Estimated Cost Savings and New Revenue From Installing an EHR

Based on research studies and federal funding estimates for an electronic health record system of no particular brand name, installing an EHR system can generate as much as $1.7 million per physician in cost savings or new revenue over five years, according to R&D MedTech, the maker of an EHR system. Here is the breakdown:

Practice Process Improvements ($216,300). A federal study found an EHR for a single physician yielded savings $26,600 in year one, $41,300 in year two, $31,400 in year three, $85,100 in year four and $85,100 in year five.

More Revenue Through Better Coding ($210,000). A study of 14 small practices found each physician could raise his/her revenue by as much $42,000 per year with increased coding levels resulting from implementation of EHR.

Malpractice Liability Insurance Discount ($25,000). Many malpractice insurance carriers are offering physicians discounts of 2-5 percent for using an EHR in their practice, on the premise the EHR system will reduce risk by helping to eliminate some of the most common reasons for claims, such as oversights on patient record reviews or notifying patients of prescription refills.

PQRI Financial Incentives ($50,000). The Physician Quality Reporting Initiative provides financial incentives of up to an additional 2 percent of Medicare payments to physicians who successfully report on specific quality measures provided to patients. Incentive payments range from $1,000 to over $98,000.

E-Prescribe Stimulus ($6,000). This amount covers two years of incentives, assuming most practices will switch to the full Medicare EHR stimulus incentive available in 2011.

Medicare/Medicaid Stimulus ($44,000/$63,750). Starting in 2011, physicians who meet the “meaningful use” criteria for certified EHRs for all applicable years would receive $44,000 through Medicare or $63,750 through Medicaid.

Tax Incentive ($250,000). The American Recovery and Reinvestment Act amended Section 179 of the Tax Code to increase the small business expense for qualified property to $250,000 with a 50 percent bonus depreciation.

Clinical Trial Revenue ($500,000). For clinical trials, additional new revenue is available to practices using EHR that was not available with paper records.

In-House Pharmacy Revenue ($360,000). This involves linking EHR to an on-site dispensing system in place of phoning or faxing prescriptions to the pharmacist, making call-backs for non-formulary drugs, and answering inquiries because of illegible handwriting and mandated prior authorization for refills.

See the full estimate by R&D MedTech.

Survey of Nurses’ Upcoming Plans Suggests Nursing Shortage Will Return

A recent nationwide survey of nurses shows that many of them plan to leave their jobs, suggesting that the nursing shortage will return, according to a release from AMN Healthcare.

The ongoing nursing shortage appeared to dry up last year, as RNs who had been in part-time work or had left nursing altogether came back to fulltime work to supplement dwindling household income.

But the January survey by AMN, a healthcare staffing agency, suggests this surge in the nursing supply will be temporary.

The survey found that:
* 6 percent of nurses permanently employed in hospitals plan to retire in the next one to three years, reducing hospitals’ nursing workforce by more than 70,000.
* 28 percent plan to leave the nursing field entirely or cut back on hours because the job is affecting their health.
* 30 percent said they would not be in their current job a year from now.
* 48 percent said they plan to alter their career path in 1-3 years.
* 55 percent believe that the quality of care that nurses provide has declined compared to five years ago.
* 59 percent said they would select nursing as a career if they did it all over again.
* 64 percent said they would recommend nursing as a career to young people.

Read AMN Healthcare’s release on nursing sup

Illinois Supreme Court Rejects Medical Malpractice Caps

In a setback for physicians and hospitals, the Illinois Supreme Court nullified the state’s medical malpractice law, ruling that a cap on non-economic damages enacted in 2005 by the state legislature is invalid.

“Today’s court decision threatens to undo all that Illinois patients and physicians have gained under the cap, including greater access to health care, lower medical liability rates and increased competition among medical liability insurers,” said J. James Rohack, MD, president of the AMA, in a written statement following the ruling.

The Supreme Court upheld part of a lower court’s 2007 ruling that the state’s medical malpractice law violated the separation of powers clause in the Illinois Constitution by allowing lawmakers to interfere with a judge’s ability to reduce verdicts, according to a report in the Chicago Tribune.

The case, LeBron, a Minor v. Gottlieb Memorial Hospital, involved a malpractice lawsuit filed in 2006 against the hospital by the family of a girl who suffered severe brain damage and other injuries during her delivery there.

The state’s hospital association also spoke out strongly against the ruling, which has been followed closely by the healthcare industry and could play into the national healthcare reform debate this year, according to the Tribune report.

“The hospital community is deeply concerned that this decision will renew the malpractice lawsuit crisis and make it more difficult for Illinoisans to access or afford health care as liability costs for physicians and hospitals are driven to unsustainable levels,” said Illinois Hospital Association President Maryjane A. Wurth, in a written statement.

Read the Illinois Supreme Court’s medical malpractice cap ruling (pdf).

Read the Chicago Tribune’s report on Illinois medical malpractice caps.

Chuck Lauer: 10 Points on Leadership

1. Leading is not the same as managing. There is a huge difference between managing and leading. “Leaders do the right thing and managers do things right,” it has been said. While managers focus on working toward the organization’s goals, orchestrating resources in an effective and efficient manner, leaders need to engage in strategic thinking. They need to pay less attention to details and focus on the big picture.

2. Don’t live in a bubble. Great leaders listen to their people, obtaining a variety of perspectives from a variety of sources. This helps them distill their own decision-making. They ask employees what they think and probe them on the pros and cons of a proposal. This not only shows employees that they are valued but also gets the leader closer to the best solution.

3. Cherish and respect employees. Leaders function as enablers, helping employees perform their jobs to the nth degree. A leader can only get work done through other people. Employees who get respect will produce at their highest capacity and make the leader look good. Make sure people have the tools to do their jobs — and the freedom to make mistakes!

4. Choose a clear mission. Leaders make sure the mission of their organization is plainly articulated and followed day in and day out. A mission statement can sound nice and look really good, but it has to be more than a bunch of words. It should be the very heart and soul of what the organization is about. It should inspire and direct.

5. Demonstrate integrity. Successful leaders recognize that the way they behave reflects the principles and ethics of the organization. Integrity and ethics are essential for any leader. A leader cannot just be “one of the boys.” Leaders need to stand above the rest and show the way.

6. Be transparent. Great leaders don’t believe in secrecy or closed-door meetings. They must conduct themselves with transparency and openness so that rumors don’t start and employees don’t feel shut out. Leaders who are frank rather than evasive — even about difficult issues — will be able to win employees’ trust.

7. Embrace responsibility. Outstanding leaders come in all shapes and sizes, from a variety of backgrounds, but what really sets them apart is their enjoyment in taking on responsibility and willingness to make tough decisions when necessary. Leaders don’t waffle or equivocate. They make sure their decisions are fair-minded and balanced.

8. Share credit. Leaders know the value of giving credit to others, even as they step forward immediately to take the blame for losses, so that their people are protected and valued. “A leader is best when people barely know he exists,” the Chinese philosopher Lao Tzu said. “When his work is done, his aim fulfilled, they will say, ‘We did it ourselves.’ ”

9. Leadership isn’t for everyone. Not all that many people want to take the hard hits that leaders have to absorb, regardless of whether they run a hospital, a clinic or a restaurant. A study of graduate students several years ago showed that well over 60 percent did not want the responsibility of being a leader. While there are many talented people, only a select few will embrace a leadership role.

10. Have courage. Leadership requires courage. Leaders have to go beyond just taking care of their own careers. They need to engage in calculated risks that will secure the future of the whole organization. This is especially important in these trying times, when healthcare is faces so many enormous challenges.

Chuck Lauer ( chuckspeaking@aol.com ) was publisher of Modern Healthcare for more than 25 years. He is now an author, public speaker and career coach who is in demand for his motivational messages to top companies nationwide.

Massachusetts Report Finds Hospitals’ Negotiating Clout With Insurers Drives Up Costs

Massachusetts hospitals and physician groups with market clout negotiate rates that are twice as high as for other hospitals, and such clout is the main cause of healthcare inflation in the state, according to a release by State Attorney General Martha Coakley.

Ms. Coakley’s office based the findings on a year-long study of the Massachusetts market, finding that about 10 hospitals enjoy reimbursements 10-100 percent higher, for similar work, than reimbursements for the other 55 hospitals in the state.

The office’s report says the 10 favored hospitals had brand-name recognition or few competitors in their markets, but it did not name any provider or insurer, saying its aim was to identify systemic problems and not blame individual organizations.

Based on its findings, the report recommended against establishing global payments covering a patient’s entire medical care for an illness, an approach recommended by a state commission.

The study concluded that higher healthcare costs are basically caused by rising prices, not increased demand for new services. One major insurer reported provider price increases accounted for 80 percent of the growth of medical expenses from 2006-2009.

The report called on the state to:

• Discourage or prohibit contract provisions that perpetuate market disparities;
• Increase transparency and standardization in payment and quality;
• Reform payments to account for market distortions; and
• Encourage development of a “value-based” healthcare market.

Read the Massachusetts Attorney General’s release on health insurance reimbursements.

Five-Year Fix for Medicare Doctor Pay Cuts in Works

As lobbying intensifies, momentum is building to provide a five-year reprieve that would block a 21-percent fee cut to physicians who treat Medicare patients. If no legislative action is taken this month, the physician pay cut is set to go into effect in March, according to a report in The Hill.

The Senate recently passed pay-as-you-go legislation requiring Congress to offset new spending or tax cuts with corresponding spending cuts or tax increases, and the House passed a similar bill last year and is expected to take up a new version next week, The Hill reported. The Senate bill includes an exemption from pay-as-you-go for the physician payment fix. Specifically, it would allow Congress to spend up to $82 billion for physician payments without having to find offsetting savings or revenue sources. This amount would be enough to lock in fees at their current rates for five years.

The American Medical Association and other physician groups — joined by AARP — have been lobbying for a more expensive overhaul to the Medicare physician payment system, known as the sustainable growth rate formula, or SGR. Passing a permanent fix could cost $200 billion, according to a Feb. 2 report in Politico. Finding such a solution tops the AMA’s healthcare reform agenda.

Read The Hill’s report on physician fee cuts.

Intrapreneurship

I was in a meeting recently and a discussion was proposed as to whom should be the owner of an idea originated inside a hospital. The employee, the institution, both?

It is clear to me that when a physician is hired to do research, the output of this research should belong to the hospital, and the hospital should acknowledge his/her contribution by giving away part of the benefits obtained from it. In this case, the new idea would probably have been unthinkable outside the premises of the hospital, without its infrastructure and assets, so it makes sense.

But what happens if an employee has an idea, let’s say, related to his/her field of experience but not necessarily linked to research? Let’s take this example, if an OR Nurse perceives a need and thinks about a solution to this need while in the operating room, let’s say a new medical device, should the idea belong to the hospital? Well, yes, the idea came to them because they were working at the hospital, but can the hospital claim any ownership over it?

Who is the owner of the idea, then? It may seem a futile discussion, but to me it represents the most important barrier to innovation in our healthcare systems, so it is far from trivial. Sometimes employees don’t engage in innovation because they perceive the ownership issue as unfair. If we want to foster innovation in healthcare, this question needs to have a clear answer. At the end of the day, it all goes down to how the hospital sees healthcare professionals: Do employees work for the hospital, or do they work at the hospital?

Are hospitals really willing to encourage innovation and intrapreneurship inside their premises? Are hospitals willing to create a culture of reward for those entrepreneurs? There is a lot to be gained here: if the hospital succeeds in fostering innovation, it can create a great environment to attract talent, lead, and generate economic value and social impact.

People do respond to incentives. That’s something I learned very early when dealing with innovators and entrepreneurs. Innovation should not trigger a war between the healthcare facility and the employee. It should always be a win-win scenario where both parties can create a lot of value if they cooperate. So, in my opinion this is not about claiming ownership, but about both parties acknowledging how far can they go and how better they will be if they work together, and share the ownership. That’s the answer that makes sense to me.

 

Gov. Paterson proposes bill to require disclosure from PBM

New York Governor David A. Paterson has proposed legislation that would increase transparency and promote competition among pharmacy benefit managers (PBMs) by requiring them to disclose additional drug information to health plans, doctors, and patients.
“PBMs perform a valuable service, but there is little oversight of their practices and little competition,” said New York State Health Commissioner Richard Daines, M.D., in the release. “The three largest PBMs—Medco, Caremark, and Express Scripts—manage pharmacy benefits for 200 million Americans, 95% of those who have prescription drug coverage.”

Under Paterson’s bill, PBMs would be required to disclose the actual use of drugs by the health plan’s participants, any conflict of interest that the PBM might have with the health plan, any increase in the net price to the health plan for a covered drug and the reason for the increase, and all contracts entered into by the PBM with a network pharmacy or pharmaceutical manufacturer. The bill would also notify patients and disclose any relevant clinical and financial information to prescribers before a PBM could switch a patient to a more expensive drug, the governor said in the press release.

Healthcare Spending Reaches 17.3% of GNP, Largest 1-Year Rise Ever Recorded

Independent actuaries working for the CMS reported that the healthcare sector’s share of the economy grew by 1.1 percent in 2009, the largest one-year increase ever reported, according to a report in Health Affairs.

The healthcare sector’s rising share of the economy, magnified by a contraction in other sectors, reached 17.3 percent of the gross domestic product and is expected to reach 19.3 percent of GDP by the end of the decade.

Looking at another measure, healthcare spending growth, 2009 was not a record year. Healthcare spending grew by 5.7 percent to $2.5 trillion last year, higher than the 4.4 percent it logged in 2008 but lower than the 6 percent reported in 2007. This year, the actuaries expect healthcare spending growth to slow to 3.9 percent.

Factors for the 2009 increase included increased spending on Medicaid, which rose 10 percent in 2009, increased spending on COBRA health insurance for the newly jobless, a large number of baby-boomers entering Medicare and treatments for H1N1 patients.

Government healthcare spending in 2009 rose by 8.7 percent to $1.2 trillion, or nearly half of total national healthcare spending. By 2012, the government’s share of healthcare spending will exceed half, compared with one quarter 50 years ago, before Medicare and Medicaid were created.

Private-sector healthcare spending did not grow as fast as government spending and is expected to increase by 2.8 percent in 2010, a slow-down caused by continuing loss of health coverage due to unemployment and the expiration of the COBRA created by the stimulus bill.

The Los Angeles Times quoted analysts who were dismayed by the healthcare sectors’s increases.

Stuart Butler, an analyst at the Heritage Foundation, said the figures show that more aggressive cost controls are needed. “The only way to do this is to simply spend less,” he said.

Len Nichols, health policy director at the New America Foundation, added: “If you believe that much medical care is unnecessary, as I do, then it is criminal that we are spending so much.”

Read Health Affairs‘ report on healthcare spending.

Retail clinics on hit-or-miss trajectory

RETAIL HEALTH clinics have embarked on a period of retrenchment, according to a recent analysis by the Deloitte Center for Health Solutions.

There are currently more than 1,100 retail health clinics in the United States offering non-urgent healthcare services in pharmacies and grocery stores.

Between July 2008 and July 2009, the number of operators increased nearly 40%, including the entry of acute care organizations via contractual arrangements with drug store and grocery chains. In addition to the six largest players in the market, more than 50 organizations now operate nearly 140 clinics, claiming 11% of the market.

But just as new players jump in, many established operators are refining.

Clinic openings slowed from an astounding 350% growth rate in 2007 to 30% in 2008. During the first five months of 2009, the market contracted 5%, although the report forecasts modest growth for the year. Nearly 150 clinics closed in 2008. Although more than half of those were associated with smaller retail stores and startups, established operators likewise contracted.

RediClinic, which operated more than 50 sites in 2007, operated just 21 by mid-2009. CVS Caremark’s MinuteClinics, which dominate the market with 451 sites, shed dozens of locations in stores not owned by the company and closed 104 underperforming clinics in the first two quarters of 2009, according to the report.

But don’t read that trend as a retreat or as a direct effect of a recession, says Paul Keckley, executive director of the Deloitte Center for Health Solutions. Keckley says disruptive innovations in healthcare delivery rarely progress on a smooth trajectory.

For the most part, the report notes, retail clinics are modestly profitable and enjoy adequate patient volume. There’s also increasing evidence that insurers are covering their services.

FORMULA FOR GROWTH

The pullback, Keckley says, “has been a decision by the hosts to really focus on refining the model to make it scalable.”

For businesses accustomed to operating in the retail arena, that means refining business models to manage extended hours, liability and additional personnel costs. The hosts likewise need to determine exactly what range of services they’ll provide in a scaled model. Most clinics offer a limited range, such as diagnosing upper respiratory infections and prescribing the appropriate antibiotic. Potential new services could include injection and infusion services, chronic disease management, smoking cessation and direct-to-employer insurance programs.

Keckley expects retail clinics to emerge from this “breather” period with more refined business models tailored to the type of host site—be it a pharmacy, supermarket, big box retailer or employer setting—where the clinic operates. He anticipates a second wave of cautious growth through 2011 followed by more accelerated growth through 2014 with the market topping out at about 4,000 clinics in 2015. Most of the growth, he says, will occur in suburban markets where clinic users would most likely have commercial insurance.

John Bigalke, national managing partner for Deloitte’s health sciences practice, says the clinics could play an important role in providing healthcare for Medicaid recipients as well. As states grapple with providing primary care for the growing Medicaid population, retail health clinics may offer one way they can “continue to uphold their end of the social contract,” he says.

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