Given the level of anticipation over the Internal Revenue Services ruling on hospital information technology subsidies to physicians, youd think the celebratory fireworks would still be going off weeks after the May 11 legal memorandum.
Instead, the silence has been deafening. Whatever reaction there has been has been cautiously guarded at best and at worst downright critical. So whats really going on?
The memorandumsought by hospitals, physicians and IT advocates of all stripesaddresses the issue of whether not-for-profit hospitals can provide financial assistance to doctors to acquire and implement IT systems in their clinics and offices without jeopardizing the hospitals tax-exempt status under the Internal Revenue Code. The code bars a tax-exempt organizations charitable assets from inuring to or benefiting a private individual.
That legal uncertainty was viewed by many as one of the last big hurdles in linking hospitals and hospital systems electronically to their affiliated physicians, group practices and clinics to improve patient care through better coordination of data.
In its May 11 ruling, the IRS said definitively that not-for-profit hospitals can provide IT subsidies to physicians without risking their tax exemptions as long as the IT systems and services fall within those permitted by HHS under its IT rules and regulations.
On the surface, this would seem like great news. The IRS says capital-rich hospitals and hospital systems can give or loan money to capital-poor physicians and group practices to buy IT as long as what they buy and how they use it doesnt violate any other federal laws. But as reporter Joseph Conn points out in this issues Beyond the Headlines, hospitals and physicians may have preferred the legal uncertainty as it provided a convenient excuse not to do something they really didnt want to do.
Blaming the IRS was a lot easier than owning up to the truth.
And the truth is physicians dont trust hospitals. Physicians who allow themselves to be subsidized are afraid they will be forever on the hook to their hospital benefactors, or loan officers, giving the hospitals economic leverage over their practices. Other physicians fear that linking their offices up to hospitals would give those hospitals access to the physicians patient data, including financial and clinical information. Still others just dont like IT, as reporter Andis Robeznieks reveals in this issues Feature, and not having the money gave them a reason to hide their IT phobia.
As for hospitals, how many really want to or can afford to serve as the deep pocket for physicians IT wants and desires? Do they give subsidies to all affiliated physicians? Some? Only those that are loyal admitters? Its a position not many hospital executives wanted to be in despite the public stance that they would if they could if only it wasnt for that damn IRS.
And once hospitals start giving physicians money for IT; why not give them money for medical technology? What if those same physicians take the money, invest in IT and medical technology, then compete with the same hospitals by opening up their own hospital, ambulatory surgery center and diagnostic imaging center? It could get messy.
For both hospitals and physicians, life was a lot easier before the IRS memorandum. Now, both sides have to put their money where their mouths have been to serve what they both claimed was in the best interest of patient care. This is going to get really interesting.
David Burda is the editor of Modern Physician, based in Chicago. Contact Burda at [email protected].