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Hospital M&A Cost Boosted Significantly By Health IT Integration

Posted on August 18, 2014 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. Contact her at @ziegerhealth on Twitter or visit her site at Zieger Healthcare.

Most of the time, hospital M&A is sold as an exercise in saving money by reducing overhead and leveraging shared strengths. But new data from PricewaterhouseCoopers suggests that IT integration costs can undercut that goal substantially. (It also makes one wonder how ACOs can afford to merge their health IT infrastructure well enough to share risk, but that’s a story for another day.)

In any event, the cost of integrating the IT systems of hospitals that merge can add up to 2% to the annual operating costs of the facilities during the integration period, according to PricewaterhouseCoopers. That figure, which comes to $70,000 to $100,000 per bed over three to five years, is enough to reduce or even completely negate benefits of doing some deals. And it clearly forces merging hospitals to think through their respective IT strategies far more thoroughly than they might anticipated.

As if that stat isn’t bad enough, other experts feel that PwC is understating the case. According to Dwayne Gunter, president of Parallon Technology Solutions — who spoke to Hospitals & Health Networks magazine — IT integration costs can be much higher than those predicted by PwC’s estimate. “I think 2% being very generous,” Gunter told the magazine, “For example, if the purchased hospital’s IT infrastructure is in bad shape, the expense of replacing it will raise costs significantly.”

Of course, hospitals have always struggled to integrate systems when they merge, but as PwC research notes, there’s a lot more integrate these days, including not only core clinical and business operating systems but also EMRs, population health management tools and data analytics. (Given be extremely shaky state of cybersecurity in hospitals these days, merging partners had best feel out each others’ security systems very thoroughly as well, which obviously adds additional expenses.) And what if the merging hospitals use different enterprise EMR systems? Do you rip and replace, integrate and pray, or do some mix of the above?

On top of all that, working hospital systems have to make sure they have enough IT staffers available, or can contract with enough, to do a good job of the integration process. Given that in many hospitals, IT leaders barely have enough staff members to get the minimum done, the merger partners are likely costly consultants if they want to finish the process for the next millennium.

My best guess is that many mergers have failed to take this massive expense into account. The aftermath has got to be pretty ugly.

Study: EMRs Have Saved Canadian Health System $1.3B Since 2006

Posted on May 3, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. Contact her at @ziegerhealth on Twitter or visit her site at Zieger Healthcare.

At our current stage of EMR implementation, the evidence is sketchy at best that EMRs are draining costs from the U.S. health system.  But our friends to the north seem to be capturing tangible savings, according to new research by Pricewaterhouse Coopers LLP (PwC).

The PwC study, which was backed by the Canada Health Infoway, a not-for-profit whose focus is accelerating the development of EMRs by family physicians, looked at the implementation of EMRs by family doctors across Canada.  The study focused on the period between 2006 and 2012.

Adoption of EMRs by primary care doctors in Canada has more than doubled between 2006 and 2012, from 23 percent to 56 percent, Healthcare Informatics reports. These EMR investments were paid for largely through investments by the provinces and territories in EMR programs, medical practices and  Infoway.

According to Healthcare Informatics, PwC found that during that period, the Canadian system saved $800 million Canadian dollars in administrative efficiencies, such as staff spending less time pulling charts and less time by doctors reading and maintaining paper files.

PwC also found savings of $584 million Canadian dollars in health system efficiencies, such a drop in duplicated diagnostic testing and adverse drug events.

In addition to concrete financial savings, EMR adoption improved chronic disease management and preventive care, such as mammogram screening rates.  EMR use also improved communication between care providers, as EMRs allowed new providers to quickly and easily research histories on patients without resorting to archaic fax communications.

As part of PwC’s research, they cited examples which paint the picture of how EMRs are changing healthcare in Canada.

Since implementing EMRs, PwC notes, 67 percent of Saskatchewan’s family doctors, office managers and specialists say that their medical practices are more or significantly more productive than before.  Also, 94 percent of of doctors enrolled in Alberta’s EMR program said that patients get their test results faster; in addition, 97 percent said that they’re not needlessly repeating tests and investigations.

PricewaterhouseCoopers Finds EMR Data to be Health Industry’s Most Valuable Asset

Posted on October 2, 2009 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

The following is an expert from the press release by PricewaterhouseCoopers (PWC) about EMR data:

Hundreds of billions of gigabytes of health information are now being collected in electronic medical records, and three-quarters (76%) of more than 700 healthcare executives recently surveyed by PricewaterhouseCoopers LLP agree that the secondary use of this information will be their organization’s greatest asset over the next five years. The data that could be mined from the health system can improve patient care, predict public health trends and reduce healthcare costs, but PricewaterhouseCoopers finds lack of standards, privacy concerns and technology limitations are holding back progress.

According to PricewaterhouseCoopers, the healthcare industry won’t see the full value of investments in electronic medical records and other health IT investments until it finds secondary uses for the information being gathered. Yet 90 percent of executives surveyed feel the industry needs better guidelines about how health information can be used and shared, and 76 percent feel that national stewardship over, or responsibility for, the use of the health data should be regulated.

In its newly published report “Transforming Healthcare through Secondary Use of Health Data,” PricewaterhouseCoopers calls for public-private collaboration and a role for government in creating incentives for the private sector to collect, share and use health data; to establish standards; and to redefine technical architecture to allow interoperability.