MGMA conference: EHR implementation hindered by Medicare cuts

NEW ORLEANS—Electronic health records (EHRs) are helping medical practices' bottom lines, but the threat of Medicare reimbursement cuts may lead them to stop investing in the technology, according to new survey data released by the Medical Group Management Association (MGMA) at its annual meeting last week.

One survey found that practices that implemented EHRs reported better financial performance than those that didn't. Specifically, EHR-using practices owned by hospitals and integrated delivery systems (IDS) reported $42,042 more in operating margin per full-time-equivalent (FTE) doctor than practices using paper records. EHR-using practices not owned by a hospital or IDS reported $49,916 more in operating margin. Further, non-hospital and IDS-owned practices that had had an EHR for five years reported 10.1% higher operating margins than those who were in the first year of having an EHR.

Practices may be loathe to implement EHRs, however, given the looming threat of reimbursement cuts due to Medicare's sustainable growth rate (SGR) formula, a second survey found. Forty-five percent of practices reported they would likely delay buying an EHR system in response to the 23.6% cut set for Dec.1, and the additional 6.5% cut set for Jan. 1, 2011. “It's a supreme irony that, on the one hand, the government is offering incentives to practices to purchase EHRs, but then plans to cut the SGR so they can't buy EHRs,” said William Jessee, MD, MGMA president and CEO, at a press conference.

About half of survey respondents also said they would stop seeing new Medicare patients if the cuts go through, and 28% said they would stop treating all Medicare patients altogether. Sixty-one percent said they were likely to reduce administrative support staff; 54% would reduce clinical staff; and 77% would delay buying new clinical equipment and/or facilities, the survey found. Indeed, data from August show about a third of practices already started reducing the number of new appointments for Medicare patients, and cut staff, once Congress failed to definitively act on Medicare cuts by a June 1 deadline.

A third survey found that hospital- and IDS-owned practices reported considerably lower revenue than non-hospital-owned groups for 2009. The median revenue for a multispecialty practice not owned by a hospital was $798,608, compared to $448,597 for a hospital-owned group, per FTE. “A lot of it is how you account for revenue,” explained Dr. Jessee. “Non-hospital-owned practices count ancillaries, for example; hospital-owned practices don't.”

Specialists in hospital- and IDS-owned practices reported median total compensation of $294,984, compared to $353,549 in non-hospital and IDS-owned practices. Yet primary care physicians working in the former type of practice reported median income of $192,116, compared to $179,688 in the latter, the survey found. “The need for primary care coverage and referrals in hospital- and IDS-owned practices may contribute to the overall difference in compensation,” said Jeffrey Milburn of the MGMA Health Care Consulting Group, in a press release.

—Jessica Berthold, associate editor