Report Questions Effectiveness of Hospital EHR Incentive Payments

October 15, 2014 in News

Subsidies provided under the HITECH Act have not been effective at increasing adoption of electronic health records by hospitals, according to a draft paper published by the National Bureau of Economic Research, Modern Healthcare‘s “Vital Signs” reports.

Under the 2009 federal economic stimulus package, health care providers who demonstrate meaningful use of certified EHRs can qualify for Medicaid and Medicare incentive payments.

Details of Draft Paper

For the draft paper, researchers sought to determine the effect the HITECH Act had on EHR adoption among hospitals. The report authors used EHR adoption data prior to 2008 to create a baseline to compare with EHR adoption by hospitals under the HITECH Act, which created the federal meaningful use incentive program.

In addition, researchers calculated the amount of federal subsidies spent per new EHR adoption by estimating the amount of EHR incentive payments received by each hospital under the HITECH Act. The researchers also talked with hospital CIOs about their experiences adopting EHRs.

The draft paper did not evaluate the effect of the meaningful use incentives on non-hospital eligible professionals.

Draft Paper Findings

The researchers found that the 2011 U.S. hospital EHR adoption rate would have been achieved just two years later in 2013 without the help of federal incentive payments (Tahir, “Vital Signs,” Modern Healthcare, 10/14).

Specifically, they found that EHR adoption among hospitals increased from 48% in 2008 to 77% in 2011 with the federal incentive payments. They estimated that without the incentive payments hospital EHR adoption would have been 67% in 2011 and would have reached 77% in 2013 (Dranove et al., NBER, October 2014).

Further, the draft paper noted that since incentives were available to all hospitals, not just those that had not yet adopted EHRs, the cost of facilitating additional EHR adoption was $48 million.


Draft paper co-author David Dranove, a professor of health industry management at Northwestern University, questioned whether using subsidies to accelerate adoption of EHRs was the correct thing to do. He said, EHRs “are still not ready for prime time,” adding that the researchers “weren’t surprised at the reluctance of hospitals, even with this huge financial incentive, to adopt the technology” (“Vital Signs,” Modern Healthcare, 10/14).

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