Hospitals can anticipate financial burden from new EHRs installs

Hospitals installing new EHRs or electronic health record systems should anticipate a sizable cash drain as the procedure disrupts business and adds technology and training expense, Moody's Investors Service claimed in a report this week.

During the first year of new EHRs installations, the median decline in operating cash flow for hospital systems is 10 percent with a 6 percent falloff in days cash on hand, Moody's said after examining system installs over the past several years. EHR installations can cost anywhere from several million dollars for a small, stand-alone hospital to a half-billion dollars for larger systems.

Moody's discovered in looking at 39 recent launches that the installs can disrupt billing and patient throughput.

"Implementing new EHRs or electronic medical record systems carries significant financial risk for hospitals because the systems are vital to the provision of care and billing," the report said.

Though disruptive in the first year of execution, the damage to operating performance commonly dissipates after the first year as staff and clinicians become proficient in the technology, Moody's said.

An EHR is the electronic nervous system of a hospital or clinic, allowing staff to onboard patients, track care, view clinical workflow and bill for services. It also increasingly contains information that can help systems and hospitals gather information useful toward meeting new payment models.

Vanderbilt University Medical Center in Nashville has been preparing for more than a year for the Nov. 2 launch of its new Epic EHR across the entire academic health system.

Vanderbilt decides to have 1,000 third-party consultants and trainers on hand in the first week to minimize disruptions and help employees through the switch, Vanderbilt EHR project leader Dr. Kevin Johnson said in a May interview. He likened the transition to "changing a jet engine in midflight."

Vanderbilt has budgeted $214 million for the conversion.

UMass Memorial Health Care is going live with its own Epic rollout later this year. Already, the preparation is hitting the bottom line of the Worcester, Mass.-based system.