By Andrew Clark.
Information technology is a funny thing. It can make sharing information in a variety of formats faster, more convenient, and more accurate. However, the success of any technological advancement is entirely dependent on the rate at which its use is adopted by the intended users. And adoption depends on a variety of factors, including: cost, time, routine disruption, comfort, convenience, reliability etc. It can also depend on one’s stage in life (for example, consider the texting, Facebook, and twitter usage of teens vs. grandparents). Early adopters (think of those first in line at the Apple Store for any Apple product launch) are technology junkies looking for the next big leap, willing to handle the high cost and often unreliability (bugs) of a new technology. Late adopters are the more practical consumers, looking for the lower cost and higher reliability of a tested technology. It usually takes winning over the late adopters for a technology to be successful and sustainable (consider the failed Apple’s Newton product vs. the iPod, iPhone).

Electronic Medical Records (EMR) are no different. The success of EMR depends on its adoption by physicians, and not just the early adopters but also the later ones. Many EMR systems are currently in use and several have been for some time. The benefits of using an EMR system are many. For the patient, health records can be more accurately tracked, updated, filed, shared, and accessed by a variety of parties. This can translate into more transparency for the patient, a reduction in needless repeated tests for second opinions, and reduced medical errors. For the healthcare provider, an EMR system can also mean faster and more accurate patient note documentation, faster billing cycles, better collection, a reduction in overhead costs, more accuracy in diagnoses, etc. As doctors become more familiar with EMR systems and as the systems themselves improve, these benefits will continue to be realized in more powerful ways. However, the primary problem has been a strong barrier to adoption due to doctor’s preferences, as many physicians continue to prefer the more familiar, yet older manual methods of record keeping. The next step for EMR adoption is converting these late adopters, many of which are older physicians with reluctance to change.

The Obama Administration’s 2009 ARRA Stimulus bill includes ~$19.2B to subsidize and encourage Electronic Medical Record (EMR) system adoption at hospitals and physician offices – otherwise known as the HITECH act. Additionally, President Obama has himself stated a goal of complete adoption by 2014. The subsidies are designed to be paid to individual doctors for “meaningful use” of “certified” EMR systems starting in 2011 with declining annual payments through 2016 (what constitutes a “certified” system and “meaningful” use is still being worked out, and will not be addressed here). It’s a five-year incentive bonus with the last year of any payments in 2016 (for any adopting in 2015 or before), meaning that it will be most beneficial for a physician to implement a system prior to or in 2011 or 2012 to receive the full subsidy through 2016. For providers in rural areas the subsidy payments will be 25% higher. This is the carrot.

The bill then provides for annual penalties starting at 1% of Medicare reimbursements in 2015, rising to 5% in 2018, for those physicians who have not adopted nor are “meaningfully using” an approved EMR system. This is the stick.

Many healthcare professionals are skeptical whether this carrot and stick approach by the government will work, citing the high cost of adoption compared to the subsidy and the many unreliable aspects of the current EMR offerings. In fact, PricewaterhouseCooper’s Health Research Institute issues a study showing that adoption will be more effectively driven by the stick (reimbursement penalty) that the carrot (EMR subsidy). However, it appears that the HITECH act is already working and the evidence is showing a proliferation of EMR adoption prior to the 2011 subsidy payout.

The Healthcare Information and Management Systems Society (HIMSS) developed an EMR adoption model that grades hospitals on eight stages of EMR adoption (0-7, where 0 equals no EMR and 7 equals full EMR). The HIMSS Analytics 2009 Annual Report details that in 2008 close to 33% of all U.S. hospitals were in the 3rd stage of EMR adoption (stage 2), which includes clinical data repository and medical imaging. Additionally, over 35% of U.S. hospitals were in the 4th stage (stage 3), which was up from 25% in 2007 and includes everything from stage 1 and 2 as well as clinical documentation and CDSS error checking. It should be noted that <1% of hospitals reported full EMR as of 2008, but the important things is the movement through the stages (i.e., ~41% at least at stage 3 or higher in 2008 vs. ~28% in 2007). Furthermore, the most recent HIMSS data show that in 2009 (post ARRA stimulus bill) EMR adoption at U.S. hospitals accelerated, as ~65% of hospitals had at least reached stage 3 and ~15% had at least reached stage 4. I would expect that this acceleration would continue in 2010 and into 2011, when the subsidy first arrives.

For physician offices, the CDC’s Center for National Health Statistics reported in February of 2010 that EMR adoption in 2009 reached ~44%, up from ~35% in 2007. The report distinguishes between adoption, basic use, and full system use in physician offices. Similar to hospitals, full system use is still rare (only ~5% of physician offices in 2009 report full use) as it requires running every administrative and record keeping activity through the system. However, what’s most important here is adoption. Adoption means at least some components of an EMR system is in place – usage will only increase over time.

Furthermore, Dr. Greg Parston at Accenture released a survey of over 1000 physicians taken in 2009. The results show that 60% of physicians plan to adopt an EMR in the next two years, and that of physicians 55 and younger 80% plan to adopt an EMR in that same timeframe. Most physicians cited the forthcoming EMR subsidies as the primary reason for adoption. Not only is this astounding, but I think it’s pretty close to accurate.

I spoke with many physician offices a few months ago about EMR adoption and usage, and I discovered that well over half were already using some EMR components and another 20% had already begun implementing an EMR system this year or had plans to do so. The overwhelming sentiment was that adoption was rapidly increasing prior to and into 2011. Additionally, likelihood of adopting in the next 3 years was high amongst current non-EMR users. What I heard was that the government goal, the subsidy and the forthcoming penalty were a primary reason for adoption, but I also discovered that efficiencies were already being realized.

For instance, many reported a reduction in time spent by doctors dictating notes, thereby spending more time with patients or seeing more patients (EMR systems allow for doctors to use a template system that can be quickly filled-in after each patient visit using a point and click format, with an area for some more customized notes). Additionally, several physician offices noted a reduction of transcription time, whether it was outsourced or performed by an in-house employee. Many had eliminated transcription usage all-together. In-house transcriptionists were converted into coding, billing and collection specialists or were let-go entirely reducing headcount expenditures. Overall, doctor’s experiences were mostly positive.

The data and the recent experiences of EMR adopters are very encouraging. We’ve likely already passed 50% adoption by physician offices and even greater in hospitals, and are on our way to 60% or higher by the end of 2011. It’s unlikely that we will see complete adoption by 2014, but we may get close (Of course, full EMR usage will continue at low rates and will come more slowly, but again, the important thing here is adoption). Of all the problems with the ARRA stimulus bill and the subsequent PPACA healthcare bill, this is one area where the Obama Administration appears to be spending taxpayer dollars wisely. EMR adoption and usage will benefit all parties, from patients to providers to payors. Efficiency gains, error reduction, smarter medicine, and transparency, are all forthcoming benefits of EMR usage, and the results are already seen. EMR and EMR component providers are going to experience an influx of demand in a dynamic and changing healthcare marketplace. EMR adoption and usage is increasing rapidly and it’s very exciting.