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Electronic Health Records: Why can’t they save money?

In a recent blog entry, influential Harvard physician and professor, Ashish Jha, discusses whether the right questions are being asked about Electronic Health Records (EHRs). Faced with the developing reality that EHR’s do not seem to be producing any notable savings to health care providers and purchasers, Dr. Jha suggests that EHRs have been overhyped from the start and that the focus has been on making these systems into tools that help providers get money from payers sooner. Not that Dr. Jha wants to stop the progress, he just wants to eliminate the expectation of a financial return for the investment.

Dr. Jha also suggests that EHR financial returns don’t look positive since healthcare payment incentives are wrong. He insists that if a provider becomes more efficient that they “will likely lose revenue to insurance companies or to government payers.”  He notes that EHR’s that support an electronic messaging system from patients to doctors at Kaiser led to ambulatory care visits dropping by 20% and that revenue dropped as well. This is not an attractive proposal for providers.

Where, Dr. Jha drops the conversation, however, is a consideration of these facts in light of Affordable Care Organizations (ACOs) and bundled payments that are taking an increasing role in payment to Harvard hospitals and other Massachusetts providers. Providers on an ACO model reap savings and bonus payments from their insurers for reducing services. And even if this may ratchet down the reimbursement rates in the next contract year, it will also mean that the provider may qualify for a higher spot on the tiered network products being successfully promoted by health insurers to corporate health insurance buyers.

Another view proposed by Jha is that providers are not making enough effort to use these systems to improve quality and the patient experience. Interestingly, in a very open battle for patients in Massachusetts, providers should have plenty of financial incentive to improve the customer experience. What patient would not applaud the need to no longer carry along a list of medications or medical history in their purse (as my mother used to do) in order to get through reception and into the doctor’s office? Further, the provider who offers that enhanced customer experience can use it in an active marketing campaign to attract and retain patients. Wouldn’t it be nice to see providers competing on the basis of service quality?  Of course, it would.

So, perhaps EHRs are just not being used to their fullest by providers.  Let’s hope for much more innovation before writing off possible economic gains for providers.

About the Author

Phil Edmundson is the Chairman and CEO of William Gallagher Associates (WGA), insurance brokers and consultants for businesses with over 30 years in the insurance industry. He manages strategy, talent acquisition and development, and management / acquisitions at WGA.

617.646.0229    PEdmundson@wgains.com   Connect with Phil on LinkedIn   

Follow Phil on Twitter @PhilEdmundson


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