Kerry Bill Would Help Physicians Borrow Money For EHRs

Many physicians have complained that they must invest in electronic health records now in order to qualify for government subsidies that will be paid in increments over five years, starting in 2011. These incentives are substantial-physicians may be eligible for up to $44,000 from Medicare or $64,000 from Medicaid if they have enough Medicaid business. But physicians either have to lay out a substantial sum, take a lease, or borrow the money.

Physicians are generally considered good risks, but banks have tightened their terms for all borrowers since the credit crunch began. To make it easier for physicians to purchase EHR systems, Sen. John Kerry (D-Mass.) has proposed legislation that would allow small practices to get loans backed by the Small Business Administration (SBA). According to a press release from Kerry's office, the money could be spent on "computer hardware, software, and other technology that will assist in the use of electronic health records and prescriptions."

The SBA uses a number of criteria for deciding which businesses are eligible for its support. Among other things, it guarantees "special purpose loans" that further or cushion the impact of government policies. For the chosen enterprises, the SBA will guarantee up to 85 percent of the principal on loans of up to $150,000 and 75 percent on loans of $150,000 or more in its principal loan program. The cap on SBA-backed loans is $2 million. Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums.

It is not clear why Kerry introduced this legislation now, but he has long had an interest in health IT. In 2007, he introduced a bill that would have required physicians to use electronic prescribing. A scaled-down version of that measure, with incentives for e-prescribing and penalties for not doing it, was included in the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008.

If Kerry's new bill passes, it would probably push some physicians who are reluctant to make a big upfront investment to adopt EHRs. But many doctors will continue to resist this major change in their workflow and approach to medicine, regardless of the financial incentives provided. The government will have to provide much more education and implementation support to create widespread health IT adoption.