Financing Your EHR System - Dec 7. 2010
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This webinar discussed financing options for electronic health record (EHR) adoption. It began with introductions of the panelists and their experience in healthcare and EHRs. The webinar then covered considering the full range of EHR costs, different licensing models, payment structures with EHR vendors, and low-cost financing from banks. Additional funding sources discussed included grants, incentives from CMS, and services from regional extension centers. Tax incentives and malpractice premium relief for EHR users were also reviewed. The webinar concluded with a discussion of the long-term benefits and cost savings of EHR use based on studies.
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Financing Your EHR System - Dec 7. 2010
- 1. Webinar How To Finance Your EHR Moderator Michael Barr MD, MBA Panelists Trenor Williams, MD Greg Fuller Richard Katon, MD, MPH
- 2. Introductions Dr Trenor Williams Medical Director, eHealthDC Founder of Clinovations He has over 15 years of experience in healthcare And has been a leader in healthcare consulting for the 6 years 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 Greg Fuller Program Manager, eHealthDC Extensive experience in health IT Responsible for leading eHealthDC, the District of Columbia Regional Extension Center
- 3. EHR FinancingAmericanEHR Partners WebinarTrenor Williams, MDGreg Fuller 12/07/2010
- 4. Presentation Objectives Adopting electronic health records (EHRs) can be costly Costs include more than just EHR software Some prices bundled with EHR costs, others extra Licensure types and creditor will impact cost and payment terms Finding the required funds can be challenging, especially for small, rural, and independent practices Many, traditional and creative financing options and funding sources exist to help This presentation will help you understand financial needs, licensing terms, sources for funding and support, and financial benefits of EHR adoption.
- 6. Hardware
- 7. Training
- 12. Productivity loss during implementation
- 13. Tech support, both initial and long-term
- 19. Fax machines and servers
- 20. Document scanners and servers
- 21. Patient kiosks
- 22. Handheld devices
- 23. Facility upgrade
- 25. Decide How to Structure Payments with the EHR Vendor
- 26. Banks May Offer Low Cost Health IT Financing Traditional and customized loans and credit lines Individually underwritten to meet your practice needs Competitive rates Fixed or variable Repayment options Delayed and longer (60 months) repayment terms Interest only and graduated interest payments Products structured to align with CMS Medicare and Medicaid Incentive Payment Program Regional Extension Centers can you help identify local options
- 27. Consider Creative Sources for Additional Funding, Discounts, or Services Operational cash flow In-kind donations and contributions Primary care association or medical society support Federal, state, local, or private grants Pay-for-performance programs CMS Meaningful Use Incentive Payment Program Group purchasing and contract negotiation from Regional Extension Centers Tax deductions Malpractice premium relief Health system and health plan donations through Anti-kickback Safe Harbor Accrual of long-term benefits from EHR use
- 29. Medicaid EPs may receive up to $63,750
- 30. Learn more at www.cms.gov/EHRIncentiveProgramMEDICARE
- 31. Regional Extension Centers Offer Robust and Affordable EHR Implementation Services Teams of experienced local health IT professionals with intimate knowledge of the local medical community Direct, rapid and reliable access to a pipeline of key information on health IT and meaningful EHR use For providers who do not currently have an EHR system Help choose and implement EHR Offer group purchasing discounts and pre-negotiated contract terms for EHRs and IT hardware For providers who already have a system Help eligible providers meet the criteria for incentive payments from Medicare or Medicaid for the meaningful use of EHRs Services available at significantly discounted and competitive rates
- 32. Tax Incentives May Allow You to Write Off EHR Purchase and Loans in One Year Tax incentives could lower overall after tax costs IRS Tax Code Section 179 May deduct full purchase price of qualifying equipment purchased or financed during a single tax year, rather than over multiple years Total deduction up to $500,000 on up to $2M in purchases $200,000 Cost of Equipment/Software $200,000 Section 179 Deduction 50% Bonus Depreciation Deduction on remaining above $500,000 $0 $0 Normal 1st Year Depreciation $200,000 Total 1st Year Deduction $70,000 Tax Savingsassuming 35% tax bracket $130,000 Cost after Tax Savings
- 33. Malpractice Premium Relief May Be Available for EHR Users Doctors using EHRs pay fewer liability claims than those not using EHRs1 Some insurers may be willing to offer premium relief Discounts Reduction or freezing of annual premium increases 1. Virapongse A, et al. “Electronic Health Records and Malpractice Claims in Office Practice.” Archives Internal Medicine. 2008;168(21):2362-2367. 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
- 34. EHR Safe Harbor Allows Health Systems and Plans to Donate EHRs and Related Services Donations may not exceed 85% of costs Physicians or practice must pay remaining costs Cash and other forms of direct payments to recipients not permitted Recipients may not be selected based on value or volume of referrals to the donor (but may be selected based on other criteria) br />
- 35. Understand What Donations are Permitted or Excluded from the EHR Safe Harbor 1. Legal interpretation on varies Health Systems Offering Several Options: EHR System 1 EHR System & Implementation 2 EHR System & Implementation & Management 3
- 36. Long Term Benefits Associated with EHR Adoption May Offset Some Initial Investment 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. ― David Blumenthal National Coordinator for Health Information Technology 16
- 37. Studies Demonstrate EHR Use Can Improve Efficiency and Productivity Increased accuracy in coding, leading to average billable gains of $26 per patient visit1 Improved care delivery from clinical decision support capabilities (average 12-20% improvement)2 Increased patient flow, staff productivity and increased revenue3 1. http://www.aafp.org/fpm/2004/1100/p43.html#fpm20041100p43-b2 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 3. http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=1958&PageID=20410
- 38. EHRs Can Yield Positive Net Financial Returns with Benefits Increasing as More Features Used Wange, S., et al. (2003) “A Cost-Benefit Analysis of Electronic Medical Records in Primary Care”. The American Journal of Medicine. V.114 , April Net benefit from using an EHR for a 5 year period was $86,400 per provider
- 41. Philanthropy
- 43. Tax deductions
- 44. Group purchasing
- 46. Bank terms
- 49. Grants
- 51. Introduction Dr Richard Katon Dr Katon is the founder Family HealthCare a primary care medical practice located in Montgomery County Maryland Dr Katon received his medical degree from the MD from the State University of New York MPH Johns Hopkins University.
- 52. Practice Experience in Financing an EHRRichard Katon, MD, MPHwww.familyhealthcaremd.com 6 Years Ago: 5 Physicians, 3 Physician Assistants 2 Office Locations, Looking to Add a 3rd Transferring or Faxing Charts Between Locations Today: 8 Physicians, 7 Mid-Levels 3 Locations e-MDs EHR Live for 5 Years Bank Loan Paid Off NCQA Level 3 PCMH Improved Patient Care
- 53. The Numbers: $250,000 for EHR Software and Hardware Financed Using Personal Credit to Sign for Loan Among 5 Partners $52k per year automatic bank withdrawal for 5 years $35k-$40k Annual Maintenance paid from regular practice cash flow (15 providers) $55k Hardware Refresh/Updates (5 year total) $3k-$4k Coding Training ROI Within 1st Year with Improved Billing
- 54. Summary Remember all of the costs associated with EHR adoption Keep in mind the long term cost savings and tax breaks There are an array of different payment and financing options to help your practice with the costs of EHR adoption Further information on AmericanEHR.com http://blog.americanehr.com/americanehr-partners/2010/11/how-to-pay-for-your-ehr.html
- 55. Question & Answer To provide us feedback on this webinar and/or AmericanEHR Partners please email Feedback@americanehr.com
Editor's Notes
- 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.