Insurer finds EMRs won't pay off for its doctors

The Massachusetts Blues believes that the return on physicians' investment doesn't warrant buying the technology as part of its bonus programs.

By Pamela Lewis Dolan — Posted March 10, 2008

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One health plan has come to a conclusion that many physicians already have reached: The financial benefits of office-based electronic medical records systems are not worth the cost to doctors.

Relying on information from past studies, including an American Medical Association estimate that doctors see only 11 cents of every dollar saved through the use of information technology, BlueCross BlueShield of Massachusetts recently announced that it has decided not to require physicians to install an EMR to participate in its bonus program.

But the Massachusetts Blues did find value in information technology that physicians would need to use. Its own cost-benefit analysis concluded that computerized physician order entry makes financial sense in the hospital setting, and it said in February that it would require health systems to install CPOE by 2012 to participate in the bonus program.

Analysts say the Massachusetts Blues' decision won't make technology advocates change their tune on the benefits of EMRs. But they say it strengthens the case for outside funding for physician EMRs.

"One of the things we researched and were concerned about [was] making sure [hospitals] had the money to invest. Were there any hospitals that would have problems coming up with capital?" asked Robert Mandel, MD, vice president of health services for the Massachusetts Blues.

"For physicians I think it is more complicated, and [EMRs] are more expensive. The return on investment doesn't materialize for practices like it does for hospitals."

The insurer made its announcement about the CPOE requirements on the heels of a study conducted by the Massachusetts Technology Collaborative and the New England Healthcare Institute. The study found that CPOEs could help prevent 55,000 medication errors in the state of Massachusetts and provide an annual cost savings of $170 million statewide, or $2.7 million per hospital.

With an estimated cost of $2.1 million to implement a CPOE system and an annual price of $435,000 to maintain it, the study concluded that a CPOE system could provide full payback to the average hospital in about 26 months, mostly through reducing hospitalizations caused by errors.

The Massachusetts study did not look at physician practices. But the Blues estimated that it would take five to six years for an EMR to recoup its cost in an office-based practice.

The insurer is not suggesting that EMRs are not worthwhile, Dr. Mandel said. It just realizes that it would be unrealistic to expect physicians to make an investment few could afford.

Geoffrey Baker, CEO of Med-Vantage, a health care informatics company that, along with the Leapfrog Group, has conducted annual surveys of pay-for-performance programs since 2003, said physicians recognize the benefits of EMRs but simply can't afford to embrace them. "To expect physicians to pay for this is not a realistic proposition," he said.

AMA Board of Trustees Chair-elect Joseph M. Heyman, MD, an ob-gyn from Amesbury, Mass., agrees that the return on investment is low for physicians. AMA policy supports EMRs but does not support requiring physicians to purchase them.

Dr. Heyman said EMRs have quality and safety benefits, which is why more money is needed to help physicians make the investment.

"The AMA remains optimistic about the promise EMR systems and other HIT hold for improving patient care, and we encourage government and insurers to offer financial assistance to physicians for the purchase of HIT so more physicians are able to embrace this technology," said Dr. Heyman, who has an office EMR.

Steve Arendt, MD, former chair of the AMA's e-Health Advisory Committee, said he doesn't expect the plan's announcement to discourage doctors from trying to implement the technology. But it fuels the case for outside sources of funding, said Dr. Arendt, vice president of the physician executive group for the technology company McKesson.

While few insurers have stepped up to the plate with money for fear their investments might benefit competitors, the Massachusetts Blues has stepped up to some extent, Baker said.

It contributed $5 million toward the Massachusetts e-Health Collaborative, which fully wired physicians across three regions with EMRs and developed a health information exchange. The collaborative is studying the impact of such a system. (See correction)

Dr. Mandel said that if the state passes pending legislation that would provide $750 million in grants to physicians to adopt EMRs, the Blues might change its mind about requiring physicians to adopt the technology. It currently has P4P plans that reward doctors for using EMRs.

Dale Magee, MD, president of the Massachusetts Medical Society and an ob-gyn from Shrewsbury, Mass., and an EMR user, offers a warning. Just as practices can't assume that the benefits touted by proponents will occur right out of the box, neither health systems nor insurers should expect that to happen in hospitals, either, he said.

For example, researchers who conducted the CPOE study told Dr. Magee that medication alerts were overridden 80% to 90% of the time on hospital systems. While the warnings can carry value, he personally has seen a pattern of the systems "crying wolf" and actually slowing down physicians who constantly have to override warnings that don't apply.

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Less reliance on EMRs for P4P

A recent study asked health plans what categories they used to calculate pay-for-performance rates. The one-year trend showed fewer plans including technology use in calculations, though the report didn't say why.

Performance domain measured 2005 2006
Clinical quality 51.6% 58.4%
Patient safety or medical error reduction 15.0% 10.4%
Efficiency or cost of care 34.8% 22.8%
Patient satisfaction or experience of care 22.1% 13.1%
Clinical health information technology adoption 21.5% 14.8%
Administrative capability, such as electronic claims submission 15.4% 8.3%
Member access, such as open panel or evening hours N/A 4.7%

Note: plans use multiple performance domains, so totals add up to more than 100%.

Source: "Pay for Performance: National Perspective, 2006 Longitudinal Survey Results with 2007 Market Update," Med-Vantage and the Leapfrog Group, December 2007

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This story incorrectly stated the amount BlueCross BlueShield of Massachusetts contributed to the Massachusetts eHealth Collaborative. The insurer contributed $50 million. American Medical News regrets the error.

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