One-on-One with Post & Schell Attorneys Steven Fox & Edward Shay, Part II

June 24, 2011
Steven Fox       Edward Shay It’s no surprise that the recently passed Economic Recovery Package contains billions for hospitals and physicians
Steven Fox Edward Shay

It’s no surprise that the recently passed Economic Recovery Package contains billions for hospitals and physicians to invest in healthcare IT. But only by digging into the legislation — specifically the HITECH Act, part of the massive American Recovery and Reinvestment Act of 2009 — can those responsible for getting that money understand what will be required of them, and when. Healthcare Informatics Editor-in-Chief Anthony Guerra recently talked with Steven Fox and Edward Shay, attorneys and partners at Post & Schell, to better understand the substance of the act.

Part I

AG: Healthcare organizations are not being given the money to then go out and buy an EMR, correct? This is essentially a reimbursement process for demonstrable, “meaningful” use?

SF: I think Ed and I both agree that, if you have it in place today, you will get the money as long as it meets those requirements, one of which is to be certified. So if you have a system in place today that is not certified, I think you would not be able to get it unless that vendor goes back in and gets a certification prior to the time when you have to have meaningful use.

AG: This is a bit comical, but I think it costs about $35,000 to get certified, so you might want to pay for your vendor to go get certified so you can get $2 million.

SF: If your vendor can’t come up with $35,000, maybe you want a different vendor too.

AG: Probably. Probably none of the vendors I’m thinking of haven’t spent the money, the big hospital vendors. What would you advise CIOs to do between now and Dec. 31 when these guidelines come out? Should they be doing research, digging into the stimulus bill, getting lawyers, doing their vendor research, I think you mentioned something like that, what are your thoughts there?

ES: I think a CIO should not be waiting much beyond the middle of the summer to develop a really detailed implementation plan, a timeline that’s basically an 18-month timeline of all the steps (see attachment at the end of this interview), all of the internal and external steps that they need to take, and the kinds of people that they need to retain or engage to help them do what they need to do. I just think that is essential, and that you must get your team put together because again, to use the Y2K analogy, I think that, if you will, the A-team players are just going to be one-arm paper hangers within the next six-10 months, and there’s going to be a lot of hospitals waiting for their calls to be returned if they don’t prepare. I think the CIO needs to really take the lead especially on that planning and team-building function.

SF: I was agreeing with Ed. There is just a lot of self appraisal and self analysis that hospitals need to be doing to see where they stand. For instance, some hospitals might be in the midst of a multi-year plan that they need to reexamine. I just did a contract with a hospital last year and the EMR was going to be one of the later parts of the project, in say 2013, so now they may want to reappraise that and say, ‘We need to change our whole implementation approach and make sure that we have the EHR up and running as the second step, rather than the fifth step in this process.’

If they don’t have any expertise in-house, in terms of the technological expertise, they need to go out and get a consultant. And also, they should have a lawyer; they shouldn’t wait until the last minute to do that. We try to be on our client’s teams pretty much from the beginning, so we can make sure they’re going down the right path, as Ed said.

ES: Think about it this way, almost any CIO has a good understanding of what an electronic health record does, and as they review the existing systems in their hospital, they probably know they’ve got legacy systems that will be very difficult to integrate into an electronic health record. Maybe they’ve got an older image archive or something like that, and now is the time when you want to either replace or upgrade those existing systems so that when you get the details on what is a certified EHR, you can move forward to integrate those existing systems into the certified HER. It’s all of that preparatory work that I think needs to go on now. If you need to acquire systems to replace some of those legacy systems, now’s the time to do it, not in the middle of next year when everybody’s going to be focused on getting RFPs out to acquire certified EHRs. There’s a lot of lead time, this has a long path, that I think CIOs really need to focus on.

AG: From what I understand, by Dec. 31 of this year, there are going to be guidelines that allow people to move forward. So although we’re guessing at what people should do, and suggesting what we think is going to happen, we’re not sure about the steps to take until those regulations come out. Is that correct?

ES/SF: Yes, that is correct. Absolutely, no question.

AG: So now we’re talking about — and tell me if I’m wrong on these dates — we’re talking about a period between Dec. 31 of this year, when those regulations come out, and October 2010, which is the beginning of the 2011 fiscal year. October 2010 may be the point at which you have to prove demonstrable use of the systems to get the money. Is that correct?

SF: Well, it’s a little vague as to where in 2011 you will have to be a meaningful user, whether it’s from Oct. 1, or just at some time during that fiscal year, but clearly at some point starting on Oct. 1 you should be a meaningful user.

AG: So we’re talking about a 10 to 12 month, maybe more, let’s say 10 to 16 month Gold Rush-type environment during which hospitals, especially the ones that don’t have these systems in place, will be scrambling to vendors, consultants and lawyers to get help. I would think that might tempt these technology and service providers to jack up their pricing.

ES: Agreed.

SF: Yes. That absolutely could happen.

ES: It’s going to be an intense, demanding time period and probably a very bad time period in which to change CIOs by the way. So again, I think fortune favors the well prepared. CIOs should be really putting together a detailed implementation plan.

Don’t forget, we’re talking about incentive payments where the money comes in on the back end. If you want to buy an EHR, you’ve got to finance it on the front end. One of the things the CIOs are going to have to do is go back into their budgeting process with their institutions and give them realistic budget numbers about what they need to replace or upgrade legacy systems, what’s their estimated price for the acquisition of the EHR, what are all the soft costs that surround it and, in the tough credit market, how are they going to finance that?

AG: I was just thinking that. I was going to say this is really fascinating because in this economy with the tight credit, who can float a bond issue? But it’s clear they’ve got to come up with this money on the front end. They’ll get it back, but it’s like a rebate; they have to lay it out, and if you want to lay it out, you have to get the cash.

SF: Except there is one other thing that I think sophisticated CIOs are going to do, and that is they’re going to try and let the vendors finance it. They are going to try and let the vendors know the money is coming back under the government formula, and so why not say, ‘If you want this sale, you’re not going to have your normal payment plan.’ Every vendor, of course, likes to get paid 100% up front, but I think this would be a time to stretch out those payments and say, ‘We’re going to pay you over the course of time as we get reimbursed by the government.’ So that might also be a way to do that.

Part III

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