Medical Practices Move Health IT To Cloud

Lower upfront costs, outsourcing options among factors driving physicians toward cloud-based EHRs and practice management software.

Ken Terry, Contributor

September 6, 2013

4 Min Read

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Economic factors and government regulations are starting to push independent physician practices to the cloud, according to a new survey by Black Book. Many practice leaders view integrated practice management (PM)/electronic health record (EHR) systems, coupled with outsourcing of revenue cycle management (RCM), as their best hope for remaining autonomous, according to the research firm.

Black Book surveyed more than 8,000 CFOs, CIOs, administrators and support staff at U.S. hospitals and physician practices between April and August of this year. The sample was skewed toward small primary care practices, Doug Brown, managing partner of Black Book, told InformationWeek Healthcare.

Among the key survey findings:

-- 87% of practices agreed their billing and collection systems need upgrades.

-- 42% were considering an upgrade of their RCM software within six to 12 months.

-- 92% of those seeking an RCM/practice management system upgrade were considering only systems integrated seamlessly with EHRs.

-- 71% of practices were considering a combination of new software and outsourcing services to improve their RCM systems.

-- 89% of those entities preferred a single PM/EHR vendor.

-- 89% of physicians currently replacing their EHRs wanted a single vendor for all their IT systems and preferred vendors that offer software, outsourcing and consulting options.

-- 96% of practices that had attested to Meaningful Use and/or were highly satisfied with their EHR vendor said that integrated PM/EHR systems are key to ensuring practice survival without being acquired by hospitals or larger physician groups.

Drilling down a bit further into the data, 86% of business managers said their current PM systems could not accommodate upcoming regulatory requirements and updates. Nearly all of them stated that their practice's financial software and workflows were unprepared for participation in accountable care organizations. They said that a seamless RCM/PM/EHR system would ensure long-term practice independence and greatly improve productivity and profitability.

[ Picking the right EHR can be a big risk. See EHR Roulette: Gambling On Medicine's Future. ]

In contrast, Black Book found, 72% of physician practices, whether networked, independent or part of a large group or hospital system, anticipated declining-to-negative profitability in 2014 because of diminishing reimbursements and underutilized or inefficient billing and records technology.

The declining profitability of practices has made it more difficult for them to replace EHRs that aren't working well for them. Consequently, cloud-based EHRs, which don't require an upfront investment in software or servers, look attractive to these practices.

"Those who are replacing their EHRs are all moving to cloud-based systems because they can't invest the money [in a site-based client server system] and they have productivity issues and so on," Brown said. "They're taking the least expensive route this time, and that would be the cloud-based system."

In addition, he noted, many physicians and practice managers are interested in outsourcing some or all of their billing and collections to fix problems in their RCM operations. While they could do this through billing agencies, some of which host PM systems remotely, they are increasingly choosing cloud-based vendors that offer integrated PM/EHR packages, coupled with outsourcing options, Brown noted. "That's the preferred mode right now."

This trend actually began several years ago, but it appears to be accelerating now because of the increasing financial pressures on practices.

The integrated EHR/RCM/PM companies that received the highest satisfaction ratings among survey respondents were not necessarily the biggest EHR vendors. The top 10 companies, in order, were: Kareo, Care360/Quest Diagnostics, Care Cloud, Athenahealth, eClinicalWorks, Vitera, McKesson, Optum, Cerner and Aprima.

Four of the top five vendors market Web-native products, while eClinicalWorks offers a cloud version of its client/server software, coupled with revenue cycle management functions, said Brown. Irvine, Calif.-based Kareo, which makes a PM system that integrates with several EHRs such as Care360, launched its own cloud-based EHR a year ago, he added.

The top performing EHRs were generally more popular among primary care practices than among medical or surgical specialty practices, Brown noted. But that's not surprising, considering that most EHRs -- cloud-based or not -- are designed for primary care rather than for other specialties.

Training and implementation support from cloud-based vendors is fairly generic, the report said. Few of these companies do onsite training and system configuration. But among the top 20 vendors -- including major companies that have onsite client/server as well as remotely hosted systems -- few do a good job of training users, Black Book concluded.

Another indication of how big a problem this is: 18% of the survey respondents said they'd use implementation consultants, rather than rely on vendors, when they replaced their systems, Brown said.

About the Author(s)

Ken Terry


Ken Terry is a freelance healthcare writer, specializing in health IT. A former technology editor of Medical Economics Magazine, he is also the author of the book Rx For Healthcare Reform.

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