Economic downturn adds new uncertainties to IT planning

The U.S. recession is making for an immediately murky future for the adoption of health information technology.

Experts say if you have the money, now is an especially good time to implement IT because of the efficiencies you will gain that will pay off once the economy turns around. However, they acknowledge that physicians aren't flush with cash for IT, and that hospital partners and some vendors are struggling as well.

Hospitals in good financial standing are planning to move ahead with health IT plans, despite their inability to get credit, by scaling down projects or postponing them. But for underfunded hospitals and small physician practices that have no places to cut or extra capital, the future of HIT adoption is less clear.

The American Hospital Assn. released its "Report on the Economic Crisis: Initial Impact on Hospitals" in November 2008. It found 39% of hospitals were reconsidering or postponing planned health IT projects. A separate survey by the National Alliance for Health Information Technology, the College of Healthcare Information Management Executives and AHA Solutions found that 94% of hospitals have cut IT budgets by extending implementation time or reducing the scale of new projects.

Jane Horowitz, NAHIT's chief operating officer, said the findings were encouraging because they showed hospitals are proceeding cautiously, as opposed to walking away from entire projects. Horowitz said that not only are they not abandoning the projects, but in many cases they are prioritizing them. "When they are being asked to be more efficient, HIT is the way to go," she said.

Dan McMurray is managing director of Focus Management Group, a national consultancy group based in Tampa, Fla., that works with hospitals and practices facing financial crises. He said the highest-performing hospitals that have well thought-out business plans could not only make it through the financial crisis unscathed but could become stronger. But the bad news, McMurray said, is that such hospitals make up a small percentage of the total. "Sixty percent to 80% of hospitals are in trouble. Many are in deep trouble."

The economy will force underperforming hospital programs to shut down, providing money for other areas. It could also help eliminate some of the competition or present opportunities for mergers and acquisitions.

The hospitals' troubles may be trickling down to physicians.

"We have a liquidity crisis not just on an economy basis but on an individual facility or practice basis," said Bobby Guy, an attorney with the Nashville, Tenn., law firm of Waller Lansden Dortch & Davis. "I'm not sure what the result will be on that. But it will be harder to get money from physicians on this. Physicians aren't feeling flush."

Guy said since Stark law exceptions and anti-kickback safe harbors went into effect in 2007, practices have been looking to hospitals to help with IT purchases, but "hospitals won't have the money to help anymore."

Horowitz said the recent survey did not cover the question of hospitals helping physician practices, but it's one she hopes future surveys will address.

McMurray said it's possible high-performing hospitals will still be able to make a business case for helping physicians out with health IT purchases. But Robert James Cimasi, president of St. Louis-based Health Capital Consultants, said despite the financial crunch, physicians are still skeptical of accepting help from hospitals.

There are unanswered questions about implications of donated health IT on practices, he said. Many physicians are concerned with ownership of data among other things, he said.

Robert Tennant, senior policy adviser for health IT for the Medical Group Management Assn., said practices must also be aware that the financial crunch is affecting their vendors, as well. Tennant is particularly concerned that some practices might get in trouble by opting out of an electronic medical record system to adopt a much cheaper e-prescribing system.

He said while e-prescribing is a smart first step into full EMR adoption, the final requirements for stand-alone e-prescribing systems have not been released.

In order to be eligible for Medicare e-prescribing bonuses that started Jan. 1, use of a system certified by the Certification Commission for Health Information Technology is required. But Tennant said vendors may not have money to invest to make their systems CCHIT-compliant.

He advised practices to negotiate that the vendor will pursue CCHIT certification. When the rules come out if updates are needed, the vendor will provide them at no cost.

"If they say they have no plans to be CCHIT certified, then you probably don't want to go with them," Tennant said. "Any bonuses down the road will be contingent on that certification."