To anyone with basic training in economics, MU designated a very important concept long before “meaningful use” co-opted the abbreviation under HITECH. The original MU, marginal utility, is part of the foundation of microeconomic theory—marginal analysis. It ought to be a key consideration in every provider’s approach to deciding if meaningful user designation under the federal incentive program is worth the time and money. (Don’t forget that providers must make the investment before pursuing incentive payments. HITECH does not provide up-front seed money.)
Marginal analysis embodies two steps for answering such questions. First, it looks solely at the relationship between additional expenditures and additional utility (i.e., value in use at the margin) of a possible activity. If the marginal utility exceeds the marginal cost, the analysis proceeds to the second step. The second, essential step in marginal analysis is comparing any investment with a positive marginal utility to other ways that the same resources might be spent.
A new activity with marginal value greater than marginal costs is not economically justified until additional analysis shows that its returns are greater than the returns from other ways that the same limited resources could be expended. In other words, positive MU is not a solely sufficient reason for making an investment when resources are scarce—clearly the situation facing all providers in today’s unforgiving economy. Marginal analysis ultimately supports the investment with the highest MU when investment capital is limited. (If your organization has unlimited funds, you can ignore the point of this blog post.)
As a medical economist focused on information technology for more than a decade, I do not believe that providers should automatically seek MU designation just because the value of the incentives is expected to exceed the costs of making the necessary investments in HIT. The key decision factor is the potential returns of other ways the same money could be spent. All other things being equal, providers will discover that investments in HIT can reasonably be expected to yield the best returns to the bottom line. Digital transformation of health care is a precondition to better, less-expensive health care for all Americans.
Becoming a government-qualified meaningful user will make the most economic sense for some providers, but none should blindly assume that HITECH is the only option. The rational approach is comparing all feasible HIT investments that will improve efficiency and effectiveness, and then choosing the best one. Given the narrow focus and uncertainty of “meaningful use” as being defined under the HITECH Act, I think that comprehensive marginal analysis will cause many providers to decide that the best returns are likely to come from HIT investments not eligible for the federal incentives. What do you think?
1 comments:
Dr Bauer:
Were this only about the EHR incentives, then your point would be the end of the matter. However, the real incentive is not the positive incentive payments that a provider may receive by adopting qualified EHR solutions in the next few years. The incentive is not being caught by the penalties, which kick in beginning in 2015.
For a physician with a very minimal amount of Medicare volume, the economic analysis may indicate that other investments deliver higher quality returns.
For most hospitals, the question should be looked at in terms of whether the EHR adoption incentives available prior to 2015 provide a clear benefit to accelerating the adoption of the EHR in a manner that complies with the requirements of meaningful use. Economically, for most hospitals, the penalties are so severe that failure to get there by 2015 makes this a mandate -- irrespective of any value derived.
For a 60 year old physician with a modicum of Medicare patient volume, the economically rational choice may be retire from medicine (or simply refuse to see any more Medicare patients -- leaving a practice unencumbered by penalties).
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