EHR Best Practices And Challenges

Describe a scenario when change management would be helpful with implementing a new system. What best practices would you recommend?


When responding to your peers, explain how the best practices chosen by your peers can help overcome potential challenges that may come up.

7-1 Discussion: EHR Best Practices and Challenges

Describe a scenario when change management would be helpful with implementing a new system. What best practices would you recommend?


When responding to your peers, explain how the best practices chosen by your peers can help overcome potential challenges that may come up.

Classmate # 1

· Amanda Jack posted Jun 16, 2020 3:35 AM

Hi everyone,

Change management can help in implementation a new system in that it can help minimize the risk of failure. I think this is very important since the risk of failure when implementation a new HER for a healthcare organization has this risk like many other projects. Change management can help minimize risk in several aspects, making the organization act in a proactive (ready for change) perspective rather than reactive to the change. Rather than reacting to a change, the organization and leadership can navigate it accordingly.

As we read in our resources this week, a few risks can present themselves in any implementation process (Harle, 2016). An example of this is EHR compliance. Once compliance regulations change, it can develop into a problem if not handled correctly. Using the change management style, these risks can be navigated rather than hinder a project. A best practice suggestion could be that once these risks are identified teams are assigned to navigate according to change management practices.

Classmate # 2

· Yolanda Beasley posted Jun 16, 2020 8:01 AM

Hello class,

One thing that is inevitable is change. Something that happens all the time in healthcare, the sunset/disable of an old application and implementing a new application. There has to be a champion- a person or team that initiate and execute the change process. Champions have to make sure team members are prepared for the transition. Communication has to be clear and precise, resistance has to be managed while there may be a discovery of future improvements to the new application, but most importantly productivity has to be measured.

16 LORENZI, RILEY, Managing Change

Review Paper n

Managing Change: An Overview


A b s t r a c t As increasingly powerful informatics systems are designed, developed, and implemented, they inevitably affect larger, more heterogeneous groups of people and more organizational areas. In turn, the major challenges to system success are often more behavioral than technical. Successfully introducing such systems into complex health care organizations requires an effective blend of good technical and good organizational skills. People who have low psychological ownership in a system and who vigorously resist its implementation can bring a ‘‘technically best’’ system to its knees. However, effective leadership can sharply reduce the behavioral resistance to change—including to new technologies—to achieve a more rapid and productive introduction of informatics technology. This paper looks at four major areas—why information system failures occur, the core theories supporting change management, the practical applications of change management, and the change management efforts in informatics.

n JAMIA. 2000;7:116–124.

It’s not the progress I mind, it’s the change I don’t like. —MARK TWAIN

Along with the inevitable failures, medical informat- ics has had many successes—probably more than should have been expected, given the challenges of the hardware, software, and infrastructure that faced us in the past. However, many of the successful sys- tems were implemented as stand-alone systems that involved a modest number of people. Furthermore, the systems were often implemented in specific, lim- ited areas that could see potential direct benefits from

Affiliations of the authors: University of Cincinnati, Cincinnati, Ohio (NML); Riley Associates, Cincinnati (RTR).

This paper was the basis of a presentation by Dr. Lorenzi that was part of the Cornerstone on Managing Change, one of four Cornerstone sessions included in the program of the AMIA An- nual Fall Symposium, Washington, DC, November 6–10, 1999.

Correspondence and reprints: Nancy M. Lorenzi, PhD, Univer- sity of Cincinnati Medical Center, P.O. Box 0663, 250 Health Professions Building, Cincinnati, OH 45267-0663. e-mail ^

Received for publication: 11/1/99; accepted for publication: 11/18/99.

the systems. Typically, there were local champions, who made major and personal commitments to the success of the systems, and the enthusiasm of these champions was readily transmitted to the people with whom they worked directly. In turn, most of the peo- ple working on these systems felt like pioneers, and the literature of medical informatics is filled with their accomplishments.

When we embark today on designing, developing, and implementing more complex systems that have wider impact, a new set of challenges looms even larger. Certainly, technical challenges still exist; they always will. However, as our new systems affect larger, more heterogeneous groups of people and more organizational areas, the major challenges to systems success often become more behavioral than technical.

It has become apparent in recent years that success- fully introducing major information systems into complex health care organizations requires an effec- tive blend of good technical and good organizational skills. A ‘‘technically best’’ system can be brought to its knees by people who have low psychological own-

Journal of the American Medical Informatics Association Volume 7 Number 2 Mar / Apr 2000 117

ership in the system and who vigorously resist its im- plementation. The leader who knows how to manage the organizational impact of information systems can sharply reduce the behavioral resistance to change, in- cluding to new technology, to achieve a more rapid and productive introduction of information technol- ogy.

Knowledge of the significance of people and organi- zational issues is not new. One of our informatics pi- oneers, Octo Barnett, identified political and organi- zational factors as being important 30 years ago.1

However, given the realities of that era, they were ‘‘well down the list.’’ By 1998, Reed Gardner, another definite pioneer, stated in his Davies Lecture2:

In my opinion, the success of a project is perhaps 80 percent dependent on the development of the social and political interaction skills of the devel- oper and 20 percent or less on the implementation of the hardware and software technology!

We are seeing a shift in the balance of the people and organizational issues as opposed to the technical is- sues. An effective medical informatics change strategy can help convert what health care organizations are experiencing today—technology-centered tension— into welcomed opportunities that will lead to im- provement in all phases of the health care process.

The content that supports both the intellectual content and strategy for this cornerstone comes from multiple disciplines, e.g. psychology, sociology, management, and anthropology. This paper discusses four major topics—why information system failures occur, the core theories supporting change management, the practical applications of change management, and the change management efforts in informatics.

Why Do Information System Failures Occur?

If only it weren’t for the people, those awful people, al- ways getting tangled up with the systems. If it weren’t for them, the health care area would be an informati- cian’s paradise.*

Complex problems rarely have simple solutions. Dur- ing the many stages of the solution process, there are numerous opportunities to go wrong, whether the so- lution tends to be a technical one or not. As we delve

*Paraphrased from Kurt Vonnegut, Jr., in Slaughterhouse-five: ‘‘ ‘If only it weren’t for the people, the goddamned people,’ said Finnerty, ‘always getting tangled up with the machinery. If it weren’t for them, earth would be an engineer’s paradise.’ ’’3

into increasingly complex medical informatics prob- lems, we will increasingly face this challenge. In reviewing information system failures cited in the lit- erature as well as drawing on our personal observa- tions and experiences, we have seen the rising impor- tance of the human issues that are often referred to as people and organizational issues.

Table 1 presents a categorized overview of the reasons for contemporary failures in implementing major in- formation systems. There is typically no one single cause in a given case. In fact, a snowball effect is often seen, with a shortcoming in one area leading to sub- sequent shortcomings in other areas. No precise sta- tistics exist for the relative importance of the causes; however, personal observation tells us that the two most important are communications deficiencies and the failure to develop user ownership.

Change and Change Management

Technology has indeed taken a place next to war, death, divorce, and taxes as a prime cause of bone-shuddering anxiety.—JOHN SEYMOUR

Change is a constant in both our professional and our private lives. Our children grow up taking for granted such things as powerful personal computers that we could not envision at their ages. The idea that human beings naturally resist change is deeply embedded in our thinking about change. Our language (e.g., ‘‘re- sistance to change’’), our assumptions, and our mental models about change all seem to imply that some- thing in our natures leads us to resist change. How- ever, it is easy to find examples of human beings, from childhood on through old age, actively seeking out change of all sorts. Human beings do not necessarily resist change automatically; however, many people do resist being changed, i.e., having changes imposed on them.

Organizational change normally involves some threat, real or perceived, of personal loss for those involved. This threat may vary from job security to simply the disruption of an established routine. Furthermore, there may be tradeoffs between the long and short run. As an individual, I may clearly perceive that a particular proposed change is, in the long run, in my own best interests, and I may be very interested in seeing it happen, yet I may have short-run concerns that lead me to oppose particular aspects of the change or even the entire change project.

The rate of change is escalating in virtually all organ- izations. The pressure is intense on anybody con-

118 LORENZI, RILEY, Managing Change

Table 1 n

Reasons for Contemporary System Failures Category Examples

Communication Ineffective outgoing communication Ineffective listening Failure to effectively prepare the staff for the new system

Culture Hostile culture within the information systems organization Hostile culture toward the information systems area No strategies to nurture or grow a new culture

Underestimation of complexity Missed deadlines and cost overruns Lost credibility

Scope creep Failure to define and maintain original success criteria Failure to renegotiate deadlines and resources if criteria do change

Organizational No clear vision for the change Unintended consequences Ineffective reporting structure Staff turnover Staff competency Provision of a technical ‘‘fix’’ to a management problem Lack of full support of ‘‘boss(es)’’ Roles and responsibilities not clearly defined or understood by everyone Several people vying to be ‘‘in charge’’ Adequate resources not available from the beginning Failure to benchmark existing practices Inability to measure success

Technology System too technology oriented Poor procurement Lure of the leading (bleeding) edge Inadequate testing

Training Inadequate or poor-quality training Poor timing of training—too early or too late

Leadership issues Leader too emotionally committed Leader’s time over committed Too much delegation without control Failure to get ownership in the effort Leader’s political skills weak ‘‘Lying’’ to get initial approval

nected with the health-related world to focus time and attention on understanding the forces driving the changing environment and develop or implement the information systems needed to support the altered en- vironment.

Change Management

The phrase change management is very common in management articles as well as newspapers.4,5 More- over, managerial interest in the topic has been stim- ulated by the comments of Peter Drucker6 as to whether one can manage change at all or merely lead or facilitate its occurrence within an organization. Nevertheless, using the traditional terminology, what

is meant by change management, how did it evolve, and why has this concept become so important?

Change management is the process by which an or- ganization gets to its future state, its vision. While tra- ditional planning processes delineate the steps on the journey, change management attempts to facilitate that journey. Therefore, creating change starts with creating a vision for change and then empowering in- dividuals to act as change agents to attain that vision. The empowered change management agents need plans that provide a total systems approach, are re- alistic, and are future oriented. Change management encompasses the effective strategies and programs to enable those change agents to achieve the new vision.

Journal of the American Medical Informatics Association Volume 7 Number 2 Mar / Apr 2000 119

Today’s change management strategies and tech- niques derive from the theoretic work of a number of early researchers.

Examples of Core Theories from Other Disciplines

In 1974, Watzlawick, Weakland, and Fisch published their now classic book, Change: Principles of Problem Formation and Problem Resolution.7 Theories about change had long existed. However, Watzlawick et al. found that most of the theories of change were phil- osophical and had been derived from mathematics and physics. Watzlawick et al. selected two theories from the field of mathematical logic on which to base their beliefs about change. They selected the theory of groups and the theory of logical types. Their goal of reviewing the theories of change was to explain the accelerated phenomenon of change that they were witnessing.

Watzlawick et al. concluded that the earlier theories explained first-order and second-order changes:

n First-order change is a variation in the way processes and procedures have been done in a given system, leaving the system itself relatively unchanged. Some examples are creating new reports, creating new ways to collect the same data, and refining ex- isting processes and procedures.

n Second-order change occurs when the system itself is changed. This type of change usually occurs as the result of a strategic change or a major crisis such as a threat against system survival. Second-order change involves a redefinition or reconceptualiza- tion of the business of the organization and the way it is to be conducted. In the medical area, changing from a paper medical record to an electronic med- ical record represents a second-order change, just as automated teller machines redefined the way that many banking functions are conducted world- wide.

These two orders of change represent extremes. First- order change involves doing better what we already do, while second-order change alters the core ways we conduct business or even the basic business itself.

Golembiewski, Billingsley, and Yeager8 subsequently added another level of change, defining middle-order change as lying somewhere between the extremes of first- and second-order change. Middle-order change ‘‘represents a compromise; the magnitude of change is greater than first-order change, yet it neither affects the critical success factors nor is strategic in nature.’’

Kurt Lewin is credited with combining theories from psychology and sociology into the field theory in so- cial psychology.9 Lewin focused on motivation and the motivational concepts that underlie an individ- ual’s behavior. Lewin believed that there is tension in a person whenever a psychological need or an inten- tion exists, and the tension is released only when the need or intention is fulfilled. The tension may be pos- itive or negative. These positive and negative tension concepts were translated into a more refined under- standing of conflict situations and, in turn, what Lewin called ‘‘force fields.’’

Lewin indicated that there are three fundamental types of conflict:

n Individuals stand midway between two positive goals of approximately equal strength. A classic metaphor is the donkey starving between two stacks of hay because of the inability to choose. In information technology, if there are two ‘‘good’’ systems to purchase or options to pursue, then we must be willing to choose.

n Individuals find themselves between two approxi- mately equal negative goals. This certainly has been a conflict in many organizations that wish to pur- chase or build a health informatics system. A com- bination of the economics, the available technolo- gies, the organizational issues, among other factors, may well mean that the organization’s informatics needs cannot be satisfied with any available prod- ucts, whether purchased or developed in-house. Thus, the decision makers must make a choice of an information system that they know will not com- pletely meet their needs. Their choice will probably be the lesser of two evils.

n Individuals are exposed to opposing positive and negative forces. This conflict is very common in health care organizations today, especially regard- ing health informatics. This conflict usually occurs between the system users and the information tech- nology or financial people.

Kurt Lewin’s field theory allows the types of conflict situations commonly found in health care to be dia- grammed and analyzed.

Small-group theory is another tool that is highly ap- plicable to health informatics because of the way that health care environments and activities are organized. Caring for patients and educating students typically involves many small groups of people. Small-group theory can help us understand why there are such wide ranges of effectiveness among these groups.

120 LORENZI, RILEY, Managing Change

These are just a few examples of the social science theories that can help the change management leader understand some of the underlying behavioral issues that need to be faced as health informatics technology is brought into today’s complex health systems.

Practical Applications of Change Management

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.—NICCOLO MACHIAVELLI

One of the most difficult problems organizations face is dealing with change. In today’s rapidly changing, highly competitive environment, the ability to change rapidly, efficiently, and almost continually will distin- guish the winners from the losers. Many health-re- lated organizations will disappear because they find themselves unable to adapt. Furthermore, many of the pressures for change in health care organizations are independent of technologic change. This means that informaticians working for change are doing so in or- ganizations that are already highly stressed by other pressures.

Major organizational changes typically involve many different types and levels of personal loss for the peo- ple in the organization. For example, change always requires the effort to learn the new, which is a loss in terms of time and energy that could have been used elsewhere. Although some may welcome the learning opportunity, many of us don’t want to invest that time and energy unless we are dissatisfied with the current arrangements or see powerful advantages to the pro- posed change. Upgrading to new software is a com- mon example, in which the future benefits may not be seen as sufficient to outweigh the short-term in- vestment required to learn the new programs.

Second, people want to feel good about themselves. Ideally, people are able to take pride in their work, feel responsible for a job well done, feel they are part of a high-quality enterprise, and feel that their time has some significance. In many work situations, the work itself and the organizational culture make it dif- ficult for people to feel good about themselves. In these poorer situations, people usually invent strate- gies to help them feel better about themselves, and these strategies involve getting some sense of control, belongingness, and significance out of their work. Sometimes this involves opposition to management, on the assumption that management is always up to no good. More commonly, the worker–management relationships are not completely alienated. Still, the

workers’ strategies for achieving ‘‘good’’ feelings are unknown to or quite misunderstood by management. Therefore, change initiatives, unknowingly and un- intentionally, threaten to cause the workers serious personal loss. Not surprisingly, the workers resist and do all they can to sabotage such change initiatives.

Third, change initiatives often require large losses for middle managers. Generally, people perceive that in- formation systems increase the ability of top execu- tives to know more about what is going on and to exert more direct control. This means a serious loss of personal and organizational significance for the mid- dle manager. Sometimes middle managers fight this loss. Any significant organizational change involves changing habits, that is, changing the way we ac- tually do our work. This usually involves changes in the way we interact, both with people and our tools. New systems require us to learn a new set of behav- iors.

Types of Change

Changes in an organization can often be identified as one of four types, with the definite possibility of over- lap among them:

n Operational changes affect the way the ongoing op- erations of the business are conducted, such as the automation of a particular area.

n Strategic changes occur in the strategic business di- rection, e.g., moving from an inpatient to an out- patient focus.

n Cultural changes affect the basic organizational phi- losophies by which the business is conducted, e.g., implementing a continuous quality improvement (CQI) system.

n Political changes in staffing occur primarily for po- litical reasons of various types, such as those that occur at top patronage job levels in government agencies.

These four different types of change typically have their greatest impacts at different levels of the orga- nization. For example, operational changes tend to have their greatest impacts at the lower levels of the organization, right on the firing line. People working at the upper levels may never notice changes that cause significant stress and turmoil to those attempt- ing to implement the changes. On the other hand, the impact of political changes is typically felt most at the higher organizational levels. As the name implies, these changes are typically made not for results-ori- ented reasons but for reasons such as partisan politics

Journal of the American Medical Informatics Association Volume 7 Number 2 Mar / Apr 2000 121

or internal power struggles. When these changes oc- cur in a relatively bureaucratic organization, as they often do, those working at the bottom often hardly notice the changes at the top. Patients are seen and the floors are cleaned exactly as they were before. The key point is that performance was not the basis of the change; therefore, the performers are not much af- fected.

Microchanges and Megachanges

When communicating about change, the models of Watzlawick and Golembiewski tend to be too abstract or difficult to explain. A more practical model that we frequently use divides changes into microchanges and megachanges, with no great attempt at elaborate defi- nitions. As a first approximation, the following scheme can be used to differentiate between the two:

n Microchanges—differences in degree

n Megachanges—differences in kind

Using an information system as an example, modifi- cations, enhancements, improvements, and upgrades would typically be microchanges, while a new system or a very major revision of an existing one would be a megachange. This scheme works surprisingly well for communication within organizations as long as we remember that one person’s microchange is often an- other person’s megachange. So while the system de- signers think they are making a minor change to en- hance the total system, an individual end user may see the change as a megachange and resist it vehe- mently. When designing the total ‘‘people’’ strategy for any system, it is important to involve a variety of people from the very beginning, to clearly understand how groups function in the organization and how the work is really done.

The Cast of Characters

For any given change, people can occupy a wide range of roles that will strongly influence their per- ceptions of the change and their reactions to it. These are roles such as champion, end user, developer/ builder, watchful observer, obstructionist, and such. As on the stage, some people may occasionally play more than one role. In other cases, the roles are unique. Unless we clearly identify both the players and their roles in any change situation, we risk mak- ing decisions and taking action based on generaliza- tions that are not true for some of the key players.

An overview term often applied to the various roles is stakeholders. The stakeholders have some interest

or stake in the quality of both the change and the change implementation process. The roles of the stakeholders are subject to change, especially during a change process that extends over some time.

For those implementing change, the following steps are critical:

n To identify what roles they themselves are occu- pying in the process

n To identify what roles the others involved in the process are playing, being careful to recognize mul- tiple roles

n To identify carefully which role is speaking when one is communicating with those playing multiple roles

n To monitor throughout the process whether any roles are changing

Resistance to Change

It is easy to change the things that nobody cares about. It becomes difficult when you start to change the things that people do care about—or when they start to care about the things that you are changing.—LORENZI AND RILEY

Resistance to change is an ongoing problem. At both the individual and the organizational levels, resis- tance to change impairs concerted efforts to improve performance. Many corporate change efforts have been initiated at tremendous cost only to be halted by resistance among the organization’s employees. Or- ganizations as a whole also manifest behavior similar to that of individuals when faced with the need to change.

The relationship between individual and organiza- tional resistance to change is important. An organi- zation is a complex system of relationships between people, leaders, technologies, and work processes. From this interaction emerges organizational behav- ior, culture, and performance.

These emergent properties and behaviors are tightly linked in two directions to the lower-level interac- tions. Organizational resistance to change is an emer- gent property, and individual resistance to change can give rise to organizational resistance. A self-reinforc- ing loop of increasing resistance can develop as indi- viduals create a environment in which resistance to change is the norm. That environment in turn en- courages increased resistance to change among indi- vidual employees. The self-reinforcing nature of this loop can be tremendously powerful, defeating re- peated attempts to break out of it.

122 LORENZI, RILEY, Managing Change

Studies of system dynamics frequently reveal that ma- jor problems that everyone thought were external are actually the unintended consequences of internal pol- icies. The basic dynamic behind this phenomenon is that the organization is made up of a network of cir- cular causal processes: A influences B, which then in- fluences C, which in turn influences A, i.e., the snake bites its own tail. Understanding these internal orga- nizational dynamics is a prerequisite for leading ef- fective change processes.

Rituals of Transition

All change involves loss. In many cases, change re- quires at the minimum that individuals give up fa- miliar routines. In some cases, the loss is substantial, affecting position, power, networks of friends and col- leagues, and such. In all these situations, rituals of transition can be crucial in assisting people to grieve and let go of the old and move on to the new.

The strategies for overcoming the barriers to change are quite diverse and touch on every aspect of the organization. No organization can begin using all the strategies at the same time or even in a short period of time. A better approach is to focus on one or two until they become part of the normal way of operat- ing, i.e., until they become engrained in people’s hab- its. Only then is it time to introduce another strategy. In this way, over time, the organization gradually im- proves its abilities to learn rapidly, to adapt to new conditions, and to embrace change.

Change Management Efforts in Medical Informatics

If you design something that works with an already ex- isting model and doesn’t require people to change their religion, the idea has a better chance of working.—TED SELKER, IBM

The current formal focus on change management in the medical informatics area is relatively new. Two early pioneers in analyzing the impact of information systems were Diana Forsythe and Henry Lunds- gaarde. Diana Forsythe worked at the boundaries of cultural anthropology, medicine, and computer sci- ence. She was among the first anthropologists or so- ciologists to collaborate with computer scientists to study the work practices of computing. Her ethno- graphic work on software development in medical in- formatics revealed that cultural and disciplinary as- sumptions are routinely (but often unintentionally) designed into such software, potentially reducing the system’s benefits to clinicians or patients. Her field

research in various medical disciplines suggested ways in which software and other technology might better meet those needs.11–13 Henry Lundsgaarde14,15

evaluated the PROMIS system. This study produced in- sights into people and organizational issues and is an excellent example of how to combine qualitative and ethnographic methods with quantitative ones.

A concerted effort to introduce the people and orga- nizational aspects more formally and broadly into medical informatics began in 1993 with a working conference in Cincinnati, Ohio, held under the aus- pices of the International Medical Informatics Asso- ciation (IMIA). The years since have shown that this working conference was a seminal event, in that it brought together for the first time isolated individuals interested in the topical area. A number of today’s leaders in the area were present at that conference, representing different academic backgrounds, differ- ent types of organizations, and different countries.

Following that working conference, IMIA approved a working group to study further the organizational impact of computers in medicine. Other related working groups were approved by AMIA, the European Federation for Medical Informatics, and the Health Informatics Society of Australia. These working groups accepted as their charge some variation of the following theme—applying knowledge of human behaviors to the implementation of informatics in a health care environment.

The IMIA and AMIA working groups, under the ini- tial leadership of Nancy Lorenzi, accepted a four- phase driving-wedge diffusion strategy to spread their messages across the profession. The first phase of this strategy was designed to build awareness of the importance of the topic of people and organiza- tional issues in the area of health informatics. One dif- fusion product was the book Organizational Aspects of Health Informatics: Managing Technological Change, pub- lished in 1994.10 This was followed by a case studies book, Transforming Health Care through Information: Case Studies, published in 1995.16

The second phase of the diffusion process was de- signed to educate people about the research from other disciplines, e.g. psychology, sociology, anthro- pology, and cognitive sciences, that is directly relevant to medical informatics. Products that support this dif- fusion strategy include the working group newsletter, Organized Aspects of Medical Informatics, edited by Bon- nie Kaplan, PhD, and co-edited by Marilynne Herbert, PhD. Presentations at national and multinational con- ferences and publications in recognized informatics journals are other examples of this phase of the dif- fusion strategy.17–20

Journal of the American Medical Informatics Association Volume 7 Number 2 Mar / Apr 2000 123

The third phase of the diffusion process is to apply established methods and models from other disci- plines (e.g., psychology and sociology) to the medical informatics area. The working groups actively en- courage current practitioners and students to model their medical informatics research efforts using doc- umented and accepted concepts from other disci- plines.

The fourth phase assumes that our ongoing research will reveal the need for some concepts and methods that are unique to medical informatics. This phase is designed to develop new, discipline-specific research methods and models. The working group encourages students in master’s and doctoral programs as well as active researchers to consider innovative research de- signed specifically for the area of medical informatics.

The Road Ahead

I’m very interested in the future because I plan to spend the rest of my life there.—ROBERT WOOD JOHNSON

As medical informatics becomes involved in ever larger and more complex systems, both the overall or- ganizational leaders and the informatics leaders must adapt to the following realities.

When the impact of technologic change is being man- aged, people’s needs come first: Without people, we don’t have an organization. We must implement the new technologies to do what they do best—struc- tured, repetitive work—and let the people do what they do best—think, be creative, and solve problems. People are far better at reviewing boring work than doing it. It is because of these concepts that workflow technology is rapidly changing the role of today’s in- formation worker from an information transcriber and mover to a true knowledge worker—an infor- mation user.

The knowledge workers are the foundation. Accord- ing to Peter Drucker in ‘‘The New Society of Organi- zations,’’21 the world economy is in the midst of trans- formation to the ‘‘knowledge society.’’ Increasingly, knowledge is not just one resource among many; it is ‘‘the primary resource for individuals and for the economy overall.’’ The essential purpose of manage- ment in the knowledge society is to encourage sys- tematic organizational innovation. Drucker makes the important point that in a knowledge economy, the true source of competitive advantage is not so much technology, research and development, or even knowledge itself. It is the people, the knowledge workers whose skills and expertise are the foundation for all innovation.

We need to develop a new way of looking at how we currently function in our organizations. Management and workers will have to come together to build bet- ter, more productive work environments by under- standing the long-term issues affecting their future and by creating a new way of thinking about how these current enabling technologies can best be used.

Technology Is Not Enough

Because technology investments are largely made up of things (i.e., hardware and software), it is easy to make the mistake of believing that a technology is implemented once it has been bought and installed. In fact, nothing works without people. These human issues become magnified in the process of redesigning work processes. Many work-process redesign projects focus exclusively on technology and fail to address the human and organizational aspects of work. In these instances, organizations fail to explore non- technical solutions to improving organization pro- cesses, such as training or changes in structures, pro- cedures, and management practices. Most often, technology strategy drives organizational change. While the business strategy may be clear, it is often not reflected in a defined organizational change strat- egy.

Too many technically good applications have failed because of sabotage by users who like the old ways in which things were done. Managing the natural re- sistance to change and helping convert that resistance into commitment and enthusiasm must be a planned process. New systems should enhance the quality of work life and increase responsibility, empowerment, and motivation.

The Role of Customers

We must rethink our customers’ needs, using the con- cept of customer in the broad sense in the complex health care world. Any time our customers see us do- ing something better, we win. The message is that we need to identify correctly those parts of our processes that are visible to our customers and consider reen- gineering them first. The real key is to ensure that we are getting the right process right. For example, Mu- tual Benefit in the United States transformed their in- surance policy issuing and payment process. They were ecstatic with the results of redesigning what had previously been a 24-day process of paying insurance claims, after the redesign payments could be made, in less than a day, generally within three hours. Within 90 days after implementing the new processes, they filed for protection from their creditors. Why? They

124 LORENZI, RILEY, Managing Change

did not pay equal attention to re-engineering the pro- cesses that brought in the money.

However, the concept of customer needs is also im- portant in the internal sense. In these times of increas- ing change, it will be even more critical that our peo- ple do not perceive that changes are being made just for the sake of change. When the culture is focused on constantly improving the meeting of customer needs, the rationale for rapid and frequent changes becomes much clearer to those in the organization. This point is constantly stressed by Oren Harari in his books22 and monthly columns in Management Review.

The Road to Success

Common wisdom suggests that technology drives change in the organizational environment, but com- mon wisdom is wrong. Instead, information technol- ogy is a powerful enabling force that creates new op- tions and opportunities in the environment for what organizations produce—whether goods or services— and how they produce it. The early response by in- novative players drives change. Each of the enabling technologies has the potential to transform one or more dimensions of the workplace. Taken together they act as a powerful set of technologies that orga- nizations will have to harness to be successful in the 21st century. There are no quick fixes. Solving these problems requires a response targeted to the needs of our organization, but we need to know how our or- ganization’s strategy will play out in the environment as a whole.

The road ahead will not be an easy one. However, the medical informatics area is poised to create outcomes that many of us could only dream of a few years ago. Our challenge will be to implement our concepts and systems as smoothly as possible, not wasting our pre- cious opportunities and resources because we ignored the pitfalls of managing change.

References n

1. Barnett GO. The use of computers in clinical data manage- ment: the ten commandments. Presented at American Med- ical Association Symposium on Computers in Medicine. February, 1970.

2. Gardner R. Davies keynote lecture. Proceedings of the Com-

puter-based Patient Record Institute Conference. Washing- ton, DC: CPRI, 1998.

3. Vonnegut K Jr. Slaughterhouse-five; or, The Children’s Cru- sade, a Duty-dance with Death. New York: Delacorte Press, 1969.

4. Ackoff RL. The management of change and the changes it requires of management. Syst Pract. 1990;3(5):427–40.

5. Ackoff RL. Creating the Corporate Future: Plan or be Planned For. New York: Wiley, 1981.

6. Drucker PF. Management Challenges for the 21st Century. New York: Harperbusiness, 1999.

7. Watzlawick P, Weakland JH, Fisch R. Change: Principles of Problem Formation and Problem Resolution. New York: Norton, 1974.

8. Golembiewski RT, Billingsley K, Yeager S. Measuring change and persistence in human affairs: types of change generated by OD designs. J Appl Behav Sci. 1976;12:133– 57.

9. Deutsch M, Krauss RM. Theories in Social Psychology. New York: Basic Books, 1965.

10. Lorenzi NM, Riley RT. Organizational Aspects of Health In- formatics: Managing Technological Change. New York: Springer-Verlag, 1994.

11. Forsythe DE. Using ethnography to investigate life scien- tists’ information needs. Bull Med Libr Assoc. 1998;86(3): 402–9.

12. Aydin CE, Forsythe DE. Implementing computers in am- bulatory care: implications of physician practice patterns for system design. Proc AMIA Annu Fall Symp. 1997:677–81.

13. Forsythe DE. Using ethnography to build a working sys- tem: rethinking basic design assumptions. Proc 16th Annu Symp Comput Appl Med Care. 1992:505–9.

14. Gardner RM, Lundsgaarde HP. Evaluation of user accep- tance of a clinical expert system. J Am Med Inform Assoc. 1994;1(6):428–38.

15. Lundsgaarde HP. Evaluating medical expert systems. Soc Sci Med. 1987;24(10):805–19.

16. Lorenzi NM, Riley RT, Ball MJ, Douglas J. Transforming Health Care through Information: Case Studies. New York: Springer-Verlag, 1995.

17. Lorenzi NM, Riley RT, Blyth AJC, Southon G, Dixon BJ. Antecedents of the people and organizational aspects of medical informatics: review of the literature. J Am Med In- form Assoc. 1997;4(2):79–93.

18. Kaplan B. Addressing organizational issues into the evalu- ation of medical systems. J Am Med Inform Assoc. 1997; 4(2):94–101.

19. Ash J. Organizational factors that influence information technology diffusion in academic health sciences centers. J Am Med Inform Assoc. 1997;4(2):102–11.

20. Southon FC, Sauer C, Grant CN. Information technology in complex health services: organizational impediments to successful technology transfer and diffusion. J Am Med In- form Assoc. 1997;4(2):112–24.

21. Drucker PF. Managing in a Time of Great Change. New York: Truman Talley Books/Dutton, 1995.

22. Harari O, Ulrich R. Leapfrogging the Competition: Five Gi- ant Steps to Becoming a Market Leader. 2nd rev ed. Sac- ramento, Calif: Prima Publishing, 1999.

F E B R U A R Y 2 0 0 6

Overcoming Barriers to Electronic Health Record Adoption Results of Survey and Roundtable Discussions Conducted by the Healthcare Financial Management Association

© Copyright 2006 Healthcare Financial Management Association

For more information about this project, visit or contact Janice Wiitala, director of research and development, HFMA,



Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. How Are Hospitals Progressing in EHR Adoption? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3. What Are the Top Barriers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4. What Are the Solutions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Standards and Interoperability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Expectations for government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Hospital strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Funding and Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Expectations for government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Hospital strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Physician Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Expectations for government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Hospital strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

5. What’s Best for Patients? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

HFMA Statement on the Government’s Role in Encouraging EHR Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Overcoming Barriers to Electronic Health Record Adoption Results of Survey and Roundtable Discussions Conducted by the Healthcare Financial Management Association


Key Findings

Where Are Hospitals Now in EHR Adoption? Hospitals have a long road ahead to adoption of elec- tronic health records. The EHR functions in which the greatest number of hospitals reported signifi cant progress are: ● Order entry (38 percent) ● Results management (27 percent) ● Electronic health information/data capture (23 percent) ● Administrative processes (23 percent)

By comparison, relatively few hospitals reported sig- nifi cant progress in clinical decision support (13 percent), health outcomes reporting (13 percent), and patient access (2 percent). Larger hospitals were further along in EHR adoption than were mid-sized or small hospitals, and nonrural hospitals were slightly further along than were rural hospitals. According to survey respondents, the most signifi cant barriers to EHR adoption are: ● Lack of national information standards and code sets

(62 percent) ● Lack of available funding (59 percent) ● Concern about physician usage (51 percent) ● Lack of interoperability (50 percent)

Only 28 percent of respondents cited insuffi cient fi nancial return as a signifi cant barrier. Funding and ROI were greater concerns for hospitals indicating a low level of EHR adoption than for those indicating a higher level. Mid-sized hospitals were more concerned about funding as a barrier than were either large or small hospitals. Funding was a more signifi cant barrier for rural hospitals.

Expectations for Government The key desired actions of government are to: ● Facilitate development of national standards and code

sets (57 percent cited as an “extreme” expectation; 22 percent cited as a “high” expectation)

● Provide grant funding (45 percent extreme; 35 percent high)

● Provide payment incentives (38 percent extreme; 32 percent high)

● Simplify the Medicare payment system (37 percent extreme; 26 percent high)

● Accelerate investment in regional networks (26 percent extreme; 37 percent high)

Survey fi ndings, amplifi ed by roundtable discussions with healthcare fi nancial executives, indicate that hospi- tals are determined to implement EHR systems, but that government action in the areas of standard-setting and fi nancial support would signifi cantly speed adoption.

Hospital Strategies Among the leading strategies of hospitals are to: ● Participate in formative or existing regional informa-

tion networks ● Participate with vendors to explore connectivity and

fi nancing solutions ● Collaborate with other healthcare organizations to

control costs ● Identify physician champions ● Start by providing physicians with electronic access

to information that they most need to receive


1. Introduction

E lectronic health record systems hold the prom- ise to address the two most crucial challenges to the U.S. healthcare system: controlling costs

and improving quality. Rising healthcare costs—now up to 16 percent of the nation’s GDP—create palpable hardship for patients, employers, and providers. At the same time, evidence such as the fi ndings of the Institute of Medicine reports Crossing the Quality Chasm and To Err Is Human suggests that the quality of the nation’s health care is far less consistent or eff ective than providers and patients have a right to expect. While no one believes a panacea exists for the ills of the U.S. healthcare system, EHR systems are a promising means to control costs and improve quality. “Reengineering the wobbly parts of this dysfunctional

system cannot be accomplished without a vitally impor- tant new tool: computerized physician support, includ- ing a comprehensive, automated medical record,” wrote George C. Halvorson, chairman and CEO of Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals, in the March 2005 issue of hfm (“Healthcare Tipping Points,” pp. 74-80). The federal government shares this view, and in April 2004, President Bush issued an executive order establishing the position of the National Health Information Technology Coordinator in the U.S. Department of Health and Human Services, charged with leading “nationwide implementation of an interoperable health information technology infrastructure to improve the quality and effi ciency of health care” within 10 years.

Ideally, a universal EHR will be a seamless patient record that crosses the continuum of care. The U.S. Department of Health and Human Services provides this defi nition: “An electronic health record is a digital collection of a patient’s medical history and could include items like diagnosed medical condi- tions, prescribed medications, vital signs, immuni- zations, lab results, and personnel characteristics like age and weight.” (“Secretary Leavitt Takes New Steps to Advance Health IT National Collaboration and RFPs Will Pave the Way for Interoperability.” HHS news release, June 6, 2005.) In its survey, HFMA identifi ed the following functions of EHRs (based on those identifi ed by the Institute of Medicine in 2003): ● Order entry/order management. Clinical test,

consults, and medication order entry are managed electronically.

● Results management. Physicians are able to access all information on patient care delivered at the hospital or health system.

● Electronic health information/ data capture. All patient health records are contained in a computerized repository.

● Administrative processes. Scheduling, resource management, billing, and other administrative systems are interoperable.

● Electronic connectivity. There is fully eff ective electronic exchange of clinical data among the healthcare team and other care partners.

● Clinical decision support. Enhanced clinical performance is achieved through computerized tools (e.g., computer-assisted diagnosis and disease management.)

● Health outcomes reporting. The system can auto- matically extract information for quality indicator reporting.

● Patient access. Patients have remote access to their individual records.

What Is an Electronic Health Record?


The promises of EHRs are many: fewer adverse drug events, lower morbidity and mortality rates, seamless continuity of care, greater effi ciencies, and lower costs. Unfortunately, the barriers are as formidable as the promises are alluring. Historically, hospitals have spent relatively small amounts on IT, and the proportion of paper in health care dwarfs the amount in other indus- tries, so they do not have a strong foundation on which to build. EHR systems carry price tags high enough to make a CFO toss and turn, especially because high costs and inadequate payment have left many hospitals with a reduced ability to expend the capital necessary for routine maintenance, much less expensive tech- nology. And EHR systems require a signifi cant amount of change in clinical and administrative processes— and change has never been a core competency in health care. “How are we ever going to get there from here?” asked David Brailer, MD, PhD, the person appointed to the position of National Health Information Technology Coordinator to spearhead the Bush administration’s drive toward national EHR adoption. “It’s a feat of culture, professionalism, and fi nance more than it is anything about technology.” HFMA President and CEO Richard L. Clarke, DHA, FHFMA, noted, “Hospitals are doggedly determined to implement these systems as part of the mission of their organizations to improve quality and safety for their patients.”

HFMA Involvement in Financial Aspects of IT For many years, the Healthcare Financial Management Association has been delivering expert opinion on how to assess and realize the value of IT for the benefi t of hospital operations and patient care. In 2004, HFMA’s Financing the Future project featured research showing that the three most commonly cited future capital proj- ects all focused on technology: digital radiology systems, computerized physician order entry systems, and other major IT.* Further, Financing the Future research showed that hospitals planned to increase their capital spending by an average of 15 percent per year over the fi ve years following the date of the fi ndings, compared with average annual increases in capital spending of just 1 percent over the preceding fi ve year—one indication of a capital crunch related to technology investment. Later in 2004, HFMA held a CFO summit on EHRs, which yielded the paper Making the Business Care for Electronic Health Records. In 2005, David Brailer was a keynote speaker at HFMA’s Annual National Institute and began discussions with HFMA about collaborating to learn from healthcare fi nance professionals about the fi nancial barriers to implementing EHR systems and how the government can help overcome those barriers. As a result, in January 2006, HFMA conducted a survey of senior healthcare fi nance executives at hospi- tals and health systems of various sizes and regions to identify how healthcare fi nancial executives view the barriers to EHR adoption and the actions government can take to encourage adoption. The survey yielded 176 responses. In addition to the survey, HFMA, in collaboration with Brailer, met with 15 healthcare fi nance executives from across the country to identify ways that hospitals and the government can address some of the formidable challenges that stand in the way of a universal EHR.

* The Financing the Future project was a collaboration between HFMA and GE Healthcare Financial Services with research conducted by HFMA and PricewaterhouseCoopers.

National EHR adoption

is “a feat of culture,

professionalism, and finance.”


2. How Are Hospitals Progressing in EHR Adoption?

H ealthcare organizations have come a long way in EHR adoption, but they have an even longer way to go (see Exhibit 1). In none of the EHR functions

did a majority of hospitals report making “signifi cant progress.” The functions in which the greatest numbers of hospitals reported signifi cant progress were order entry (38 percent), results management (27 percent), electronic health information/data capture (23 percent),

Order entry/ order management

Results management

Electronic health information/data capture

Administrative processes

Electronic connectivity

Clinical decision support

Health outcomes reporting

Patient access

Not very far along

0% 20% 40% 60% 80% 100%

Making progress Significant progress

Exhibit 1

Level of EHR Adoption by Function

© Copyright 2006 Healthcare Financial Management Association, Westchester, Ill.

and administrative processes (23 percent). Relatively few hospitals reported signifi cant progress in clinical decision support (13 percent), health outcomes reporting (13 percent), and patient access (2 percent). Larger hospitals were further along in EHR adoption than were mid-sized or small hospitals, and nonrural hospitals were slightly further along than were rural hospitals. (See Exhibits 2 and 3.)

High Level of Adoption

Low Level of Adoption




0% 20% 40% 60% 80% 100%







High Level of Adoption

Low Level of Adoption



0% 50% 100%





Exhibit 2

Level of Adoption By Bed Size

Exhibit 3

Level of Adoption: Rural vs. Nonrural


3. What Are the Top Barriers?

P erhaps not surprisingly, survey respondents and roundtable participants focused on issues of standardization, funding, and acceptance.

The survey results showed the following as the most signifi cant barriers (see Exhibit 4): ● Lack of national information standards and code

sets (62 percent) ● Lack of available funding (59 percent) ● Concern about physician usage (51 percent) ● Lack of interoperability (50 percent)

Surprisingly (for a group of fi nancial executives), only 28 percent cited insuffi cient fi nancial return as a signifi cant barrier, suggesting a faith in the promise of EHRs and a determination to implement them that transcends traditional fi nancial thresholds. The signifi cance of the barriers varied depending on the stage in EHR adoption and other site-specifi c factors. Predictably, funding was a greater concern (64 percent) for hospitals indicating a low level of adoption, but of less concern (44 percent) for those

further along in adoption. Financial return was a greater concern (38 percent) for hospitals indicating a low level of adoption, but of less concern (19 percent) for those further along in adoption. Mid-sized hos- pital fi nancial leaders were more concerned about funding as a barrier to adoption than were either large hospital or small hospital leaders. Funding was a less signifi cant concern for nonrural hospitals than for rural hospitals.

Lack of consistent national information standards and code sets

Lack of available funding

Concern about physician usage

Lack of interoperability with other systems

Lack of available staff resources

Lack of existing regional information network

Concern about payer adoption

Insufficient financial return

Privacy concerns










0% 10% 30%20% 40% 50% 60% 70%

Exhibit 4

Top Barriers to EHR Adoption

© Copyright 2006 Healthcare Financial Management Association, Westchester, Ill.

Only 28 percent

of those surveyed

cited insufficient

financial return as a

significant barrier.


4. What Are the Solutions?

G overnment has an important role to play in fostering EHR adoption, according to both HFMA survey respondents and roundtable

participants. The following sections outline expectations for government involvement, as well as hospital-focused strategies, for the key concerns of standardization, funding, and physician acceptance.

Standards and Interoperability More than 60 percent of respondents to the HFMA survey were worried about the lack of consistent stan- dards and code sets—in other words, the informational architecture that would facilitate the sharing of patient information among providers, payers, and others. The federal government foresees a national health informa- tion network consisting of regional health information organizations that freely exchange information. But the architecture to realize this national vision is uncertain, according to roundtable participants.

Also missing is a solution for identifying and tracking patients in a regional or national database. Privacy concerns make using social security numbers problematic. Solutions being discussed include an algorithm-like approach like that used by credit bureaus when consumers inquire about their credit history. A patient would answer several questions to verify his or her identity.

Expectations for Government HFMA survey respondents’ highest-ranked expectation for government facilitation of EHR adoption was to create standards and code sets, cited by 57 percent as an “extreme” expectation, and by 22 percent as a “high” expectation (see Exhibit 5). Healthcare fi nancial execu- tives also expressed the hope that the government will require private payers to adhere to any national IT standards that are developed. But healthcare executives are understandably wary of federal intervention in

Provide grant












0% Facilitate

development of national

standards and code sets

Provide payment


Accelerate investment in regional networks

Simplify Medicare payment


Provide tax incentives











Exhibit 5

Expectations for Government

© Copyright 2006 Healthcare Financial Management Association, Westchester, Ill.


standards setting, especially after HIPAA has caused so many compliance problems. “As the largest purchaser of health care, the govern- ment should have some input [into standards setting],” notes one survey respondent. “But providers need to drive the design, implementation, and adoption of the system.”

Hospital Strategies It is, of course, too early to see how the federal plans will play out. Rather than sitting on the sidelines, many hospitals and health systems are going forward with eff orts to collaborate with other local providers to share data. Winona Health Services, a small community hospital in Winona, Minn., shares an electronic record and database with three local physician offi ces/clinics. “To get that done in a small setting like ours, we went with integrated systems, not interfaces,” says Michael Allen, FHFMA, CPA, vice president and CFO. “We don’t have

separate lab systems and radiology systems; we have one integrated system. As a result, Winona’s referring physicians can now access hospital information about their patients. “You could have a patient who went to two local clinics and our emergency room, and all that information would be available to the physician,” says Allen. Another collaborative eff ort is under way in Kalispell, Mont. It began when there was a shortage of local radiol- ogists in the rural communities, and the rural facilities approached KRMC and the local radiologists in Kalispell for their services utilizing a picture archiving communi- cation system. “The rural hospitals used to have to wait up to seven days for radiology reports. Now, our radiolo- gists get a voice clip in two hours and a written report in ten hours,” says Candy Deruchia, director of computer information services at Northwest Healthcare. Providers around Kalispell have also collaborated to improve the electronic exchange of information among regional hospitals and physician offi ces. A purchased

The Bush administration is emphasizing public- private collaboration to encourage EHR adoption. Last year, HHS chartered a commission of public and private experts—called the American Health Information Community—to recommend a market- based approach for making health records digital and interoperable. HHS has also awarded contracts to private, not-for-profi t groups to begin creating four of the stepping stones needed for a national patient record (see Exhibit 6).

Data standards. The American National Standards Institute is developing a process for harmonizing the data standards that will be used to exchange health information across the United States.

Certification of EHR products. The Certifi cation Commission for Health Information Technology is creating a process for certifying EHR products. To become certifi ed, IT vendors will need to meet criteria related to functionality, interoperability, security, and reliability. HHS has put this on the

fast track: Certifi ed ambulatory EHR products are scheduled to be on the market by June 2006. Criteria for inpatient EHR products are also in the works.

Architecture for the NHIN. Four health IT organizations (Accenture, Computer Science Corporation, IBM, and Northrop Grumman) have developed consor- tiums with healthcare providers to develop an archi- tecture and a prototype network for information sharing among hospitals, laboratories, pharmacies, and physicians. These four consortiums will work together to ensure that information can move seam- lessly among the four networks to be developed. The consortiums are scheduled to have prototypes completed by fall 2006.

Privacy and security issues. RTI International is over- seeing a multidisciplinary team called the Health Information Security and Privacy Collaboration. The team’s goal: to address the variances in privacy policies and laws that prevent the sharing of information.

The Government’s Approach to EHR Adoption


Exhibit 6

Role of Certification Commission for Healthcare Information Technology

Source: Department of Health and Human Services.

Standards Harmonization


American Health Information Community Chaired by HHS Secretary Mike Leavitt

Office of the National Coordinator Project Officers

Strategic Direction

Governance Process Engaging Broad Array of Public and Private Sector Stakeholders

CCHIT: Compliance Certification Contractor

Certification Criteria + Inspection

Process for EHRs and Networks

Accelerated adoption of robust,

interoperable, privacy-enhancing

health IT

Harmonized Standards

Network Architecture

Privacy Policies

Privacy/Security Solutions


NHIN Prototype


enterprise medical record and physician practice IT solutions allow for tracking of patient encounters through out various facilities, electronic signatures, tracking of reports and lab and radiology orders and results, and other tasks to be completed electronically between the acute inpatient and outpatient arenas. Next on the agenda: Kalispell providers are hoping to hook up other disparate IT systems in their region, such as those used for home health and long-term care. A regional health information network is in the plans, as well as a master patient index that will help providers track patient information across the continuum of care. Without nationally sanctioned data standards, healthcare providers that want to build a regional information network must adopt one of the existing data standards available in the marketplace. For exam- ple, Oregon Health and Sciences University in Portland has adopted, to the extent possible, the standard used by the vendor that supports Portland’s Oregon Computerized Health Information Network and the

Kaiser Permanente Network, which is a large referrer of patients to OHSU. Now, many of the providers hook- ing up to that network are also adopting that standard. “This has helped things in terms of interoperability,” says Bradley N. King, CPA, vice president and CFO at OHSU. Eleven months into implementation, OHSU is electronically connected with about 400 referring physicians, and within several months, OHSU expects to be connected with about 800 physicians and 70 practice sites. Patient identifi ers are also being created at a regional level. For example, Massachusetts is hoping to create a master patient identifi er that can be used to track patients. Current plans involve identifying patients by a series of personal facts. “Surveys show that the federal government is the last entity that the American people want touching their identity,” Brailer told roundtable participants. “That’s why we’re pushing for regional projects to keep doing this.”


Funding and Incentives A 2005 RAND analysis predicted that implementation of a nationwide EHR network would cost more than $100 billion over 15 years—$6.5 billion per year for hospitals and $1.1 billion annually for physicians (Extrapolating Evidence of Health Information Technology Savings and Costs). A study sponsored by the Common- wealth Fund and the Harvard Interfaculty Program for Health Systems Improvement, published in the August 2005 Annals of Internal Medicine, estimates that $156 bil- lion in capital investment will be necessary over fi ve years along with $48 billion in annual operating costs. Hardware and software costs are only part of the equation. Providers also have to pay implementation costs and systems maintenance. There are also signifi – cant costs related to lost time and revenue. Yet it is possible to demonstrate a positive ROI with implemen- tation of such a system, says OHSU’s Bradley King, with major savings occurring in transcription, coding, and medical records fi ling costs. Wall Street is starting to question whether hospitals are making major investments in IT. But Moody’s and other bond examiners want to see that these invest- ments are leading to a clinical transformation that will bring improved quality and lower costs. In other words, if hospitals don’t make it work, they might see their future ability to garner capital dissolve. “I think a lot of us will get there in terms of building our respective electronic medical records,” says Michael P. Freed, CPA, executive vice president, corporate resources, and CFO, Spectrum Health, Grand Rapids, Mich. “But we’re trying not to waste a lot of time and eff ort getting down a path, spending a lot of money, and fi nding out that that was not a path that was going to take us where we want to go.” HFMA research shows that fi nancial leaders from mid-sized hospitals are more concerned about EHR funding than are fi nancial leaders from large and small hospitals. Small, independent hospitals that don’t have the fi nancial pockets of a large hospital system also face major funding challenges. But paying for this behemoth is, obviously, a concern for everyone.

Expectations for government. Many healthcare executives surveyed expect the federal government to allocate funding for EHR development. Some executives saw a role for grant funding. Some also thought that tax incentives would help. Another favorable idea: provide fi nancial incentives for investing in IT in the form of provider payments through Medicare and Medicaid. Private payers might follow suit once they saw the federal government off ering such incentives. The federal government can also help hospitals by easing regulatory barriers. For instance, simplifying the Medicare payment system could help hospitals lower their administrative costs, freeing up monies that can be used for IT investments. HFMA’s survey showed the following expectations for government related to funding and creating fi nan- cial incentives for EHR adoption: ● Provide grant funding (45 percent extreme;

35 percent high) ● Provide payment incentives (38 percent extreme;

32 percent high) ● Simplify Medicare payment system (37 percent

extreme; 26 percent high) ● Accelerate investment in regional networks

(26 percent extreme; 37 percent high)

Hospital strategies. Some larger hospitals are fi nding ways to fi nance the equipment and software-related costs of an EHR. However, almost 70 percent of health executives surveyed plan to use cash from operations as their primary funding source. So keeping costs down is a priority.

What should

government do?

Many say allocate funding

for EHR development.


Working with a single vendor can help, says Guy Alton, FHFMA, CPA, CFO at St. Bernard Hospital in Chicago. “We decided to look for one vendor who could basically take care of everything. We’ve tried very hard not to stray from that. It reduces our overhead. The systems, the modules all talk to each other, and we’re not having to maintain interfaces on our own.” St. Bernard has also saved about $250,000 by building some of its hardware internally. In Montana, Kalispell providers are fi nding that collaboration can bring costs savings. “A driving force in our collaboration has been dollars,” says Northwest Healthcare’s Candy Deruchia. “To do these things independently would be much more costly than if we collaborate and purchase together or share common information.” Some roundtable participants expressed an interest in creating state loan pools for small providers who are having trouble fi nancing an EHR. These pools might pro- vide low-cost funding for IT with less stringent fi nancial requirements than private lenders typically off er. Gary Vogan, FHFMA, CPA, senior vice president and CFO, Holy Cross Hospital, Silver Spring, Md., emphasizes that it is important that management com- municate eff ectively to the board why this investment is necessary. “Quality and safety are the big drivers,” he says. “And relatively close to that is effi ciency.” For Vogan’s organization, an EHR will help distinguish the organization as a high-quality provider, and will eliminate signifi cant expense associated with “shuffl ing paper back and forth.”

Physician Acceptance “Our version of a computerized physician order entry system is a physician handing an order to somebody next to him saying, ‘You do it, because it’s taking too long for me to sit there and do it myself,’” says Spectrum Health’s Michael Freed. “The struggle we’ve run into is getting physicians to actually operationalize this because of concerns about their own productivity.” Time, after all, is money to the independent physi- cian. These same physicians are also being asked to lay out immense sums of money to computerize their own practices in anticipation of an EHR.

“I actually had a physician group tell me they’re waiting for the Yahoo version,” says Freed. “They’re a small business, and they’re saying, ‘This is a huge expenditure per doctor. How do I know a web-based version won’t suddenly come out of nowhere and cost next to nothing.’ So a lot of physicians hold back and say, ‘I’m waiting till the last possible moment on this.’” Many hospitals are considering covering some or all of the costs of digitally connecting physician offi ces. “When you look more closely at availability of technical resources, it would be the hospitals that would be in the best position to transition this kind of technology to community physicians; however, regulatory approvals and funding incentives would need to be established to enable hospitals to successfully accomplish this EHR technology transfer,” says William Lammers, CPA, senior vice president, fi nance, and CFO, Sisters of St. Francis Health Services, Mishawaka, Ind. But many gun-shy hospital lawyers are putting the brakes on these physician-hospital partnerships, out of fears of violating the Stark/anti-kickback laws. Hospitals and physicians can be penalized if physicians refer Medicare or Medicaid patients to a hospital with which they have a fi nancial relationship.

Expectations for government. Hospital executives want clear guidelines from the federal government on how to provide computer support to physicians without violating the Stark/anti-kickback laws. At the HFMA roundtable, Brailer said discussions about this are well under way in Washington. Once, again, the federal government should also be a leader in the development of positive payment incentives that encourage physicians to acquire and implement EHR systems.

Hospital strategies. Winona Health Services has found a way to not implicate the Stark/anti-kickback laws and is providing computer solutions to its physician offi ces. The hospital was able to set up a per-physician licensing deal through its IT partner. “It pretty much represents a monthly cost-per-physician for each


5. What’s Best for Patients?

D espite the signifi cant barriers, HFMA is fi nd- ing dogged determination among hospital fi nancial executives to invest in and implement

EHRs. “The goal is to stay patient-centered,” says Deruchia. “What do you ultimately want for your com- munity? As long as you stay patient-centered, you can make good decisions off of that philosophy, knowing that there are going to be drawbacks and pros and cons.”

There’s a long road ahead toward universal connec- tivity. But healthcare executives also need to take credit for how far the healthcare system has come in a short amount of time. “We’re all moving very rapidly when you realize that we are trying to change 100 years of paper in fi ve years or so,” says Freed. “In our organiza- tion, just trying to get into the game of interoperability and CPOE was a mega-process unto itself. There’s all this sausage-making that no one is seeing unless they’re sitting in the kitchen like we are.”

clinic,” says Winona’s Michael Allen. This agreement has worked pretty well. The physician offi ces could fi nd enough value in the deal to pay the fee.” But getting IT into the hands of physicians is only half the battle. How can hospitals get physicians to use it? Several executives who participated in the round- table cited the importance of a physician champions who push their colleagues to adopt the technology. Setting the stage for a successful physician roll out is also important for a successful clinical transformation. For example, before introducing computerized physician order entry, Adventist Health System in Winter Park, Fla, has asked its physician leaders to build the content of the system—the clinical guidelines and prompts— based on evidence-based medicine. “So when we do

get to a CPOE, it can be something that creates value for the doctor,” says Brent Snyder, FHFMA, senior vice president. United Regional Health Care System in Wichita Falls, Texas, is trying a similar approach. “We’re trying to create a recognition for change among physicians,” says Phyllis Cowling, FHFMA, CPA, the system’s presi- dent and CEO, and past Chairman of HFMA. Hospital staff are presenting physicians with performance data that demonstrate the need to understand and improve clinical and operational processes. Another way to create physician converts: providing electronic access to information that physicians would like to receive more rapidly. Many hospitals are starting with lab results.


Point 1. HFMA believes that universal implementation of EHRs will produce a profound societal return— improving care and reducing costs. The societal return of EHRs develops from enhanced quality and patient safety through improved continuity of care and clinical decision making, reduced clerical and administrative costs, and more eff ective use of health services.

Point 2. HFMA believes that government has a key role in facilitating the universal adoption of EHR systems. Government’s role should be to: ● Work with the private sector to create a broad-based

national vision of what these interoperable systems should accomplish, and defi ne the standards, charac- teristics, and attributes of the components needed to achieve that vision

● Encourage development of innovative fi nancing mechanisms—such as tax incentives, grants, and others—and provide relief from regulatory barriers

● Lead, as the major payer for healthcare services, in the development of positive payment incentives for providers to acquire and implement these systems, and to ensure private payers do likewise

Point 3. HFMA believes the true societal benefi ts of EHRs occur only through universal adoption. Organizations and physicians with limited access to capital must be able to avail themselves of these systems. HFMA will bring together thought leaders in capital fi nance to identify innovative solutions and facilitate the use of these solutions.

Point 4. HFMA believes the current system of paying for healthcare services is dysfunctional. Public and private payment systems are rife with defi ciencies such as confl icting incentives, overly complex payment rules and techniques, and lack of standardized approaches, which inhibit eff ective use of technological solutions and drain resources away from patient care and neces- sary investments such as EHRs. Government, employers, payers, and providers must work together to fi nd mutually benefi cial solutions to these problems through a commitment to administrative simplifi cation.

HFMA Statement on the Government’s Role in Encouraging EHR Adoption

Overcoming Barriers to Electronic Health Record Adoption

The Healthcare Financial Management Association is the nation’s leading membership organization for more than 34,000 healthcare fi nancial management leaders employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting fi rms, and insurance companies. Members’ positions include chief executive offi cer, chief fi nancial offi cer, controller, patient accounts manager, accountant, and consultant. HFMA off ers educational and profes- sional development opportunities; information on key issues aff ecting healthcare fi nancial managers; resources such as technical data, checklists, and research reports; and networking opportunities—all of which provide our members with the practical tools and ideas they need to ensure career and organizational successes. For more information, visit HFMA’s web site at

For more information on this project, visit

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