Wanted: Better Incentives

But others argue that physicians need to be given better incentives before they move toward wide-scale deployment of these systems. Jeffrey W. Rose, CEO of HealthAlliant, a nonprofit adviser to regional health information organizations, says that none of the pay-for-performance pilots currently under way offer enough payment to overcome the obstacles. "Ninety-plus percent of the benefits [of EHRs] accrue to others--insurers, hospitals and government entities," he says. "We expect physicians to make the investment even though others get the benefit."

Because of this cost/benefit dynamic, Rose and other physicians think that insurers and state and federal governments should put up more money for EHRs. For example, the American College of Physicians, which represents specialists in internal medicine, wants to see either low-cost loans or outright grants for physicians who plan to implement EHRs. Rose says that research on one of their large-scale projects showed that EHRs created $US125 million in annual savings for medication management and another $100 million in diagnostics management. It also showed that 95 percent of the savings went to self-insured employers and commercial and government health-care plans. "They expect doctors to pay for this, and it just isn't fair," he adds.

But Dolores Mitchell, executive director of the Massachusetts Group Insurance Commission, disagrees. Mitchell has implemented a pilot program that tracks how individual physicians do on specific quality-of-care measurements so patients in the state-funded plan can see how their physicians perform; these physician profiles, which are culled from EHRs, could eventually be used in a pay-for-performance system. "There's a lot of push from doctors to say [we] should put up the money [for EHRs]. Well, think of everything else that goes into a doctor's office--if they put an MRI in their office, they don't ask me to pay for it. This is what it costs to be a modern, efficient, safe practice--it's a cost of doing business. You deal with that in two ways: You charge more money, and I believe the tax laws of this country still allow you to write it off as tax deduction."

Mitchell says doctors worry about system obsolescence, the overall cost of implementation and the changes in the way practices work. She's sympathetic to a point but hopeful that the pilot projects will show doctors that EHRs "only hurt for a minute."

The hurt actually lasts for more like three months, Basch tells doctors at MedStar Health, where he is medical director of e-health. Basch is helping to roll out EHRs from GE Physician Office to the roughly 800 doctors employed by MedStar Health, which had $US2.7 billion in revenue and more than 1 million outpatient visits in its last fiscal year.

Basch says that the up-front costs are between $US15,000 to $US20,000 per physician, about 40 percent of which is the cost of hardware, including flat-screen monitors and networking equipment. He is nearing completion of a two-year rollout to 100 physicians, starting with practices that volunteered. Basch expects a variety of returns over the long run, including reduced medical errors, cost savings and improved quality of care. While large organizations like MedStar are well-positioned to gain benefits from EHRs, smaller practices that have adopted the systems find they can also get great returns.