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Readers write to say that electronic medical records cost more than you think; that companies should be required to make matching 401(k) contributions; and more.
CFO Readers, CFO Magazine
June 1, 2009
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Although "Strong Medicine" (May) does provide some insight into why insurers want electronic medical records (EMRs), it has a lot of misconceptions and misstatements. Among them:
1. "Just as technology streamlined industries like retailing and financial services, it should create efficiencies in health care that will slow premium growth from its traditional annual rate of about 7%." There are no citations offered to show a decent study demonstrating such "efficiencies."
2. "Malpractice insurers have already linked electronic systems with better-quality care; some will reduce premiums by as much as 5% for doctors who have gone digital." Very few have actually decreased their premiums. In fact, EMRs can actually result in increased errors, decreased quality, false documentation, and the loss of privacy.
3. "…only about 9% of the country's 5,000 hospitals and just under 20% of its 800,000 physicians use computerized recordkeeping…." The only data of importance is what falls into the category of "meaningful use." The actual numbers are 2% of hospitals and 4% of physicians.
4. "Rand…estimates that when 90% of…providers use such systems, the savings will amount to $77 billion a year." This has never been proven.
5. "…ROI calculations of such a move showed some modest financial benefit." Studies have shown that for every group that makes an EMR work, another 50% have a failed installation. And of those that do make their systems functional, only about 10% actually use them "significantly." Why didn't the author interview angry doctors who have lost thousands in the quest for the EMR ROI?
6. "For small practices…the price of implementing an EMR system could reach nearly $40,000 per physician." That's only the initial cost, which ignores the average $1,500 per month ongoing fees and the cost of "significant use." Overall, the average five-year cost is estimated to be about $300,000 per physician.
7. "CFOs…may soon develop an affection for EMRs, especially if the technology proves to be an antidote to soaring health-care premiums." Again, these systems are expensive, rarely show an ROI, and have never been shown to decrease health-care costs.
Alberto Borges, M.D.
The Author Responds: In most cases, Dr. Borges is referring to projections, estimates, and tangential issues beyond the scope of the article. Previous studies haven't tested EMRs under the same kind of conditions that will exist should substantial adoption come to pass; that is, with certification, standardization, training — and motivation.
The story did refer to doctors who have had EMRs for many years; they aren't unhappy, but the systems they use are more like electronic order-entry than EMR. Their views may change, however, if they find out there is no cheap way for them to plug their systems in to the government-sanctioned network. They seem to expect that one of the existing companies (or an up-and-comer) will target them as a desirable market and come up with a solution.
Sounding Off on 401(k)s
Section 401(k) of the Internal Revenue Code was meant to supplement retirement ("401[k]risis," April). However, with the government's blessing, it has now turned into a primary retirement vehicle, which the employer no longer gives a damn about and doesn't even have to contribute to. Companies should have to make matching contributions, no matter what, and bankruptcy laws must be changed to give employees real ownership in return for the promises management made to them.
Get ready for 90% of retirees to become welfare recipients on your taxpayer dime.
Commercial Exchange Advisors LLC
We are in the middle of a secular bear market. It started in early 2000, and if history is any guide, will last anywhere from 15 to 18 years. In markets like this the "buy and hold" investment strategy does not work well. Modern Portfolio Theory, on which most 401(k) allocations are built, performs poorly. But you can make money in markets like this, if you know what you're doing. Unfortunately, that precludes most mutual-fund companies, retail stockbrokers, and registered representatives.
More regulation, more due diligence, more government involvement, more education, more information for employees, and so on, all miss what we have found to be the most important point: people want advice. And this advice needs to be independent, objective, unbiased, and not influenced by the platform the fund choices sit on.
Charles C. Scott
Pelleton Capital Management Ltd.
Plan sponsors and their investment committees (whose members are fiduciaries and bear personal liability for fiduciary breaches) are not the guarantors of investment performance and are not required to search out the lowest cost investments or service providers, but they are required to follow and document conformity with prudent investment practices. Having a well-crafted investment policy statement and documenting conformity with its implementation, monitoring, and evaluation provisions will help insulate fiduciaries from liability.
Further, when benchmarking administration and procedures to best practices, plan sponsors and their investment-committee members should specifically benchmark their conformity to a prudent investment fiduciary standard. Plan sponsors that wish to have an independent assessment of such conformity and that would see the benefit of demonstrating that to employees as a means of forestalling employee criticism or lawsuits should consider applying to a fiduciary assessment organization such as CEFEX.
Cambridge Fiduciary Services LLC
In "Watching Where You Misstep" (InTech, April), we incorrectly stated the position that Greg Zaffiro holds at Platinum Partners. He is the firm's managing director.
An April letter headlined "Modest Proposal" suggested that $787 billion in federal bailout money would be better spent by distributing it directly to 300 million Americans. As many readers pointed out, that would amount to $2,500 per person, as opposed to the $250,000 per person that the letter writer claimed. We were so excited at the prospect of a six-figure payout that we failed to catch the error.