Health Law

Distressed Hospital Survival Through HIT?

By Helen Oscislawski

[Installment 6 - Governance Considerations from HIT for the Board and Other Hospital Stakeholders]

On August 4, 2009 the Associated Press reported at http://www.usatoday.com/news/health/2009-08-04-electronic-medical-records_N.htm that Sac-Osage Hospital, a 47-bed hospital in rural western Missouri, 'is borrowing nearly $1 million to pitch its paper medical charts and purchase a state-of-the-art electronic health records  [EHR] system. The hospital is hinging its survival on what it hopes will be a $3 million windfall of federal incentives for hospitals that go digital.'

This survival strategy for Sac-Osage Hospital is hazardous because there is an inherent risk in the hoped-for windfall in 2011 under the economic stimulus law. As the AP report goes on to states: 'The risk lies in the federal government's ultimate definition of what constitutes a ‘meaningful use' of electronic records.'

As I reported in my fifth blog post on July 28, 2009, health providers will have to meet minimum prescribed standards (the meaningful use) for their EHRs if they are to benefit in the future from the federal economic stimulus package under the HITECH Act to recoup a portion of the heavy costs that they will incur to implement their EHRs programs. 

The bet that Sac-Osage Hospital says it is making by borrowing to invest in EHRs is the highest - the very survival of the hospital. Its Board and Administration have clearly made the determination that other possible alternatives for capital financing and investment by the hospital will not have the monetary potential return of the HITECH windfall. It is somewhat sobering that Sac-Osage Hospital bases its financial survival plan not on more effective delivery of healthcare or new treatment modalities but on digitalization of its health records. However, a positive by-product of EHRs and the demonstration of 'meaningful use' that will be needed to realize the fruits from HITECH of an investment in EHRs presumably will be fewer medical errors, a more efficient healthcare delivery system and a higher quality of care.

Unfortunately for Sac-Osage Hospital and other health providers seeking to benefit from the HITECH windfall, the landscape for qualification could change markedly over the next two years. As technology evolves, the expectations as to what constitutes meaningfully use may rise. Sac-Osage Hospital and other small rural hospitals will also be competing for a share of HITECH money with larger and more well-financed institutions that are much further advanced with EHRs. 

Other challenges can come not just from the crystallization of 'meaningful use' but also the enactment of the health reform package that is looming ahead. The package itself may directly or indirectly affect how EHRs are to be generated and used, thereby impacting programs for implementing HIT. 

Hopefully, the substantial majority of hospitals are not in a mode that their survival depends on the stimulus money from implementing EHRs. However, the Boards of health care providers cannot afford false starts and mistakes if they are to meet the meaningful use standards of the HITECH Act on a timely basis. These matters must be appropriately analyzed and monitored continuously at a high level in the hospital, with committed Board oversight. 

 [To be continued in Installment 7]

Full post as published by HIPAA Health Law & Technology on August 10, 2009 (boomark / email).