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Increasing Health IT, EHR Investment Runs Up Practice Costs

New data from MGMA shows that increasing health IT and EHR investments are running up major practice costs.

By Sara Heath

Health IT and EHR investments are costing physician-owned multispecialty practices thousands of dollars per physician, according to a new report from the Medical Group Management Association (MGMA).

The 2016 MGMA Cost and Revenue Report shows that health technologies such as EHRs ran physician practices up to $32,500 per physician in 2015. These expenses included information technology equipment, staff, maintenance, and other expenses.

According to MGMA, these rising costs are a result of meaningful use, which provided monetary incentives to encourage practices to adopt EHRs and robust health IT systems. Although these incentives initially helped mitigate the up-front costs for EHR adoption, they slowly petered out starting in 2011.

Since then, health IT costs have risen by 40 percent, the data shows, and physician practices have faced rising health IT costs.

According to MGMA officials, this shows an issue with federal incentive payment and health IT policies.

“While technology plays a crucial role in helping healthcare organizations evolve to provide higher-quality, value-based care, this transition is becoming increasingly expensive,” said Halee Fischer-Wright, president and CEO of MGMA.

“We remain concerned that far too much of a practice’s IT investment is tied directly to complying with the ever-increasing number of federal requirements, rather than to providing better patient care. Unless we see significant changes in the final MIPS/APM rule, practice IT costs will continue to rise without a corresponding improvement in the care delivery process.”

Likewise, the group says these rising costs are due to the need for more robust health IT systems. Over the course of meaningful use, providers have adopted additional technologies like patient portals to help bolster their practices. According to a recent MGMA poll, 50 percent of 850 surveyed physicians work with an expansive patient portal that provides functions like online appointment scheduling.

The report shows that other federal policies may be running up physician practice costs.

In 2015, physician-owned practices saw a 15 percent increase in operating costs for full-time physicians, an jump up from the 10 percent increases these practices have seen in years prior. MGMA suggests that these operating cost increases put greater pressure on healthcare organizations as they continue on the path toward value-based healthcare.

Federal agencies are also spending more money on health IT, shows a separate report released last month.

According to a Govini report, the Department of Health & Human Services, the Department of Veterans Affairs, and the Defense Agency all increased its health IT spending by 27 percent over the past year.

HHS had the highest health IT spending, with the sub-agency the Centers for Medicare & Medicaid Services (CMS) spending $13 billion in contractual spending between 2011 and 2015.

Going forward, the report shows an upward trend in health IT spending. At CMS, leaders plan to spend $333 million for call centers, claims processing systems, and other modernization projects.

At the VA, IT experts plan on expanding access to telehealth through part of a $1.2 billion network expansion grant. The agency also plans to spend $370 million on network security improvements.

DHA plans on expanding its share of health IT spending through the Department of Defense’s EHR modernization project.

This spending is the result of more and more emphasis on health technology. As noted in the MGMA report, many government incentive programs require this technology investment. However, this emphasis may also be the result of a culture change. As the healthcare industry catches up to other industries, it may need to quickly adopt new technologies and approaches.

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