The bottom line is as important in healthcare as it is in any other industry. Whether a for-profit provider trying to keep the investors happy or a non-profit provider just trying to stay afloat, keeping costs down is an integral part of staying in business. One way to stay in the black (or make the black numbers bigger) is to make the switch from paper medical records to electronic medical records (EMR). EMR is accomplished through the use of software which is integrated throughout a medical practice and digitally stores all the same data that providers would otherwise put on paper. Although the upfront costs might be significant, the switch will improve resource management, have various tax benefits, and open a variety of reporting capabilities.
Resource Management Implications on Healthcare Finance
Resource management is an important part of maintaining a healthy bottom line in the health care industry. Paper records carry high costs. Paper, folders, and printers must be purchased in high quantities. The records must also be stored, in some states for up to seven years, often requiring older records to be stored off-site for a fee. Lastly, the man-hours required to search for and copy paper records can add up quickly.
Electronic records are cheap by comparison. The initial cost of purchasing the software and training employees on the software might be high, but the savings will quickly make up for it. The cost of materials and storage are virtually non-existent, and a well-maintained electronic file system can be accessed and reproduced in a matter of seconds rather than minutes or hours.
Tax Implications on Healthcare Finance
As part of the American Recovery and Reinvestment Act of 2009, Congress adopted measures which afford healthcare providers both incentives and penalties related to the adoption of EMR systems, both of which can have a huge impact on any given year's profit margin. Providers who adopt an EMR system before 2015 can receive up to an additional $65,000 in reimbursements from Medicaid and up to $44,000 in reimbursements from Medicare. The Medicare incentives are available in decreasing amounts between now and 2015, so the earlier a system is implemented, the more the money available to the provider. However, beginning in 2015, the incentives will cease and reimbursements to providers who have not implemented an EMR system will be reduced by between one and three percent. For more information, see this pamphlet produced by Beacon Partners.
Reporting Implications on Healthcare Finance
Each EMR system has different capabilities, but every system will enable healthcare providers to report data that would never be possible with a paper records system. Some EMR software will even allow an integration of management and accounting reporting functions. Either way, the reports generated can assist providers in determining where the practice has inefficiencies and how to eliminate those inefficiencies.
Additionally, EMR is a prerequisite to sharing electronic health records (EHR) with other physicians. EHR capabilities give health care providers an added measure of efficiency in treating its patients. At the very least, it improves the speed with which providers can get a sense of the patient's entire medical history. In some cases, it may facilitate a faster diagnosis, leading to cost savings for both the patient and the provider.
Healthcare finance can be daunting. With limited money in the budget, making the switch from paper records to EMR may not seem like the most effective way to improve the bottom line right now. However, doing so is a proven cost savings mechanism for any healthcare provider that is serious about reducing costs.
Seth Bauer - Seth Bauer is an attorney. He practices law, and is a critical thinker in areas such as leadership, work-life balance, and ...
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