2. Organizational
Background
Health Alliance Hospital (HA) is a 135-
bed, not-for-profit hospital serving
North Central Massachusetts and
Southern New Hampshire. It is
affiliated with the UMass Memorial
Healthcare System (UMMHC).1
UMMHC and HA do not have a
cohesive EHR system. The numerous
and disparate systems pose a
challenge to transparent
communication of health information.
In recent years, UMMHC and HA have
made strategic investments to improve
IT infrastructure.
3. Problem Statement
The Physician Networking Project was
initiated at HA in the past year with the
goal of developing interfaces between key
inpatient areas (lab, rad) and the affiliated
office practices.
4. Financial Barriers and
Opportunities
BARRIERS OPPORTUNITIES
Limited capital budget Meaningful Use incentive
payments
Office practices have
limited budgets
Cost savings due to
efficiencies created3
Stark Law2
Cost savings due to
decreased utilization of
resources4
EMR vendor fees Improved billing5-7
Ongoing costs of
maintenance and upgrades
Decreased liability risk8
5. ASSUMPTIONS*
Avg cost of an interface $10,000
Subsidy to office practices $5,000
Net cost of interface to office
practices
$10K - $5K = $5,000
Average labor cost/secretary $25.40/hr
Estimated secretarial time saved
daily per physician
15 min/day
Labor time saved per
week/provider
15 min x 5 days = 1.25 hours/wk
Labor costs saved/week/provider 1.25 hrs/wk x $25.40/hr =
$31.75/week
Labor costs saved/year/provider $31.75 x 48 work-weeks/yr =
$1524 /year
*Base case assumptions are based on current practice estimates at the Montachusett
Women’s Health Practice at HA for a single provider.
6.
7.
8.
9.
10.
11.
12. Interpretation
O The projected 5-year capital investment analysis suggests that
development of interfaces between critical service areas (lab,
radiology) and the office practices are an overall wise investment,
especially when partially subsidized by HA.
O The projected 5-year capital investment analysis shows that larger
practice groups can achieve even greater savings, capitalizing on
efficiency gains to be had when multiple providers are utilizing a
single interface.
O The hospital subsidy of a single physician practice is a critical factor
in sustaining these savings.
O The loss of the subsidy does not negatively impact practices with two
or more physicians.
13. Recommendations
O Continue the networking project for fiscal year 2015, as it is resulting in significant
cost-savings to office practices.
O Communicate the cost-savings to physicians to encourage further on-boarding to
the project.
O Emphasize the importance of taking advantage of the hospital-funded subsidy,
which will only be provided for a limited time (due to restrictions set forth by Stark
Law).
O Expand the project to encourage interface development between other critical
inpatient areas, such as pathology, the emergency room, and the operating room,
connecting them to outpatient practices.
O Continue current pace of the IT implementation projects, until such time as current
demands are met. Thereafter, initiate projects on an incremental, as-needed
basis.
14. References
1. http://www.umassmemorialhealthcare.org/healthalliance-hospital
2. http://www.cmanet.org/news/detail/?article=hhs-extends-stark-exception-and-safe-harbor
3. Tierney WM, Miller ME, McDonald CJ. The effect on test ordering of informing
physicians of the charges for outpatient diagnostic tests. N Engl J Med.
1990;322(21):1499–1504.
4. Schmitt KF, Wofford DA. Financial analysis projects clear returns from electronic
medical records. Healthc Financ Manage. 2002;56(1):52–57.
5. Agrawal A. Return on investment analysis for a computer-based patient record in the
outpatient clinic setting. J Assoc Acad Minor Phys. 2002;13(3):61–65.
6. Wang SJ, Middleton B, Prosser LA, et al. A cost-benefit analysis of electronic medical
records in primary care. Am J Med. 2003;114(5):397–403.
7. Ewing T, Cusick D. Knowing what to measure. Healthcare Financial Management.
2004;58(6):60–63.
8. Virapongse A, Bates DW, Shi P, et al. Electronic health records and malpractice claims
in office practice. Arch Intern Med. 2008;168(21):2362–2367.
9. Gapenski, L. Healthcare Finance, 5th Edition. Health Administration Press, Chicago,
2014.
10. https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/benchmarks/perform
anceSP?File=SPPerfReturns&bench=SP
