Health IT’s Long-term Costs Are Unknown

Federal funds are making it feasible for health care providers to switch to electronic records. But a panel of financial experts speaking last week to the Nashville Health Care Council said it’s not clear how the numbers for health care IT will look once the stimulus money is gone.

The federal stimulus plan enacted last year included 19 billion dollars to help doctors and hospitals adopt electronic record systems. Without it, analyst Darren Lehrich of Deutsche Bank Securities says the money crunchers at health care companies couldn’t justify the cost of adopting the new technology.

“That’s why the stimulus funds are pennies from heaven for hospital providers. For a lot of people who really put the numbers and looked at it, the returns have not been there in making those investments.”

The stimulus funds will help pay for installing new systems and training workers to use them. But while the panel agreed the federal funds are good for IT firms, several pointed out that no one knows yet how much it will cost to maintain and use the new systems year after year. And while proponents say electronic records will cut down on the the instances of doctors duplicating tests and procedures already run by other physicians, the panel said it’s not clear how much of a financial impact that will have.

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The US House and Senate are struggling to reconcile differences between the two versions of health care overhaul legislation that passed late last year. But no matter what the end result, the analysts say the changes being should be good for hospital companies.

Whit Mayo from R.W. Baird says the move towards health coverage for more people means more business for hospitals, and that the expansion of Medicare is especially good news.

“Having a heavy dependence on Medicare, you know, for the hospitals is a big plus. When half of your business is Medicare, they use 3 times as much health care as the other age categories.”

Although the panel agreed that the effects of the legislation won’t be felt for several years, all six analysts predicted that hospital companies should perform well in the coming year. Several pointed to Franklin-based Community Health Systems as a company to watch.