Medical RecordsPolicy & Law

Linking Meaningful Use and HIT Sector Consolidation

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Since January, the Centers for Medicare and Medicaid Services (CMS) have implemented incentive programs to drive meaningful use of Electronic Medical Records (EMR) technology – software and support tools that represent a roughly a $40B marketplace

Since January, the Centers for Medicare and Medicaid Services (CMS) have implemented incentive programs to drive meaningful use of Electronic Medical Records (EMR) technology – software and support tools that represent a roughly a $40B marketplace

In August, CMS reported that $6.9B in total EMR incentives were paid to 143,800 physicians and hospitals – a number that will likely increase markedly in the coming quarters.  This is because hospitals and eligible professionals know that to receive the highest possible financial incentive they must deploy and demonstrate meaningful use of an EMR before 2014.

Curiously, these incentives don’t seem to be enticing as only 20% of Medicare and Medicaid eligible providers are taking strides toward EMR implementation and only 55% of eligible hospitals have received an EMR incentive payment.  We think they’re delaying investments for a few reasons.

  • Implementation costs are high, and the financial return of EMR systems isn’t fully proven
  • Poorly preforming EMR vendors are causing senior hospital executives to consider their options
  • Clinical leadership unwilling to change the clinical processes required to derive value from an EMR system
  • Creating and maintaining clinical content for a successful EMR system is very complex

Regardless of the rationale behind delaying the EMR mandates as stipulated in the Health Information Technology for Economic and Clinical Health (HITECH) Act, providers will be forced to comply or face penalties.

In fact, CMS estimates that 55% of hospitals will incur compliance penalties by 2015 and as providers race to comply, a range of EMR implementation support services are poised to grow.

  • External IT consulting and training: IT complexities coupled with resource constraints and hospitals IT staffing shortages is creating significant demand for consulting services. This area represents 43% of the implementation costs associated with EMRs.
  • Hardware: As EMR systems continue to advance in complexity and functionality, a requisite increase in hardware (i.e. laptops, tablets, mobile devices, backup storage device) associated with successful implementations will result and today account for ~25% of total EMR project costs.

As evidenced by consolidation activity SAIC buying Vitalize and MaxIT, we continue to assert that large healthcare providers will be aligning with and acquiring IT consulting companies to fill their staffing gaps and enhance their ability to more seamlessly integrate effective EMR solutions.

Let us know what you think.

Barrett Lynner

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