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Billions in Stimulus Funding for Healthcare IT – What To Do?

Part of the larger, $787 billion stimulus package signed by President Obama in mid-February is $19.2 billion under a bill called the HITECH, or Health Information Technology for Economic and Clinical Health Act. Hey, no one said these things would have simple names.

That $19.2 billion directs most of the funding – $17.2 billion of it – to pay for the widespread adoption and "meaningful use" of "certified" interoperable electronic health record (EHR) technology. The other $2 billion covers a wide range of healthcare information technology projects including health records, health information exchange, computerized physician order entry, clinical decision support systems and electronic prescribing.  Recently we ran a webinar about the HITECH funding – slides and an audio are available below.

The EHR funding will be administered through CMS – Medicare and Medicaid – in the form of reimbursements available to physicians and hospitals, and spread over several years. The $2 billion is allocated by the Office of the National Coordinator for Health IT to be headed by Dr. David Blumenthal, appointed to the job on March 20, 2009. A couple questions come to mind:

How do you get healthcare stimulus money? As of this week the details of the process are still being developed by several federal agencies.

So what does this mean for healthcare IT companies and how can companies get stimulus funding?

First, the stimulus funding is intended to boost rapid technology adoption in the hopes of controlling healthcare costs, making healthcare more efficient and perhaps creating jobs. Despite the fact that there are more than 200 companies offering some form of EHR technology to physicians and hospitals, adoption is still too slow – by some estimates, well below 15% market penetration with perhaps a third of those using the systems effectively. An even worse EHR market assessment was published on March 26, 2009, which said that just 1.5% of non-Federal hospitals in the U.S. are using a comprehensive EHR system. Yikes!

(An interesting recent development is the start of a backlash, often from doctors, against the orthodoxy that widespread use of HCIT technology is an unquestioned good. The latest is this opinion piece from Time, this week. Among other intriguing points, it argues that EMRs could increase healthcare costs and push providers to input inaccurate information. I’ll write more about this later.)
Second, the stimulus funding is intended to foster better integration among the various proprietary HCIT technologies, which have been notoriously complex and difficult to integrate.

Third, the EHR funding encourages adoption through a payment schedule that can subsidize the costs of purchase and implementation, but it also includes a penalty. In 2014 physicians will see reduced Medicare and Medicaid reimbursements if they have not implemented EHR technologies and are not using them effectively.

The details of accessing the ARRA and HITECH funds are not yet fully developed, but the race is on for companies to tap into these funds.  Whatever the details turn out to be, HCIT companies with a strong public image and strong brand awareness will be best positioned to take advantage of this rare opportunity in which the government is essentially funding their customers to buy their products. That means HCIT companies with strong government relations, strong brands and a strong public presence must maintain and extend it. HCIT companies without those advantages had better build them, and fast. 

Several of us from our Healthcare IT Practice will be at HIMSS next week. We’ll be in booth # 3145, so please stop by and let’s talk about this.

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Dave Close

Dave Close

Managing Director at MSLGROUP

Dave Close has worked in technology and healthcare PR since the internet was a fishing accessory. His long view and appreciation of the absurd guide his opinions about business, life and coffee.

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