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Digital Health Could Seal Fate of Small Hospitals

Posted on August 30, 2013 I Written By

As Social Marketing Director at Billian, Jennifer Dennard is responsible for the continuing development and implementation of the company's social media strategies for Billian's HealthDATA and Porter Research. She is a regular contributor to a number of healthcare blogs and currently manages social marketing channels for the Health IT Leadership Summit and Technology Association of Georgia’s Health Society. You can find her on Twitter @JennDennard.

I am not a healthcare investment expert by any means, but two recent pieces of news make me wonder if the digital health movement will inadvertently result in the hurried demise of already struggling small and rural hospitals.

According to a recent CB Insights report covered by MedCity News, 362 digital health deals last year accounted for an all-time high of $1.5 billion. Of those deals, 55 were exits – smaller digital health companies bought up by larger players. CB Insights notes the majority of these acquired companies were those that provided products that make administrative health processes more efficient, such as EMRs and revenue cycle management systems. This is an assumption, but I’m inclined to think these EMR companies priced their products below their more corporate competitors. These companies may well have supplied their systems to the budget-conscious small and rural hospital market.

As most everyone knows, small and rural hospitals are facing an uphill battle these days when it comes to keeping their doors open. A recent Georgia Health News item noted that three rural hospitals in the state have closed in 2013, with some predicting an additional 20 facilities will close within the next two years. The article cites constant cash shortages, claims disputes with payers, lower projected payments to hospitals from Georgia’s new state employee benefit contract, and reduced indigent care funding as contributing factors to the poor financial health many small Georgia hospitals find themselves in.

While these may be specific to Georgia, they are almost surely indicative of similar problems seen by similar institutions in the U.S. At least 849 facilities across the country will soon face the common problem of increased scrutiny by Medicare as a result of the current “bloated and unwieldy” state of the critical access hospital program, which was designed to financially stabilize small hospitals by providing them with higher Medicare reimbursement rates.

It looks to me as if the digital health exits noted above are perhaps indicative of a broader industry trend. Small and rural hospitals are already under enormous pressure to care for underserved populations in a fiscally responsible way. As the healthcare vendor market consolidates and looks to digital health as the next best venture, will we see more affordable EMRs folded into those that are less so? Where will small healthcare facilities turn for their healthcare IT?

Where do you think these two trends will converge in the next year or two? Please share your comments below.

Regional Extension Centers (Finally) Help Docs Get Incentives

Posted on August 3, 2012 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 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.

For a while there, it seemed like the RECs didn’t have their act together, particularly when it came to reaching out to and closing the deal with doctors. Getting the right person on the phone wasn’t that easy, in fact. Well, times change. A new report suggests that the RECs have gotten on top of things.

The new study, which was issued by the General Accounting Office, concludes that healthcare providers who partnered with a REC — a step which involves a modest fee — were more than twice as likely to get an incentive payment under the Medicare incentive program.  The data in the report comes from 2011, and drew on varied government sources.

On a related note, the GAO reported that 2,802 hospitals and 141,649 professionals registered for the Medicare incentive program last year. Of that group 761 hospitals and 56,585 professionals got incentive payments through Medicare.

The agency also took a look at which types of hospital were more likely to get the Medicare incentive, and got some unsurprising results (summary courtesy of EMR Daily News):

Critical access hospitals were less than half as likely to earn incentives as acute care hospitals.

Hospitals in the top third of size (measured by number of beds) were 2.4 times more likely than hospitals in the bottom third to earn an incentive payment.

Nonprofit and for-profit hospitals were 1.1 and 1.5 times more likely than government-owned hospitals, respectively, to receive an incentive payment.

Only one in ten (12.2 percent) of eligible rural hospitals were awarded Medicare EHR incentive payments.

Taken as a whole, I  see this as a “good news/bad news” situation. One the one hand we have the welcome news that the REC program is actually delivering on its promise, something I imagine we’re all glad to see.

On the other, the critical access/rural hospital numbers are simply unacceptable. There’s no reason that people in these hospitals would be any less capable of meeting Meaningful Use standards, but they lack the staff and capital needed to push their efforts along. Ultimately, this could lead to a major disparity in care for Americans living in remote areas.

I’m not sure what the answer is here — other than perhaps a FAT load of grants for such hospitals helping them with MU efforts — but something has to be done.  I’m pretty sure that “the rich hospitals get richer” wasn’t HHS’s intent for MU.