Technology Budgeting Strategies for Your Medical Practice

June 3, 2013

How practices are using creative financial strategies to keep up with the latest technology - and afford their EHRs.

After investing in a new EHR system, pediatrician Harry Miller planned to install computer terminals in every exam room so physicians would have easy access to patients' files. But new computers were expensive and he didn't really need top-of-the-line high-speed models, so he went on eBay and found refurbished machines for a fraction of the cost of buying new.

"We upgraded at first instead of going all new, which enabled our buying power to go a little further," says Miller, part of three-physician Four Seasons Pediatrics in Clifton Park, N.Y., which he started with his wife five years ago. "With technology, you can start slow and upgrade as you go along."

Buying refurbished computers is just one strategy Miller has used to build a tech-savvy office on a limited budget.

Smart budgeting strategies like those employed by Four Seasons are critical as small practices make the leap from paper to EHRs and attempt to take advantage of the latest Web programs, software, and devices needed to stay competitive. EHRs are an essential first step, experts say, but after a typical outlay of $40,000 or so to buy a system, small practices often feel strapped and must consider their next purchases carefully.

"When you're buying on a limited budget, you have to find the tool that will be useful for the task you need it for," says Derek Kosiorek, principal consultant with the Medical Group Management Association's healthcare consulting group who specializes in health IT. "Don't buy something just because it looks like it will help, but have proof that it will help."

At the same time, you should resist scrimping on important purchases because it's likely to cost you more in the long run, he adds.

"The more you spend on IT, the more efficiently your office will run in the end," says Kosiorek. "If you have 10-year-old computers, they will run slower and cause more headaches for your staff and make them less efficient than if you invest in newer equipment and keep it up and running."

Affording the true cost of EHRs

Many small practices decided to invest in EHRs in order to take advantage of Medicare financial incentives that began in 2012.

Physicians who began attesting for "meaningful use" of certified EHR technology, part of CMS' EHR Incentive Programs, last year are eligible for up to $44,000 per physician in Medicare incentive payments over five years and $63,500 in Medicaid incentives (due to sequestration, EHR incentive payments processed after April 1 are subject to a 2 percent cut). Practices can also receive smaller bonuses for electronic prescribing and reporting on certain quality measures.

For those who geared up for Stage 1 of meaningful use, the investment is starting to pay off, says Steve Rallison, administrator of GreenField Health in Portland, Ore. The membership-based family practice, with 13 providers, received about $120,000 in incentive payments for its first year of participation.

However, the incentives, while significant, don't typically cover the cost of owning and maintaining a system.

"Once you've made that commitment, you have to be prepared to handle the ongoing support and maintenance fees," says Rallison. "You have to dedicate staff to help the technology work for patients and physicians."

Practices transitioning from paper charts also incur significant costs getting the system up and running and ready to report on meaningful use, says Michael Swor, solo physician and owner of Swor Women's Care in Sarasota, Fla., which has 10 total employees, including two nurse practitioners. For example, he hired temporary staff for six months to scan charts into the system and saw revenue shrink due to lower staff productivity during the transition from paper to electronic files.

So how does a small practice afford all of this?

For starters, by attesting as soon as possible for the first stage of meaningful use.

While incentive payments do not cover the EHR investment, they are a significant help as the practice moves forward, says Swor. His practice, for example, has been able to use incentive money to add other features tied to the EHR, such as electronic prescribing and a lab interface, a patient portal to interact with patients, and an analytic program that helps extract meaningful use statistics and reports.

Apart from the obvious Medicare and Medicaid reimbursement, practices can get help paying for an EHR system by participating in various pay-for-performance programs. Miller, for example, qualified for significant incentives through the nonprofit Bridges to Excellence incentive program, which certifies practices that meet certain performance criteria set by the National Committee for Quality Assurance and other quality assessment groups.

By adopting EHRs and becoming certified as a Patient-Centered Medical Home by Bridges to Excellence (run by the nonprofit Healthcare Improvement Incentives Institute) Four Seasons Pediatrics received more than $30,000 in Bridges to Excellence incentive payments over three years and qualified for other insurer-sponsored pay-for-performance programs. As a result, the practice achieved a positive return on investment less than three years after implementing electronic records.

Cost-effective add-ons

Sometimes budgeting requires an upfront purchase in smaller, money-saving technology.

"Practices that just grab an EHR off the shelf, plug it into their practice and keep things the same as they have always been, tend not to be successful," says Jason Mitchell, a family physician who directs the American Academy of Family Physicians' Center for Health IT. "You have to make ongoing incremental changes - the office is more than its EHR system, you have to look at all of the systems together."

But what if you only have a limited budget (such as a few thousand dollars) at your disposal? Here are a few of the smartest add-ons that can save your practice money in the long run - so you can have more money in your budget for bigger purchases later on.

1. Upgraded billing system. It makes sense to upgrade your billing system when you purchase an EHR so that your practice management and clinical sides work together, says Mitchell. Having a unified system allows physicians to see the cost implications of clinical decisions, such as prescribing medications, which will be increasingly important under healthcare reform.

2. Automated phone system. This can integrate with your practice management system and can be another cost-effective purchase because it saves staff time on making calls, says Swor. His office uses PhoneRover, a Web-based software service that automatically sends appointment reminders to patients. "We used to call each patient personally to remind them of appointments," says Vonnie Weaver, business manager for Swor Women's Care. "I looked at the time it would save to have an automated system make the calls instead of an employee and the ROI was pretty obvious. We save four to six hours a week on calling." Employees now spend just a few minutes every morning uploading a file to PhoneRover, which provides a daily report of phone calls received, says Weaver. Staff find out about cancellations two days in advance, enough time to fill those spots with other patients and avoid losing billable income.

3. Patient portal. A robust patient portal is another wise investment after you've implemented an EHR, says Kosiorek. Portal technology is one of the basic essentials that practices can incorporate into their EHR, and will become very common over the next few years as practices gear up for Stage 2 of meaningful use, he adds. Swor says he is looking at installing a portal that will allow patients to make appointments online in real time. For a relatively small monthly fee, patients would be able to log onto the portal to view a calendar with available appointment slots. A Harris Interactive online poll conducted in July 2012 highlighted the pent-up consumer demand for online products, finding that while 65 percent of respondents rated online access to their medical records as important or very important only 17 percent of patients had been offered the service. The survey reported similar results for e-mail access to doctors, online appointment setting, and online billing and payments."A lot of physicians put off the patient portal step but we went right to it with our new system and the efficiency is great for doctors and staff," says Miller. Patients can log on to the portal to view their lab results, for example, saving the office staff from calling every patient with test results."When a lab result comes in, it automatically goes into the portal as soon as I've reviewed it," says Miller. "I can stop that if it's something I need to discuss with the patient, but the majority of labs are normal. We click a button to attach an explanation of the lab and the patient gets an e-mail to log onto the portal."

GreenField Health added secure messaging to its portal so patients can contact their physicians at any time.

4. Digital signing technology. Rallison is also looking into using DocuSign, a service that allows patients and physicians to sign documents electronically from any Internet device and have them sent directly to the electronic record. Digital signing not only saves money on paper, but also printing, copying, delivery, and filing costs associated with a paper-based system.

5. Free or low-cost mobile apps. Some applications available for smartphone and mobile devices can increase your productivity yet cost nothing, notes Swor. "A lot of fantastic apps have changed the way I do things dramatically," he says. For example, he uses a pdf-to-file application to scan documents with his smart phone and e-mail or upload them to DropBox, where someone on his staff can download them from any computer.

When deciding which features to add, always consider the value to your practice, advises Kosiorek. Will the new gadget or application result in actual cost savings or is it just a nice convenience?

For example, a blood pressure monitor that automatically feeds results into the electronic record might be slightly more convenient than having a nurse manually enter the information but doesn't add up to significant savings.

"It's a bit more efficient but is it worth the investment to dump your old equipment in favor of the new one? Probably not," says Kosiorek. "It's probably more cost effective to have your old equipment run its course and buy the new equipment when you need it. Don't go willy-nilly buying all the new gadgets - find out what is going to work for you, what will make your practice more efficient and invest wisely."

More strategies to save

While experts don't recommend scrimping on your EHR system, there are some ways to save on ongoing maintenance and data storage without sacrificing safety and security:

1. Consider the cloud. Practices should look into cloud-based data storage in lieu of maintaining servers in their office, says Mitchell. While cloud storage may cost about the same as maintaining a server on-site, when you consider the annual costs over five years, it may be more cost effective after you account for the cost of periodic upgrades to your server and adding additional servers for faxing or e-prescribing. While the EHR industry is structured for the client-server setup, it is gradually moving toward the cloud-based, or Software as a Service model, which allows physicians to access applications over the Internet that are hosted remotely by a vendor or service provider, says Kosiorek. "Cloud-based storage is inherently less expensive in terms of equipment, resources, and staffing, and it is what every other business and industry is moving toward."Another downside to the server model is that the architecture isn't compatible with iPads and other newer handheld devices, says Mitchell. However, some cloud-based systems - such as drchrono and ElationEMR - are designed to work on the iPad, he says.

2. Outsource expertise. GreenField Health offsets some of its EHR-related costs by providing consulting and hosting services to other small practices, says Rallison. Its subsidiary - GreenField Technology Services - currently provides hosting services and application support to six small practices. Data is stored at an off-site business center in a secure building equipped with redundant power sources and fire suppression systems. "After we made the investment [in a data storage center] we saw that we had unused capacity and we had practices coming to us for advice," says Rallison, who hired a physician with technological expertise to run the outsourcing operation."Hiring that person cost us more than we would normally invest but by servicing these other practices it more than offsets his salary plus some of the expenses we incur by being a high-tech practice and having secure, reliable technology," says Rallison.

3. Store data off-premises. Remote data storage is an economical solution for small practices that find themselves in a resource bind after investing in EHRs, says Rallison. "They get the benefit of a robust EHR at a palatable cost without investing in servers, backup, and hiring an IT person. If you want to stay independent, you need to find organizations that will provide hosting and support so you don't have to worry about that part of your business."

4. Learn from your peers. Swor and Weaver advise other small practices to take advantage of expert advice and other physicians' experiences when considering any significant technology investment. For example, they selected an EHR system that was being used by two large groups in the area with considerably more resources to research the purchase. Weaver then talked to five office managers who were using the system."I found out how they had their offices set up and what equipment worked the best," says Weaver. "That helped us make a decision about what products to buy to go along with using the EHR system."

And, of course, as with any technology purchase, do your research upfront to ensure you get value for your money, says Swor.

"When it comes down to whether to spend significant money, I am a big believer in getting expert advice," he says. "Even if we have to pay for it, we get expert advice on any new technology we want to purchase and incorporate into our practice. It's such a big decision."

In Summary

Looking for ways to afford technology? Here are some great budgeting strategies to consider:

• Buy refurbished computers on eBay if you don't need top-of-the-line models.

• Attest as soon as possible for the first stage of meaningful use.

• Look into pay-for-performance programs, such as insurance incentive programs.

• Consider cloud-based data storage over maintaining servers on-premises.

• Use digital signing technology.

• Tap into free or low-cost mobile apps to improve productivity.

Janet Colwell is a Miami-based freelance writer specializing in healthcare. She can be reached via editor@physicianspractice.com.

This article originally appeared in the June 2013 issue of Physicians Practice.