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Electronic Health Records Project

Electronic Health Records Strategy


I. Introduction

From the convergence of great opportunity, precipitated by rebuilding a storm-devastated healthcare system in an environment of windfall revenues, and great need, precipitated by storm-driven lessons about destroyed medical records, has emerged a post-hurricane commitment to develop a statewide electronic health record (EHR) that will not only preserve patient medical records but also will support Louisiana’s transition to a new model of healthcare delivery.

The design of this EHR system will:

  1. assure that the information needed to provide coordinated care is available near the patient’s home and community;
  2. provide full access to a patient’s health information when referred for specialized care within the State’s safety net system;
  3. provide seamless access to critical medical records when patients are displaced through disaster;
  4. improve efficiency and quality of healthcare delivery; and
  5. promote transparency in costs and treatment options

To assure full integration of such a system, the LSU System Office proactively formed the Electronic Medical Records Operations Council. The dual charge to this council is to unify implementation and management of a statewide EHR system within the LSU hospitals and to coordinate its work with other state agencies as well as private sector facilities to provide an information infrastructure that will support an integrated system of care.

The EHR is integral to Louisiana’s revamped healthcare delivery system. In addition to its other functions, the EHR will facilitate Louisiana’s ability to achieve the national patient care goals announced by the Institute of Medicine in 2001:

  1. safety,
  2. effectiveness,
  3. patient centeredness,
  4. timeliness,
  5. efficiency, and
  6. equity

Specifically, the EHR will provide:

  • Uninterrupted critical access in the wake of disaster to patient’s medical records, history of disease, and recent treatments;
  • Support for Louisiana’s medical home model that promotes continuity of care for rural patients, which is central to Louisiana’s strategic plan to develop regional health information organizations (RHIOs). This facet of the EHR will assure that rural patients have access to sophisticated specialty healthcare without leaving their local community;
  • An investment that will promote quality of care including improved management of chronic diseases;
  • Continuity of patient information regardless of the patient care setting;
  • Direct economic benefits accruing from both improved support for research and medical education and enhanced capability to secure funding for grants and clinical trials, in addition to efficient revenue cycle management that will yield cost efficiencies and potential revenue enhancements;
  • Support for accreditation of graduate medical education training programs that require use of electronic health records by interns, residents, and fellows. A corollary benefit will be to make Louisiana more competitive in retaining its brightest and most qualified students and healthcare professionals.
  • Enhanced transparency in cost and treatment quality measures so that patients can make more informed decisions about where they seek their medical care. With the assistance of national consultants, the LSU EMR Operations Council has developed a five-year cost estimate and a prioritized list of components necessary to construct a complete EHR for the 10 LSU hospitals. To complete the project will require approximately $84M in one-time funding and $32M in start-up costs for the first five years of the project ($6.4M/year for 5 years), for a total 5-year cost of $116M.

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1The terms Electronic Health Record (EHR) and Electronic Medical Record (EMR) will be used interchangeably in this document, although the literature does make a distinction between the two concepts.
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II. Project Background and Present Status

A. Early Efforts

Management of the 10 LSU hospitals is divided between the LSU Health Care Services Division (HCSD) and the LSU Health Sciences Center–Shreveport. Over the past decade, the health information technology (HIT) systems have evolved from stand-alone billing systems to more unified clinical and administrative information systems, and the systems within the LSU hospitals represent various components of HIT evolution. Although both HCSD and LSUHSC-S share common goals, the systems implemented to achieve those goals were not always the same. The Health Care Services Division, working with the School of Public Health of LSUHSC-New Orleans, developed the Clinical Inquiry System (CLIQ) to be a sophisticated patient data repository that serves not only as a method to manage all electronic results for a patient but also as the basis for the quality management system required by the HCSD Disease Management Program. In Shreveport, commercial systems from the Siemens Medical Systems (SMS) were implemented to provide not only the same patient data repository capability but also computerized patient order entry (CPOE) and medication management of the “five rights” (right patient, right medication, right dose, right time, right route.)

In 2006, the LSU Systems Office contracted with HealthLink, a subsidiary of IBM, to conduct an analysis of the information technology systems for the LSU hospitals. From more than 30 interviews with executives, physicians, managers, and staff, the IBM consultants produced:

  1. a status report,
  2. a proposal for a governance structure for the management and deployment of information technology;
  3. a list of information technology projects that could be implemented quickly, inexpensively, and that would provide maximum impact in a short period of time, and
  4. a proposal for a roadmap for the long-range development of IT systems for all the LSU hospitals.

In response to this study, the first step within the LSU Systems Office was to create the Electronic Medical Records Operations Council. The members of the EMR Operations Council were selected to assure organizational representation, technological proficiency, clinical proficiency, and efficient collaboration with healthcare management at the State level. Committee members were charged with developing a master plan for the acquisition, implementation, and operation of an electronic health record system, to develop a business model to facilitate the campus decision process for implementation of these systems, and to ensure that IT systems at the various hospitals could interchange data in a manner most beneficial to the patients. The complete results of this study can be found in the Appendix (“First IBM HealthLink Study, 2006”.)

C. EMR Operations Council: Initial Goals

The committee, using the recommendations from the IBM HealthLink study, established the following set of goals through December, 2007:

  1. to identify potential technology models for a statewide Electronic Health Record (EHR) system;
  2. to hire a consultant to develop a cost and risk analysis of these models;
  3. to seek state and federal funding for the first and subsequent years of the project;
  4. to participate in related statewide efforts to develop electronic health record systems; and
  5. to begin Phase 1 implementation of the basic building blocks of an EHR for the LSU hospitals.

In February, 2007, the Operations Council met with a fiscal analyst in the Division of Administration to present the strategic plan for the development of a statewide EHR for LSU. Using many of the lessons learned following hurricanes Katrina and Rita, the Operations Council presented the role of the EHR in healthcare redesign:

  1. disaster recovery,
  2. continuity of care,
  3. a statewide clinical data repository of medications and allergies, and
  4. the implications for patient care, quality of care, transparency of cost, and disease management.

Returns on investment were identified, not only monetary returns but also returns for healthcare quality, education, and research. At the time of this presentation, the cost and risk analysis for the project had not yet begun, although internal estimates indicated that this would be a 4-5 year project at a cost of $80M - $100M. For the first year, $35M was requested for four of the basic building blocks of an electronic medical record system. During the 2007 regular session, the Louisiana Legislature appropriated $30M for the project, signaling its approval of the initiative.

D. Second IBM HealthLink Study

Next, the Operations Council and the consultant, HealthLink, developed the cost and risk analysis for four chosen models:

  1. VistA, the VA’s EHR system,
  2. Soarian, the new system from Siemens (the 20-year clinical vendor for the LSU hospitals);
  3. other enterprise-level systems from vendors that market a complete EMR package; and
  4. the “Gap Model,” that is, a complete EHR that uses existing systems and adds required missing components

Analysis of the four EHR models focused on the following guidelines:

  1. the EHR should facilitate the ability to achieve national patient care goals set by the Institute of Medicine (safety, effective, patient centeredness, timeliness, efficiency, and equity);
  2. the EHR components should be integrated to ensure that clinicians are presented with as few user interfaces as possible, and if several user interfaces are required, there should be a common look and feel;
  3. the EHR should have strong revenue cycle management capabilities to address potential changes in Louisiana’s healthcare funding model;
  4. the EHR should have tools for reporting transparency of cost and treatment, for the development of “value exchanges,” and for reporting quality measures required in pay-for-performance reimbursement models; and,
  5. the EHR should be flexible enough to address issues unique to Louisiana.

An example is the LSU/Veterans Administration (VA) project to develop jointly new hospital facilities in New Orleans. VistA, the VA’s EHR system, was selected as a model for analysis not only for this reason but also because the software is in the public domain and there is no purchase cost. Soarian, the new system from Siemens was selected because of its existing long-term relationship with LSUHSC-S and because the data migration issues should be minimized. The Gap Model was a practical consideration to incorporate existing systems in the absence of specific project funding.

The results of the HealthLink cost and risk analysis are presented without change or modification in the Appendix. The consultants were specifically instructed not to select any specific model or vendor but to provide only the cost and the risk for each of the four models. However, two significant budgetary considerations were omitted from their findings:

  1. the $30M appropriation from the legislature was not factored into the analysis, and
  2. the cost for the Radiology Information System/Picture Archiving and Retrieval System (RIS/PACS) was not included in the overall cost. Because the RIS/PACS is common to all four models, adding its cost to the overall cost of the four models is straightforward. However, the present operating cost of the existing RIS/PACS systems was included in the present operating costs presented by HealthLink.

Because this analysis would be used to justify funding, budgets were developed both for new, one-time costs as well as for net new operating costs. (Net new operating cost, also called “Start-Up cost”, is defined as operating costs that will be incurred over and above all present operating costs.) Because two significant budgetary items were omitted from the HealthLink analysis, amended budgets are provided in this document that specify one-time costs and net new operating costs for each of the four models. Again, note that the HealthLink budgets found in the Appendix do not include this updated information.

D.2 Analysis of Findings

The complete list of components comprising a fully functional EHR can be found in the Appendix (“Components of an EHR”) and was developed as part of the second IBM HealthLink study. To evaluate the cost for each of the four models, HealthLink prepared a Request For Information (RFI) based on the desired EHR components and functionality. This RFI was sent to representative vendors of the four models (and when possible, two vendors per model.) Vendors were asked to specify one-time, implementation, and recurring costs for each component in the EHR. If the vendor could not supply a component, the vendor was asked to note that this component was not included. For each of the four models, any component of the EHR not included within the response to the RFI was subsequently added to the model so that all four models provided approximately the identical functionality. By definition, the Gap Model included every component specified for the EHR. Because VistA, the EHR for the Veterans (Most articles associate VistA with the Veterans Health Administration and they always capitalize the V and the A in VistA) Administration, has weak or non-existent revenue cycle management components (appointment, registration, hospital billing, physician’s billing, claims editing and scrubbing), the cost of each such component (as listed in the Gap Model) was added to the VistA Model to ensure the missing functionality was restored. The Siemens Model and the Vendor Model were treated in the same way to assure that the models were comparable and the cost of any missing functional component was consistent with the cost found in the Gap Model.

The HealthLink estimates of one-time cost for the four models, amended to include the cost of RIS/PACS, are shown in Figure 1.

New One-Time Costs

Figure 1

The VistA model is the least expensive at a cost of approximately $61M. The cost for the Gap model is approximately $65M, $3.8M higher than VistA. While the VistA Model is the least expensive, the cost of the additional modules and interfaces needed for a complete EHR dispel the myth that VistA is “free”.

Start-Up costs (net new operating costs), defined as all operating costs above and beyond present operating costs, are shown in Figure 2. Although there is a similar cost estimate developed by HealthLink and shown in the Appendix, the amounts below also include operating costs for the RIS/PACS system, a cost not included in the HealthLink analysis. All other expenses used to develop net new operating costs were identified by the HealthLink analysis. For the first five years of the product, the Siemens model has the lowest net new operating costs ($16.75M) followed by VistA, Vendor, and Gap, in ascending order of cost.

Start-Up Costs, 5-Year

Figure 2

In the Appendix, the figure (in the “Second IBM HealthLink Study, 2007”) titled “EMR Recurring Costs by Model” lists the components that comprise the total operating costs over five years, although note that these are total costs and not net new operating costs, and also note that the maintenance costs for RIS/PACS are not included in this graphical analysis. The Siemens model is least expensive because Siemens does not customarily charge for software maintenance until the specific module has been implemented, while all three other models require that full software maintenance costs be assessed at the time of purchase. The VistA model has the highest personnel resource requirements because (1) VistA is written in an old programming language, MUMPS, and (2) the interfaces to non-VistA systems (such as revenue cycle management) are numerous and complex.

To develop the risk analysis, HealthLink consultants conducted 48 interviews with executives, physicians, managers, and staff. A list of the interviewees is found in the Appendix (“Second IBM HealthLink Study, 2007”.) Each risk was assigned a severity and probability score. Global risks are also listed in this Appendix document, as are the consultant or interviewee’s recommendation to address the risks. For each model, model-specific risks were also identified both from implementation and operational perspectives. A summary of the functional risk analysis shown in Figure 3 graphically demonstrates that VistA carries the highest functional risk of the four models.

Functional Risk Analysis

Figure 3

Finally, the consultants provided a concise cost and risk analysis summary, shown in Figure 4.

Cost & Risks Analysis Summary

Figure 4

Based on its review of the risk analysis and the amended cost analysis, the Operations Council reached the following conclusions:

  • while VistA has many strong clinical components and has the least expensive one-time costs, it is probably the most complex and carries the highest risk because (a) it is written in MUMPS, a very old programming language, (b) the revenue cycle management components are weak or non-existent, (c) the complexity of the system is further increased because of the need for interfaces to all the missing system components, (d) there are very few vendors that provide implementation and support services, and even fewer that have existed more than 5 years as a corporation, and (e) there is no precedent for its implementation by a comparable hospital system (outside the VA.)
  • Model 4, the Gap model, has nearly the same one-time cost as VistA ($61M vs. $65M), but the total five-year net new operating costs are higher than for any other model. Furthermore, the Gap model is the least integrated system and carries increased operational risk because it requires a large number of interfaces to systems from a heterogeneous mix of vendors.

    Therefore, the unanimous recommendation by the Operations Council, supported by the LSUHSC Chancellors and the CEO of HCSD is the competitive acquisition best represented by Models 2 and 3 (Siemen’s and Vendor).

    This decision presents the lowest implementation and operational risk, addresses the strong revenue cycle management capabilities that will be required as Louisiana’s healthcare funding model evolves, and will likely provide vendor-based tools for reporting transparency of cost and treatment, for development of “value exchanges”, and for reporting quality measures that will be required in pay-for-performance proposals presently under consideration within CMS (Center for Medicaid and Medicare Services). Although a vendor might propose to implement a customized version of VistA in response to the competitive Request for Proposals, such response would need to address the specific risks already identified as being inherent in VistA.

Comparisons of projected cost with other comparable systems indicate that this proposal is conservative, a fiscal result of optimal use of existing resources. Although there is limited research data available in the literature, there has been an extensive analysis of the IT expenditures for Kaiser Permanante. The Wall Street Journal in particular reported the following data for 2002:

  1. 8.5 million covered lives,
  2. 10,000 doctors, and
  3. an IT budget for 4 years of $1.5B. (More recent information on Kaiser Permanente suggests that the 4-year expenditure was $3B.)

If an extrapolation is made using the most conservative numbers, the per-patient and per-physician cost (in 2002 dollars) would be $150,000 / physician and $176 / patient. For the 1200 LSU physicians, the extrapolated EHR cost over 4 years would be $180M. Alternatively, the extrapolated 4-year EHR cost to cover approximately 1M patients would be $176M. These two estimates are remarkably similar to each other and to the estimates provided to LSU by the Second IBM Study. Additional information provided by the HIT Leadership Panel reports that health information technology (HIT) expenditures as a percentage of revenue seem to have grown from 1-2% in 1998 to 4-5% currently. For the LSU Hospitals with a yearly budget of about $1B, yearly HIT expenditures would be expected to be $40M to $50M instead of the present $16M. These figures are far less than those of the IT industry (10% of revenue) and financial services industry (7%). HIT expenditures are expected to grow in the next several years, and growth estimates vary from 5-7%, 10-15%, and as high as 18% per year, primarily in response to the State and Federal initiatives to improve the ability of patients, payers, providers, and purchasers to make knowledgeable decisions about the quality and cost of care.

F. Statewide Initiatives

To support the coordination-of-care model, such as the “medical home”, and to ensure that critical health information is available during a disaster, electronic health records should be available at four levels:

  1. the primary care doctor’s office,
  2. the local hospital,
  3. the specialty hospital, and
  4. (for patient allergies and medications) at the statewide level. (See the attached figure.)

For example, when the primary care physician uses an electronic medical record within the medical home model, that same electronic record should be available if the patient is admitted to a local hospital. When the local hospital also has a compatible electronic medical record, the patient’s information is easily made available to a specialized hospital facility that is able to retrieve and read the patient’s medical record. Collectively, these four levels of cooperative record-keeping comprise a Regional Health Information Organization (RHIO) that supports continuity of care as required by the “medical home” model. While Louisiana may have many such RHIOs, a subset of the RHIO information (allergies and medications) should be available at a statewide level so that in the event of a disaster, critical patient information will be available to provide emergency care regardless of where the patient may be displaced. This fourth level, the statewide disaster-preparedness system, is called the Louisiana Health Information Exchange (LaHIE). LaHIE will also provide a means of interconnectivity for electronic health record systems, not only between RHIOs but also for individual hospitals and physician offices. Funding for these initiatives will represent an enormous stride forward in the redesign of health care for Louisiana.

Louisiana Health Information Exchange (LAHIE)

G. Strategic Plan and Timetable for the LSU EHR

As indicated in the following timetable, there are several LSU initiatives already in progress to acquire and implement the basic building blocks of an Electronic Health Record: RIS/PACS, electronic master patient index (E-MPI), and an internal LSU Health Information Exchange so that all LSU patient information can be accessed from all ten LSU hospitals. All new systems will be acquired competitively, and not through extensions of amendments of existing vendor contracts. During implementation of these fundamental building blocks of the EHR, a request for proposals (RFP) will be developed for the remaining EHR components. The complexity of such an RFP will require that consultants assist in the development and selection process. The order in which the components of the EHR will be implemented will be determined by a number of factors such as patient needs, governmental requirements for reporting of quality measures, Louisiana state initiatives such as continuity of care through concepts such as the “medical home,” Federal government initiatives such as e-prescribing and pay-for-performance, and internal LSU initiatives such as improvements in revenue cycle management. In general, each EHR component will be implemented simultaneously across all ten LSU hospitals. Every effort will be made to avoid redundant implementations whenever possible. However, some may be necessary. For example, a master patient index (E-MPI) is needed to identify a patient’s medical record number in each of the ten LSU hospitals and is a requirement for a statewide RIS/PACS. Presently, there is no statewide LSU E-MPI, so this system will be one of the first basic building blocks to be implemented. Because most major system vendors have their own internal E-MPI, this initial implementation may be a bridge between the existing systems and the ultimate EHR-vendor E-MPI system. Every effort will be made to minimize continued expenditures on systems that may ultimately be replaced.

III. Conclusion

In the past 18 months, remarkable progress has been made in developing a master plan for the acquisition, implementation, and operation of the new EHR for the LSU hospitals. Initial funding has been procured for the foundational EHR components, and implementation of these components is underway. The LSU System Office has ensured that there is a business model to facilitate the campus decision process for implementation of these systems and to ensure that IT systems at the various hospitals can interchange data in a manner that provides the most benefit to the patients. Information Technology staff at DHH, LSU, LONI, and the Rural Hospital Coalition are working together to ensure that standards are established so that statewide initiatives create systems that are interoperable and able to provide efficient information exchange. LSU recently appointed a Vice-President for Health Affairs and Medical Education who will lead the drive to redesign healthcare for LSU from the System level, and there is now a Chief Information Officer as part of this new LSU team. Funding provided by the legislature from Regular Sessions in 2007 and 2008 together with funding from the ARRA (Federal Stimulus Package) will enable continued progress toward the development of the outlined statewide EHR for the LSU hospitals.