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December 2009/January 2010 – Web Exclusive

Health Care: On the Record

“It’s kind of like the beginning of the space age. Houston got Mission Control and NASA and became the center of the space program. We have a similar opportunity now to do that in HIT.”

– Dr. Joseph H. Schneider

Can Texas take the lead in electronic medical records?

by Mark Wangrin

Dr. Joseph H. Schneider
Texas Medical Association ad hoc Committee on Health Information Technology

Medical records have become a big business – and a multi-billion-dollar political issue.

The recent federal stimulus act set aside up to $19 billion to encourage health care professionals to adopt electronic record-keeping. Texas physicians and hospitals are scrambling to get their share.

It’s a race Texas isn’t winning – or losing. Not yet.

According to Dr. Joseph H. Schneider, chairman of the Texas Medical Association’s (TMA) ad hoc Committee on Health Information Technology, Texas could become a national leader in health information technology (HIT). The stimulus incentives, coupled with new state initiatives and Texas’ large number of medical technology firms, make the state fertile ground for growth.

“If Texas is bold and smart, we have a chance to take the leadership,” he says. “It will take time, money, people and organization. But if we sit back, we will be at the mercy of what others decide.

“We are at a critical time,” says Schneider, who also serves as president and chief medical information officer for the Baylor Health Care System. “It’s kind of like the beginning of the space age. Houston got Mission Control and NASA and became the center of the space program. We have a similar opportunity now to do that in HIT.”

Your Health, Digitized

Health information technology (HIT) is an umbrella term for an alphabet soup of electronic record-keeping systems, ranging from accounting to prescription drug tracking to employment and personal medical history. The systems directly affected by the stimulus incentives are electronic medical record (EMR) and electronic health record (EHR) programs.

According to the National Alliance for Health Information Technology, EMRs are electronic systems that collect and manage patient information for use by doctors and other medical staff within a single office or organization. EHRs, by contrast, are aggregated electronic records of health-related information that can be collected and used across multiple organizations. Thus EHRs can tap into multiple medical records to build a more comprehensive view of a patient’s medical history.

Proponents of both cite a variety of benefits from a nationwide EHR system, including significant cost-cutting and time-saving as well as improved data collection, better patient outcomes and the avoidance of medical errors such as harmful drug interactions.

How Texas Compares

No reliable statistics compare Texas with the nation on adoption rates for EMR/EHR systems. What data are available, however, indicate the state is lagging but open for wider adoption.

An assessment of health information technology readiness as of December 2008 by BioCrossroads, an initiative promoting the life sciences in Indiana, divided the states into four categories of HIT adoption – formational, foundational, implementation and operational. Texas fell into the foundational category; 19 states were rated in the two groups ahead of Texas, “implementation” and “operational.”

“Texas is probably no worse than average,” says Cathy Huddle, vice president for market development for San Antonio-based Sevocity, a medical records technology firm. “One of the things we have not seen in Texas but have seen in other states is a statewide initiative.”

Indiana, one of five states deemed “operational,” began a push toward electronic record-keeping in the 1990s, forming a coalition of government and physician groups to coordinate its implementation.

“It’s a market-by-market battle,” says Dr. Marc Overhage, president and CEO of the Indiana Health Information Exchange. “It’s not just something you plunk down in the state. It’s about building trust, building relationships and overcoming those thousands of little details that can become barriers.”

A November 2007 Texas Medical Association survey indicated that 33 percent of the state’s physicians use EMR – though Schneider says the number of doctors truly using a “fully functional” EMR system is probably in single-digits – and 25 percent said they had no plans for implementing one. Almost two-thirds of the latter said that, without financial assistance, the cost would be prohibitive.

Record Incentives

The American Recovery and Reinvestment Act provides incentives through the federal Medicaid and Medicare programs for physicians who adopt electronic record-keeping systems.

Medicare incentives can total up to $44,000, depending upon the year in which the practice adopts the new technology.

Incentive by Year
201120122013 2014 20152016 TOTAL

Medicare incentives can total up to $63,750 for eligible physicians, including an initial payment of $21,250 for adopting health information technology and annual payments of $8,500 for making “meaningful use” of the system.

Payment Schedule (maximums):
Year 1Year 2Year 3 Year 4 Year 5Year 6
HIT Adoption$21,25000000
“Meaningful Use”0$8,500$8,500$8,500$8,500$8,500

Source: Texas Medical Association

Carrots and Sticks

Enter the American Recovery and Reinvestment Act (ARRA). To encourage the wider adoption of HIT as part of a broader health reform agenda, ARRA sets aside $19 billion to provide incentives for the adoption of electronic systems – and, later, will impose fines on those who fail to do so.

The federal stimulus program for health information technology would begin incentive payments in 2011 of up to $44,000 over six years from Medicare funds, or $67,350 from Medicaid, to physicians who make “meaningful use” of EMRs. The Medicare incentives are available to small practices, while the Medicaid perks are targeted for physicians who serve substantial numbers of Medicaid patients.

Penalties of up to 5 percent of Medicare reimbursements would be levied on physicians who don’t make “meaningful use,” beginning in 2015. At this writing, federal officials had postponed defining meaningful use until April 2010.

The federal incentives underline the fact that money is the biggest hurdle to the widespread adoption of HIT. The state has a higher share of single-physician practices (43 percent) than the national average (34 percent), according to TMA’s survey. Due to their cost, single-doctor and small group practices face the most formidable obstacles in implementing electronic record systems.

And these practices often serve a relatively small percentage of Medicare patients, which means that neither the incentives nor the penalties in ARRA will mean much to them.

“Many physicians will not see the benefit, either because they see a limited number of Medicare/Medicaid patients, or because it just is not [financially] feasible,” Schneider says. “It would be very beneficial if private commercial payers were to step up and provide adoption incentives that closely align with the federal incentives.”

Even physicians who are positioned to benefit from the ARRA incentives may not receive enough help from them to cover the costs of an electronic record system.

“Some studies indicate that even if a physician is eligible for the maximum amount of $44,000 through Medicare, there is still a $22,000 shortfall over five years,” Schneider says. “And the annual licensing fees can be about 20 percent [of the purchase price], so there are ongoing costs that continue long after the incentives are over.”

To further assist Texas doctors with the move to HIT systems, the TMA is collaborating with state university systems and the Dallas-Fort Worth Hospital Council to establish a series of HIT Regional Extension Centers that will primarily aid small or single-physician practices in establishing and running EMR systems. Funding is expected to come through in early 2010 and the centers should be up and running by summer, Schneider says.

Made in Texas

Texas’ formidable technology sector is poised to make a run at current software leaders New York and California. Texas is home to three of the 67 software manufacturers producing EMR software for small practices that have been certified by the Certification Commission for Health Information Technology in 2008, putting the state in an eight-way tie for fifth behind California (11), New York (nine), Georgia (five) and New Jersey (four).

Austin-based medical information systems analyst Vinson Hudson has prepared a top 10 list of EMR/EHR systems vendors. No Texas firms made the list, but Hudson says several are poised to make the jump, including e-MD of Austin, Aprima of Carrollton and Dell.

Round Rock-based Dell in particular made waves in the field in November, when it acquired healthcare technology giant Perot Systems for $3.9 billion.
 “It feels like the dam is about to burst,” says Huddle. Huddle estimates the state stands to gain at least 900 new jobs from the federal push for EMR/EHR. FN

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