Alphabet Soup: EMRs, ACOs, Meaningful Use What do the Statistics Say?

Alphabet Soup: EMRs, ACOs, Meaningful Use — What do the Statistics Say?

Maria Shepherd

Data Decision Group

Talk to any physician about current issues in healthcare and patient care, and you won’t have to dig far to get them to spew acronyms. Before you know it, they’ll be talking about ACOs, EMRs and the impact on U.S. healthcare. Here is a quick review of the alphabet soup to help you stay ahead of the conversation.

Why This is Important?

An electronic medical record (EMR) is a tool designed to help track patient data and share it among different healthcare providers. The development of Accountable Care Organizations, or ACOs, never can exist without this basic digital tool. The ACO goal is to create integrated networks of physicians and hospitals that will share the care of a population of patients. Sharing care means that one payment will be made per patient, putting downward price pressure on everything about that care, including the price of medical devices.

Background

Does all of this sound familiar? In the 1990s, these plans were called HMOs and their stated purpose was to reduce healthcare costs. That didn’t happen. In fact, between 1990 and 2003, spending on healthcare in the United States increased from 11.9 percent to 15.2 percent.1 In 2009, the Centers for Medicare & Medicaid Services estimated the percentage of U.S. gross domestic product spent on healthcare at 17.6 percent.2 So why will healthcare reform and ACOs work when HMOs didn’t? The ACO goal is to provide care that is highly coordinated, with shared access to EMRs to improve quality and reduce costs.
 

What is an Accountable Care Organization?

According to a recent article in The Boston Globe, the new healthcare law is still taking shape, so no precise definition exists, and ACOs “may take different forms.”4

An ACO would deliver care differently from our current fee-for-service healthcare system. In theory, the ACO system would provide payments from private or Medicare insurance through an annual payment for each patient, based on a category that includes their age and health history.

ACO Pros and Cons

Proponents feel that ACOs would reduce the waste of the fee-for-service system, where patients are sent from one medical provider to another, each with its own incentives and systems. Another goal is to incentivize preventive care, keeping patients healthier with less dependence upon the U.S. healthcare system. Detractors are concerned that the tabulation of individual healthcare spend may affect the decision to continue treatment, order tests and refer patients to specialists. Other concerns are about referrals based on the quality of care vs. the lowest-cost provider.

Physicians already are seeing strength in numbers. If practice size trends are increasing, this could create powerful provider groups that have more control of their markets.5 According to The Boston Globe: “Doctors, hospitals, and insurers are scrambling to forge alliances and create new models for delivering reliable care more affordably, spurred on by the perfect storm of rising healthcare costs, shrinking Medicare and Medicaid reimbursements, and growing requirements of the new national healthcare law.”6

A Long and Winding Road: The Status of EMRs and Meaningful Use

Substantial federal financial incentives are earned by providers who make “meaningful use” of EMRs, because tracking the progress of digital healthcare technology conversion is a policy priority of the Obama administration. The goal is to improve quality and efficiency of care by encouraging almost 700,000 U.S. clinicians and 5,000 acute care hospitals to use EMRs.7 There is approximately $30 billion in incentives and a penalty of reduced payments for non-compliant healthcare providers. This makes “meaningful use” a powerful federal program to change health care delivery. However, progress has been slow. In a recent survey of U.S. hospitals (see table below), it was found that the share of hospitals that had adopted EMR records had risen only slightly, from 8.7 percent in 2008 to 11.9 percent in 2009.
 

Only 2 percent of U.S. hospitals reported having an EMR system that meets federal government “meaningful use” criteria.

According to a recent study conducted by Harvard University, while there is “overwhelming evidence” that EMRs can help [the system] the disruption that implementing these systems can cause has forced many hospitals to move slowly.

“EHR [electronic health records] systems can cost tens of millions of dollars to purchase and implement,” the study’s authors noted.“The problem is that the bonuses that hospitals get for meeting meaningful use are front-loaded, meaning hospitals have to implement and use EHRs by 2012 in order to get the bulk of the incentives. This is an aggressive timeline, and many hospitals may not make it. If they miss out, it may be years before many of these hospitals will be able to afford to purchase and install their own EHR systems.”9

References:

1. www.kff.org/insurance/snapshot/chcm010307oth.cfm

2. www.cms.gov

3. www.kff.org/insurance/snapshot/chcm010307oth.cfm

4. The Boston Globe, Feb. 6, 2011

5. www.fiercepracticemanagement.com/story/solo-practices-take-stand-against-trend-go-big/2010-09-01

6. The Boston Globe, Feb. 6, 2011

7.www.jama.ama-assn.org/content/304/15/1709.full.pdf+html

8. www.ahadata.com/ahadata/html/News070208c.html

9. “A Progress Report on Electronic Health Records in U.S. Hospitals,” Ashish K. Jha, Catherina M. DesRoches, Peter D. Kralovec, Maulik S. Joshi, Health Affairs, online, Aug. 26, 2010.

Maria Shepherd, founder of Data Decision Group, has 20 years of leadership experience in medical device/life-sciences marketing in small startups and top-tier companies. The firm quantitatively and qualitatively sizes opportunities, evaluates new technologies, and assesses prospective acquisitions. Shepherd can be reached at (617) 548-9892 or at [email protected] or www.ddecisiongroup.com.