Most small group practice leaders are aware of the myriad patient care and financial benefits that EHR software can offer. But they also view purchasing and implementing the technology in their organization as a daunting — if not impossible — financial task.
And it’s not getting any cheaper.
According to a 2014 Medical Economics survey, 45% of physicians have spent more than $100,000 on EHRs, including costs for service, hardware, software, training, and consulting. Further, the 2014 Cost Survey study by MGMA revealed that information technology cost per full-time employee physician in 2013 rose 14% to $9,323 from the prior year for single-specialty, primary-care practices, and has continued to rise for the past several years.
What’s more, some physicians still aren’t happy with the technologies they are purchasing. A survey released last summer by AmericanEHRPartners conducted on behalf of the American Medical Association found that of 940 physicians surveyed, only 34% said they were satisfied or very satisfied with their EHR technology in 2014, down from 62% that reported so five years ago. As such, many medical groups might be looking to make a change to a new system.
Resolution: Identifying Needs
Fortunately, the dawning of the New Year also comes with a new era in not just EHR features, but also financing options for small group practices. Before swallowing the cost of some of the larger, complex technology options in the market, practice leaders should first resolve to evaluate what their specific practice needs in an EHR — and what it doesn’t.
A single-specialty practice with just a few physicians and one location isn’t likely to need all the bells and whistles that can jack up the cost of an EHR. So leaders can avoid some sticker shock in advance by paring down their list of must-haves before exploring software and financing options.
And once that list is finalized, small practices should resolve to look into alternative EHR systems, such as those built with open-source software or by so called disruptive vendors that ultimately can be cheaper to implement and use. Disruptive vendors typically have smaller target markets, lower gross margins and simpler products, which in turn can result in less expensive technologies that may be more suitable for small group practices that don’t need software with lots of complex options.1
In addition, small groups can consider working together with another larger group practice to negotiate a group rate on a system, or use a cloud-services provider to fully manage the technology and data, which could be a less expensive option in the long run as EHRs may be taxing on a practice’s older hardware and related software systems.
Resolution: Understanding Costs
While practice leaders might still experience some sticker shock when evaluating EMR options, they need to remember that the following incentives, tax benefits and financing options can make EMRs eminently affordable:
• Known as the Meaningful Use program, title IV of the Health Information Technology for Economic and Clinical Health Act of 2009 (the HITECH Act) provides financial incentives up to $63,500 per health care provider who implement an EMR system that is certified by an Office of the National Coordinator for Health IT (ONC) Authorized Certification Body (ONC-ATCB). Remember though, that while these payments can cover a substantial portion of EMR system costs, practices only receive payments after verifying “meaningful use” of the system, a process that could take several years.
• Various provisions of the US Tax Code, including Section 179 and the related Bonus Depreciation provisions, enable healthcare providers to deduct the full purchase price of an EMR system immediately on their business tax returns, which can help with EMR financing.2
• Bank financing can provide medical practices with a set amount of funds at a fixed interest rates. Typically, the practice then has a set time of three to five years to repay the loan. After repaying the loan, the medical group will then own the EMR system in full.
• Deferred payment or leasing programs are available from many EMR vendors, large corporate partners of these EMR vendors, and specialty finance companies. There are many varieties of leases from EMR vendors, and if structured appropriately, the full purchase price of the system may still be deductible in the first year while spreading payments over three or more years, generating significant cash flow over the first half of the lease.3 Leases also give small group practices a variety of options when it comes to how long they want to keep the technology, which would be helpful in preventing the buyer’s remorse that is currently plaguing many physicians.
Looking Ahead
While taking the plunge and purchasing a new EHR can produce some financial worries, the good news is that if small practices choose the right system and the right financing option, they can confidently move forward and begin to reap the benefits associated with electronic records. To find out how RevenueXL can help your small practice evaluate which EHR systems and financing options are right for you, contact us today.
Alok Prasad is the President of RevenueXL Inc. which provides compelling EMR Software and Revenue Cycle solutions to small and mid-sized practices. RevenueXL offers free EHR software to its medical billing clients.
References
1. Haugen, H. Innovative Ways for Small Practices to Invest in Tech. Physicians Practice. Accessed at: http://www.physicianspractice.com/technology/innovative-ways-small-practices-invest-tech
2. EMR System Purchasing Financing Information. Medicalrecords.com. Accessed at: http://www.medicalrecords.com/physicians/emr-financing-options
3. Ibid.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker’s Hospital Review/Becker’s Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
