The voice for the medical software reseller community.

If resellers had a hard time keeping track of HIPAA, they are bound to be even more bewildered over the next 5 years.  This is because there is a flurry of government initiatives designed to promote  interoperable EHRs.  We will take a break from HIPAA this month to explore just two recent developments of significant impact on resellers – proposed changes to the Stark laws, and a timeline for EHR Certification.

CCHIT gets Certification Contract

Last month the federal government awarded a contract to CCHIT - The Certification Commission for Healthcare Information Technology.  CCHIT is a collaboration of 3 healthcare IT associations who won the government contract to create a certification process for EHRs.  This is significant to resellers because if your EHR isn’t certified, you will probably have a tough time selling it.  In fact, this may hold up sales for the next few months as physicians wait for certification to reduce their risk of making a mistake.

CCHIT plans to release its certification criteria by the end of the year – so watch this closely.  The criteria will certainly include elements of the President’s vision for EHRs – interoperability, Quality improvement reminders and patient-accessible records.  To remain viable in the industry, software authors will probably need to comply with the published criteria.  EHR vendors will need to pay a fee to CCHIT in order to complete the certification process, which will likely require an annual or periodic re-certification for what will likely be an evolving criteria. 

Resellers will be advised to watch the CCHIT web site for the criteria, and be in communication with your EHR author regarding their plans vis-à-vis certification.  If your vendor does not become certified, it may be time to get another pony.

Stark Changes Proposed

The second significant development is the proposed rule changes to the Stark rules which will allow hospitals to buy EHRs for physicians on their staffs.  You can read the text of the proposed rule for complete details if you’re brave.  Resellers should understand that many hospitals are licking their chops for the opportunity to lock-in physicians with EHRs.  For those who are unfamiliar with Stark, it is a complex set of regulations designed to eliminate kickbacks and unfair competition.  The idea is that a hospital is not allowed to pay physicians (or offer other inducements) in order to have them admit patients.  The Bush administration and most of Congress seem willing to throw out this consumer protection in order to get help financing their plan for widespread EHR usage.

Hospitals understand better than anyone the opportunities to use information technology for competitive advantage.  In a classic Harvard Business School case study published over 20 years ago, the hospital supply distributor American Hospital Supply (AHS) gave hospital purchasing departments computer terminals, connected to a pre-internet telecommunications network, in order to simplify their purchasing.  The result was a huge growth surge for AHS, who displaced rival Johnson & Johnson in many hospitals.

One Ohio hospital, who is acting even before any Stark changes go into effect, is offering physicians free EHR software licenses (Centricity) and subsidized implementation.  In another Ohio city, two competing hospital systems have approached a large physician practice I work with about buying the practice an EHR.  Each hospital would offer interoperability with the sponsoring hospitals internal system, making it very convenient and easy for the doctor if they admit the patient to their hospital.  This is the classic lock-in designed to increase referrals and keep them coming.

The upshot for resellers?  Watch the regulatory process for a final Stark change, which could be months or even years away.  It’s tough to compete against a free EHR from the hospital.  Be aware that some physicians will choose to wait for someone else to buy the EMR for them.  Here are some thoughts for the meantime:

§            Learn to cost-justify your systems, for example with increased revenue generation, to show the opportunity cost of not buying an EHR.  If they wait two years, they will lose the financial benefits they could achieve during that time, which may outweigh the EHR costs.

§            If you are large enough, court hospitals to place your system with them, so that if they choose to buy EHRs for their physicians, you are their implementation arm.

§            If you’re not in the EHR arena, it’s time to get on a horse.  There are no guarantees in this business, but if you’re not in the game your billing software business is at risk.

The proposed Stark changes and CCHIT are but two of the many developments emanating from the federal government.  In the future, if you’re willing to read something different than the latest HIPAA news, we will present more of these other important initiatives.

Gary Pritts is not affiliated with InvestMed; he is a healthcare, business and information systems consultant with 25 years of experience.  To contact Gary with questions about this article or HIPAA in general, visit his website at:  www.eagleconsultingpartners.com