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Money for regional extension centers announced, but will it be enough?

One health IT expert breaks down why federal regional extension centers may be getting less than half the funding they need to help physicians bring electronic health record systems online.

The $375 million earmarked for the first round of health IT regional extension centers (RECs) on paper might look like a huge investment. But looks can be deceiving. One speaker at last week’s Healthcare Stimulus Exchange road show in Boston said it might be less than half of what the nation’s physicians really need to implement electronic health record (EHR) systems.

Many REC sponsors received word in January that they’d likely get funding for assisting physicians and certain other health care providers (such as clinics and critical access hospitals) with implementing EHRs. But detailed proposal reviews and record snowfall in the mid-Atlantic delayed the formal announcement until Feb. 12, when Kathleen Sebelius, secretary of the U.S. Department of Health & Human Services, unveiled the particulars of dividing the country into territories for 32 nonprofit RECs.

The math works out to an average of $5,000 per physician in implementation services to get them to meaningful use, said attorney William Bernstein, partner at Manatt, Phelps & Phillips LLP and chair of the firm’s health care division. The firm assisted in the formation of New York state’s two RECs -- one for New York’s 10,000 physicians and the other covering the rest of the state, which has 5,000 more.

Based on Bernstein’s and his peers’ experience working on New York’s Primary Care Information Project (PCIP) -- an organization promoting the exchange of health care data -- that number might cover half the actual implementation costs. In the project, 600 clinicians brought their EHR systems online; the cost of services that RECs will help defer added up to $9,000 to $11,000 per office.

I think that it will be a challenge to those organizations that don’t already have 600, 800 or 1,000 of these under their belt. Starting from scratch with $5,000 a pop is really going to be hard.

William Bernstein, partner, Manatt, Phelps & Phillips LLP

That is consistent with figures Bernstein has seen from the Massachusetts eHealth Collaborative, a similar organization that shares information and experiences with PCIP.

“Five thousand dollars, to be honest with you, is quite a challenge. It’s a stretch,” Bernstein said. “We think that we can do it … but I think that it will be a challenge to those organizations that don’t already have 600, 800 or 1,000 of these under their belt. Starting from scratch with $5,000 a pop is really going to be hard.”

Physicians and other REC-eligible providers who are surprised to learn that REC funds can’t be used to purchase hardware or software can still take heart, Bernstein said. The program’s funding will eventually amount to $600 million, and RECs will have two years to use it -- after which they will have to mostly fund themselves.

That’s not much compared to the $45 billion earmarked in the American Recovery and Reinvestment Act of 2009 for direct incentive payments to physicians and hospitals to get EHR systems up and running to meaningful use standards.

“It hasn’t even started yet. It will start in 2011,” Bernstein said. “That’s what we need to keep focused on, and that’s where all the action’s going to be at the end of the day.”

Let us know what you think about the story; email Don Fluckinger, Features Writer.

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