Managing Your Practice

The Affordable Care Act and the drive for electronic health records: Are small practices being squeezed?

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Many small practices find the expense of implementation to be a challenge,
but data suggest physicians are getting on board the EHR wagon



Two years ago, I zeroed in on the pressures straining small ObGyn practices in an article entitled, “Is private ­ObGyn practice on its way out?”1 The pressures haven’t eased in the interim. Today, small practices are still feeling squeezed to keep up with the many demands of modern specialty care. The push for electronic health records (EHRs), in particular, can profoundly affect physicians in private practice.

In this article, I outline some of the challenges facing small practices when they set out to implement EHRs, as well as the potential benefits they stand to gain a little farther down the road. Before we begin, however, let’s look at the latest trends in ObGyn practice, as they are related, in part, to the need to implement EHRs.

The exodus from private practice continues

A 2012 Accenture Physicians Alignment Survey shows an accelerating increase in physician employment. In 2000, 57% of all physicians were in independent practice; by the end of 2013, only 36% of physicians are projected to remain independent.2

The ObGyn specialty is a clear part of this trend, with both seasoned and incoming physicians finding hospital or other employment an attractive alternative to private practice. Fully one-third of ObGyn residents entering practice today sign hospital employment contracts. ObGyns who have made the switch from private to hospital practice, or who have become ObGyn hospitalists, often point to the difficulties of maintaining a solvent private practice, especially given the push toward EHRs and increasing regulatory and administrative burdens, as justification for their move.

The main reasons for the shift to employment. Top concerns influencing physicians’ decisions to opt for employment include:

  • business expenses (87%)
  • the dominance of managed care (61%)
  • the requirement for EHRs (53%)
  • the need to maintain and manage staff (53%)
  • the increasing number of patients needed to break even (39%).2

A 2008 socioeconomic survey from ACOG revealed that 23.6% of ObGyn practices are solo practices, and 27.1% are single-specialty group practices. Many ­ObGyns—especially those in solo or small practices—are hesitant to make the large capital investment that is necessary to adopt EHRs.

EHRs offer benefits—and real costs

The system-wide benefits of health information technology (HIT), including EHRs, are many. Insurers stand to save money by reducing unnecessary tests, and patients will benefit from better coordination of their care and fewer medical errors. But these advantages don’t necessarily translate into savings or revenue for physician practices. Instead, physicians face payment cuts from Medicare and private insurance.

Although there’s wide agreement that HIT can improve quality of care and reduce health-care costs, fewer than one-quarter (22%) of office-based physicians had adopted EHRs by 2009. We know the main reasons why:

  • upfront cost and maintenance expense
  • uncertain return on investment
  • fragmented business model in a high proportion of small and solo practices
  • changing and inconsistent information technology (IT) systems.

What can a practice expect to fork over?
In 2011, the Agency for Healthcare Research and Quality (AHRQ) found that the “real-life” cost of implementing EHRs “in an average five-physician primary care practice, operating within a large physician network committed to network-wide implementation of electronic health records, is about $162,000, with an additional $85,500 in maintenance expenses during the first year.”3

These figures include an average of 134 hours needed per physician to prepare to use EHRs during patient visits.3

Fleming and colleagues investigated the cost associated with implementing EHRs within 26 primary care practices in Texas. They found the cost to be $32,409 per physician through the first 60 days after the EHR system was launched, with one-time costs for hardware of $25,000 per practice and an additional $7,000 per physician for personal computers, printers, and scanners. The annual cost of software and maintenance was approximately $17,100 per physician.4

Why physicians should hold out for the return on their investment
Despite these considerable expenses, EHRs hold promise over the long term. The Medical Group Management Association reported, through a 2009 survey of about 1,300 primary care and specialty practice members using EHRs, that efficiency gains from the elimination of paper charts, as well as transcription savings, better charge capturing, and reduced billing errors, resulted in a median revenue increase of $49,916 per full-time physician after operating costs.

After 5 years of EHR use, practices reported a median operating margin 10.1% higher than that of practices in the first year of EHR use.5

Trends in the adoption of EHRs

Private practice. An article in Health Affairs showed that, by 2011, only one in six office-based physicians was using an EHR system robust enough to approach “meaningful use”—that is, the use of EHRs to measurably improve the quality of health care.6 These robust systems offered physicians the ability to record information on patient demographics, view laboratory and imaging results, maintain patients’ problem lists, compile clinical notes, and manage prescription ordering. EHR adoption lagged among non−primary care physicians, physicians aged 55 and older, and physicians in small (1–2 providers) practices and physician-owned practices.6 (ObGyns were considered primary care providers in this survey.)


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