For some practices, EHRs aren't worth it

Looking to sell your medical practice? Don't waste time and money upgrading your IT.
By Paul Cerrato
10:24 AM

For medical practices looking to put themselves up for sale, investments in new EHR systems might appear to be a smart way to up their value in the market. But that's not usually the case. If you’re trying to beef up the value of a medical practice, don’t bother upgrading your electronic health record system, says one expert, since hospitals will have ideas of their own.

So goes the suggestion from Black Book Rankings, whose recent 2013 Top Practice Management and Revenue Cycle Management Ambulatory EHR Software Vendors report found that 63 percent of independent practices believed that they could improve the value of their practice through a technology upgrade or implementation before selling.

[See also: EHR users ditching systems, trading up]

But reality soon hit home. Ninety-eight percent of survey respondents said that such investments actually devalued their practices’ worth.

"Since most hospitals convert purchased practices over to their EHRs anyway, it was adding no value to selling price after all," said Doug Brown, Black Book’s CEO. 

Two clients of IT consultant Doug Grabowski’s had just that experience. "In both cases, it was determined to be a complete waste of resources," he said. Technology acquisitions "are foot-printed based," he said; hospitals acquiring practices "are buying charts first and foremost.”

Still, "most savvy (buyers) would see value in an organization that already has an EMR because it demonstrates that the physicians know how to use it," said Mark Schneider, vice president of application services at MedStar, a nonprofit healthcare system in the Washington, D.C., area.

[See also: Practice execs stress over EMR, cash]

Investing in technology in advance of a sale to a hospital or large health system may not be a smart financial move, but there are instances when it could make a difference, said Oli Thorderson, CEO at Alvaka Networks, an IT services company headquartered in Orange County, Calif.

"If the buyer is a larger entity already standardized on an EHR system than the investment (by the selling practice) provides no value to the buyer," Thorderson said. However, if the a practice is being sold to another practice which is struggling to invest in a functioning EMR, "then I would say that could make for an attractive feature."

That sort of scenario rarely happens, though, he noted. "It seems that in healthcare, it’s the big fish gobbling up the small fish not peers gobbling peers."

While investing in technology in advance of a sale is an iffy proposition at best, one thing worth beefing up is HIPAA/HITECH compliance, Thorderson said. "The larger firms find that the risks and problems of poor security and privacy compliance vexing and risky so any measure taken in this area reduces the friction and risk involved with merger and acquisitions activity."


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