Technology partnerships and data mergers can be affordable alternatives to mergers for small and medium-sized hospitals, as they strive to provide the quality data that payers required. In the blog post, we discuss some of the challenges for each facility type.
Small hospitals (150 beds or less)
The data management requirements of consumers of healthcare informatics make the implementation of an enterprise-wide electronic health record (EHR) almost mandatory. These systems are expensive though, not just in the initial capital but in the professional services required to implement them properly.
The legacy costs of upkeep and enhancements are also more than the organization can bear. Most smaller hospitals have an IT staff of less than 10 people, who are mostly concerned with PCs and networks. Whatever EHR systems the hospital does have are usually outsourced to the vendor or a third party servicer.
Some small hospitals have implemented ingenious manual aggregation processes and reports that can in many ways replicate the enterprise-wide EHR. But this no longer an option because the manual processes eventually become cost prohibitive and detract from the clinical job functions of the aggregators (usually nurses).
The consumers of the quality data are also continuously increasing the standards and measures. This requires constant maintenance and updating by these same nurses who were pressed into a secondary informatics role.
Medium-sized hospitals (350 beds or less)
The mid-sized hospital has many of foundations in place to ensure success with an enterprise-wide EHR and the additional demands it brings. But in the new environment that requires massive amounts of reporting across large patient populations, sharing that data with regional health exchanges, and expanding regulatory requirements, it is difficult to see a mid-sized hospital extending to or acquiring others and extending its data management and best practices to its new partners.
Due to increasing demand and the diversity of service lines, these hospitals cannot scale their current informatics, business intelligence or IT infrastructure in such a way as to meet the demands of the new reporting requirements. In many cases, the infrastructure that is servicing the current application payload is at its limits, both in hardware and in personnel.
The hospital now has to replace these systems with a robust enterprise wide EHR, which requires levels of capital that spike for two to three years and many mid-sized organizations are not well equipped to handle this level of complexity and short term costs associated with a project of this magnitude.
A healthy IT budget typically runs from 3.5% to 7% of gross expenses. An enterprise-wide EHR that replaces 15 to 20 “Best of Breed” departmental systems at the same time as the implementation will spike the IT spend to 12% to 20% for two years; simply impossible for many. Many hospitals also soon discover that the infrastructures required to run and manage these enterprise-wide EHRs are vastly more expensive and complex than what is required of their current demands.
For those organizations that are able to handle all of the above challenges and come out healthy, they then find themselves unable to extend that level of effort to partners via merger or takeover. They are simply stretched to the limit within their own organization and do not have the systems or the skills required to scale this operation to others.