Who Should Pay for EHRs?

During the 2008 Presidential campaign, Candidate Obama promised an EHR for every American by 2014. The goal was to improve quality of care, reduce disparities and contain costs of health care. When the HITECH act became law in 2009, physicians found themselves under increased pressure to purchase an EHR. Many took action, went out and bought an EHR for their practice, and these are now well positioned to collect the financial incentives put forward by the HITECH act. Many more did not. EHRs are by and large a complex and expensive proposition and the HITECH incentives are not covering the average cost of purchasing and maintaining an EHR. In survey after survey, physicians consistently rank cost associated with EHRs as their top concern when considering transition from paper charts to electronic medical records. This is a bit disconcerting, since physicians have no problem buying other expensive tools and paying for human resources in their practices. How are EHRs any different?

There are three primary stakeholders in health care: those who receive care, those who provide care and those who manage the financial aspects of health care, and no, we are not getting into the quintessential argument of whether there should be only two primary stakeholders. There are several secondary stakeholders as well: those who manufacture medical goods, those who provide ancillary services and those engaged in medical research.

Various constituencies may derive more value from one particular function rather than the others, but as long as that value exceeds what is made available by a paper system, someone should be willing to pay for it. Let’s examine our stakeholders, and their willingness to pay, from the bottom up.

Secondary Stakeholders – Here we find the drug and device manufacturers and the bewildering array of diagnostic facilities. Most of these companies are largely indifferent to what EHRs do and some stand to lose revenue when EHRs shine bright lights on spending patterns. They are not likely to consider paying anything for widespread EHR adoption. On the other hand, the mushrooming mobile health and personal health application providers, who base their entire existence on the availability and successful use of EHRs, show no willingness to share in the cost of computerizing medical records. Needless to say that medical research centers which have been habituated to mostly free access to data sources, may be willing to pay data aggregators, but would never consider participation in infrastructure investments.

Health Insurance Providers – The largest health insurance provider in this country is the Federal Government through the Centers for Medicare and Medicaid Services (CMS), and CMS is proposing to bear a rather hefty portion of the costs of EHR deployments. Obviously CMS is expecting to see great financial rewards from a fully functional EHR network. Whether CMS is placing onerous or misguided requirements on the technology is a completely different question and one has to keep in mind that CMS is primarily a payer and its primary concern must be proper stewardship of tax payer funds. To do that, CMS needs data, and lots of it. You don’t usually pay a mechanic to take a look at your car – you pay him to fix it. CMS is now paying health care providers to treat people and it would much rather pay them to fix people and keep them under warranty, and it would also prefer that this is done via a fixed price contract, instead of the current time & materials model. EHRs are the tools by which quality assurance is performed and deliverables are accounted for and measured.

What’s good for the goose should be good for the gander, and private insurers figured out that paying for EHRs may not be such a bad idea after all. I am not 100% certain, but I would suspect that financing EHRs for physicians in order to improve quality of care falls under the medical expenditures rubric and can be deducted from the federally imposed Medical Loss Ratios (MLR). Since private insurers have historically ran much tighter ships than CMS, I would expect that in return for their Stark exempt contribution to EHR expenses, private insurers will ask for at least as much data as CMS and probably a lot more.

Health Care Providers – These folks are as diverse as the patients they serve, but their interests in EHR are most closely correlated to their size, which ranges from the solo doc in a micro practice to integrated delivery networks serving millions of patients. For large providers who operate multiple and varied facilities of care, EHRs are a tool to effectively manage their business. They were always willing to pay for them and they are continuing to do so now, in spite of the constant rumbling about CMS regulations. At the other end of the spectrum, the small providers, mainly physicians in private practice, who are more financially strapped than ever, see no good reason to take on debt and pay for tools with no demonstrated ability to provide tangible returns. Keep in mind that using paper-based tools to manage a few hundred customers who purchase one of a handful of services between 9 and 5 four days a week, is not nearly as onerous as managing millions of customers purchasing thousands of different services around the clock all day every day. Nevertheless, even these small providers are starting to buy EHRs. As EHR software gets better, some manage to find efficiencies never before contemplated and others are just trying to keep up with the Joneses and survive. Reluctantly and grudgingly, with lots of hard feelings building up, they too are willing to pay.

Patients – All stated goals of EHR adoption ultimately benefit patients. Some may stand to benefit more than others, but in aggregate we will all benefit from improved quality, reduction in disparities and cost containment of medical services. Whether directly or indirectly, through taxation, premiums, wage reduction, increased prices of goods and plain old cash, patients pay for the entire enormity we call health care costs, which includes cost of actual care delivery, overhead and profit margins for all other stakeholders. EHR software is part of that overhead and so are the costs of analyzing, displaying and exchanging information collected by EHR software. When CMS and private insurers and even health care providers write checks for EHR software vendors, somewhere down the line this translates into a little bit less health care for each patient and/or a little more money needed to obtain care. So although we pay for all EHR expenses, we as patients, find ourselves in the perplexing situation where we are forced to lobby, argue, advocate and practically beg for access to the work product of EHR software. And that work product is our life story. It is the record of our birth, the narrative of our childhood successes and mishaps, a document of our education, sexual activity, fears, hopes, marriages, new children, career choices, residence, divorce, widowhood, disease, death and everything in between. In other words: Data. We are paying for this data to be collected, exchanged and analyzed. We are paying for people to decide if we should have a right to opt-in or opt-out of such activities. We are paying for media campaigns to convince us that what we are already paying for is worthwhile.

So here is one suggestion: instead of paying for EHRs indirectly, while allowing all stakeholders to complain about the expenses as if the fees came out of their own pockets, how about patients paying for EHRs directly? There is no difference in aggregate and we are not talking about a lot of money for each individual patient. A yearly fee of something between $5 and $10 per patient, per facility, should suffice. Call it EHR fee, or EHR subscription. Once we explicitly pay for it, we own it; not the software, not the hardware, but the Data itself. And this is how it should be.

Margalit Gur-Arie was COO at GenesysMD (Purkinje), an HIT company focusing on web based EHR/PMS and billing services for physicians. Prior to GenesysMD, Margalit was Director of Product Management at Essence/Purkinje and HIT Consultant for SSM Healthcare, a large non-profit hospital organization. She shares her thoughts about HIT topics and issues at her blog, On Healthcare Technology.

33 replies »

  1. A better question is why are practitioners buying they current offerings when they are built on arcane technology?

    I have an advanced system that fits EHR perfectly but its very difficult to get it in front of practitioners before they waste the money on old style systems.

  2. Yes, it is, and yes, we are. But right now, we (all of us) get nothing in return because this is not an explicit transaction. If we paid for our EHRs outright, instead of having a nebulous “government” paying for them, perhaps we could at least have some say in what is to become of the data accumulated in those EHRs, and who can use and who can profit from it, instead of being relegated to begging for access to our own information.

  3. Correct me if I’m wrong, but aren’t patients already paying the lion share of physicians’ EHR implementation costs? It’s taxpayer money that’s funding the HITECH program

  4. I’d spend $5-$10 IF it would provide me a way to reduce my overall healthcare expenditures. I’m sure most patients feel the same except for the integration bill they’ll get today.


  5. And buying the politicians should not be minimized or ignored. But, people keep voting the same lame shameless incompetent incumbents back to keep feeding at the trough of public funds.

    Not teaching enough people how to fish…

    And yeah, I am getting government handouts every day. NOT! Certainly the patients I treat on Medicaid and Medicare is no handout for the work I do, that is for sure!!!

    By the way, Mr G, related to “Sally G” per the Paul McCartney song from the 70’s? The line in there, “I’m sure the G did not stand for good” certainly fits.

  6. ” 50% of Americans are getting some form of government handout/support.”

    And, of course, there’s no way to verify that YOU are not among them in any way.

  7. Who said or implied that for profit health insurers are ethical and altruistic?

    I sure didn’t. And government certainly is not an appropriate alternative to for profit insurers. Not with the gang that runs DC as of 2011,

  8. Interesting term there, rich. I heard tonight while driving home that close to 50% of Americans are getting some form of government handout/support.

    While some portion of that is valid, it is not 50% of the population. Seems to once again support my original comment that the average american is cheap and lazy.

    Entitlements do not empower people, they enslave them.

  9. ““De-identified” data is a free for all.”


    Google “Latanya Sweeney” (the “all I need is ZIP code, Gender, and DOB to back my way into your PHI” lady from MIT)

  10. Indeed it is, and this pertains to fully identifiable data. “De-identified” data is a free for all.
    Pretty much like saying that if you rip the covers from a stack of books, so the authors and publishers are not identified, and proceed to mix up all the pages, you can then use the contents in any way you want.

    The other problem with all these opt-in/opt-out debates is that right now, nobody can get access to their full chart. All those Blue Buttons and portals are very selective in what they actually provide.

  11. I am eyeball deep these days in the PHI/ePHI privacy and security issues. There is only one state that accords you explicit “ownership” of your health data. The others are a mish-mash of differing data/record ownership, access, consent (all of that opt-in, opt-out stuff) disclosure (w/ granular datum/to whom/for what purpose variations), right of review, corrections, etc “rights.”

    Moreover, it’s a moving target, as both the technology and the laws/regs change.

  12. No, not a flashcard. The usual and customary EMR that is being currently sold to practices. Nothing needs to change there, Dr. D. However, paying for the technology should give patients (people) a little more say about how their personal information is used.
    I believe there is, and there must be, an expectation of privacy when someone sees a doctor. I don’t recall a referendum where people agreed to have this expectation waived.

  13. “What if the US government uses this system for inappropriate reasons?
    You all trust government to be altruistic and benevolent.”

    Unlike the totally ethical and altruistic for-profit health insurors.

  14. So, what, we give every single person a flashcard to hold this data? Can you trust the average person to keep it available for every visit, and the computer access will be user friendly for every contact? And what if they lose it, what is the backup system? Will it be fully confidential?

    What if the computer system crashes before or during that visit? is the data recoverable? What if someone has the same name and wrong information is put on that flashcard? What if the patient uses that information falsely or for flagrant illgotten gain?

    What if the US government uses this system for inappropriate reasons?

    You all trust government to be altruistic and benevolent. Think again.

  15. Hello Brian,

    Let me answer you with a few questions. What happens to the patient data stored in those free or not-free EHRs? Do the patients know where it goes? Do they approve? Can the patients get ALL their medical records out of that system, if they choose to (as in delete everything from your database)? Can they even look at those records (all of them) whenever they please? Can they add their own content to their own records?

    Right now EHR data is treated as the property of whoever can get a hold of it by any means necessary. If patients pay for EHRs, they will own its contents, hopefully in a legally enforceable way.

    In a perfect world, it would be clear that patients own their own data and that they should be the ultimate decision makers regarding what should be done with it, regardless of who paid for the boxes it is held in. Unfortunately, this is not the case in real life, but I assume you know this already.

  16. Honestly? We don’t ask patients to pay for the phones do we? nor the paper to print charts, nor the transcriptionist.. One of the EHR vendors claims that they are the fastest growing and they are free – you get 44,000 of tax payer dollars for free software! Oh wait the drug companies are paying to put their ads right on the screen with your clinical notes. Hmmm not free..

    If you work in this industry you would know that the core reason that the govt (the largest payer) is investing in ehr’s s because they hope it will drive down costs and improve safety.. Do we ask patients to pay for other safety initiatives? What about the new MRI that the ortho down the street owns a share of? Oh that’s right patients already pay for ALL of it via lower salaries or directly if they purchase their own health insurance..

    I am curious how many EHR”s have you actually sold or implemented?

  17. Well, yeah, true. But if you were forking over $7,500 for the first doc for just the software license, it’d be different? (The range of prices for the same basic functionality is pretty difficult to understand.)

  18. I’m not sure I would feel right about asking for even $5 a year from my patients for the use of an EMR when I myself don’t pay anything for it – I use Practice Fusion and it’s free (except for the computers, ISP charges, etc)

  19. First, in response to Ms G-A’s above comment, it is only my opinion, but I also pay attention to history and patterns, and our government has deteriorated to pure partisan positioning and control, and both parties are equally guilty. We watched the Republicans use war to control the people into giving up liberties as well as the option to dissent without being called traitors and antiAmerican. Then, when the Democrats came into power, they saw the health care system as their opportunity to further erode choice and individuality per this pure partisan legislation. No transparency, no honest debate, and no matter how others want to claim their semantic interpretation of the leader of the House intended to frame the alleged debate, the outcome was fairly pure “Shut up and watch us (Democrats) get our way and deal with the outcomes later”.

    What, we are learning what are the specifics of far reaching and very controlling legislation YEARS later after its passage? This is what American citizens should expect and thank of representation? Really, while it is just a line in a sci-fi movie, art does imitate life, and when the Natalie Portman character near the end of Revenge of the Sith exclaims when the Emperor tells the Senate their branch of government is moot in saying “so this is how the end of democracy comes, to thunderous applause.” What, all of you have to wait until the bulk of the legislation comes to fruition in 2014 to find out how screwed we are in choice, freedom, and lack of options? You know what, for any and all of you as physician colleagues really think that politicians and their ilk cronies really care about the American people, you need to be asked what planet you live on. Lawyers, which is the predominate, or better yet, average, prior profession of what walks the halls of Congress of this country, by in large show nothing but distain for the medical profession. Hey, don’t believe me, just ask the average lawyer.

    Figure out the transition of this comment yet? Per the Webster’s New World Dictionary in front of me as of this writing, the second definition of the adjective part of the word “average” says, “intermediate in value, rate, hence normal or ordinary.” Seems to fit my interpretation of my interactions with our society these past couple of decades, because my comment above was NOT a wide sweeping generalization as the commenter then tries to accuse me of by asking me what planet I live on. The average person in America these days does act and expect to obtain things as cheaply as possible and is pretty damn lazy in making whatever effort to do so. What, no one rebutts my later comment how a sizeable portion of patients complain about prescription costs and not follow up with office visits to meet standards of care in treatment? Too specific an allegation? Or, does silence infer agreement?

    The usual suspect just wants to deflect and belittle responses by those who do not tout his party line. Because debate about subjective matters must really frustrate those who cannot keep to petty and trivial details that such people write multiple screen replies in trying to intellectualize and distract from the global concern.

    Oh, what is that? About autonomy and individuality. The exact matters that just terrify and annoy politicians of this century. These are concepts that do not benefit our government agenda. They want us naive, subservient, and clinging to government dogma and agenda. That is about power and control.

    Occam’s razor is a concept that fits very well here in this ongoing debate. What is the simpliest explanation to how this legislation came to fruition? The Democrats were in awe how the Republicans took a sizeable control of the country when they were a majority power, and now they found a way to get their niche when they had the opportunity.

    Do yourselves a favor and read up about Narcissistic and Antisocial Personality Disorders in the DSM IV-TR. You may look up and have that exquisite moment of clarity and realization in concluding this is what our representation of government officials has degraded into. Extreme and rigid styles of coping and engaging that just alienates people of moderate and negotiable nature.

    And the fact that fewer people seem to be concerned with this just reinforces my point of the average person in America is cheap and lazy. And thus easier to control!

    Sorry, a long rant, but due!

  20. Dr. D.,
    I may be naive, but I don’t think PPACA is about power. You may disagree with the methods, and I certainly disagree with some, but I do believe the intentions are good, and yes, I do know that good intentions often backfire.

    As to people paying for intangibles, yes, this is a problem, but that little brochure at check-in that Bobby is envisioning can explain in no uncertain terms what they are expected to pay for. And yes, of course, this includes the lifetime medical record ( I don’t like the term PHR).

    I think CMS should allow, or encourage, physicians and hospitals to charge for technology. I for one, would feel a lot better knowing who paid for what, instead of having no clue that my medical records reside in some peculiar exemption to anti-kickback laws.
    I think that the entire conversation around patients access to data should be reversed 180 degrees. The data belongs to the patient; the data is quickly becoming, the patient. All the implicit activities on patient data taking place “for health care operations” purposes, and all other activities that have little to do with health care and a lot to do with big money, should require explicit permission from the owners, i.e. those who paid for it.

  21. DeterminedMD writes

    “The average American is cheap and lazy …”

    And is accusing me of overgeneralizing?

    / j

  22. Oh, and by the way, if people aren’t cheap and lazy, why is it a sizeable portion of the population I see in practice bitch about having to pay higher copays for the brand names THEY ask for in the office, and then don’t want to come back for a follow up appt even in 3 or more months to check up on the meds effect, just want me to call in a refill?

    Doesn’t that seem cheap and lazy?

  23. Last I checked, it was called Earth, and I reside in the United States of America. Average means that, not everybody.

    Man, you people will over-generalize at the drop of a hat. And who do you interact with to find this interpretation to be so over the top anyway?

    People on average, at least more than 40% or more, are cheap and lazy here. Even rich people fit that appraisal. Ask people who visit America or have spent time on visas who are attentive and appreciative of work ethics and expectations. They don’t worship at our altars, sir.

    Yeah, buy that mantra folks, go buy stuff and save the country!!!

    Watch Carlin’s 2005 show and he’ll explain it better than I can.

  24. “The average American is cheap and lazy ..”

    What planet do you live on?

  25. but PPACA is about power, and those who want it will not give it away, even if the alleged profit opportunity seems sizeable. Besides, the average American is cheap and lazy, and asking people to spend money on something they cannot touch or quantify at moment one is not acceptable to that mentality.

    Nice thought in theory. Practice, eh, is not so nice.

  26. Very nice, as always.

    “A yearly fee of something between $5 and $10 per patient, per facility, should suffice. Call it EHR fee, or EHR subscription. Once we explicitly pay for it, we own it; not the software, not the hardware, but the Data itself. And this is how it should be.”

    I Had that very thought right when I started my REC work. You can just see the little “$5 EHR technology fee” sign taped to the check-in window, and a brochure on the counter.