Federal Incentives Prompt Providers to Replace Existing EHRs

March 11, 2011

March 11, 2011 — More than one third of healthcare organizations shopping for an electronic health record (EHR) system for physician offices are replacing an existing one, all in hopes of qualifying for federal EHR incentives, according to KLAS, a firm that researches medical software and services.

The company's report on EHR system buying habits, released last week, states that providers traditionally are reluctant to retire their EHR or practice management systems, even when vendors are no longer supporting them. The shift to widespread technology replacement — a purge, in the words of KLAS — reflects the success of an EHR incentive program created by the American Recovery and Reinvestment Act of 2009.

That economic stimulus legislation authorizes a maximum payment of $44,000 under Medicare, or almost $64,000 under Medicaid, to physicians and hospitals that demonstrate "meaningful use" of an EHR system; for example, improving patient care and lowering costs. This is the first year to qualify for incentive payments, which are stretched over 5 years in the case of Medicare, and over 6 years with Medicaid.

Among other requirements, providers must field a system that is certified as capable of performing key tasks such as electronically transmitting a prescription and sharing data with other EHR systems. Since last fall, federally appointed certification bodies have given their stamp of approval to hundreds of products, including 314 for physician offices.

4 EHR Vendors Dominate Replacement Market

KLAS surveyed roughly 400 provider organizations that were buying an ambulatory EHR system. Of this group, 35% were replacing an existing system. Some of these replacement buyers owned ancient technology, whereas others were ditching practically brand-new systems, said Mark Wagner, KLAS director of ambulatory research, in an interview with Medscape Medical News.

Providers in the market for a replacement EHR system generally limit candidates to a small field of vendors, according to KLAS, which is based in Orem, Utah. Topping the list are Nextgen Healthcare, Allscripts, eClinicalWorks, and Epic Systems, each named by one fourth of providers as a vendor they would consider, excluding their current one.

The KLAS report is available for purchase on the company's Web site. The price for physicians is $980. Physicians can look up survey data on individual vendors free of charge if they first complete an online questionnaire about the medical software, equipment, or computer services used in their practices.

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