Moody's: 6 Hospitals With Credit Challenges Related to EHRs

Electronic health records are seen as necessary for any hospital or health system, but they come with high costs.

Depending on the size of the organization, EHR installations can cost anywhere from several million dollars for a small, standalone hospital to half of a billion dollars for multistate health networks. These projects often have the potential to negatively impact hospitals' financial profiles in the short term.

Here are six hospitals and health systems with credit challenges related to EHRs that Moody's Investors Service has highlighted in the past eight months.

1. HealthEast Care System (St. Paul, Minn.). HealthEast, which includes three acute-care hospitals and several ambulatory sites, is investing $145 million into its Epic EHR system. The project is being funded through debt and cash flow, and it is expected to compress profitability this year.

2. Community Medical Center (Missoula, Mont.). Since December 2012, the 146-bed Community Medical Center has been installing Cerner and NextGen EHR systems. Moody's analysts said the projects have contributed the hospital's financial issues, which included a -1.6 percent operating margin through the first four months of its 2014 fiscal year.

3. Saint Luke's Health System (Kansas City, Mo.). Moody's analysts noted the 10-hospital Saint Luke's is in the middle of an EHR system conversion, "which could lead to operating disruptions in 2014."

4. Scott & White Healthcare (Temple, Texas). Last November, as Scott & White finalized its merger with Dallas-based Baylor Health Care System, Moody's issued a negative outlook to the system. Aside from soft volumes and a shifting payer mix, Moody's analysts said increased costs associated with Scott & White's Epic EHR system install "adversely" affected the system's operating performance.

5. Washington Hospital Healthcare System (Fremont, Calif.). The public-owned WHHS, which includes 389-bed Washington Hospital, went live with its Epic EHR system in July 2013. However, Moody's analysts and hospital officials said losses at the beginning of FY 2014 were due in part to increased expenses related to the EHR implementation. In the first two months of FY 2012, WHHS posted a -5.4 percent operating margin.

6. Robinson Memorial Hospital (Ravenna, Ohio). Last June, Moody's downgraded Robinson Memorial to "Baa3" from "Baa1" due to larger-than-expected operating losses. Parts of those losses were attributed to expenses and reduced productivity related to the 117-bed hospital's EHR system implementation in March 2013.

More Articles on Hospitals, EHRs and Finance:
Measuring the Ripple Effect: Calculating the ROI of Health IT
Whidbey General Hospital Blames IT System for Low Cash-on-Hand
EHRs and Health IT Projects: Are They Battering Hospitals' Financial Profiles?

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