Lynn Barr is the director of health information technology for the California State Rural Health Association. I met Barr soon after I noticed a crowd had gathered around her poster at the Health Information and Management Systems Society show last week in Orlando.
The association, working with insurer UnitedHealthcare, will in the next month or so to float a bond issue to raise $10 million to pay for the upfront costs of purchasing electronic health-record systems for six of California's critical-access hospitals. United would buy the bonds, and the hospitals would repay the money when they receive payments from Medicare and/or Medicaid under the federal EHR incentive payment programs created by the American Recovery and Reinvestment Act of 2009.
"Most of these hospitals, their total requirement is in the $1.5 million to $2 million range," Barr said. Initial investments in IT from proceeds of the bond issue will be "just enough to get them going" down the road to EHR adoption and meaningful use, according to Barr.
"They should have their money within about 60 days," Barr said. "Then we'll look forward to doing the second bond this summer."
That second issue, for about another $10 million, could cover as many as 14 needy critical-access hospitals, she said. The two bonds would just about cover all of the initial IT needs for the most cash-strapped critical-access hospitals in the state, she said. The remaining 15 California CAHs won't need the financial front-loading, Barr said, according to an assessment the association performed earlier to identify statewide health IT requirements.
Barr said the association first came up with an IT loan program with 3% to 4% interest and five years to pay. The loans would cost the hospitals about $200,000 per year, plus interest for $1 million in borrowing.
The deal-clinching twist was to amend the repayment period by deferring the first payment on the bonds for the first year until after the federal IT incentive money started flowing, Barr said. By then, incentive payments should be sufficient to at least pay back the loans, with some hospitals able to see a surplus of income over their IT costs, Barr said.
Barr said California's 38 state-designated rural hospitals that are not critical-access hospitals could tap into a similar program developed by insurer WellPoint. Both United and WellPoint are operating under state agreements to work to improve healthcare for the medically underserved dating back to their acquisitions of not-for-profit health plans in California, she said, but "United and WellPoint took this a lot farther than they had to."
To watch my video interview with Barr from last week's 2011 HIMSS annual conference, click here.