EHR roll­outs tak­ing a fi­nan­cial toll on hos­pi­tals

Modern Healthcare - - NEWS - By Dave Barkholz

UMass Memo­rial Health Care is go­ing live with a new elec­tronic health record sys­tem later this year. While the ex­pec­ta­tion is that there will be longterm ef­fi­ciency gains, the roll­out has al­ready had a sig­nif­i­cant ef­fect on its bot­tom line.

The four-hospi­tal aca­demic med­i­cal cen­ter saw EHR ex­penses mount to $26.1 mil­lion in fis­cal 2016, erod­ing op­er­at­ing in­come to $40.7 mil­lion for the year with more be­ing spent for the launch.

UMass has com­pany. Hos­pi­tals in­stalling new EHR sys­tems should ex­pect a siz­able cash drain as the process dis­rupts busi­ness and adds tech­nol­ogy and train­ing ex­penses, ac- cord­ing to a new re­port from Moody’s In­vestors Ser­vice.

Dur­ing the first year of EHR in­stal­la­tions, the me­dian de­cline in op­er­at­ing cash flow for hospi­tal sys­tems is 10% with a 6% falloff in days cash on hand, Moody’s said af­ter ex­am­in­ing sys­tem in­stal­la­tions over the past sev­eral years. EHR in­stalls can cost any­where from sev­eral mil­lion dol­lars for a small, stand-alone hospi­tal to a half-bil­lion dol­lars for larger sys­tems.

Moody’s looked at 39 re­cent launches and found that in­stalls can dis­rupt billing and pa­tient through­put. The dam­age to op­er­at­ing per­for­mance usu­ally dis­si­pates af­ter the first year as staff and clin­i­cians be­come pro­fi­cient in the tech­nol­ogy.

Hos­pi­tals are try­ing to man­age the risk by es­tab­lish­ing lines of credit to en­sure cash avail­abil­ity as well as get­ting the board of di­rec­tors in­volved to han­dle project man­age­ment.

Moody’s cited Wake For­est Bap­tist Med­i­cal Cen­ter in Win­ston-Salem, N.C., and Pres­ence Health in Chicago as ex­am­ples of sys­tems whose clunky EHR con­ver­sions con­trib­uted to mar­gin de­te­ri­o­ra­tion and credit down­grades.

Both have re­cov­ered. Moody’s up­graded Wake For­est Bap­tist’s debt to pos­i­tive from sta­ble last Oc­to­ber. And Pres­ence Health com­pleted a $1 bil­lion bond of­fer­ing a year ago to re­struc­ture its bal­ance sheet.

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