But physicians were so slow to spend money for clinical computing that the Centers for Medicare and Medicaid Services and the HHS Office of the Inspector General-the agencies that created rules to implement the two pieces of legislation-made exceptions to allow hospitals to underwrite most of the expense.
The 2006 changes-collectively known as the Stark Relaxation-allow hospitals and health systems to give physicians a significant subsidy-up to 85 percent of total ownership costs, excluding hardware-to buy electronic health record systems. The idea was to speed the adoption of EHRs among physicians who were reluctant to spend all that money on their own. Estimates vary on how much physicians typically shell out for EHRs, but most put the number around $50,000 upfront per physician, plus ongoing maintenance, and not including lost productivity during the transition from paper to electronic processes.
The nerve-wracking part? The special deal is scheduled to end on Dec. 31, 2013, at which point subsidizing physician EHRs will once again become illegal. Seven years should have been plenty of time to wire up a lot of docs, but factor in a plunging economy, the federal stimulus program for EHRs that's currently laced with uncertainty, and health care reform, all of which have slowed down an adoption process that's been slow at the best of times.
Hospitals haven't exactly stampeded to take advantage of the Relaxation, according to a survey from HIMSS Analytics. Out of 1,050 hospital respondents, only about 14 percent are offering EHRs to their affiliated physicians, and about 5,400 practices have taken up the offer. Integrated delivery systems are much more eager: one in four are offering a Stark Relaxation deal, compared with about one in eight single-hospital systems.
Of the ones who aren't yet offering an EHR under the relaxed regulations, about 14 percent plan to. Among integrated delivery systems, 24 percent have such plans, but among single-hospital systems only 12 percent.
"There has been a noticeable lack of interest," says Hank Duffy, principal at JHD Consulting, New York, which provides consulting and practice management services for physicians. "We started to see more in the fall of 2009, because with the stimulus funding, doctors were starting to yell, 'Hey! Help us with this!' Since then we've seen hospital-sponsored programs that are all over the map. Some provide the service at little cost initially, and others are making sure they are covering all of the direct costs." Duffy expects the offering of Relaxation subsidies to peak in 2012, though he thinks the exceptions may be extended at least long enough to sync up with HITECH incentives that expire in 2015.
But if they aren't? Hospitals providing those subsidies have to plan for the end.
Frontloading
Atlantic Health, Morristown, N.J., is subsidizing the EHR acquisition costs-software license, implementation and training-at 85 percent for primary care doctors only, for systems from either Chicago-based Allscripts or McKesson Corp., San Francisco, and possibly from a third vendor if there's enough demand.
"Some hospitals are doing annual maintenance for three years or five years, but we would rather use our resources to get systems to as many docs as possible, " says CIO Linda Reed.
Three practices are up now, with another 10 to 15 in the pipeline-still a small fraction of the 1,000 physicians that Reed estimates are eligible. "They keep hearing there are a lot of issues and they don't want to inject that chaos into their practices, " she says.
The physicians have agreements directly with the vendors. "I can't get resources or staff to manage physician office systems," Reed says. "It's cleaner to let the vendor take on the care and feeding."
Because Atlantic Health's participation stops after the systems are installed, Reed has few worries about running up against the end of the Relaxation, and she says the arrangement is better for physician relations in the long run.
"There's a tighter alignment if you're hosting and have a help desk, and if you're going to offer all those services, what happens if you don't do a good job?" she says. "Physicians hate you for closing the cafeteria 25 years ago. If you have downtime or-heaven forbid-lose data, they'll hate you a lot."
Fingers crossed
North Shore-Long Island Jewish Health System, Great Neck, N.Y., started offering EHRs from Allscripts to all 7,000 of its affiliated physicians at the beginning of this year. North Shore will cover 50 percent of the cost for an EHR that exchanges basic information with the 13-hospital system's inpatient EHR (from Atlanta-based Eclipsys Corp.), and the 85 percent maximum if physicians agree to tighter clinical integration, including reporting performance data and helping to develop practice protocols.
About 200 physicians have signed up so far and there are another 200 in the pipeline, says CIO John Bosco. The system has put an end date of Dec. 31, 2011, for new sign-ups for the time being, though the deadline may be extended, he adds.
The agreements are between the physicians and Allscripts, rather than going through the health system or the individual hospitals; North Shore's main role is to pay the subsidy.
The financial equation for physicians could change dramatically if the Relaxation isn't extended, Bosco says. "We designed the subsidy to be 85 percent of the down payment plus 85 percent of the five-year cost of ownership," he says.
But that five-year period ends in 2015, even for the earliest adopters-two years after the relaxed rules are set to expire. "It's a concern for the docs," Bosco says. "It's the difference between $500 per month per doc and $75. This is the best offer they're going to get, and even if they only get three years of subsidy, they're still making out pretty well. But we're keeping our fingers crossed that the Relaxation is kept in place."
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