Physician networks offer incentives to spur EMR use

Two physician organizations in Michigan and California announced in February that they are offering financial subsidies, discounted software or both to encourage members to adopt electronic medical records.

United Physicians, a Bingham Farms, Mich., physician organization representing about 1,500 doctors, is giving about $1 million over three years to the first 150 doctors who participate in its offer. To receive the subsidy, physicians must buy an EMR from Misys Healthcare Solutions, which has agreed to sell its software at a discount, said Steven D. Grant, MD, an internist who serves as the organization's president.

In California, Hill Physicians Medical Group, an independent practice association, has brokered a deal under which its 2,600 members can buy an EMR from NextGen Healthcare Information Systems Inc. at a substantial discount.

The initiatives are among efforts by health care organizations and other entities to make the technology more affordable to physicians, hoping that subsidies, discounts and other incentives will prompt doctors to buy EMRs sooner rather than later.

Over the past year, for example, a number of insurance companies and employers launched pay-for-performance plans offering bonuses to doctors who meet certain quality criteria, hoping that the need to easily collect the data the insurers want will spur physicians to invest in information technology.

A desire to prepare themselves for pay-for-performance programs and gain a competitive advantage drove both Hill Physicians' and United Physicians' technology initiatives.

"Doctors may be tiered on cost and quality, and whether they are going to be able to participate in certain plans may depend on whether they have an EMR in their office and can share information," Dr. Grant said. "This is a major issue that is certainly looming on the horizon and we don't want our physicians to be the last ones on the block to be able to get this."

Hill Physicians already participates in a pay-for-performance program and "for us to continue to compete successfully for that money we need to continue to improve the information technology capabilities in the physician practice," said Chief Information Officer Craig Lanway. As part of its initiative, the IPA is investing millions of dollars to provide training, implementation and support and maintenance services to physicians.

Another reason the IPA launched its EMR initiative, which like United Physicians is voluntary for physicians, is that competitors Kaiser Permanente and Sutter Health are spending $3 billion and $154 million respectively to implement EMRs. "In California, it's become a competitive issue," Lanway said, explaining that Hill Physicians is competing against those and other large organizations not only for physicians but also patients.

The California Medical Assn. and the Michigan State Medical Society did not comment specifically on the two organizations' programs, but in general they, as well as the AMA, support third-party efforts to make EMRs affordable for physicians as long as physician participation is voluntary.

Start of a trend?

Other IPAs are discussing subsidizing EMRs for their physicians, though it's unclear how serious their intentions are, according to some industry observers.

"I've certainly heard talk about it, but I don't how prevalent it is," said Margret Amatayakul, president of Margret\A Consulting LLC, a health care technology consulting firm in Schaumburg, Ill. "It just seems there's a lot of talk and no money."

Lack of money is probably the reason for the lack of follow through, with only financially strong or far-thinking IPAs likely to take steps to help their physicians move to EMRs.

"IPAs in general don't always do well financially," said Richard Angeloni, a spokesman for Brown & Toland Medical Group, a San Francisco IPA that has arranged for its 1,500 members to buy an EMR and practice-management software at discounted prices. "We're one of the more successful and financially stable IPAs in California so we're able to do this."

Brown & Toland estimates it will invest $12 million over 10 years for its technology initiative.

Sonnenschein Nath & Rosenthal LLP has several hospital clients interested in helping referring physicians acquire EMRs, but has cautioned against it, "lest they find themselves in violation of the Stark and anti-kickback acts," said Bruce Fried, a health care attorney at the firm's Washington, D.C., office.

Aware of that problem, David Brailer, MD, appointed in 2004 by President Bush as the country's first national coordinator for health information technology, is lobbying to create a Stark exception or safe harbor to enable hospitals to fund EMRs for referring physicians.

But as much as Dr. Brailer wants to revise Stark, only the Dept. of Health and Humans Services Secretary and Office of the Inspector General have the authority to authorize an exception or safe harbor, Fried said.

Whether a safe harbor allowing hospitals to help buy or finance EMRs for referring physicians would be a step in the right direction would really depend on what it said, Fried said. Not only that, but the feds also would have to fix anti-kickback laws. "It's a good thing if you can fix the Stark rule but without addressing the anti-kickback act you really haven't solved the problem."

Still, even if Stark alone is revised, physicians shouldn't expect hospitals to fall all over themselves offering them an EMR, Amatayakul said. "There are certainly hospitals that will probably take significant steps toward that if we see Stark relief, but I also think that there are many hospitals that can't even afford to buy their own system, let alone to supply all their doctors," she said.