EHRs and Other Opportunities: For Practices, The Clock is Ticking

Practices face a variety of daunting challenges - dealing with healthcare reform, increased regulation and reporting requirements, shortages of primary care providers, and endless others - and they all seem to lead to or involve negative consequences.

However, there are two economic bright spots on the horizon for healthcare. But the clock is ticking on both of them.

The first is the ARRA/HITECH Act, signed in early 2009, which set aside billions of dollars for the adoption and use of EHRs. Providers who have at least $24,000 per year in Medicare billing qualify for up to $44,000 in ARRA/HITECH funds over the next five years. For Medicaid, the amount is $64,000 and the requirements and time frame are a bit different.

However, many practices are still sitting on the sidelines, apparently unaware of or apathetic towards this potential windfall. Others are assuming they can do it later. But it takes many months or even a year or more to evaluate, select, implement, and become fully functional on an EHR. And the window of opportunity for ARRA/HITECH funds begins to diminish significantly after 2012. So the time to act is now.

The second opportunity consists of the so-called Section 179 accelerated depreciation deduction, named for the IRS code that allows businesses to deduct the entire cost of capital purchases, such as computer hardware and commercial software, rather than depreciate them over three or five years. The maximum amount of the Section 179 deduction varies by year; for 2011 the amount is $500,000. At a 30 percent tax rate, that amounts to $150,000 in tax savings for the 2011 tax year. Most experts expect it will not be renewed in 2012, given our current federal budget and political situation.

Some healthcare providers and managers scoff at these numbers, saying that they are not enough to fully compensate for the cost of EHRs. Others say that they will decide later what to do. And many are not even aware that these incentives exist.

But what other industry has ever been given any kind of significant financial incentive to automate and improve efficiencies, and to become compliant and avoid penalties? McDonald’s and Wendy’s certainly received no such incentives to eliminate paper food orders. FedEx and UPS were not compensated to implement bar-code scanning and web-based tools for tracking packages more efficiently. And the airlines weren’t reimbursed for the cost of their systems to implement e-ticketing.

All of those systems were designed, implemented and used to make those companies and those industries more efficient - to lower costs, improve quality, and increase customer satisfaction.

It’s high time for healthcare to get with the program. And the clock is ticking…

Learn more about Marion K. Jenkins and our other contributing bloggers here.