Stark and the stimulus

June 24, 2011
As I began a recent round of interviews with CIOs and analysts about the impact of the stimulus funding, I wondered how it might affect hospitals

As I began a recent round of interviews with CIOs and analysts about the impact of the stimulus funding, I wondered how it might affect hospitals that are helping physician groups deploy electronic health record systems.

Since 2007, many hospitals have been taking advantage of the legislative exceptions to the anti-kickback statute and Stark Federal Physician Self Referral law to donate up to 85 percent of the cost of EHR software to physicians. But with physician offices getting up to $44,000 in Medicare incentives over five years, would hospitals still be as interested in offering financial help?

Two CIOs whose organizations have used the Stark exception told me they would continue to do so. Paul Peabody, vice president and CIO of Beaumont Hospitals in Royal Oaks, Mich., said that taking advantage of the Stark exception, Beaumont already has 136 physician offices sharing its Epic system and by year end hopes to have that number up to 300.

Jennifer Laughlin, CIO of UW Health Partners-Watertown Regional Medical Center in Watertown, Wis., said one of her strategic goals is to get a communitywide interoperable EHR system. "We have put the system in place with 11 clinics we own, and in February started using the Stark exception to offer it to an independent practice of six providers."

Watertown Hospital uses Meditech, and with partner LSS Data Systems offers ambulatory care pushed out to independent clinics in an ASP model that is subsidized by Watertown, with independent clinics paying a per-physician-per-month fee. Laughlin believes Watertown will continue to offer subsidies to encourage physicians. "With small physician practices, it is going to be very expensive and there will be a steep learning curve," she said. "We have the know-how, having done it in our own clinics, to help them."

Erica Drazen, managing partner of emerging practices at research firm CSC Global Healthcare Sector, notes that the stimulus is silent on Stark, so hospitals can still subsidize, but they may feel they have competing priorities in house. They have to get to CPOE and quality reporting, she said. It may divert their attention from anything outside their own four walls. The Medicare incentives are substantial and they don't want to miss them.

Lynne Dunbrack, program director for research firm Health Industry Insights, said it was likely that some smaller organizations hurting from the economic downturn would divert some of the funding they may have spent on Stark. Others may see this as a time to accelerate deployment, she added. It all depends on the hospital strategy in terms of reaching out to physician networks.

Perhaps some of the as-yet-unspoken-for grant money will be made available to hospital-physician group partnerships. Stay tuned.


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