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OH Hospital Points to EHR Implementation for $22.6M in Losses

An EHR implementation at Fairfield Medical Center contributed to $22.6 million in operating losses in 2018.

A Cerner EHR implementation contributed to $22.6 million in losses at Fairfield Medical Center.

Source: Thinkstock

By Kate Monica

- Ohio-based Fairfield Medical Center experienced $22.6 million in operating losses due to the expenses associated with a Cerner EHR implementation in 2018, according to Columbus Business First.

Fairfield Medical Center CFO Sky Gettys contributed $22.6 million of a total $22.8 million in operating losses to the cost of the EHR system upgrade.

Full-year revenue at Fairfield Medical Center declined by less than 1 percent over the past year, while expenses jumped by 7 percent. A decline in outpatient volume and an increase in drug costs also contributed to an overall rise in operating expenses.

The cost of the EHR implementation should not spell long-term financial trouble for the Ohio health system, Gettys told Columbus Business First.

“The system has enough reserves that one-time investments can occur,” Gettys told the news source in a written statement. “Now that we have moved past the one-time cost of implementation, we believe that we will be back on track.”  

“It has been a trying year; however, that strain was not felt by our patients,” Gettys continued. “We are proud of how our staff rose to the occasion to maintain the high-quality healthcare our patients have come to expect.”

In 2017, Fairfield Medical Center saw only $1.9 million in operating losses. The health system had anticipated this increase in expenses as a result of construction costs associated with a new $30 million outpatient facility at its River Valley campus in north Lancaster, Ohio.

In 2019, Fairfield Medical Center leadership predicts another $2.4 million in operating losses due to the costs of opening its River Valley campus, according to Gettys. After the opening of its new outpatient facility, medical center officials expect to increase clinical efficiency and patient volume with the help of the Cerner EHR implementation and its new location.

Moody’s Investors Service lowered the rating on Fairfield Medical Center’s bonds in the fourth quarter of 2018 based on operating losses observed throughout the year. The bond credit rating company stated an increase in financial pressure from the cost of implementing the new Cerner EHR system contributed to the ratings hit.

However, Gettys is confident the investments over the past year will help to improve Fairfield Medical Center’s financial position in the future.

“I believe that (the system) controls its own future in managing our costs and growing our services,” Gettys told Columbus Business First.

Costly EHR implementations historically contribute to a significant spike in operating losses for health systems in the months following go-live.

In 2018, Vanderbilt University Medical Center (VUMC) reported lower operating income compared to 2017 due to an Epic EHR implementation.

Expenses at the medical center jumped by $257 million because of an increase in salaries, wages, benefits, medical supplies, and drug costs. VUMC attributed to sharp increase in labor expenses to its $200 million EHR implementation project.

One-time spikes in operating costs are to be expected after EHR implementation investments. In some instances, problems arising from botched EHR implementations can lead to significant losses years after the system launch.

In 2017, Dana Farber Cancer Institute claimed problems with its Epic EHR implementation contributed to significant losses and decreased revenue throughout its third fiscal quarter.

The hospital reported operating losses of $44.2 million in its third quarter. During the same time last year, Dana Farber reported operating losses of only $6 million.

The medical center pointed to ongoing problems with billing due to its Epic EHR software as a primary contributing factor. The cancer center went live with the EHR system in May 2015. In the years following, the EHR system allegedly caused the hospital to lose up to $25 million due to billing problems.

Billing issues also contributed to an annual loss in net patient services revenue of $2.4 million.

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