The Health IT Stimulus Package… for 2011?

Posted on February 27, 2009 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I’m always happy to have people smarter than me do a guest post on EMR and HIPAA.  There’s far too much going on with Health Care IT for me to be able to cover everything that’s going on.  So, I’d like to thank Randy Pickard for sending in the following guest post about the HITECH stimulus act.

There is almost a Kafkaesque quality to the likely short term impact of the stimulus package upon adoption of Electronic Health Records (EHR) systems. The passage of the stimulus package will probably serve as a speed bump to EHR adoption until the details of the act have been spelled out. Up until the passage of the stimulus package, adoption of EHR systems has been proceeding slowly but steadily. However, the vaguely defined promise of $17 billion in reimbursements for EHR if unknown criteria are met could result in gridlock among purchasers in the short term while they wait for finalization of the provisions of the stimulus package’s Health Information Technology for Economic and Clinical Health Act (HITECH Act).  

A quick glance at the income statements of four publicly traded vendors that receive a significant portion of their revenues from EHR systems provides an indication of steady revenue growth from EHR sales. Income has been increasing by 10% or more per year for these four vendors, Allscripts, Cerner Corp., Eclipse, and NextGen.  (Although the increases in income is not simply due to EHR related sales. Acquisitions of other vendors and sales of other software products has also contributed to the revenue totals).

Company Symbol Period Ending Annual Revenue in ‘000’s Increase Vs. Previous Year
Allscripts MDRX Dec ’07 $281,908 24%
Cerner Corp CERN Dec ’07 $1,519,877 10%
Eclipse ECLP Dec ’07 $477,533 12%
NextGen Healthcare QSII Mar ’08 $186,500 19%

It seems likely that the revenue for these firms from new EHR sales will be greatly reduced in the near term, as purchasers sit on their hands waiting for answers to questions about how they can obtain reimbursement for their EHR spending. The HITECH Act designated that reimbursement would only be provided if a certified EHR was implemented. However, the certification standard is to be developed by an office (ONCHIT) that has not been staffed yet, with a coordinator that has not been named yet by the Secretary of HHS, who has not been appointed yet. Further, the bill indicates that reimbursement will go to establishments that show “meaningful use” of health IT, an undefined description that will likely deter healthcare organizations from rushing to purchase an EHR system. Given that the details of the plan to stimulate the adoption of EHR’s are far from being flushed out, is it any wonder that the Congressional Budget Office has estimated that a mere 2.3 percent of the health IT funds would be distributed in fiscal years 2009 and 2010?

About the Author – Randy Pickard is Vice President of Product Innovation for User Centric, Inc. a user experience research firm. User Centric recently released EHR and PHR white papers: How to Select an Electronic Health Record System that Healthcare Professionals Can Use and Google Health vs. Microsoft HealthVault: Consumers Compare Online Personal Health Record (PHR) Applications

Thanks Randy! If you’re interested in doing a guest post, feel free to Contact EMR and HIPAA.