Brother, Can You Fund an EHR?

Tim Size, executive director of the Rural Wisconsin Health Cooperative, a collaborative of 35 rural hospitals, is also a member of that state's bond authority. "It's tough times for small facilities to get financing, and they can't afford the risk of a variable interest rate," Size says. "The whole capitalization issue is still out there and it hasn't been addressed. They may have an accelerated depreciation schedule for critical-access hospitals, but that doesn't start until you are actually deemed to be a meaningful user of healthcare IT. The criteria to become a 'meaningful user' has not yet been established."

Tom Green, CEO of Columbus, OH-based Lancaster Pollard, a financial advisory firm for healthcare organizations, says the recession's domino effect exacerbates hospitals' credit struggles. "Increased unemployment means fewer people on health plans, or employers cutting back on plans or increasing deductibles. Uncompensated care is on the rise and elective surgeries are going away. At the end of the day it all flows through to the income statement, and if they have less cash flow they become less eligible for debt," he says.

Some indications suggest that lowering interest rates could prompt healthcare providers to pay for the IT upgrades using public debt, Pickens says. And Green says the federal government's reimbursements for successful EHR programs should make the process of finding a loan a little easier for healthcare providers, although they may have to look a little harder than they're accustomed to.

While Green believes the EHR money and the push by the federal government is a plus for the healthcare delivery system, he also notes that it's not really optional, because the federal government will begin to reduce Medicare payments in 2015 for healthcare providers that don't implement an EHR. "It's a double-edged sword. The government is saying, 'We are going to provide this for you, but we are doing this to you as well,'" Green says. "The good news is that we almost needed a crisis like this to get to the EHR system. So at the end of the four or five years we'll probably look back and say that was fortuitous because we needed something to prompt us to do it. But, if you are a hospital and this happens to be the worst possible time to commit to this, you may be thinking, 'I got a lot of fish to fry, and that wasn't one of them.'"