ProMedica, a health system based in Toledo, Ohio, is in the middle of installing an Epic Systems Corp. electronic health record, and that transition led to some financial pain in the first half of 2016.
ProMedica's $1.9 million operating loss was “primarily driven by significant expenses due to the implementation of the Epic electronic health record launch,” executives wrote in first-half financial statements. The estimated financial impact of the Epic launch in the first six months of 2016 was $19 million.
In the same six-month period of 2015, ProMedica had a $42.7 million operating surplus. Higher costs tied to salaries and employee benefits within both ProMedica and its health insurance company, Paramount, also contributed to the deficit.
Hospitals have been racing to install or replace EHR systems over the past several years, gaining federal incentive dollars along the way. Through this past April, the government program has paid out $34.5 billion in EHR incentives to more than 4,900 hospitals and nearly a half million physicians and other eligible clinicians. Roughly 96% of hospitals have a certified EHR system, although the open exchange of records has lagged.
Most hospital systems have turned to a small circle of EHR vendors, including the privately held Epic, based in Verona, Wis., and the publicly traded Cerner Corp., based in Kansas City, Mo. Spending on the technology doesn't stop after the initial purchase, though, as EHRs require updates and maintenance.
ProMedica's EHR project has modernized many parts of the not-for-profit system. Two of ProMedica's community hospitals that went live on Epic this past spring were previously using paper charts, the system said.
The next phase of the EHR project will begin Nov. 1, when four more hospitals are brought on, as well as 300 physicians. ProMedica expects it will run fully on the Epic system by next May.
Revenue at ProMedica increased only 0.9% in the first half of 2016, totaling $1.56 billion. Reimbursement from treating patients actually declined year over year because of lower volumes of inpatient admissions, surgeries and emergency room visits. Paramount kept the system's revenue afloat as it covered more members and collected more premiums.
ProMedica owns 12 hospitals throughout Ohio and Michigan. This past July, the system officially divested St. Luke's Hospital in Maumee, Ohio, making it an independent hospital again. ProMedica lost a long battle with the Federal Trade Commission over St. Luke's. FTC officials forced the divestiture, saying ProMedica had too much pricing power with St. Luke's.