Electronic Health Records

Adoption & Implementation News

Another NC hospital falls to Epic EHR implementation costs

By Jennifer Bresnick

- Wake Forest Baptist Medical Center isn’t the only North Carolina hospital struggling with poor credit ratings and huge revenue gaps after attempting the installation of an Epic EHR system.  Its neighbor in Greensboro, Moses Cone Memorial Hospital, just received a “negative” outlook from Standard & Poors (S&P) due in part to the $130 million spent on purchasing, implementing, and maintaining their new Epic infrastructure.

While the hospital retained its AA rating on NC Medical Care Commission’s fixed-rate series 2011A bonds, the downgrade is a significant blow to the hospital’s reputation, and comes after the elimination of 300 jobs in the past year.

“The negative outlook reflects our view of the deterioration in Cone Health’s operating performance and in some aspects of its balance sheet over the last two fiscal years,” credit analyst Karl Propst said. “Some metrics are now weaker than AA medians.  However, because management believes that fiscal 2013 was a transitional year, and because we believe that management has a clearly outlined plan to restore a positive operating margin in fiscal 2014, we continue to view the AA rating as appropriate.”

The hospital experienced a $17.9 million operating loss through third quarter of its financial year, and also reported an 18.9% drop in net patient revenue, due in part to declining Medicare and Medicaid reimbursements.  The Epic implementation costs, which included the hiring of 90 full-time staff to handle the change, are viewed as temporary, but still represent a major blow to the hospital’s coffers.

Epic Systems is the largest EHR vendor in the country by number of meaningful use attestations, and is a popular choice for hospitals.  But horror stories about skyrocketing costs are nearly as plentiful.  Besides Wake Forest’s woes, which include cutting 950 workers from its payrolls and rescinding merit-based raises for those employees who were left, the company has been implicated in the closure of the emergency room at St. Andrews Hospital in Boothbay, Maine, due to its overwhelming financial burden.

“We are told that MaineHealth has spent over $150 million on an Electronic Medical Records (EMR) system that helps all of its subsidiaries,” said Stuart Smith, Selectman for the Town of Edgecomb and a member of the St. Andrews Regional Task Force.  “The system failure also adds operational costs going forward that were not planned for and regional consolidation of finance will now be delayed.”

Many customers have successfully installed Epic without running their budget into the ground, as evidenced by more than 23,000 meaningful use attestations, and Cone Health is confident that its troubles are only temporary.  “Cone Health remains financially strong despite that environment. While the negative outlook is disappointing, there is no cause for alarm,” said Jeff Jones, Chief Financial Officer at the hospital in response to the downgrade. “We are confident that we have the correct measures in place to meet the future health-care needs of our communities.”



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