Are IT Costs Squeezing Community Hospitals Dry?

The results of our fifth annual Community Hospital IT survey are in, and one thing is clear — the cost of IT is having an adverse effect on the survival of small, rural hospitals.

Money problems, unsurprisingly, are universal in healthcare. Declining reimbursement, decreasing inpatient volume, increasing competition, and government funding cuts are just a handful of the financial challenges leadership teams deal with daily.

These challenges are difficult for any health system to overcome, but they are having a particularly devastating effect on community hospitals — so much so that nearly 50 rural hospitals have closed since 2010 according to the North Carolina Rural Health Research Program. And while we may not be headed towards a second coming of the late 1980s/early 90s when 440 small hospitals closed, it’s clear community hospitals are feeling the financial squeeze more than their larger counterparts.

With that in mind, we once again set out to find what particular challenges were causing the most pain for leaders of rural hospitals in our fifth annual Community Hospital IT survey, and the cost of implementing health IT — from initial costs to maintaining systems — was cited as the major hardship.

Living On A Budget (And A Prayer)
We asked participants to rank eight specific health IT implementation challenges — initial costs, maintenance costs, lack of IT resources, mandates/regulations/compliance, lack of interoperability standards, acceptance by clinical staff, adjusting to healthcare reform/ value-based reimbursement, and the inability of technology to meet hospital needs — from most to least challenging. More than a third, 35.6 percent, selected initial costs as the biggest pain point. Combining those respondents with the 6.8 percent who selected maintenance costs as the most pressing issue means more than 40 percent of those who participated in the survey cited costs as their biggest health IT challenge.

Brian Blaufeux, CMIO of Northern Westchester Hospital, was in charge of vendor selection when his facility was making buying decisions to support HIPAA secure tech. “I looked at the pricing and felt there was a bit of a hurdle to get over initially,” Blaufeux recalls. “And with any new project, there are going to be ongoing fees. I certainly think the initial outlay is a big hump to get over but, in terms of maintenance costs, it’s more of an issue if the vendor needs to do something specific for you. That’s pretty similar across the board.”

Hugh Chatham Memorial Hospital CIO Lee Powe notes costs are relative depending on a number of factors ranging from what systems the facility uses to how large the facility is. “What’s a high cost for one facility depends on their profitability margins and what they’re making as far as revenue coming in,” says Powe. “We’re doing well, so the amount of money I put into capital on an annual basis can go anywhere from $1.2 million to about $1.8 million, but if you picked a 25-bed facility, rolling out $50,000 might be a high dollar figure.”

Powe further illustrates this point by comparing his 81-bed facility to Novant Health, one of the larger Health Systems on the East Coast. “Novant could put in something that costs a couple million dollars, a figure that would be high to me. If someone said, ‘Lee you have to implement Epic,’ I would have a heart attack because the cost is so enormous for their system.”

Powe singles out IT as one particularly big hurdle, noting you can either implement an EHR or not. “It’s bimodal. I think you have what I would call an activation cost, like in ambulatory practice. You’re not going to take something that has 10 modules and implement three of them,” Powe explains. “That’s going to cause you more pain than implementing the whole thing. I think activation and maintenance costs for technology are daunting for some. I’m not saying that we’re rolling in the dough, but they’ve made wise decisions and it’s worked for them, even though these things are not perfect.”

Blaufeux, adding to Powe’s point, says community hospitals are on their own with no economies of scale. “Whether you’re purchasing stretchers or EHR software, community hospitals simply don’t have bargaining power, and that’s why a lot of consolidation is happening,” says Powe. “A true community hospital has to do everything alone — IT, HR, laundry — it goes on and on.”

Sean Patrick, IT Director at Gifford Health Care, says his facility has IT cost-related issues as well, but he is more than ready to think outside the box to overcome them. “A lot of the hospitals are moving towards leasing models to avoid capital expenses,” Patrick explains. “My hospital is not there yet, but I’ve sat down with my CFO to try and come to an understanding. We lease other high-ticket equipment, but IT is just one of those areas they’re not ready to apply that concept to.”

Patrick feels leasing should be given serious consideration to combat the rapid rate at which technology is changing. “We put the new server in two years ago, and it’s obsolete,” Patrick says. “Now we’ve got to replace it. If you lease, you can get the latest and greatest and only have to pay a service contract.”

Patrick fields calls from finance companies saying they don’t care who he’s buying equipment from, they simply want to give him a line of credit. “I can buy from HP or Dell and in the end it’s a lease where we’ve just got to pay X number of dollars per month,” says Patrick. “And at the end of that lease, you upgrade to a new device. It’s almost like a revolving line of credit where you just pay, but you’re staying current.”

It’s Not Just About The Benjamins
While financial concerns topped our survey, they are not the only challenge community hospitals face. Mandates/regulation/compliance, in fact, were cited by 18.6 percent of respondents as their single- biggest pain point, followed by acceptance by clinical staff (cited by 11.9 percent of respondents), lack of IT resources (cited by 10.2 percent of respondents), and lack of interoperability standards (cited by 8.5 percent of respondents).

When sorted by average ranking, initial costs remained the biggest pain point with an average ranking of 3.05, but lack of IT resources jumped to second with an average rating of 3.53. Mandates/regulations/ compliance were third (average ranking of 3.93), maintenance costs fourth (average ranking of 3.98), and lack of interoperability fifth (average ranking of 4.58).

Blaufeux was one of those frustrated with a lack of IT resources, choosing it as his biggest pain point. “From my standpoint, it’s just me and a team of four or five former nurses who are doing the IT build,” Blaufeux said. “They do all the cuts, tweaks, upgrades, maintenance, and training of new staff.”

Blaufeux’s small staff is constantly being challenged with everything from new regulations to something simply not working the way it should. “There’s always potential risk in the system,” says Blaufeux. “From something not being documented correctly to a result not getting where it needs to be — I end up doing all kinds of workflows, trying to figure out how to improve them.”

Part of improving workflows is adjusting the staff, a difficult task when you aren’t their boss. “I work with the clinical staff very closely,” says Blaufeux, “but they’re not really my staff. I’ve got a lot of things on my list, and things keep coming up, and I want everything to be as good as it can be.”

Lack Of Interoperability Returns Healthcare To The Old Days
Powe selected lack of interoperability as his number one challenge primarily because, as a small hospital, Chatham loses a number of patients to larger facilities in the area. These larger facilities, such as Wake Forest and Novant, use Epic for their EHR while Chatham uses Thrive from Evident.

“All the big facilities, they’ve got it made because they can share data among themselves,” Powe says. “But the little guys trying to send data to them are having a very difficult time. Meaningful use (MU) requires me to send data to the next provider of care, and the lack of interoperability between our different systems makes that difficult. They want me to get an account to look in their Epic system, but I don’t need an account because they’re not going to send me patients.”

Even if Chatham wanted to switch to Epic, Powe says it’s not affordable. “We’re not affiliated with a large hospital. We’re a small, independent, not-for-profit facility that stands alone, and we’re just trying to give a larger facility our patients’ data so it can take care of them. We’d like the data to beat the patients to the hospital, but the rules are very challenging for us. Nobody wants to receive the data; they just want us to play in their system. We have no need to play in their system.”

As a result, Chatham is forced to print patient records and send them to the larger facilities. “It kind of defeats the purpose of electronic records,” notes Powe.

Regulations, Mandates, And Legislation
How much discomfort do mandates, regulations, and legislation cause? Quite a bit, according to those who took part in our survey. In fact, mandates and regulations have caused Chatham to change the way it forecasts its future.

Chatham used to operate under a concept of strategic plans and tactical plans, each looking out a number of years. Specifically, the strategic plan was a five-year outlook while the tactical plan focused on the next two years.

“We’ve had to change our planning because mandates and regulations are making us,” Powe says. “We live in a world of get it done now, then prepare for the next thing coming in six months, or the thing that’s going to be here next October.”

And it’s not just federal mandates forcing this change in thinking. North Carolina, where Chatham is located, put transparency laws in place requiring hospitals to submit average costs for every insurance provider on certain DRGs, OR, and imaging procedures. “I’m not sure what they’re doing with the data,” Powe says, “but just putting in all the time to do that on a quarterly basis and get it submitted to the state is just one example of the disruption mandates can cause.”

Powe also refers to a second mandate requiring Chatham to become part of the North Carolina Health Information Exchange. “They’re trying to migrate the HIE over to be under the control of the state, but then they let twenty people go,” Powe says. “Now there are only five people running it, which is causing a lot of pain.”

When asked if any mandates have been helpful, Powe replied it was difficult to say. “I think, when the emphasis was placed on health IT, that put us in a better place because it made us embrace technology and make it work better for the overall system,” says Powe. “I don’t necessarily know that jumping feet first into MU was a great approach, though.”

Powe would rather have seen emphasis placed on medication safety because that’s where he feels patients are being harmed. “I’m not talking about giving the wrong medication,” Powe says, “I’m talking about managing medications from a patient’s perspective. At least our side of the table understands the drugs — it’s just got to be overwhelming on the patient’s side. I wish they would have put more emphasis on medications as opposed to the little check boxes for MU.”

Blaufeux also struggles with regulations, noting the MU transition of care was particularly difficult to administer. “That was a pain, and we’re still working on the details of it,” Blaufeux says. “It created a new workflow on the receiving end for certain physicians, so if you get tagged as a referral physician, that specialist is now getting a CCD in their inbox and their EHR system. To me, this is how it’s supposed to work. But it’s relatively new from their standpoint and they say, ‘Wait, I’ve never seen this patient before. I don’t want to be responsible for this.’”

Adding complexities to an already complex concept is MU Stage 3 and how to ensure secure communication with patients and their EHR data. “We want to see what the final rule is,” says Blaufeux. “At least we’re going to have a little time for that.”

Blaufeux notes there are always new regulations coming out, citing October’s ICD-10 switch as “a big one.” Blaufeux suggests providers will eventually get to relatively accurate diagnoses, but getting them to document the level of detail needed is going to be difficult. “There are vendors that sell templates for certain diagnoses that will allow you to document the specificity that ICD-10 requires,” says Blaufeux. “Whether people will use them or not is another story.”

Some Aren’t Buying It
Convincing clinical staff of the value of health IT was, on average, not as great a concern in the grand scheme of things, ranking sixth in our survey. But to those facing that challenge, it is very real.

Blaufeux has been fighting to convince clinical staff of the value of EHRs. “To get someone who’s very busy doing certain things the way they’re doing them and to try to convince them to do it another way is difficult,” says Blaufeux.

What Blaufeux does is find thirty minutes here or there when staff has time to sit and talk to gather their input. “One example is discharge summaries that didn’t include the problem,” Blaufeux recalls. “After that was pointed out, we added the problem list, and they’re starting to use that template.”

That same philosophy applied to certain order sets for sepsis care, which were not ideal in terms of how the fluids were structured. Blaufeux started holding conversations with the emergency department, incorporating the feedback, and now the order sets are being used. “I’d say it takes time. It’s easy to change an order set or a template, but to get people to use it is a little harder, especially if they’ve been doing something for years,” says Blaufeux. “IT or otherwise, it’s not easy for people to do things a different way, especially with EHRs that allow you to do certain tasks in more than one way.”

Change Starts At The Top
While change generally is driven by those lower on the totem pole, it can’t truly begin until those on the top are willing to commit to it. Overcoming challenges presented by health IT is no different. At Northern Westchester, Blaufeux saw this firsthand with increased collaboration between clinical and financial teams.

“I have regularly scheduled meetings with heads of departments so I can hear their pain points and figure out what they’re doing to work around planned workflows,” Blaufeux says. “Most of the time problems remain in the dark, unless you ask.”

Acceptance and implementation of IT projects are smoother as a result of these meetings, and Blaufeux thinks his facility is overcoming some major obstacles. “I would say continually meeting with clinical leaders of different departments and our Chief Medical Officer to make sure that we’re using the tech and the EHR to the best of its ability is helping doctors do what they need to do and document what they need to. Sometimes the two tasks are at odds with each other.”

Chatham, like Northern Westchester, is in an enviable position in regard to administrative support. Despite the cost associated with IT, Powe says he’s been able to implement all of the initiatives his department has needed.

“I’ve had it slow some projects down a little bit, but I’ve been given pretty good flexibility,” says Powe. “This organization is fabulous, and the board supports all my decisions, so we’ve been able to put in some pretty expensive projects here. I guess that is probably a rare thing.”

That’s not to say Chatham hasn’t had to tighten its belt, especially when the hospital was not making money and had to conduct layoffs. That belt-tightening didn’t stop technological advances, however. “I still got support from the administration and the board to keep buying and doing the things that needed to be done,” Powe says. “That’s the reason I’m still here — they listen to you, they respect your decision, and you’ve got the credibility that when you say, ‘I need to spend $800,000 on storage,’ they’ll say, ‘It’s a hard pill to swallow, but we understand and we’ll support you.’”

Powe feels those in charge know investing in technology is going to take Chatham to where it wants to go. “I’ve finally accomplished two goals I’ve been working on for a long time,” says Powe. “When I got here nine years ago, I thought I would really like Chatham to be “Most Wired,” and this year we accomplished that. We also achieved Stage 6 certification on the Electronic Medical Record Adoption Model by HIMSS Analytics, another milestone we’ve strived for over the last five or six years.”

Powe credits his administration for not only recognizing what IT needs but also embracing it. “They’re listening to the physicians, and the physicians are on board with it,” Powe says. “The physicians are saying, ‘Oh my God, how we’ve changed from where we were nine years ago to where we are today.’ It’s like night and day.”

For a complete overview of survey questions and results, visit healthitoutcomes.com/go/community.