Opportunity for HIT Vendors to Do Good

Yesterday, I found an email from Health and Human Services (HHS) in my inbox highlighting a new initiative where the “Obama Administration and Text4Baby join forces to connect pregnant women and children to health coverage and information”. The goal of this partnership is “to promote enrollment in both Medicaid and the Children’s Health Insurance Program (CHIP)”. Having more babies and children obtain insurance coverage is obviously a worthy endeavor, and if it can be accomplished by simply sending informative text messages to pregnant women, even better. Of course having insurance coverage doesn’t always translate into having access to an actual doctor, particularly for Medicaid enrollees.

In an unrelated coincidental turn of events, it just so happened that I have had the recent opportunity to spend time with large numbers of Pediatric practices, most of which were small independent practices in middle-class suburban areas. The main goal of these conversations was to elicit doctors’ opinions on Electronic Health Records (EHR). As expected, only a small fraction of independent Pediatricians are currently using fully certified EHRs, and amongst those there is an even distribution of happy customers and disillusioned ones. A significant portion is actively engaged in purchasing EHRs, but the vast majority is pondering on what to do next. It turns out that one cannot have any discussions about EHR without sooner or later digressing to costs and precarious financial situations. Yes, EHR usability, or lack thereof, comes up in casual conversation, but by far most doctors understand that paper is over and computers are here to stay whether they are perfect or not. The barrier to jumping on the EHR bandwagon is always financial. Pediatrics in particular is not a very lucrative specialty and cash reserves are practically nonexistent in these small practices. 

And here is where I observed a very interesting and very positive trend. These suburban practices are considering opening their doors to Medicaid kids in larger and larger numbers. Both the recession and the possibility of obtaining enough government incentives to cover technology purchases are responsible for this trend, which I observed locally, but may very well be larger in scope. Pediatricians (and pediatric sub-specialists) are only eligible for Medicaid incentives and only eligible for the full incentive if at least 30% of their patients are covered by Medicaid. Meaningful Use incentives were aimed at providing a partial solution to the cost conundrum, of course, but there is a chicken and egg dilemma here. You can’t get the incentives unless you buy the EHR and you can’t buy the EHR unless you get the incentives, or take a loan, which is a very frightening alternative for most small practices and for many independent physicians whose personal wealth has been decimated in the last few years.

For illustration purposes, the total first year cost of an average EHR purchase, including training, implementation and hardware is around $100,000 for a practice of 5 physicians. Medicaid first year incentives for such a practice would almost to the penny cover the initial EHR costs. More importantly, Medicaid first year incentives are based on the administrative activities of buying the EHR and NOT on achievement of Meaningful Use. It doesn’t make sense to ask Medicaid to advance doctors $100,000 based on a promise to buy an EHR, and it would be unwise to have Medicaid send incentive checks to EHR vendors, but there is a third option, which provides EHR vendors with an opportunity to do well by doing good, for a change.

Here is how I would structure this transaction:

• EHR vendor in partnership with hardware vendor creates a bundled offering not to exceed the $21,000 per provider which is equal to the Medicaid first year incentive.
• Practice submits proof of eligibility for Medicaid maximum incentive to vendor
• Practice submits proof of registration with CMS and State Medicaid program
• Practice contractually obligates itself to attest to State Medicaid and submit proof of attestation to vendor within an agreed upon timeframe from contract signing (10 working days should be fine)
• Practice contractually obligates itself to remit full payment to vendor upon receipt of Medicaid incentives and no later than 6 months from contract signing

The value proposition to EHR (and hardware) vendors should be obvious considering that most of those who had the cash, already bought an EHR and the bulk of the remaining market is going to take its sweet good old time to “make a decision”. I do understand the implications of such arrangements to cash flow and balance sheets of technology vendors, but the competitive advantage to those larger vendors who can afford to make this offer would be big enough to warrant the costs, and the risk to the vendor is truly minimal. Yes, this would be similar to extending credit to the practice for six months, but psychologically this is very different, since there is much unwarranted mistrust amongst physicians that Medicaid will actually send them a check. Seeing that the vendor is willing to participate in taking the “risk” will generate significant and quantifiable good will.

The value proposition for society and the moms reached by Text4Baby is that the brand new coverage they are obtaining will actually come with a doctor happy to take care of their babies. Priceless.