Doctors Go Digital

For more than a decade, federal health officials have tried to persuade doctors and hospitals to abandon paper and switch to electronic health records, but it's been a tough sell. The cost of equipment and training, the hassle of digitizing paper records, and uncertainty about how well information technology systems actually will work have stymied progress.

But financial incentives for doctors who take the electronic records plunge could be turning the tide.

Two recent surveys indicate that 41 percent of doctors and 95 percent of hospitals are ready to give electronic records a try. The reason: $27 billion in payments is available for those who make the switch.

The payments to doctors, which could be as much as $63,750, are part of the 2009 American Recovery and Reinvestment Act. "Never before have there been incentives like this," says Melinda Buntin, chief economist for the Office of the National Coordinator for Health Information Technology.

She warns health care providers, "This is a one-time opportunity--we're not going to have another stimulus bill. If you want to bring your practice into the 21st century, now is the time to act."

Indeed, the law calls for financial penalties for those who fail to do so.

Doctors and hospitals that don't opt in will face a 1 percent reduction in Medicare and Medicaid reimbursements per year starting in 2015. That penalty goes to 3 percent by 2017, and the Health and Human Services secretary has the option of increasing the cuts to 5 percent by 2019.

Medical providers seem to be getting the message.

A survey by the National Center for Health Statistics at the Centers for Disease Control and Prevention indicates that 41 percent of office-based physicians "intend to take advantage of federal incentive payments" and switch to electronic records, the Office of the National Coordinator announced in January.

Then in February, the American Hospital Association said 95 percent of 1,297 hospitals it surveyed "want to participate" in the incentive program. The survey also indicates that fewer than 2 percent of those hospitals now have electronic records systems that meet the requirements to qualify for incentive payments.

Dr. David Blumenthal, the national coordinator for health information technology, hailed the survey results as a reversal of the low interest in EHR adoption in previous years. "I believe we are seeing the tide turn toward widespread and accelerating adoption and use of health IT," he says.

The payments, which started going out this year, are worth up to $44,000 for doctors who treat Medicare patients and up to $63,750 for those who treat Medicaid patients.

"Information technology has the potential to transform health care as it has transformed many parts of our economy and society in recent decades," the President's Council of Advisors on

Science and Technology said in a December 2010 report.

Electronic health records promise to reduce mistakes, increase efficiency, cut costs and improve the quality of care for individual patients and patient populations. But getting to that point won't be easy, even with incentive payments, e-records experts say.

For electronic health records to deliver on their promises, the economics of health care will have to change. "We will have to move away from a fee-for-service model" to one where pay is based more on outcomes--good health, says Christine Bechtel, vice president of the National Partnership for Women and Families, a longtime supporter of electronic health records.

"Fee for service pays for volume. The more stuff you do under fee for service, the more money you can make," she says. More tests, more office visits, more surgeries all mean more money for doctors, laboratories and hospitals.

By contrast, electronic health records aim to increase information sharing and collaboration. On a basic level that means test results and X-ray images will be entered into an electronic record once and will be instantly available to any doctor who needs them. There will be no need for multiple tests--or for multiple billings.

Beyond these sorts of cost-savings, e-records facilitate information-sharing--between primary care physicians and specialists, for example. The expected result is better care, but for medical providers, the economics of switching to such a model remains uncertain.

Electronic records systems will have to "support two universes," says Dr. Steven Waldren, director of the American Academy of Family Physicians' Center for Health IT. One is the current world, which focuses on the volume of procedures and provider productivity, he notes.

The other is a future in which doctors are motivated to boost patient care, quality and cost-effectiveness, Waldren says.

That future features efficient exchanges of patient information among doctors, hospitals and researchers; automated decision support to aid diagnosis and treatments; online portals through which patients can participate in their own health care; and electronic prescriptions--all while protecting patient privacy.

For the most part, neither the electronic health records systems nor the doctors who would use them are there yet. And despite the recent surge of interest in incentive payments, doctors might discover they don't stack up to the cost of launching electronic records systems.

Medical practices can expect to pay $30,000 to $50,000 per doctor for electronic records systems during the first year, and 10 percent to 15 percent of that each year thereafter, Waldren says. Buying Internet-based e-medical records services might be a cheaper way to go--some services cost as little as $250 to $1,000 per doctor per month, he adds.

The Office of the National Coordinator for Health Information Technology has set up regional extension centers to help doctors and hospitals select e-records systems and train their staffs to use them.

But Waldren says he has seen enthusiasm for e-records wax and wane. A 2003 survey indicated that 80 percent of family physicians expected to be using electronic records within two years. In fact, about 30 percent did, he adds.

"We've been encouraging our members to adopt electronic records since 2000," Waldren says. "But for some practices, the right decision is not to do it today."

William Matthews is a freelance journalist who has covered government and technology in Washington for two decades.