Has your practice ever overpaid for technology? Family medicine physician James Holsinger's has.
Holsinger, who runs a solo practice with his wife, Kathy, in Keokuk, Iowa, once purchased an automated complete blood count (CBC) machine for $50,000, only to have insurance compensation for blood count testing decrease. The end result: "The machine didn't have the payoff" Holsinger thought it would.
But paying too much hasn't always been a bad thing. In 2003, Holsinger, an early adopter of technology, paid more for his e-MDs EHR than today's first-time physician-buyer pays for the same system. In the long run, the EHR has saved him time and headaches, though the prices today's practices pay are enviable.
"It's like a big-screen TV," says Holsinger. "If you get the one with 3D, it's $5,000 or $6,000 more, but as time goes on, the price goes down. Now it's 25 percent less."
In all, Holsinger says the experience of overspending has taught him a lot of valuable lessons that now guide him in making smarter technology purchases. Many practices are in the same boat, having learned the hard way that they spent too much on technology, from EHRs to their practice's websites. Overspending — or the initial underspending that results in spending more money long-term — can have other consequences too, beyond the financial ones.
So if, for example, a practice tries to cut corners by not spending money on a secure e-mail service, it may owe up to thousands of dollars in HIPAA fines if patient data is compromised, says Beverley Caddigan, a healthcare consultant who works with medical practices and other businesses on technology purchases.
"Too often, I go into medical practices where they have overspent, underspent or unwisely spent," she says.
So as your practice looks to make some high-tech investments — whether in an EHR, practice management system, patient portal, website, or iPad — how can you be sure you're spending what you should —no more or no less? Taking the advice of our seasoned spenders and technology experts is a great start.
The rising cost of technology
At a time when the demand for new technology has reached its peak, practices are strapped for cash. From increasingly stingier reimbursements from payers to rising costs of utilities, technology, and insurance, providers today face more financial stressors than ever before.
And although technology can alleviate some of those stressors and improve a practice's performance, it initially can be a financial drain, one not easily plugged with EHR incentive money.
According to our most recent 2011 Technology Survey, completed by 1,017 physicians, nearly one out of four said they paid more than $10,000 for EHR software alone, excluding hardware and training costs. The Office of the National Coordinator estimates the average cost, all things included, for an EHR is about $35,000 per physician, notes Mary Griskewicz, HIMSS senior director of healthcare information systems. And that's just an EHR. In October, at the Medical Group Management Association's MGMA11 Conference in Las Vegas, Robert Tennant, senior policy adviser for government affairs, said for a typical, three-physician practice, the cost of conversion to ICD-10 — for which there is an Oct. 13, 2013, deadline — is estimated to be $83,290.
"Everybody says when you move to health information technology, you are able to automate processes and decrease administrative staff, but you are replacing them with folks to maintain your high-tech systems," says Tennant. "What we found is that overall costs increase when practices adopt technology such as EHRs. However, the bottom line may increase as well, as you become more efficient."