Brigham and Women's Hospital Reports $53M Budget Shortfall after Transitioning to Epic

Dec. 15, 2015
Boston-based Brigham and Women’s Hospital (BWH) has reported its first budget shortfall in more than 15 years, in part due to costs associated with switching electronic health record (EHR) systems, according to a STAT News report.

Boston-based Brigham and Women’s Hospital (BWH) has reported its first budget shortfall in more than 15 years, in part due to costs associated with switching electronic health record (EHR) systems, according to a STAT News report.

The hospital fell $53 million short of its budget in the fiscal year that ended Sept. 30, according to BWH spokeswoman Erin McDonough. The EHR transition in June, which is still ongoing, was part of a broader, $1.2 billion Epic implementation across the 10 hospitals in the Boston-based Partners HealthCare system, of which BWH is included, STAT reported.

Brigham, a 793-bed hospital, brought in $3.3 billion in revenue in fiscal year 2015, according to McDonough. It had expected a $121 million surplus, which would be reinvested into capital projects and other costs such as pay increases. But it came up $53 million shy of that number, she said, per the STAT report.

At a recent BWH town hall-style meeting, Dr. Betsy Nabel, M.D., said that the transition had led to budget overruns and complications. Nabel cited three factors for the shortfall: The hospital lost patient volume in February when Boston got slammed by snow; it paid more than expected into its employee pension fund; and it lost money transitioning to Epic.

The Brigham and Boston-based Dana-Farber Cancer Institute hired 1,500 extra staff to help with the massive Epic go-live in June. BWH knew the cost would be significant, and budgeted $47 million for the transition last fiscal year, according to McDonough. But the switch ended up costing $27 million more, she said.

Half of that came from an intentionally reduced patient volume in the summer, when the hospital opted to move slowly to avoid medical errors due to miscoding. The other $13.5 million came from the problem of patient visits not being properly coded to reflect the complexity of each patient’s case within the new health records, which resulted in lower reimbursement from insurance companies, Nabel said.

According to the STAT report, Epic’s president flew to Boston from the vendor’s Verona, Wisc. headquarters to offer guidance. Nabel said the coding problem is temporary, and that the transition has not led to an increase in medical errors. Nabel also said that expecting the Brigham to meet its budget every year “is sort of like you expect the [New England] Patriots always to win.”

The report also included a response from Epic spokeswoman Erika Koch who said that there are “up-front investments” to launching the company’s software system. But “what we typically see when a health system transitions to Epic is permanent, long-term improvement in financial health and increased bond ratings,” Koch said.

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