Behind the ballooning medical e-records cost

A system that’s supposed to revolutionize health care in Hawaii is costing the state’s taxpayer-supported hospitals more than double the originally projected cost at the Hawaii Health Systems Corporation — the quasipublic agency that runs the state’s primarily rural hospitals.

“We’re always at the legislature trying to find more money for our safety-net hospital system, said Randy Perreira, executive director HGEA, the state’s largest public worker’s union. “But at the same time it seems there’s a faucet running somewhere else that nobody’s trying to address.”

The faucet this time is the conversion to electronic medical records — a requirement of the federal Affordable Care Act that’s proving anything but affordable for HHSC.

“Our original cost was in the $50 million range,” HHSC’s West Regional CEO Jay Kreuzer said. “It’s now $109 million.”

That’s $109 million over five years to covert HHSC hospitals to the system primarily Siemens was contracted to roll out.

Originally, the schedule would have had it done last year at half the cost. Why is it taking so long at double the initial price?

“It took us longer because we wanted to make sure — we call it remediation — that we worked through all the issues in West Hawaii,” the first site to roll out the system, Kreuzer said. “We had to add significantly staffing, just about double the personnel to our IT staff, to support the EMR, and originally we underestimated the staff it would take to run it.”

KHON2 asked what degree is the contractor at fault here vs. the state, HHSC or even the lawmakers?

“Whoever gave an estimate that was 50 percent too low is at fault,” said Sen. Josh Green, chairman of the Senate Health Committee. “I have no idea who could have made a mistake that low.”

Siemens Healthcare points out their original contract never changed, but that the hospitals kept asking for more and more, and that HHSC delayed the roll-out dates (see Siemens’ full statement at the end of this print edition).

Only one site is up: Kona Community Hospital. The second, Maui, is supposed to be next month, and some of the others are getting cold feet fast.

Already Kahuku told HHSC no thanks, and got a stern rebuke from HHSC interpreted as demanding a $2 million payout.

“I think that is really kind of dirty business,” Green said. “I don’t like that.”

HGEA also doesn’t like what it sees.

“Employees have long expressed upset at the number of private contracts that the HHSC has engaged in, the use of consultants,” Perreira said. “We’re seeing in some cases people making double of what a civil servant would make.”

“We have to support it after we go live and we didn’t have the staff to do that,” Kreuzer said. “We’re recruiting for 35 new full-time positions in IT department. Those are positions that are difficult to fill very quickly so we’ve had to supplement with some consulting work until such time that we get those positions filled.”

KHON2 asked HHSC: Are you confident those can be filled with civil service or people that don’t have to be hired as consultants at sometimes double the price?

“Yes,” Kreuzer said. “We are successful in recruiting the folks, it’s just taking a little more time to get them online, and without that backfill of consultants the project would be delayed even further.”

HGEA is also concerned about a Siemens employee serving as the HHSC’s chief information officer.

“It’s like the wolves watching the henhouse because in that case this individual is responsible for project oversight it would seem,” Perreira said, “and how do you watch the contracts that your company is responsible for?”

KHON2 asked HHSC, who keeps tabs on the contractor when the contractor’s the one serving as the CIO?

“That’s a very good question,” Kreuzer said. “We engaged another consultant, Bekins Partners, to oversee Siemens, so any Siemens invoice or Siemens decisions that would benefit Siemens are not made by Siemens themselves.”

HHSC is still on the hook, per this contract addendum, to pay the CIOs way back and forth to the mainland just about every week, plus the cost to live here.

“Through our contract we get the services of this CIO free but we do pay for travel, and living expense in Hawaii,” Kreuzer said, adding HHSC feels they’re probably paying about half as much as they would for a CIO on salary.

“Hey, come on,” Green said of the consultant-as-CIO. “We do these massive buys for technology and then you’re going to hire somebody from within the company? Maybe they should be offering some extra pro bono support because the state has gone so far in with the technology.”

But the state is so far into the deal that some fear we just have to keep paying the growing tab.

KHON2 asked HHSC, are we getting $109 million dollars better health care from this?

“You’ve got to realize EMR does a lot of things,” Kreuzer said. “EMR allows for instant access to information by other practitioners and other clinical staff. There’s a huge safety component like verifying medications and dosages that the computer automatically does for you.”

But what about when it glitches? Sen. Green is also a doctor and had this happen with the electronic system HHSC:

“Last weekend I had an 85-year-old woman come in with chest pains and I was treating her for what could be a heart attack and the system locked me out,” Green said. “I couldn’t get in with my password and I blew my stack… this person could be dying. It’s like anything else, we get very dependent on our technology like these iPads and iPhones which we all love but if we don’t have adequate safeguards it could be dangerous.”

Another possible problem: Other hospitals in the state like queens are using a different e-record system, so there’s more work to be done to get these two systems to talk. Siemens says part of the project’s Stage 2 addresses interoperability and adds, “This functionality may necessitate further work effort to implement and HHSC may decide to purchase further services from Siemens to assist with that effort.”

“They’re going to need more consultants and more technicians to find what’s going to be a compatible language,” Green said. “If we invest in this product, 5 years from now it might have to be replaced if we have new partners.”

Some HHSC facilities could be up for a change of hands if pending legislation advances. A deal with mainland company Banner Health fell through last year, but local providers may be eyeing the opportunity to take over.

“That could change their thinking, if they look and see say on Maui that they’re going to form a partnership sooner rather than later,” Green said, “then Queen’s or Hawaii Pacific Health could say, well OK, we think it’s good because we can streamline services, we can streamline the healthcare system, they can see savings by not having to invest in a $30 million EMR system that some are seeing as a boondoggle.”

Can anything be done now to not only protect patients, but control the spending?

“The light at the end of the tunnel is obviously to get all the facilities in HHSC up and running on EMR,” Kreuzer said. “We have not scheduled the third go-live at this point in time because we want to make sure get Maui live in March, but we hope to have another facility go live in 2014.”

KHON2 asked, when can the taxpayer, or the patients for that matter, expect a final resolution of this?

“We can decide that we’re not going to finance any further operations on this. We can turn the spigot off,” Green said. “All those monies that we divert toward a system that could end up becoming obsolete are opportunities list.”

The health committee chair says this year’s legislative session will have resolve it one way or another.

We’ll follow up to find out how this gets fixed.

Siemens Healthcare full statement:

“The initial contract with Siemens Healthcare was valued at $28,662,740. The cost for the scope of work outlined to be delivered by Siemens in the initial contract has not changed. Since initial contract execution, HHSC has requested additional services and products from Siemens, some unforeseen from initial assessment, which include additional modules, services associated with the implementation of new modules and services to augment HHSC staff. At this point, the project remains on schedule and is within budget. Siemens and HHSC remain fully committed to addressing outstanding issues, including those related to resources, on an ongoing basis. HHSC is planning to install the system at MMMC in March 2014. Within two years, upgraded health information systems and an EHR system in all of HHSC’s remaining facilities will better support the healthcare needs of the island communities.

HHSC will not be charged more than the initial contract value for the scope of work included in that contract. The project timeline was extended at HHSC’s election based on its internal business requirements. Because it is a fixed-fee engagement, HHSC has not experienced cost overruns due to this timeline extension. Siemens will continue to respond to additional requests for products and services from HHSC should they be requested.

HHSC, like other customers with complex and varied operations, at times needs to adjust project scopes or undertake additional projects as a result of external factors beyond Siemens’ or the customer’s control. For instance, the United States Department of Health and Human Services has been promoting the use of EHR technology through the Centers for Medicare & Medicaid Services EHR Incentive Program. This is currently a multi-stage program that has specific requirements for the type of functionality and interoperability that must be included in a certified EHR solution. When HHSC first contracted for Soarian, the 2014 Edition Stage 2 requirements, which HHSC is currently working to attest to, had not yet been proposed for public comment.

Siemens will deliver solutions that meet current EHR Incentive Program requirements applicable to Siemens customers, including HHSC. In Stage 2, new elements focus on improving interoperability among healthcare organizations, additional clinical quality measurements and increased patient access to healthcare information. New functionality needed to be added to the solution being delivered to HHSC in order to meet these requirements. This functionality may necessitate further work effort to implement and HHSC may decide to purchase further services from Siemens to assist with that effort.

The concept of providing outsourcing services in an interim advisory capacity for day-to-day operations while a customer fills a vacancy is a common practice in the healthcare IT industry. HHSC selected a Siemens employee to assist the executive suite as an interim solution until HHSC identifies a permanent CIO. The Siemens employee filling this role has no authority or financial oversight for any contracts, Siemens or otherwise; instead, oversight is directly provided by the HHSC Corporate Board and the CEO’s office.

Siemens is committed to interoperability – that is, the ability for Siemens’ EHR solutions to talk to those of other companies via standard protocols. Interoperability standards do need to be aligned across the industry. Siemens has representation on a variety of international and national standards and policy committees that establish the necessary standards and implementation guidance to continuously improve on the ability of health information technology to exchange data within and across provider organizations in support of greater continuity of care and improved data access.”

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