By Reik Read, Robert W. Baird & Co.
The stimulus spending package, or American Recovery & Reinvestment Act (ARRA) of 2009, authorizes $23B in spending for healthcare information technology, with a key focus on the adoption of electronic health records (EHR) by 2014. Of this, $2B is available immediately to begin the process of building infrastructure and support for EHR deployment. According to Dr. David Blumenthal, who has been appointed by President Barack Obama as National Coordinator for Health Information Technology, less than 20% of hospitals have electronic health records today, while the figure for doctors is around 10%. EHRs would provide healthcare professionals with electronic access to an individual's medical history, even when that history has been recorded by multiple providers. Therefore, the EHR system necessitates inter-operable communication of standardized data between hospitals and physicians. In our view, RFID could play a potential role in the development of these health records, particularly given the tight timeframe that needs to be followed. The Department of Health and Human Services needs to issue its Interim Final Rule by December 31, 2009 and legislative incentives begin in 2011.
The legislation is structured to offer $17B in incentives and $13B in potential penalties associated with driving EHR adoption. Provided physicians employ "meaningful use" of a "certified" EHR, they will receive bonus payments from Medicare beginning in 2011 and ending in 2016. For those doctors that do not employ such systems, they will face Medicare reimbursement penalties beginning in 2015. Hospitals that comply with meaningful use EHRs by 2011 will be provided with a $2M bonus payment. Given this structure, we believe the healthcare community is well incented to participate.