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Health Leaders
November 2007
http://www.healthleadersmedia.com/magazine/view_magazine_feature.cfm?content_id=200934&category_id=426
The Office of Inspector General and the Centers for Medicare & Medicaid
Services relaxed the Stark and anti-kickback laws in August 2006 in an effort to
increase electronic medical record adoption by allowing hospitals to assist
affiliated physicians. But the new rules haven’t affected Jim Nania much. The
chief financial officer of Hallmark Health in Boston, Nania wasn’t waiting for the
feds to act; Hallmark formed a joint venture two years ago to spur EMR
adoption—and that was before the laws were relaxed. Still, despite the
elimination of a regulatory barrier, many hospitals remain cautious about
providing financial help in this area.
Why haven’t more hospitals followed Hallmark’s lead?
Perhaps they’re still gun-shy considering the potential penalties of the past.
Perhaps the new regulations only serve to muddy the waters further in an already
complicated legal morass. But Laurance Stuntz, a partner in the Boston office of
Computer Sciences Corp., thinks part of the delay is that the Internal Revenue
Service aligned itself with the Office of Inspector General and CMS just this past
May, and that hospitals may just need more time; he predicts that organizations
will become increasingly active on this front. For hospitals, assisting in this area
may offer much to gain, but for now, the benefit of providing such help is hard to
measure.
“A few of my clients are planning around what it will cost them so they can figure
out how much to charge physicians,” he says. “I haven’t run into anyone who’s
looking at giving this to their affiliated physicians free in hopes that they’ll start
admitting more at the hospital. It’s not at all clear that the referral volume you get
will offset the cost of providing that EMR.”
Meanwhile, Hallmark and Nania believe their joint venture solution bypasses the
legal hurdles Stark once presented. They launched it two years ago, and the fact
that Stark and anti-kickback were later relaxed was just icing on the cake. The
real benefit, to them, comes from tying physicians more closely to the hospital.
Impetus from insurers
Hallmark’s approximately 150 referring physicians didn’t already have an EMR
for the same reason most small physician practices don’t have one: They
couldn’t afford it. Hallmark had already introduced an EMR for its approximately
60 employed physicians, driven largely by managed care contracts that had
“significant performance incentives” built in that relate to implementing an EMR
as well as computerized physician order entry, Nania says.
But with such a large group of referring docs, Nania saw an opportunity to tie
those physicians more closely to the hospital. What better way to do it than to
bring physicians onto an EMR that Hallmark had already paid for?
“We thought: What can we do to get primary-care physicians and specialists
more aligned with the hospital?” Nania says. The answer turned out to be
deceptively simple: Figure out a way to encourage them to use Hallmark’s EMR
and build an integrated database for all physicians that admit to Hallmark
facilities—employed and private.
“Essentially this is a physician EMR, and it needs to be a physician-driven
enterprise,” he says. “What was attractive organizationally was to do it as a joint
venture to pull employed and private physicians together.”
Physician-driven
To avoid violating the Stark and anti-kickback regulations in place at the time,
physicians paid the incremental cost of joining the system through the joint
venture—board representation for which is dominated by doctors, although Nania
and Kevin Hoppe, the hospital’s vice president of managed care, also serve.
Physicians were happy that someone was actually doing something to help them
improve their patient care as well as the efficiency and profitability of their
practices, Nania says. Hallmark, meanwhile, hoped the increased goodwill from
its efforts would translate to improved patient volumes, though both sides were
careful not to tie any assistance in the technology arena to such goals. “At a
minimum it ought to help us from a retention standpoint to keep the physicians
we already have,” says Hoppe.
Because Hallmark already pays for maintenance and much of the capital costs,
only incremental costs are passed on to doctors through the joint venture.
Hoppe says getting affiliated physicians to sign on was a “huge marketing effort.”
But he possessed a powerful selling point. Because the 150 affiliated physician
contracts can be purchased through the joint venture, doctors are able to
generate significant discounts from the EMR vendor, GE Healthcare, that
wouldn’t be available if they were trying to tie in on their own.
Practice management ties in
Doing it Hallmark’s way was not cheap. It cost between $6 million and $8 million
over two years to bring 150 referring physicians into the system. Despite that
cost, Hallmark hopes to bring in an additional 50 referring physicians over time.
Hallmark built its EMR system for employed physicians with GE Centricity, one of
the two choices for EMRs based on the managed care contract’s incentives. In
the joint venture, the board decided to stick with GE because it also offered a
valuable practice management component for doctors’ offices.
Even as Hallmark builds on its staff of employed physicians, finding a way to
provide more services for affiliated physicians has helped soften the rough edges
some referring physicians feel toward hospitals that strive to employ more of their
referral base.
“Physicians are spending less time in the hospitals,” says Nania, whose facility
faces strong competition from the Boston area’s contingent of academic medical
centers. “We hope this will attract other physicians who have only sent a minor
part of their business here in the past.”
So is Hallmark just an outlier, or will other hospitals now look to use EMRs as an
alignment tool? It’s too early to tell, says CSC’s Stuntz—but he’s not entirely
convinced.
“It removes a barrier, but I’m not convinced that it removes the major barrier,” he
says. For physicians, cost is perceived as a significant hurdle, so if the hospital
sees providing EMR assistance as an opportunity to further its mission, such
initiatives will likely become more common. But until some credible studies prove
moving to an EMR improves efficiency, many physicians may remain
unconvinced. Meanwhile, hospitals must do some complicated cost-benefit
analyses to determine whether offering such add-ons helps their bottom line.
“It depends a lot on how competitive the market is and what their competitors are
offering,” says Stuntz, adding that offering an EMR to affiliated physician may
become a cost of doing business in competitive markets. “It depends on whether
the physician is likely to be admitting to all hospitals or whether they would be OK
with admitting to just the one that offers the EMR.”
Philip Betbeze is finance editor with HealthLeaders magazine. He can be
reached at pbetbeze@healthleadersmedia.com.
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