Vendor as lender (HIMSS meeting)
■ Worried about the cost of health information technology? Some companies are offering their own financing, including payment plans, and stimulus money could help you make your payments.
By Pamela Lewis Dolan — Posted May 18, 2009
Upfront costs have long been a major barrier to health IT adoption. So some technology vendors are prepared to offer credit.
Vendors who already have a financing mechanism for larger clients buying multimillion-dollar systems are now extending their credit lines to small practices that spend an average of about $30,000. Other vendors are partnering with finance companies to offer deferred payments.
The vendors figure that with physicians able to get money from the federal government for investing in technology, doctors will be able to pay the loans back.
"There's a good comfort level that this stimulus money is, in fact, going to flow and will actually be provided as incentives to physicians and hospitals," said Vishal Wanchoo, president and CEO of GE Healthcare Information Technology.
Buy now, pay later
The stimulus package, which will provide $17 billion in incentives for health IT adoption, passed just weeks before physician and health IT leaders convened in Chicago April 4-8 for the annual meeting of the Healthcare Information Management Systems Society. The news created buzz around the conference site.
While physicians listened in on several sessions geared toward what the stimulus package incentives mean to them -- about $44,000 per physician paid out over four years -- several shared this conclusion:
"When you're working day to day ... it's hard to think of incentives two to three years out," said Timothy Zoph, vice president and chief information officer of Northwestern Memorial Hospital in Chicago, which is helping some of its affiliated physicians adopt electronic medical record systems.
Until now, the financial return on investment for an EMR has been questionable at best. Physicians were unwilling to take on loans they weren't certain they could repay.
And now, even though the incentive plan offers the hope of a financial return, traditional loans are harder to come by thanks to an overall credit squeeze.
But physicians can't put off the investment until the economy turns around.
Because qualifying for the incentives requires "meaningful use" of the systems, most experts presenting at April's conference agreed that to meet those requirements by 2011, when the incentives are scheduled to kick in, adoption needs to happen much earlier.
"What we expect is there will be financial mechanisms through which the vendors will mimic what the physicians will be getting through the incentive program, and we expect that to develop very rapidly," said David Classen, MD, chief medical officer for Falls Church, Va.-based technology services company CSC.
Larger companies were quick to offer financing plans, which leads many to believe smaller vendors will soon follow suit to stay competitive.
What many, including GE, are offering, through their own financing departments, are delayed payment plans that will require no money for the first few months then monthly payments, in the range of a few hundred dollars per physician per month, rising incrementally over two to three years.
Like most traditional loans, interest rates would apply, and many are set according to the practice's credit history.
Lynne Durham, manager of marketing and communications for Sage Software, said her company has offered financing options through a partnering finance company for some time but now makes it part of the pitch to potential clients as a result of the stimulus package. And practices are responding, she said.
"From a marketing perspective, our in-bound leads have jumped tremendously. We are setting records for the number of calls we are getting specifically inquiring about our electronic health records," Durham said.
Wanchoo said GE had monitored the stimulus legislation closely and knew physicians and hospitals would have two main concerns: when the payments were coming and how "meaningful use" would be defined.
The definition of the term, which will help determine the amount of reimbursement, is expected to come out later this year and change over time.
Vendors are being called on to ensure that their products meet and keep up with the changing criteria.
Physicians need to stipulate in their contracts that vendors must make the necessary updates to their products to keep them compliant.
Zoph said two-way conversations between practices and vendors need to take place when physicians are shopping for systems.
"You must be positioned in your implementation plan and your investment and strategy for your organization to say, 'Let's not go down this path unless we are confident we can demonstrate meaningful use,' " Zoph said, speaking as part of a media panel that was held during the HIMSS conference.
Vendors say they are acutely aware of physicians' concerns over meaningful use and are doing everything they can in their contracts to make potential clients feel more at ease.
Wanchoo said GE has been creating systems with functionalities they know will be a part of meaningful use, such as quality reporting mechanisms.
Durham said financing and meaningful use are both key points Sage has bundled in its post-stimulus pitch to physicians, even to those that already have adopted health IT but still could qualify for the incentives.
"We have customers who say they don't know anything about any incentives even though we have been doing active outreach on this topic," Durham said.