Hospitals Slow to Offer EMR Subsidies to Docs

The study is available online at www.hschange.org/CONTENT/1015

The federal government's relaxation of self-referral and antikickback laws has had a “modest” effect in encouraging hospitals to subsidize physician purchases of electronic medical record systems, according to an analysis by the Center for Studying Health System Change.

Some hospitals are proceeding slowly, offering subsidies for acquisition of electronic medical record (EMR) software to small groups of closely affiliated physicians, while other hospitals are offering physicians only IT support services or extending their vendor discounts, according to the analysis of 24 hospitals. The analysis was funded by the Robert Wood Johnson Foundation.

In 2006, the Health and Human Services Department announced that it had created two safe harbors that would allow hospitals to subsidize up to 85% of the cost of EMR software and IT support services for physicians. For their part, physicians would be responsible for paying the full cost of the hardware required for the EMR system. The regulations are scheduled to sunset at the end of 2013.

The analysis by the Center for Studying Health System Change, which is based on in-depth interviews with executives at 24 hospitals, found that 11 of the 24 hospitals were considering offering some type of subsidy to physicians to help cover their EMR costs. The remaining 13 hospitals were not planning to provide direct subsidies to physicians, but some were considering extending their EMR vendor discounts or offering IT support services.

Hospitals that chose not to offer direct financial support to physicians cited differing reasons for the decision. For example, some hospitals opposed the idea of offering EMR subsidies to physicians.

Other hospitals said that granting access to vendor discounts was a sufficient incentive for physicians preparing to adopt EMRs. And still other hospitals were interested in providing the financial subsidies directly to physicians but couldn't afford to do so.

For those hospital executives who said that they were considering a direct EMR subsidy to physicians, improving patient care and forging closer relationships with referring physicians were the top reasons cited for moving forward with EMR assistance.

“Hospital executives expected physicians would be more likely to maintain, and even expand, their relationship with the hospital because of the improved efficiency from interoperability with the hospital's IT systems,” the researchers wrote.

One factor that appears not to be driving the trend toward hospital subsidies is interest on the part of physicians. The arrangement has some potential drawbacks for physicians, according to the analysis.

For example, under the safe harbor provisions, physicians are still responsible for 15% of the software costs and 100% of the hardware costs associated with setting up the EMR system.

Moreover, physicians using the hospital-sponsored EMR may have difficulty storing records for patients who are treated at other hospitals where the physicians provide care for patients. Also, the hospital-sponsored EMR could serve as a barrier if physicians later wanted to switch their hospital affiliations, according to the analysis.

“While hospitals have strategic incentives to provide support, particularly to tie referring physicians to their institution, the effects of the regulatory changes on physician EMR adoption will ultimately depend both on hospitals' willingness to provide support and physicians' acceptance of hospital assistance,” Joy M. Grossman, Ph.D., one of the study authors, said in a statement.

The study is available online at www.hschange.org/CONTENT/1015

The federal government's relaxation of self-referral and antikickback laws has had a “modest” effect in encouraging hospitals to subsidize physician purchases of electronic medical record systems, according to an analysis by the Center for Studying Health System Change.

Some hospitals are proceeding slowly, offering subsidies for acquisition of electronic medical record (EMR) software to small groups of closely affiliated physicians, while other hospitals are offering physicians only IT support services or extending their vendor discounts, according to the analysis of 24 hospitals. The analysis was funded by the Robert Wood Johnson Foundation.

In 2006, the Health and Human Services Department announced that it had created two safe harbors that would allow hospitals to subsidize up to 85% of the cost of EMR software and IT support services for physicians. For their part, physicians would be responsible for paying the full cost of the hardware required for the EMR system. The regulations are scheduled to sunset at the end of 2013.

The analysis by the Center for Studying Health System Change, which is based on in-depth interviews with executives at 24 hospitals, found that 11 of the 24 hospitals were considering offering some type of subsidy to physicians to help cover their EMR costs. The remaining 13 hospitals were not planning to provide direct subsidies to physicians, but some were considering extending their EMR vendor discounts or offering IT support services.

Hospitals that chose not to offer direct financial support to physicians cited differing reasons for the decision. For example, some hospitals opposed the idea of offering EMR subsidies to physicians.

Other hospitals said that granting access to vendor discounts was a sufficient incentive for physicians preparing to adopt EMRs. And still other hospitals were interested in providing the financial subsidies directly to physicians but couldn't afford to do so.

For those hospital executives who said that they were considering a direct EMR subsidy to physicians, improving patient care and forging closer relationships with referring physicians were the top reasons cited for moving forward with EMR assistance.

“Hospital executives expected physicians would be more likely to maintain, and even expand, their relationship with the hospital because of the improved efficiency from interoperability with the hospital's IT systems,” the researchers wrote.

One factor that appears not to be driving the trend toward hospital subsidies is interest on the part of physicians. The arrangement has some potential drawbacks for physicians, according to the analysis.

For example, under the safe harbor provisions, physicians are still responsible for 15% of the software costs and 100% of the hardware costs associated with setting up the EMR system.

Moreover, physicians using the hospital-sponsored EMR may have difficulty storing records for patients who are treated at other hospitals where the physicians provide care for patients. Also, the hospital-sponsored EMR could serve as a barrier if physicians later wanted to switch their hospital affiliations, according to the analysis.

“While hospitals have strategic incentives to provide support, particularly to tie referring physicians to their institution, the effects of the regulatory changes on physician EMR adoption will ultimately depend both on hospitals' willingness to provide support and physicians' acceptance of hospital assistance,” Joy M. Grossman, Ph.D., one of the study authors, said in a statement.

The study is available online at www.hschange.org/CONTENT/1015

The federal government's relaxation of self-referral and antikickback laws has had a “modest” effect in encouraging hospitals to subsidize physician purchases of electronic medical record systems, according to an analysis by the Center for Studying Health System Change.

Some hospitals are proceeding slowly, offering subsidies for acquisition of electronic medical record (EMR) software to small groups of closely affiliated physicians, while other hospitals are offering physicians only IT support services or extending their vendor discounts, according to the analysis of 24 hospitals. The analysis was funded by the Robert Wood Johnson Foundation.

In 2006, the Health and Human Services Department announced that it had created two safe harbors that would allow hospitals to subsidize up to 85% of the cost of EMR software and IT support services for physicians. For their part, physicians would be responsible for paying the full cost of the hardware required for the EMR system. The regulations are scheduled to sunset at the end of 2013.

The analysis by the Center for Studying Health System Change, which is based on in-depth interviews with executives at 24 hospitals, found that 11 of the 24 hospitals were considering offering some type of subsidy to physicians to help cover their EMR costs. The remaining 13 hospitals were not planning to provide direct subsidies to physicians, but some were considering extending their EMR vendor discounts or offering IT support services.

Hospitals that chose not to offer direct financial support to physicians cited differing reasons for the decision. For example, some hospitals opposed the idea of offering EMR subsidies to physicians.

Other hospitals said that granting access to vendor discounts was a sufficient incentive for physicians preparing to adopt EMRs. And still other hospitals were interested in providing the financial subsidies directly to physicians but couldn't afford to do so.

For those hospital executives who said that they were considering a direct EMR subsidy to physicians, improving patient care and forging closer relationships with referring physicians were the top reasons cited for moving forward with EMR assistance.

“Hospital executives expected physicians would be more likely to maintain, and even expand, their relationship with the hospital because of the improved efficiency from interoperability with the hospital's IT systems,” the researchers wrote.

One factor that appears not to be driving the trend toward hospital subsidies is interest on the part of physicians. The arrangement has some potential drawbacks for physicians, according to the analysis.

For example, under the safe harbor provisions, physicians are still responsible for 15% of the software costs and 100% of the hardware costs associated with setting up the EMR system.

Moreover, physicians using the hospital-sponsored EMR may have difficulty storing records for patients who are treated at other hospitals where the physicians provide care for patients. Also, the hospital-sponsored EMR could serve as a barrier if physicians later wanted to switch their hospital affiliations, according to the analysis.

“While hospitals have strategic incentives to provide support, particularly to tie referring physicians to their institution, the effects of the regulatory changes on physician EMR adoption will ultimately depend both on hospitals' willingness to provide support and physicians' acceptance of hospital assistance,” Joy M. Grossman, Ph.D., one of the study authors, said in a statement.