ARRA "Feeding Frenzy"

June 24, 2011
The stimulus is working! Whether you're red (hate it) or blue (love it), the government's $17B promise of HITECH funds has sent hospitals to market

The stimulus is working! Whether you're red (hate it) or blue (love it), the government's $17B promise of HITECH funds has sent hospitals to market across the country. We're a tiny firm (half-dozen fulltime consultants), yet we're absolutely swamped with clients and inquiries. And it's not just the large IDNs and AMCS, but community hospitals and even Critical Access Hospitals (<25 beds) who are all looking for a slice of the government pie. It's crazier than Y2K!!

Hardly matters that all the money is conditional on what Blumenthal and his Boston CIO buddies (who come from large facilities with IT budgets in the tens of millions — versus the thousands for small hospitals) eventually define as "meaningful use." Every hospital in the country seems to have had a fire lit under its IT derriere in a rush to market and buy an E.H.R. Exactly what constitutes one doesn't seem to matter - just buy one quick!

We've heard from several vendors already that they can't schedule demos for several months due to rising demand, and a few candid ones are admitting they are building a line for implementations. The existing client base of most vendors are also clamoring for upgrades to their legacy systems to add EMR modules, stretching scarce implementation resources even further.

It's an amazing tribute to the lobbyists hired by HIMSS and large HIS vendors (one and the same?) — they have pressed both the flesh and hot buttons in both the current and previous administration to such an extent that even people who know absolutely nothing about HIS systems (i.e.: politicians) are clamoring for EMRs as the only way to save health care. If only these brilliant lobbyists has some technical skills to help design CPOE systems that physicians will actually use... Most hospital CPOEs are anathema to busy admitting physicians, who only want to get patient rounds over with quickly so they can get back to there offices where they need to spend far more of their precious time typing notes into user-unfriendly practice EMRs.

Last week, I heard an amazing voice of reason from the CEO of a 60-bed hospital. We were holding a kickoff meeting for a system selection process, educating his Selection Committee of department heads on the steps we'd be following and what vendors they should consider. They should of course consider the leading vendors for small hospital (under 100 bed) systems, most of whom charge about $1M one-time for a total HIS, and about $150K for maintenance. We also reviewed several mid-sized vendors as well, who have superior functionality in terms of an EMR, but who charge $2-3M capital and $300K+ for annual maintenance. The CFO pointed out how he had heard from his state hospital association that they could expect about $2M back in stimulus funds, so maybe they could afford the higher-priced, and presumably better EMRs? The CEO thought for a moment, and then pointed out that the stimulus funds are one-time, whereas the ongoing costs were forever: vendor maintenance fees, nurse informaticists, hardware upgrades/refreshes, a past-time CMIO, etc. He wisely decided to just look at systems they could afford under current reimbursement, just in case their new EMR turns out to not be "meaningfully used" by his extremely independent medical staff.

Wisdom form the mouth of "babes" — that the executives of much larger facilities should heed, before rushing will-nilly into this feeding frenzy, only to find out in 2015, when stimulus funds cease, that they may have bought too large a farm! The lasting legacy of the stimulus will definitely be a major transition from paper to electronic medical records. But it may also be a surge of unsustainable costs for clinical informaticists, CMIOs, hardware upgrades/ refreshes, vendor CPI price increases, "consultants" who don't go away, etc.

Maybe in 2016 our friendly lobbyists will step back in the picture then and get hospitals some ongoing stimulus "maintenance" funds!? I'll stick with my wise 60-bed CEO: only buy what you know you can afford!

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