Hospital can’t afford EMR contract, Assembly rejects funding request

CBJ Assemblymembers voted last week to essentially break a contract for a vendor’s services at Bartlett Regional Hospital.

In an uncommon move, the Assembly’s Finance Committee on May 8th considered adding a capital improvement project and operating appropriations item of about $8.5 million total to the upcoming budget. And then, Finance Committee members promptly voted to reject those appropriations for the city-owned hospital.

The Assembly earlier had never considered funding for those items even though the contract with Cerner corporation was already signed.

“We just know that that shouldn’t have happened. So, that’s why we took the corrective action,” said Finance Committee Chair Karen Crane. The contract was an unscheduled or an unfunded item on an earlier capital improvement projects list, but Crane said that it did not go through the regular CIP process.

Because the hospital has to follow the same appropriation rules as everybody in the Assembly. That money has to be appropriated. It has not been appropriated.”

Bartlett Regional Hospital Chief Executive Officer Chris Harff said the contract was signed before Tennessee-based Quorum Health Resources left as managers of the facility.

“The maintenence costs of that contract is something that we didn’t really feel comfortable,” said Harff.

(The Hospital Board voted to do their own hiring of senior leadership in December 2011, Harff’s first day on the job was in August 2012, and the hospital board voted to officially terminate Quorum’s management contract in October 2012.)

The contract with Cerner in Kansas City, Missouri was for a new electronic medical records or EMR accounting system for Bartlett. It would’ve cost the CBJ about $7.37 million in total capital improvement project expenditures, and required an ongoing maintenance fee of $1.155 million each year.

Harff said they’re already under pressure with various rising or additional costs taking a bigger piece out of $83 million in net revenues. She said the hospital’s net income or profit has been as high as $9 million. But, now, net income is projected to be down to $3.3 million.

In the industry, for hospitals to maintain, they suggest about a 3- to 5-percent profit margin. We kind of picked a number in the middle. A budget is as good as a budget, and we all know things can happen.”

Essentially, the hospital cannot afford Cerner’s million-plus annual maintenence fee for the new EMR.

Some money, although Harff could not say how much, was paid to Cerner at signing of the contract. So far, the contract has not been implemented. Harff said the next step is negotiating with Cerner for a potential resolution.

The city, like it does in every contract, has clauses that, you know, ‘this has to be approved,’ there is processes. So, we are looking to that clause to be honest to the vendor, saying ‘we don’t know if we can really afford this,’ which leaves us other options.”

Crane said the issue was not sent onto the full Assembly for consideration, so she considers the Finance Committee’s vote to be the final word on the issue.

They are now going to have to look and see if they can’t find something less expensive.”

Hospitals and other health care providers are mandated to shift to EMR, which is essentially the modern digital version of the old paper chart. Harff said they could still qualify for federal incentives and avoid being penalized, such as with potential deductions in Medicare reimbursement, if they act quickly to get a system up and running.

We’re not in danger of losing any money. But we want to make sure that we can pay for the solution we have and be financially viable.

Bartlett does have an alternative EMR system that will need significant updating to bring online, but Harff said it should come at a much lower expense than the Cerner contract.

KTOO has contacted Cerner officials in Missouri and this story will be updated if they respond with any substantial comment.

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