of implementations noted that it “has been riddled with problems so severe they could have led to patient deaths.” Indeed, some clinicians at one of four pilot centers, Naval Station Bremerton in Washington, quit because they were terrified they might hurt patients, or even kill them, the report attested.

Providing an update on Cerner’s progress with the DoD EHR implementations, a company executive recently noted that he is seeing “measurable progress” at the DoD’s initial operational capability (IOC) sites.

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