Pricey Patient Record Systems: Who Pays?

President Obama in 2009 promised the American people a modern health care system. He used his usual soaring rhetoric to say the U.S. would use the latest medical information technology to connect medical professionals and patient records, on the taxpayer’s dime, of course.

The result has been a morass of problems, setbacks and rising costs that are stressing health care systems across the country.

Electronic health records (EHR) are a digital version of medical charts. When a doctor makes notes about your health on a laptop or iPad, chances are he is sending your data into such a system. EHRs aim to make patient information, in real time, readily available to those who need it. The systems go beyond the basic clinical data collected in your doctor’s office to offer a broader view of your concerns, appointments and care.

In theory, it sounds streamlined, high-tech, neat and clean. At the start, it all sounded so rosy.

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“Within five years, all of America’s medical records are computerized,” Obama announced in January 2009. “This will cut waste, eliminate red tape, and reduce the need to repeat expensive medical tests.”

The federal government poured billions of dollars into digitizing U.S. medical records (in 2009, only 17 percent of doctors stored information digitally). Studies suggested that while Obama’s proposal could cost up to $100 billion to implement, in the long run it could save $80 billion in health costs each year.

Instead, health care systems now find their EHRs staggeringly expensive, frequently not communicating as promised, in need of constant upgrading, and financially stressful for hospitals already under duress as they attempt to collect outstanding bills from unmanageable patient deductibles — a result of Obamacare.

The situation doesn’t look like it will improve any time soon.

In 2013, New York City-based Health and Hospitals Corp. announced it had signed a $302 million EHR contract with Epic, a privately-held health care management IT system out of Verona, Wisconsin. HHC said it planned to implement the Epic EHR system at 11 hospitals, four long-term care facilities, six diagnostic treatment centers, and more than 70 community-based clinics, according to hospitalemrandehr.com.

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The 15-year contract, to be covered by federal (taxpayer) funding, was to include everything: software and database licenses; professional services; testing and technical training; software maintenance; and database support and upgrades.

But the project was already in crisis last year, just two years into the contract. The budget ballooned to $764 million, and with it, many of HHC’s top executives were fired amid charges of improper billing. Seven consultants — who earned between $150 and $185 an hour — were also kicked off the payroll.

For these systems, however, there is little that can be done to change course.

“The high costs of the current implementations likely means most large institutions won’t have any realistic way to ‘switch’ to another product in the near future if something better came along,” David Hanauer, associate professor at University of Michigan Medical School, told LifeZette. Hanauer researches clinical and health informatics, with a focus on electronic health records. “The ‘sunk’ costs are just too high.”

In the northeast, at Maine Medical Center, the Epic implementation ballooned to a price tag of $160 million, and its chief information officer was fired.

Maine Medical Center’s president and CEO, Richard W. Peterson, revealed that Epic’s billing-related issues and declining patient volumes led to a $13.4 million operating loss in the first half of its fiscal year. That was from a letter obtained in May 2013 by Healthcare IT News.

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In North Carolina, the 885-bed Wake Forest Baptist Medical Center reported financial problems due to the Epic contract. The Winston-Salem Journal in 2013 reported that the center’s CIO was planning to resign, although his resignation was reportedly not related to the Epic implementation; rather, he was “relocating to Florida to spend more time with family.”

In Denver, Colorado, the chief information and technology officer at Denver Health Medical Center resigned after a disagreement over the size of the hospital’s investment in a new Epic system. The executive said the costs could total $300 million, including a $70 million payoff to the current contractor and a doubling of the size of the IT staff, according to denverpost.com.

He said he warned the cost could bankrupt a hospital operating on thin financial margins. “My estimates weren’t flattering,” he told the Denver Post.

Massachusetts’ Partners Healthcare took the plunge in 2015 with an Epic EHR system. Its system will eventually house millions of patient records across a network of 10 hospitals and 6,000 doctors, the Boston Globe reported. This comes with a $1.2 billion price tag, the single biggest investment the health care company has ever made.

All large EHR vendors are frustrating, Dick Escue, CIO at Valley View Hospital in Glenwood Springs, Colorado, told modernhealthcare.com. If a hospital wants a third-party application or outside connection, vendors often charge a high upfront price, along with an annual fee to maintain it, he said.

He estimated the potential upfront cost at $80,000 and the annual fee at $10,000. Even with those fees, vendors often delay providing services. “They’re either unwilling or unable,” he told modernhealthcare.com. “It never gets accomplished.”

And he added this: “There are a lot of questions to consider about how health care should be run in the U.S. For instance, how much medical information should be centralized, how much should be subject to standard business practices — or, perhaps, shielded from it — and who ultimately pays the bill for it all? And ultimately, is our health care system helped or harmed by it?”

These are important questions Americans have yet to see answered, all while the money drains away.