Meaningful use Stage 3 is where all the pieces of the HITECH Act come together for physicians, hospitals and the electronic health records (EHR) vendors who serve them. With the proliferation of EHR startups since the announcement of HITECH Act incentives, physicians and hospitals need to figure out, quickly, how to pick winners that will stay solvent -- or risk the precarious financial position of not only having to purchase a new system but also failing meaningful use attestation and forfeiting federal incentive checks.
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Various studies indicate the cost of implementing an EHR in a physician practice can top $160,000, while system maintenance eats up an additional $85,000 in just the first year. In California, more doctors are using EHRs and specific types of IT for clinical work, but smaller practices are less likely to be implementing technology, according to the California HealthCare Foundation. Cost remains a key worry among providers who want to ensure the products they buy will stick around for a long time.
Physicians aren't Wall Street financial analysts. But health care providers still have to determine which vendors have the resources to stay solvent and, which ones might run out of development resources in the third phase of meaningful use -- which will include complex health information exchange (HIE), reporting of clinical quality measures and clinical decision support.
Three experts offered SearchHealthIT readers advice for decision makers struggling to choose their first EHR vendor -- or shopping for a replacement for a disappointing EHR system.
Sharon Dietz, national sales director for medical transcription services vendor ZyDoc Corp., whose company also must judiciously choose its EHR vendor partners, believes it will take two things for EHR vendors to get their customers through Stage 3 -- a lot of development bandwidth and a lot of custom tailoring to fit individual clinical workflows.
Every customer, she pointed out, could potentially have a different set of meaningful use menu quality reporting items. Moreover, Stage 3 is where HIE systems must go live; achieving interoperability between those systems could very well require one-on-one interactions.
"The patient portal alone is enormous," Dietz said. "If they actually pass these regulations to say patients need to be able to see the discharge summary and daily progress notes…[an EHR vendor] doing a strictly point-and-click solution [will] have to do more to meet that requirement to provide a narrative that is readable for a patient."
What ONC certification gets an eligible provider
The federal Office of the National Coordinator for Health IT (ONC) set up a certification system for EHR vendors to prove they can meet Stage 1 meaningful use criteria. But obtaining Stage 1 certification "just gets them a seat at the table," Dietz said. It doesn't guarantee that vendor will make it to the Stage 3 finish line.
"There have been close to 150 vendors certified for Stage 1…I have the impression that eight or nine vendors have 80% to 90% of the market that's been sold," Rishel said. "So you've got this long list of also-rans and local yokels that are often lightly funded and highly reactive to their customer base and have very little of a social or a business network that allows them to anticipate future government regulations.
Eight or nine [EHR] vendors have 80% to 90% of the market that's been sold, so you've got this long list of also-rans and local yokels that are often lightly funded.
Wes Rishel, health care analyst, Gartner
"With all of them, I would say there's a concern about financial stability that is not solely focused on their ability to put out maintenance or update releases," he continued. "It's more focused on the fact that they have succeeded in doing this for a couple of physicians, but they may not have developed the infrastructure to support growth, to support hundreds of clients. They don't have the management sophistication. They probably still have the CEO taking trouble calls from clients and things like that. We're going to lose a lot of those [vendors]."
Put contingencies in contracts, look at EHR vendor's backers
Rishel, along with Dietz and health care financial analyst Christopher McCord, managing director at Healthcare Growth Partners LLC, offered the following tips on assessing the current fiscal health of an EHR vendor as well as its longer-term prospects.
- Check a vendor's development resource pool. Is it in-house or outsourced? How big is this department, and who's running it? How long has the vendor been in business? What kind of customers are they supporting and how well does the vendor cover those calls? All good questions to contemplate, Dietz said.
- Understand contingencies for worst-case scenarios. Skip right to the unpleasant part of conversations with the EHR vendor -- what happens if they go bankrupt? Some vendors might put the EHR source code in escrow for providers just in case, McCord said. Others might do the same with patient data, Rishel said. Either way, Rishel added, there would be former employees of the vendor looking for work -- and available to help providers transition to their next EHR system. Make sure these (or other satisfactory contingencies) are put in writing.
- Look at the revenue model. Dietz pointed out that companies that collect large licensing fees up front, as opposed to those using a subscription-fee model, are potential candidates to run out of resources before the Stage 3 finish line. Furthermore, application development will be necessary for Stages 2 and 3, because the regulations haven't yet been finalized. McCord also noted that, while the subscription-fee vendors do have long-haul income from which to draw, they can be resource-poor at the beginning.
- Look at who is backing the company. If the EHR vendor is relatively new, are its backers well-known technology venture capitalists with strong reputations and who aren't known for quickly pulling the plug on software under development? Factor that in.
"Just because meaningful use is in place doesn't mean these vendors are going to start dropping off, but I do think there will be some filtering here through the three stages of meaningful use criteria," McCord said. "Some vendors will meet Stage 1 but sort of fall off at Stage 2 because investors don't want to pony up the money for the development required to get there."
Above all, take the time to check the vendor's customer references. If you can, visit them on site and ask all the questions your facility normally would of a hardware vendor before investing in a major piece of medical equipment.
It's also a good idea to find an EHR vendor whose customers resemble your business in size and patient base. The further away you are from the typical customer of that EHR vendor, the more customization you'll likely require. "Talk to objective customer references, not just those who are on the [vendor] advisory board," McCord said.
If vendor doesn't reach meaningful use Stage 3, don't panic
While it might seem that the above advice implies conservatism for selecting an EHR vendor, McCord pointed out that some providers must take some risk -- or else innovation will stall. He advised providers to look at a vendor's viability but not base a decision completely on it. Instead, "factor it in cautiously." There can be reward with risk.
Health care CIOs might imagine an EHR vendor switch as a nightmare scenario, a rats' nest of technical complexities, employee retraining and data conversion. All those issues will likely come into play to one degree or another. However, our experts agree that switching EHR vendors might not be so nightmarish when the ongoing federal health data interoperability efforts bear fruit. Cloud systems beginning to take hold in the market will also likely make patient data more portable than proprietary.
Put another way: After vendors and providers adopt interoperability standards throughout health care, we'll all look back and realize that the initial transition from paper to EHR systems was a lot more difficult than changing EHR vendors.
"It's still somewhat of a blow," McCord said, adding, "I think the financial blow is softening somewhat because you're seeing [more EHR vendors] go to more of a subscription model. So if you end up switching, then maybe you just switch your subscription to someone else. That's a lot less painful than writing a big up-front check and then turning around and writing another big up-front check."
Let us know what you think about the story; email Don Fluckinger, Features Writer.