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October 27, 2014 Readers Write 1 Comment

Navigating EHR Disillusionment: Strategies for Maximizing Value
By Joel French


EHRs are a necessary but small component of what provider networks require to financially prosper in competitive markets being rapidly transformed by narrow networks, contracting reimbursement rates, and risk-bearing payment arrangements. As digitization proliferates, acute and ambulatory providers have become more vocal with EHR criticisms, including a lack of interoperability, workflow disruptions, and adverse impact to physician productivity. Many physicians now view themselves as data entry clerks.

Research from the American College of Physicians, Deloitte, and Physician’s Foundation finds that physicians have mixed opinions on EHRs, with significant downside sentiment. In the Deloitte study, 75 percent of physicians say EHRs are not cost-effective and do not save time.

One might assert the US health industry is suffering from Gartner’s Trough of Disillusionment regarding EHRs, defined as the period when “interest wanes as experiments and implementations fail to deliver.” This disillusionment exists because individual and organization expectations of EHRs exceed what they were actually designed to do. History abounds with examples of beliefs that were widely (if not universally) viewed as true, only to be later disproved by practical experience or fuller knowledge.

The point of view that integrated EHRs should be central to a health systems’ competitive strategy is one common view that is easily disproved by examining this assertion under the lens of basic business logic. By definition, a competitive advantage gives an organization an edge over its rivals and an ability to generate greater value (value is generally expressed in terms of market share growth, profitability, or enterprise value). The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

As it relates to EHRs, once most or all hospitals in a geographic market have implemented such a tool, that tool itself ceases to be a competitive advantage. It should be better understood as a fundamental business input or asset, not materially dissimilar to facilities, medical equipment, or business licenses. Table stakes, as some might say.

Executives who have invested in EHRs hoping to derive investment returns above their cost of capital must first come to grips with the following truth: EHRs were designed to solve specific problems within the confines of a health system, but nearly all incremental revenue and contribution margin opportunities originate outside health systems in care communities. Trying to retrofit or adapt EHRs designed for use inside the walls of an enterprise for use outside the walls and across a community is fraught with risk and tantamount to believing the world is flat.

In 1837, Hans Christian Andersen wrote a fairy tale, now widely known, called “The Emperor’s New Clothes.” The metaphorical point applies to any situation wherein the overwhelming majority of observers willingly share in a collective ignorance of an obvious fact, despite individually recognizing the absurdity. The notion that implementing the same EHR as your competitors or peer group would somehow provide a sustainable competitive market advantage is completely devoid of classical business logic any first semester college freshman understands.

Today, an increasing cackle of honest voices are murmuring that the Emperor is naked. Those voices will only get louder as more organizations experience bond rating downgrades or executive removals attributable to expensive and unsuccessful EHR experiences.

To be sure, EHRs are necessary and are typically superior to the analog predecessors they replaced. They can be effective tools for clinical documentation, intelligent alerting, retrieval of patient data, and order entry/results return within the setting for which they were intended – the hospital or the clinic. Their deficiencies are exposed when care teams need to coordinate across not just physical settings, but differing organizational boundaries.

The migration to value-based care is accelerating, requiring fundamentally news ways of working to increase revenue while simultaneously keeping populations healthy. Nearly all at-risk payment models – such as episodic bundling, avoidable readmission penalties, Medicare Shared Savings, and ACOs – require better orchestration of care transitions across organizational boundaries. Successful health systems in the new health economy must therefore utilize technologies to integrate electronically and economically with scores of market trading partners, many of whom will have heterogeneous technologies and fragmented corporate ownership.

To grow, health systems must exploit all their channels – not just employed physicians, but also independent providers and other stakeholders – in order to access new referral sources, effectively coordinate care for patients with chronic conditions, and reduce unit costs. There are key EHR deficits critical to health system business objectives. These will require supplementary tools to bridge functionality gaps.

With average revenue from inpatient admission volumes down 4.9 percent in 2013, health systems need a technology strategy to support outpatient revenue growth. Health systems will live or die based on their ability to find technology solutions beyond the EHR, enabling them to uncover the economic value of independent providers in their communities by delivering differentiated value to those practices.

Introducing a network layer that smartly aligns the hospital’s capacity with the community’s demand for services is not only possible, but necessary. Today’s cloud-based tools for functions such as referrals, scheduling, and analytics can create attractive investment returns against EHR cost centers that some have come to view as permanent sink holes.

These tools extend the life of EHRs and introduce accretion by supplying what they lack – the ability to quickly grow outpatient volume, curtail network revenue leakage, and lift contribution margins. Integrating these tools with EHRs adds new value to the EHR, potentially creating the investment returns originally hoped for at the time of purchase.

The industry is still a long way from experiencing Gartner’s Plateau of Productivity with EHRs, but progressive health system executives are realizing limitations of EHRs and are increasingly turning to complementary cloud technology solutions that complement them and unlock value. Health systems that survive and thrive will be those that innovate to meet industry demand, which at this point requires thinking beyond EHRs. 

Joel French is CEO of SCI Solutions of Campbell, CA.

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Currently there is "1 comment" on this Article:

  1. Great blog, Joel. At one time, the leaders in the industry, such as Intermountain, differentiated themselves clinically with an EHR that they developed themselves. Those days are gone, especially in the era of EHRs whose APIs are closed, technically or contractually. There’s little, if any, ability to significantly differentiate yourself in a competitive market. Everyone owns the same EHR utility. Unfortunately, every business in every industry now moves at the speed of software. The next few years will be interesting as we move from basic implementation of EHRs, to our attempts to modify them in support of population health, bundled and capitated payments, and geographic decentralization of healthcare.

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