Finding Money for Technology
Since the turn of the century, 2 things have become clear in healthcare. First, change, especially in group practice, is happening at a rate that we have never seen before. Second, we are in the midst of an information technology (IT) evolution. To keep up with these ongoing changes, it has become imperative that group practices incorporate technology while remaining nimble with their capital, both cash and equipment. The question becomes how to fund projects in a way that meets both short- and long-term goals.
Many practices are beginning to qualify for the Health Infor mation Technology for Economic and Clinical Health (HITECH) Act and receive funding. Are you? What are the best funding options to cover upfront costs? Does your existing technology need to be upgraded? If you have answered yes to any of these questions, this article provides suggestions on how to get started exploring funding options (Sidebar).
Reaching out to other practices in your area and specialty to understand what they have done and are doing can be very helpful. What are their experiences and successes? Ask about implementation time and the useful life of the equipment. Try to understand how your peers selected a system and paid for it. You can gather valuable information by joining LinkedIn groups devoted to group practices and electronic health record (EHR) implementation, among other topics.
When diving into a project like implementing an EHR system, the costs can be overwhelming. Consulting, software, hardware, implementation, and training are all part of the investment. There are many funding options available, and it is important to understand the benefits of each and how they can work together. It is important to think about funding early, and try to consider what will happen as you navigate your way through the technology path.
1 Bank Financing. Your local bank is most likely familiar with your practice and can provide a traditional loan. This is typically a very easy way to look at financing, and one that you may have already used. A drawback is that some banks require compensating balances, large down payments, and/or limit the amount that might be available on your line of credit.
2 Grants. There are many options for grants, including state and local government grants, payers, or local hospitals. Many can be found by doing research on Foundation center.org. Grants can be time-consuming, and may require you to hire someone to complete all necessary forms and paperwork. Therefore, the process could potentially limit your vendor choices. This is an area in which working with other practices can be helpful. Several organizations can team up to obtain grant funding for their projects. There is value in sharing the responsibilities.
3 HITECH Act. This Act provides up to $64,000 per doctor over 5 years. Many practices have been able to prove meaningful use and have already collected their first year payment. This is an exciting opportunity for many practices and worth pursuing. Ad ditional information is available through organizations such as the Medical Group Management As sociation, American Medical Group Association, Health care Information and Management Systems Society, American Health Information Management Association, as well as the Office for the National Coordinator for Health Information Technology.
4 Leasing. Leasing options can provide 100% financing for consulting, software, hardware, and implementation. Leasing is an alternative to your banking relationship that allows you to conserve your cash and working capital. Customized structures like deferred payments and skip payments often are available. It is important to consider the flexibility of a leasing arrangement, specifically for the hardware portion of your technology. Having the ability to upgrade and change hardware when it becomes obsolete, or easily add additional technology when needed, is one of the many benefits of a leasing program. Furthermore, the ability to avoid expensive out-of-warranty maintenance costs is vital. It is important to understand leasing terms and conditions and ask questions about how the program works.
You may decide that using a combination of the available options provides you with the best solution and gives you the most flexibility.