Financing Your EHR System - Dec 7. 2010


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Developed in conjunction with the Regional Extension Center for Washington DC (eHealthDC). An archived version of the Financing your EHR System Webinar will be available soon for viewing.

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  • With vendor-financed offerings you may have less leverage in negotiating contract termsRegional Extension Centers can help you:Get better than standard contractual termsObtain necessary warranties and representations from vendors that systems will comply with future meaningful use requirements (e.g., reports)
  • If a practice finances or leases the EHR, they can take the entire deduction this year, while only paying out a small portion. So Section 179 can literally result in net positive dollars deposited in a company’s bank account - giving a substantial boost to a the practice’s bottom line in the initial year
  • Study concluded that EHRs help to avert costs and increase revenue leading to significant savings for the healthcare practice in: Drug expenditures (34%) Improved utilization of radiology tests (14%) Better capture of charges (2%) Decreased billing errors (78%)
  • About 6 years ago 2003/2004, we had a 5 MD practice with 3 PAs and knew that eventually EMRs would part of the standard of care. We also had 2 locations and noticed how difficult it was to keep all of the information on paper – both locations had different patient populations and patients would rotate between them so patients would rotate between locations and we’d have to transfer the charts or fax copies of the latest record. It became cumbersome – charts were being lostknew that we were going to possibly add a 3rd location and knew it wasn’t going to be possible if they were on paper.Would get a call on Saturday night about lab test – e.g. blood sugar of 400 – and it was very difficult to know if you should go into the office and search for the chart – was it a patient that was fully controlled.
  • Evaluated Financing vs. LeasingHow did you find the bank? Went with the bank with whom they’ve been doing their banking with and had some rapport and relationship. Didn’t really shop it – shopping they did was between their bank and the leasing really. It was going to be a hassle to prove their credit worthiness to another bank. It was a small community bank at the time. The ROI data that they could show them was from the EMR company – there’s better data.Process/Difficulty in getting practice partners sign on with personal credit  There were 5 partners in the practices, who all wanted to do it – so everyone agreed on signing with their own personal credit – we were all invested in the practice so adding more risk wasn’t that worrisome. 5 partners – maybe it was a good size. Financed both the hardware and the software.
  • Financing Your EHR System - Dec 7. 2010

    1. 1. Webinar<br />How To Finance Your EHR<br />Moderator<br />Michael Barr MD, MBA<br />Panelists <br />Trenor Williams, MD<br />Greg Fuller<br />Richard Katon, MD, MPH<br />
    2. 2. Introductions<br />Dr Trenor Williams <br />Medical Director, eHealthDC<br />Founder of Clinovations<br />He has over 15 years of experience in healthcare<br />And has been a leader in healthcare consulting for the 6 years<br />Prior to eHealth DC, medical director of Family Practice at Mammoth Hospital in California and was a Lieutenant Commander in the United States Naval Reserve<br />Greg Fuller<br />Program Manager, eHealthDC<br />Extensive experience in health IT<br />Responsible for leading eHealthDC, the District of Columbia Regional Extension Center<br />
    3. 3. EHR FinancingAmericanEHR Partners WebinarTrenor Williams, MDGreg Fuller<br />12/07/2010<br />
    4. 4. Presentation Objectives<br />Adopting electronic health records (EHRs) can be costly<br />Costs include more than just EHR software<br />Some prices bundled with EHR costs, others extra<br />Licensure types and creditor will impact cost and payment terms<br />Finding the required funds can be challenging, especially for small, rural, and independent practices<br />Many, traditional and creative financing options and funding sources exist to help<br />This presentation will help you understand financial needs, licensing terms, sources for funding and support, and financial benefits of EHR adoption.<br />
    5. 5. Consider Full Range of Costs In Your Budget<br /><ul><li>Software
    6. 6. Hardware
    7. 7. Training
    8. 8. Chart conversation
    9. 9. Implementation
    10. 10. Network connectivity
    11. 11. Workflow redesign
    12. 12. Productivity loss during implementation
    13. 13. Tech support, both initial and long-term
    14. 14. Annual software maintenance
    15. 15. Hardware upgrades/replacement
    16. 16. Construction, if necessary
    17. 17. Desktop workstation
    18. 18. Laptops and tablets
    19. 19. Fax machines and servers
    20. 20. Document scanners and servers
    21. 21. Patient kiosks
    22. 22. Handheld devices 
    23. 23. Facility upgrade
    24. 24. Servers</li></li></ul><li>Choose the Type of Product Licensing That Meets Your Needs<br />Models are representative examples of payment options for a five-physician practice. Individual vendors vary considerably. These are approximate costs rather than specific examples.<br />Interface costs for lab and practice management systems only.<br />Minimum five-year contract required.<br />Adapted from California HealthCare Foundation. “Physician Practices: Are ASPs Right for You.” October 2006.<br />
    25. 25. Decide How to Structure Payments with the EHR Vendor<br />
    26. 26. Banks May Offer Low Cost Health IT Financing<br />Traditional and customized loans and credit lines<br />Individually underwritten to meet your practice needs<br />Competitive rates<br />Fixed or variable<br />Repayment options<br />Delayed and longer (60 months) repayment terms<br />Interest only and graduated interest payments<br />Products structured to align with CMS Medicare and Medicaid Incentive Payment Program<br />Regional Extension Centers can you help identify local options<br />
    27. 27. Consider Creative Sources for Additional Funding, Discounts, or Services<br />Operational cash flow<br />In-kind donations and contributions<br />Primary care association or medical society support<br />Federal, state, local, or private grants<br />Pay-for-performance programs<br />CMS Meaningful Use Incentive Payment Program<br />Group purchasing and contract negotiation from Regional Extension Centers<br />Tax deductions<br />Malpractice premium relief<br />Health system and health plan donations through Anti-kickback Safe Harbor<br />Accrual of long-term benefits from EHR use<br />
    28. 28. Eligible Providers Could Collect Meaningful Use Incentives from CMS<br /><ul><li>Medicare Eligible Professionals (EPs) may receive up to $44,000 (or $48,400 if practicing in a HPSA) paid over up to five years
    29. 29. Medicaid EPs may receive up to $63,750
    30. 30. Learn more at</li></ul>MEDICARE<br />
    31. 31. Regional Extension Centers Offer Robust and Affordable EHR Implementation Services<br />Teams of experienced local health IT professionals with intimate knowledge of the local medical community<br />Direct, rapid and reliable access to a pipeline of key information on health IT and meaningful EHR use<br />For providers who do not currently have an EHR system<br />Help choose and implement EHR<br />Offer group purchasing discounts and pre-negotiated contract terms for EHRs and IT hardware<br />For providers who already have a system<br />Help eligible providers meet the criteria for incentive payments from Medicare or Medicaid for the meaningful use of EHRs<br />Services available at significantly discounted and competitive rates<br />
    32. 32. Tax Incentives May Allow You to Write Off EHR Purchase and Loans in One Year<br />Tax incentives could lower overall after tax costs<br />IRS Tax Code Section 179 <br />May deduct full purchase price of qualifying equipment purchased or financed during a single tax year, rather than over multiple years <br />Total deduction up to $500,000 on up to $2M in purchases<br />$200,000<br />Cost of Equipment/Software<br />$200,000<br />Section 179 Deduction<br />50% Bonus Depreciation Deduction on remaining above $500,000<br />$0<br />$0<br />Normal 1st Year Depreciation<br />$200,000<br />Total 1st Year Deduction<br />$70,000<br />Tax Savingsassuming 35% tax bracket<br />$130,000<br />Cost after Tax Savings<br />
    33. 33. Malpractice Premium Relief May Be Available for EHR Users<br />Doctors using EHRs pay fewer liability claims than those not using EHRs1<br />Some insurers may be willing to offer premium relief<br />Discounts <br />Reduction or freezing of annual premium increases<br />1. Virapongse A, et al. “Electronic Health Records and Malpractice Claims in Office Practice.” Archives Internal Medicine. 2008;168(21):2362-2367.<br /> Connecticut Medical Insurance Company (CMIC) and Massachusetts eHealth Collaborative (MAeHC) launched in 2007 a 5% EHR Malpractice Premium Credit for Massachusetts clinicians using approved EHRs<br />
    34. 34. EHR Safe Harbor Allows Health Systems and Plans to Donate EHRs and Related Services <br />Donations may not exceed 85% of costs <br />Physicians or practice must pay remaining costs<br />Cash and other forms of direct payments to recipients not permitted<br />Recipients may not be selected based on value or volume of referrals to the donor (but may be selected based on other criteria)<br /><br />
    35. 35. Understand What Donations are Permitted or Excluded from the EHR Safe Harbor<br />1. Legal interpretation on varies<br />Health Systems Offering Several Options:<br />EHR System<br />1<br />EHR System & Implementation<br />2<br />EHR System & Implementation & Management<br />3<br />
    36. 36. Long Term Benefits Associated with EHR Adoption May Offset Some Initial Investment<br />While electronic health records require an initial investment of time and money, clinicians who have implemented them have reported saving money in the long term. With the efficiencies that electronic health records promise, their widespread use has the potential to result in significant cost savings across our health care system.<br />― David Blumenthal National Coordinator for Health Information Technology<br />16<br />
    37. 37. Studies Demonstrate EHR Use Can Improve Efficiency and Productivity<br />Increased accuracy in coding, leading to average billable gains of $26 per patient visit1<br />Improved care delivery from clinical decision support capabilities (average 12-20% improvement)2<br />Increased patient flow, staff productivity and increased revenue3<br />1.<br />2. Chaudry, B. et al. 2006 “Systematic Review: Impact of Health Information Technology on Quality, Efficiency, and Costs of Medical Care”. Annals of Internal Medicine<br />3.<br />
    38. 38. EHRs Can Yield Positive Net Financial Returns with Benefits Increasing as More Features Used<br />Wange, S., et al. (2003) “A Cost-Benefit Analysis of Electronic Medical Records in Primary Care”. The American Journal of Medicine. V.114 , April<br />Net benefit from using an EHR for a 5 year period was $86,400 per provider<br />
    39. 39. Consider Your Options <br />Contact your Regional Extension Center for help<br />Determine your budget<br />Estimate funds available from each option presented<br />Consider timing and probability for receiving funds<br />Identify and prioritize what is most worth pursuing<br /><ul><li>Meaningful Use Incentives
    40. 40. Operational cash flow
    41. 41. Philanthropy
    42. 42. Malpractice relief
    43. 43. Tax deductions
    44. 44. Group purchasing
    45. 45. Anti-kickback Safe Harbor
    46. 46. Bank terms
    47. 47. Vendor-financed deals
    48. 48. Pay-for-performance
    49. 49. Grants
    50. 50. Long-term benefits</li></li></ul><li>Trenor Williams, MD<br />Medical Director, eHealthDC<br />Greg Fuller<br />Program Manager, eHealthDC<br />
    51. 51. Introduction<br />Dr Richard Katon<br />Dr Katon is the founder Family HealthCare a primary care medical practice located in Montgomery County Maryland<br />Dr Katon received his medical degree from the MD from the State University of New York<br />MPH Johns Hopkins University. <br />
    52. 52. Practice Experience in Financing an EHRRichard Katon, MD,<br />6 Years Ago:<br />5 Physicians, 3 Physician Assistants <br />2 Office Locations, Looking to Add a 3rd<br />Transferring or Faxing Charts Between Locations<br />Today:<br />8 Physicians, 7 Mid-Levels<br />3 Locations<br />e-MDs EHR Live for 5 Years<br />Bank Loan Paid Off<br />NCQA Level 3 PCMH<br />Improved Patient Care<br />
    53. 53. The Numbers: $250,000 for EHR Software and Hardware<br />Financed Using Personal Credit to Sign for Loan Among 5 Partners<br />$52k per year automatic bank withdrawal for 5 years<br />$35k-$40k Annual Maintenance paid from regular practice cash flow (15 providers)<br />$55k Hardware Refresh/Updates (5 year total)<br />$3k-$4k Coding Training<br />ROI Within 1st Year with Improved Billing<br />
    54. 54. Summary<br />Remember all of the costs associated with EHR adoption<br />Keep in mind the long term cost savings and tax breaks<br />There are an array of different payment and financing options to help your practice with the costs of EHR adoption<br />Further information on <br /> <br />
    55. 55. Question & Answer<br />To provide us feedback on this webinar and/or AmericanEHR Partners <br />please email<br />