In the past 18 months, there has been an uptick in the number of medical Practices that are purchasing new Electronic Health Record (EHR) products, mostly because of the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act.

The HITECH act was designed to promote the adoption and meaningful use of health information technology. As of May 31, 2012, 43% of eligible physicians have signed up with CMS to receive the stimulus funding but only 13.8% have actually achieved Stage 1 Meaningful use (MU) stimulus funding. So after 2+ years, why have only 13.8% of physicians achieved Stage1 MU?

To help answer the question, AC Group (a Texas based Healthcare Consulting firm) conducted a survey of 1,447 practices during November 1, 2011 through March 31, 2012 and determined that 81% of practice had replaced their current PM product with one offered by the new EHR vendor. Additionally, we determined that the replacement of the older PM product delayed the EHR implementation process and had negative impact on physician revenues. Finally as indicated in numerous studies, the replacement of the PM and the implementation of a new EHR decrease overall physician productivity.

Based on the results of the survey, Mark Anderson, FHIMSS, CPHIMS, CEO of AC Group decided to investigate the reason why so many practices had decided to replace their current PM product with an integrated PM/EHR product and what was the operational and financial effect on the practice when they replaced their current PM product. To determine the effect on practice operations, a second survey was conducted from April 2012 through July 15, 2012 on those practices that decided to replace their current PM product. The follow-up survey showed that although 81% of practices had replaced their current PM product with either an Integrated or interface PM/EHR, 79% of the practices were actually satisfied with their prior PM product. So we wondered, “If practices are basically satisfied with their prior PM product, why did they replace the PM product and what was the operational effect on the practice when they replaced the PM Product?”

When asked “why did you replace your current PM product”, 83% stated that the vendor selling the EHR product had convinced the practice that they would be better off with an integrated PM/EHR product. The practices indicated that the vendor selling the EHR, in general, did not provide any facts on why an integrated product would be better, and 68% of the practice did not investigate the strengths or weaknesses of the proposed new PM product. Therefore, the practice might be upgrading to a PM product that might not provide better functionality and usability. In fact, 68% of the practices stated that the new PM product did not improve the practice’s overall financial position. In fact 63% stated that the new PM product adversely effected cash flow and lower staff productivity.

The next area we looked at was the effect on the practice’s operations. Although there are numerous reasons for having an integrated PM/EHR product, we found that when a practice replaces their current PM product, there are major negative effects on practice operations including:

95% of the new PM/EHR vendors did not migrate over the patient and insurance balances from the older system. This means that the Billing staff had to use two separate systems for a length of time, usually 9 to 12 months.

• 39% reduction in cash flow during the first two months. Over 87% of the time, a practice cannot submit claims or receive electronic Remits through the same EDI Company with two different PM vendors. Usually when switching PM vendors, there can be up to an 18 day delay in claims submission and electronic remits. This can cause major cash flow delays.
• 23% reduction in front and billing staff productivity during initial configuration and training when switching PM products. Additionally, overall staff productivity decreases by 12% during the first 90 days after go-live.
• 29% increase in patient statement costs. Until all prior balances are paid off, Patients will receive two statements each month, one from the prior system and one form the new system, increasing statement costs.
• 37% increase in days in accounts receivable during initial training and set-up and an average of 42% increase in days in accounts receivable during the first 90 days of go-live.
• 41% of the practices indicated that on average, they experienced a 36% increase in the number of denials because the new PM product did not have CCI and LMRP edits plus many of the insurance rules were missing from the new product.

Based on our findings, we recommend practices spend more time evaluating the replacement of the current PM product when considering purchasing a new PM/EHR product.

Case Studies:

1. A three-provider Family Practice based in the Los Angeles area had decided to purchase a new integrated PM/EHR product form one of the vendors. The local sales person convinced the practice, that they should replace their current Practice Management Product even though the product was meeting all of the needs of the practice. Six months after the contract was signed, the Practice’s days in A/R increased from 42 to 83 and the office had to hire two additional staff to handle the daily operations. Overall, the practice projected that the new system was going to cost the 2-providers over $43,250 during the first year. Operationally, there were four major issues. The new vendor did not convert over the prior patient balances, the vendor required the practice to changed EDI companies, and the new vendor did not provide CCI and LMRP edits and insurance rules, thus, increasing the denial rate by 38%. Finally, the new vendor only provided 3 days of internet training and did not spend any time evaluating the practice actual workflow. Thus the product was not set-up to meet the workflow needs of the practice. Because of the issues with the replacement of the PM product, the EHR implementation was delayed three months, and the practice does not believe they will meet the October 3 deadline for Stage 1 MU attestation.
2. A two-provider orthopedic practice elected to purchase a new ONC Certified EHR from a vendor that was willing to work with the current PM product which was delivered through a local outsourced billing company. The EHR vendor, simplifyMD agreed to create a two-way interface with the PM vendor at no costs, and since the PM product was not being replaced, the implementation of the new EHR product was accomplished within 10 weeks of contract signing. The practice was able to attest to Stage 1 MU and received a check from $36,000 from the government within six months of contract signing.

Conclusion:

When considering a new EHR product, practices should consider the potential interruption in cash flow and decreases in staff productivity before deciding to replace their current PM product. In some cases where the older PM product is no longer meeting the needs of the practice or is no longer being supported by the vendor, then of course a new PM product would be necessary. However, the need for a truly integrated PM product does not necessary mean you are getting a better product with improved functionality. Actually, based on physician perceptions, the replacement of the current Practice Management and Billing system might negatively affect your operations.

For more information, contact Mark R. Anderson, CPHIMS, FHIMSS, CEO of AC Group, Inc. at mra@acgroup.org or by phone at 281-413-5572

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