Partners attributes drop in operating income to EHR writeoff

Partners Healthcare, the largest healthcare organization in Massachusetts, attributed a big drop in its fiscal second quarter operating income to its decision to replace its homegrown electronic health record with a new clinical information system.

"The game's going to be won in the future off the flow of information," Partners chief financial officer and treasurer Peter K. Markell told the Boston Globe,  explaining why Partners plans to invest $600 million to $700 million in the new EHR over the next 10 years.

After writing off $110 million on its current information system, Partners reported second quarter operating income of $5.3 million, compared with $71.2 million in the prior-year period. While investment income counterbalanced some of that decline, Partners' net income fell to $132.2 million for the quarter ended March 31, 2012, from $166.4 million a year earlier.

Partners' operating revenue for the quarter grew 8% to $2.2 billion, and its patient service revenue jumped 9% to $1.7 billion, "reflecting increases in patient activities and rates," according to the Partners announcement.

The seven-hospital healthcare system, which includes Massachusetts General Hospital and Brigham & Women's Hospital in Boston, has long been a leader in the health IT field and has been accepted into Medicare's Pioneer ACO program.

Partners' decision to move from its legacy Longitudinal Medical Record (LMR) to a more capable system has been some time in coming. Recently, Partners CIO Jim Noga told InformationWeek Healthcare that the choice was between Siemens and Epic. Siemens' main drawback was that it didn't have a proven ambulatory care product, whereas Epic did. On the other hand, Siemens' healthcare unit is led by John Glaser, Noga's predecessor as CIO of Partners.

In a mid-May announcement, the big healthcare system said it would "negotiate exclusively with Epic" over the next several months. But the statement left no doubt that Partners has made its decision.

To learn more:
- read the Partners quarterly report announcement
- see the Boston Globe article
- check out Jim Noga's comments in InformationWeek Healthcare

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