MD Anderson layoffs highlight EHR finance woes

Some of the biggest names in the hospital industry have experienced significant financial setbacks when upgrading to new EHR systems.

The University of Texas MD Anderson Cancer Care Center revealed plans to cut 1,000 jobs, citing significant financial issues that began with its rollout of a new electronic health record program last spring—a situation that’s all too familiar to some of the biggest names in the hospital industry.

The jobs will be cut through layoffs and retirements, the Houston Business Journal reports, and will save the center $120 million a year. MD Anderson hired extra staff when it launched the new EHR to assuage fears that the new program would lead to a loss in productivity, but the hospital ended the 2016 fiscal year with a greater operating loss than was projected.

“Perhaps we staffed up a little more than we should have,” hospital officials said a news conference.

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MD Anderson’s situation is not an uncommon one for health systems and hospitals that are adding new EHRs, including some of the biggest names in the industry.

Partners Healthcare, a network based in Massachusetts, for instance, lost more than $70 million in operating income during the quarter than ended Dec. 31, 2015, it reported last May. The system experienced a drop in the second quarter of fiscal year 2012 that it also attributed to EHR investments.

Similar financial issues were reported at Brigham and Women’s Hospital in Boston and at NYC Health + Hospitals, according to two articles from Hospital EMR & EHR, as both struggled with financial setbacks after installing Epic EHR systems.

A Black Market Research survey found that a significant portion of health executives and health information technology experts experienced buyer’s remorse after making hefty investments in EHRs.

The survey, which polled more than 3,300 executives and IT staffers, found that 87% regretted spending on the upgrades. In addition, 14% of hospitals that participated in the survey lost enough money since upgrading their EHRs that they would not be able to recoup the costs of the new system.

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Some hospitals have experienced success with EHR installations, including reduced readmissions and more face time between patients and physicians. Horizon Family Medical Group reported a 30% drop in readmissions since it rolled out its EHR program in 2012, and revenues in “the seven figure range.” But for many organizations, the return on investment remains elusive—and the “pain points” for health IT projects are fairly universal across the board.

John Halamka, M.D., CIO of Boston’s Beth Israel Deaconess Medical Center, said recently that some healthcare technology investments may never earn a financial return.

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“In my 20 years of traveling the world, I’ve seen healthcare IT projects that improve quality in measurable ways—reducing readmissions, enhancing medication compliance and improving processes," he said. “However, I’ve never experienced an IT project that reduces costs when all expenses of implementation and operation are accounted for.”