The final rule on meaningful use of electronic medical records (EMR) is presumably going to be published soon. Under the law, financial incentives for qualifying investments in EMR begin in 2011 but turn into penalties in 2015. Pessimistic commentators fear that the final rule will require providers to do more than they are willing or able to do in the four years before the “carrot” turns into a “stick.” On the other hand, optimists argue that the size of the incentive payments will be enough to overcome providers’ resistance to EMR adoption.
As a medical economist, I’m skeptical of the optimists’ argument. I think it overlooks financial realities, beginning with the fact that incentives will only be paid to providers that have already invested in EMR. The law does not give seed money in advance, only payment for money already spent on certified systems that are meaningfully used. The current reimbursement outlook—a 21% reduction in Medicare fees for physicians and a half-trillion dollar reduction in future federal payments to hospitals—works against providers being able to borrow money to buy EMRs that might qualify for incentives.
Even more to the economic point, reimbursement for “meaningful use” under HITECH will only be a meaningful incentive if it is greater than the marginal cost of making the investment. I haven’t seen any financial analyses to convince me that authorized incentives are enough to swing the balance sheet in favor of making the investment, especially because providers do not generally have spare cash to pay the difference between the costs of an EMR and the amount of incentives. When training and compliance costs are added to the equation, purchasing an EMR just to get the incentive “does not compute” for a lot of providers.
My skepticism about the questionable value of HITECH incentives must not be interpreted as negativism toward EMR. I have argued for years that digital transformation is absolutely necessary for health reform. I cannot imagine a really good health system without electronic records. However, I fear that HITECH is delaying progress. It has put EMR implementation on hold while providers wait to see how to get federal incentives (money many will not want when they see the strings attached).
The good news is that EMRs are already a hallmark of our country’s exemplary health systems. The best providers invested in electronic records to excel in clinical care, not to qualify for reimbursement incentives. They made dramatic changes in their business models, too. I hope short-term focus on HITECH incentives will not divert attention from the fundamental lessons of leading providers’ accomplishments. Success requires a lot more than an EMR. What do you think?
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