The HIT Tipping Point: Intended and Unintended Financial Consequences

A question: What is the opposite of health IT return on investment?

The answer: Unintended financial consequences, or UFCs, for short.

The scenario: A sophisticated medical center health system begins to roll out an expensive proprietary EHR and shortly thereafter sustains an operating loss, leaving no choice but to put the implementation on hold. The operating loss is attributed to “unintended financial consequences” directly related to buying a very expensive EHR system.

This is exactly the situation at MaineHealth, who selected Epic. As recently reported by Healthcare IT News, in the last few weeks Maine Medical Center President and CEO Richard Peterson sent a memo to all employees saying the hospital …

… has suffered an operating loss of $13.4 million in the first half of its fiscal year. The rollout of MaineHealth’s estimated $160 million electronic health record system, which has resulted in charge capture issues that are being fixed, was among several reasons Maine Med’s CEO cited for the shortfall.

“Through March (six months of our fiscal year), Maine Medical Center experienced a negative financial position that it has not witnessed in recent memory,” Richard Peterson, president and CEO of the medical center, wrote in the memo to employees.

Peterson’s memo outlines the specific UFCs that explain, in part, MaineHealth’s operating loss:

  • Declines in patient volume because of efforts to reduce re-admissions and infections
  • Problems associated with being unable to accurately charge for services provided due to the EHR roll out
  • An increase in free care and bad debt cases
  • Continued declining reimbursement from Medicare and MaineCare, the state’s Medicaid program

These challenges are common to just about any medical system in the country, making MaineHealth potentially a harbinger of things to come for those hospitals and health systems that pay multi-millions of dollars for a health IT system.

The State of Maine is rightfully concerned about the developing financial scenario at Maine Medical Center and within MaineHealth. In a May 1 letter to the editor of the Boothbay (Maine) Register, local Selectman Stuart Smith questioned the EHR buying decision and associated operational costs that led Lincoln County Heathcare, a MaineHealth member, to close the local healthcare facility, St. Andrews Hospital.

I do question the $150 million figure. I think it is extremely high and Portland has had a real failure in its implementation. So much so that it looks like [Lincoln County Heathcare] will not have a real integrated EMR until 2015 and financial software problems exemplify a major failure of [MaineHealth] to create any real benefit to the state.

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