EMR enticements: What will it take?

Physicians have been slow to respond to existing programs offering a bonus for implementing electronic medical records.

By Tyler Chin — Posted Dec. 13, 2004

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After having only two takers in nine months, the 728-doctor Hawaii Independent Physicians Assn. this fall shut down its program to give $3,000 to any member who implemented an electronic medical records system.

In October, WellPoint Health Networks reported that 19,000 out of 25,000 physicians in four states participated in its $42 million initiative to give physicians a personal digital assistant-based e-prescribing system or a desktop-based paperwork reduction system. But only 2,300 selected the PDA-based clinical system.

Since August, the 150-doctor Central Massachusetts Independent Physician Assn. (CMIPA) and Fallon Community Health Plan have offered $5,000 to physicians who buy an EMR. If 10 to 15 doctors step up, the IPA and the plan will be happy.

As these examples show, the use of financial incentives to induce physicians to buy and implement EMRs has not been a smashing success. Many entities believe that physicians will adopt EMRs if the money is right, but the question remains -- how much money will it take? And is money enough to persuade physicians to adopt the technology?

Most current financial incentives for EMR adoption take the form of pay-for-performance programs under which health plans and self-insured employers offer annual bonuses to physicians who meet criteria composed of a combination of clinical, patient satisfaction, administrative efficiency and information technology measures.

There are approximately 80 pay-for-performance programs nationwide, said Beau Carter, senior health policy and strategy consultant at MedVantage Inc., a San Francisco-based consulting firm that focuses on quality bonus initiatives. Their sponsors' hope is that the financial rewards available to physicians will inspire them to buy EMRs, which proponents say make it easier for physicians to compile and present information necessary to receive their bonuses.

What's your price?

Conventional wisdom says physicians are more likely to participate in a pay-for-performance plan, and buy the necessary EMR for it, if the bonus equates to 10% of their annual salary or 10% of the revenue from a health plan, Carter said. But, he added, "nobody really knows."

Not that there aren't people trying to find out. In July, Connecting for Health -- a public-private cooperative including hospitals, health plans, employers and government agencies -- became the first organization to quantify how much insurers must offer to spur widespread adoption of EMRs by small- and medium-sized practices.

To realize that goal, payers must cover most of the initial cost of an EMR by offering $12,000 to $24,000 per full-time physician, according to the cooperative, which is funded by the Markle Foundation, New York, and the Robert Wood Johnson Foundation, Princeton, N.J.

The proposed annual incentive translates roughly into $3 to $6 per patient visit, or 50 cents to $1 per patient per month, said John Glaser, PhD, chief information officer of Partners Healthcare, a health system in Boston and a member of Connecting for Health. But the cooperative's recommendation is intended to serve as a starting point for the industry, Dr. Glaser said, because its estimate is based on two key assumptions.

First, the recommended figure assumes that "if you're really going to use incentives to materially alter physician behavior, you have to put something in the order of 5% to 10% of [a physician's] income on the table," he said.

It also assumes that doctors will be offered an incentive within the group's recommended range that will cover most of their patient panels, he said. At this time, that's not the case. The majority of pay-for-performance plans offer a third of what Connecting for Health recommends, Dr. Glaser added.

Ultimately, "for this to really cause uptake [in physician adoption] you have to have pretty broad payer adoption, so it becomes increasingly important that Medicare does something in this realm," Dr. Glaser said. "If the feds move, then that sends a signal to the market that this is going to be part of mainstream care and the mainstream way."

Medicare plans to test pay-for-performance payments in four states next year, including California. To participate in the pilots, physicians must have an EMR and an Internet connection, said Jack Lewin, MD, executive vice president and chief executive of the California Medical Assn.

The CMA supports the pilot in part because it's targeting the small- and medium-sized practices that are largely excluded from most existing pay-for-performance programs.

"We will support the pilots and encourage our doctors to become engaged, particularly solo doctors, because these pilots are organized around fee-for-service Medicare," Dr. Lewin said. "CMA's concern is that group physicians are getting ready for the digital future, but solo physicians have not been able to afford that and have in many instances been left behind" in pay-for-performance in California.

More than money

Although financial incentives will play a crucial role in determining whether physicians adopt clinical information technology, money alone won't be enough to convince most physicians to implement EMRs, said A. John Blair, MD, CEO of 2,300-doctor Taconic IPA, in Fishkill, N.Y.

To drive physician adoption of EMRs, five key barriers deterring doctors from implementing EMRs must be addressed. One is cost. Another is the EMR's complexity. Another is the difficulty physicians face in choosing a system, what with more than 200 EMRs on the market. The other barriers are a lack of staff to maintain information systems and the fact that systems can't talk to each other.

The IPA is using a go-slow, incremental approach to tackle those barriers by participating in the Taconic Health Information Network and Community. THINC is a community health information network that enables doctors, hospitals and other health care entities in New York's Hudson Valley to exchange patient data with each other.

Since 2003, physicians have used a clinical messaging service that lets them exchange clinical data electronically over the network, including inpatient and outpatient test results and hospital reports with three hospitals and a diagnostic laboratory. To encourage its members to use that service, the IPA pays for the cost of the service and will do the same when THINC rolls out e-prescribing software in 2005, said Dr. Blair, a general surgeon.

Also, several insurers and employers have committed to paying annual bonuses to doctors who prescribe electronically, which will encourage a lot of doctors to adopt e-prescribing, Dr. Blair said.

By rolling out technology incrementally, the IPA hopes that physicians will get comfortable using it, making it easier for them not only to adopt but also to pay a monthly subscription fee for an Internet-based EMR when the latter becomes available through THINC in 2006, he said. At that time, doctors will be able to select from two or three EMR vendors, who will be required to make their systems compatible with each other, Dr. Blair said.

While Dr. Blair believes that the IPA's comprehensive approach will make it easier for it to gain physician buy-in for an EMR, he acknowledges that "that's not to say we will be successful."

Still, the IPA believes it's on the right track based on recent development.

When MVP Health Plan, Schenectady, N.Y., began offering a 40-cent-per-member, per-month bonus to physicians using the clinical messaging service, the number of users jumped from 100 to 150, or 50%, over three months ending last October.

The extra pay was the sole reason for the surge, because other factors that would have caused the increase -- new services or new hospitals joining THINC -- won't happen until January 2005.

Starting slowly

Meanwhile, Worcester, Mass.-based Central Massachusetts IPA is pleased so far with the response to its offer to give $5,000 to doctors who implement an EMR.

Since August, the IPA has given grants to eight physicians, which is within the range of the 10 to 15 physicians it hopes will take the bait, said B. Dale Magee, MD, the IPA's medical director and a gynecologist in Shrewsbury, Mass.

"I don't think we need to get everyone to [an EMR] right now," Dr. Magee said. "What we need are some success stories. We need people to start trying out the EMR, getting comfortable with it, telling their friends about it and allowing others to come to their office and see just what it's like. That's what a lot of the doctors are going to need before they finally make that move."

That's a lesson that Hawaii IPA learned the hard way after its EMR cash grant program flopped with physicians. The IPA was hoping to get 30 takers but got only two over nine months ending in September, leading it to end the program.

Cost was the primary reason the offer failed, said Dan Heslinga, MD, director and chair of the IPA's care improvement program.

The $3,000 the IPA offered represented a third of the $9,000 first-year start-up cost of the EMR it wanted members to buy. But the $500 to $550 monthly fee they would have had to pay for ongoing support and maintenance apparently was even more of a deal breaker for them, said Dr. Heslinga, a family physician at a four-doctor practice in Kaneohe.

"That just seemed to be too much money," he said. "I think what [doctors] probably need to see is not only that initial subsidy but also some sort of ongoing cash flow to try to neutralize [that monthly support fee]. I think that unless they see some sort of counterbalancing cash flow increase, I think they have a hard time justifying making the investment."

So the IPA now is taking a different tack --it's going to implement a disease management registry at no cost to physicians, who will be paid $1 to $2 each time they enter encounter information into the system.

"I think that for a lot of doctors, an EMR is just too big of a bite of the apple at one time," Dr. Heslinga said. "So we're going to give them a smaller bite and try to move them along to a full EMR. It could take a couple of years."

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Let's make a deal

The financial incentives that health plans, employers and IPAs are offering to encourage physicians to adopt information technology come in different forms, including:

  • One-time cash grants
  • Annual bonus payments
  • Higher reimbursement rates or adjustable fee schedules
  • Subsidizing the cost of technology products, or providing them at no cost

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External links

Connecting for Health for the report "Financial, Legal and Organizational Approaches to Achieving Electronic Connectivity in Healthcare," October (link)

Centers for Medicare & Medicaid Services Doctors' Office-Quality-Information Technology project (link)

"The Paperless Medical Office: Digital Technology's Potential for the Internist," American College of Physicians paper, March, in pdf (link)

"Use and Adoption of Computer-based Patient Records," California Healthcare Promotion report, October 2003, in pdf (link)

"Electronic Medical Records: A Buyer's Guide for Small Physician Practices," California Healthcare Promotion report, October 2003, in pdf (link)

"Electronic Medical Records: Lessons from Small Physician Practices," California Healthcare Promotion report, October 2003, in pdf (link)

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