Uncertain Health IT Specs Could Hamper Hospital Stimulus Spending

(MoneyWatch)  Perot Systems, a technology systems integrator, says provisions of the new stimulus package are creating an unusual paradox for its health care-provider customers. While the bill promises hospitals roughly $11 million apiece, exactly how to qualify for the money remains a bit unclear. And taking time to sort that out could cost providers some of that bounty.

The new federal program is designed to reward hospitals for having a working electronic health records (EHR) system by 2011. But that leaves barely enough time to finish a large EHR implementation in time, assuming a work order were signed today, according to Tim Quigley, executive vice president of Perot Systems' health care division.

Paradoxically, said Quigley, the government might not finish defining what comprises an EHR until the end of 2009. This means hospital IT administrators will be writing requests for proposals like blindfolded kids trying to hit a pinata.

There are other uncertainties as well: will the money be disbursed in lump sum payments or some kind of installments? Does the system have to be up and running on Jan. 1, 2011, or on Dec. 31, or sometime in between?

The answers to those questions will play a large role in determining how care providers, particularly smaller regional hospitals, will finance the implementations in the meantime.

This is what Perot Systems thinks it knows about the grants: qualifying hospitals will receive a base payment of $2 million in 2011, and then payments of $1.5 million, $1 million and $500K in the subsequent three years. Hospitals can qualify for the grants in the later years, but would miss out on the first payment or payments, depending on how late they get up to snuff.

On top of those base payments, hospitals will receive money based on a complex formula involving the number of "bed-days" for Medicare-eligible patients and hospital charges; in all, hospitals can expect to receive between $10 and $11 million, assuming they qualify for the maximum.

Despite these issues, hospital administrators seems to be jumping on the bandwagon in order to make sure they qualify for the maximum grant money available. The stimulus package "definitely says keep the foot on the gas," Quigley told me.