Taking On the Cost Drivers

Karen Minich-Pourshadi, for HealthLeaders Magazine , June 9, 2010
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Putting an EMR in place is a multiyear project requiring large amounts of up-front capital—something many healthcare providers are struggling to find. With a looming government mandate that requires EMR adoption by 2015, many facilities are scrambling to get the funds together to complete this project. And yet few healthcare leaders expect much money will come back their way from the EMR stimulus package.

Clinical technology poses another financial challenge for healthcare providers. The ever-changing nature of healthcare technology calls for facilities to buy more frequently to stay cutting-edge, as well as to keep physicians satisfied and to maintain the hospital's or group practice's market position. While larger health systems may find it easier to meet these technology demands, others find that keeping a competitive advantage can be financially draining.

"Clinical technology has lately been playing second fiddle to the EMR," notes Clarke. "It has a different kind of impact on cost because clinical technology can drive volumes."

Steering toward solutions
Just as there are countless EMR and clinical technologies for hospitals to purchase, there are numerous ways to contain this cost driver.

Cost shifting
It's not a revolutionary idea for cost savings, but it is a very practical one; moreover, it must be done skillfully so as to avoid unrest with staff when requests are delayed (or denied altogether) to shift funds to a more pressing project. Wiest says Lee Memorial was just about to implement its EMR system when the recession hit. The health system had to rein in its plans and create a less aggressive implementation timeline—but cutting the project was not an option.

"As far as we were concerned, we had no choice but to get this EMR into place and our committee was already moving in this direction," Wiest says. "There wasn't any unique financing. We took funds out of other operations and revisited all our capital needs, and then we allocated a disproportionate amount to the EMR."

Leaders also are finding strength in collaboration with other facilities when it comes to EMRs. For instance, four rival hospitals in Texas—Stonewall Memorial in Aspermont, Stamford Memorial Hospital, Anson General Hospital, and Throckmorton County Memorial—collaborated to select one EMR system that could link all their hospitals, clinics, and physicians. The effort enabled them to have this technology at their small, 20- to 30-bed facilities.

Unifying systems
For early adopters of technology or health systems that merged over time, wasteful costs usually lie in having too many disparate technologies that slow down staff, increase the likelihood of errors, and diminish the quality of care.

Appalachian Regional Healthcare System in Boone, NC, a 262-licensed-bed, three-hospital health system, ran into this situation when it joined Blowing Rock Hospital, Charles A. Cannon Jr. Memorial Hospital, and Watauga Medical Center. After doing an analysis, Appalachian Regional realized that the various systems were costly in everything from employee time to supply chain processes.

"Our systems were running amok; they weren't interfacing and we had a lot of erroneous information that was costing us several hundreds of thousands of dollars," explains Terry Prescott, IT director of business applications for the healthcare system.

Appalachian Regional opted to use QuickStep Healthcare, an enterprise software package from St. Paul, MN-based Lawson. Prescott says the money spent to integrate the system this year is already coming back in better charge capture and improved accountability of supplies. "We knew this technology was needed, and we don't doubt there will be a return on investment."

Test or lease or buy
Clarke suggests healthcare providers talk to their vendors to see if there are opportunities to beta test equipment to help them refine their technologies. Providers should also look for opportunities to lease versus own the technology, he says.

"When you buy a piece of equipment it might become outdated and have no value—versus leasing, which helps keep things up to date," he says. Clinical technologies are often being refined, and when end users, such as physicians, like a product, they often champion the purchase of the latest model. Healthcare leaders are often eager to comply to keep the physicians satisfied, but this isn't a financially prudent approach, nor is it a strategic one, Clarke says.

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