Why EMR is Staffing’s Hot Growth Area
By Greg Palmer
Healthcare information technology is the new big thing in staffing, thanks to the growing need for healthcare organizations to implement electronic medical record (EMR) systems.
While many hospitals actually started using some sort of an EMR system as early as a decade ago, there was no standardization — hospitals weren’t really talking to one another. Then came the Katrina disaster, which opened the eyes of the U.S. government to the benefits of EMRs. Congress then started to work on funding and removing resistance to moving to a paperless system. But it’s been slow-going, as numbers indicate that less than 1 percent of hospitals have a full EMR system.
That’s where the opportunity lies for staffing firms. A key aspect of the Obama administration’s plans for healthcare reform relies on the nation’s doctors and hospitals adopting electronic health systems. As a result, staffing firms can and are playing a central role in the design, implementation and optimization of the systems. The intent of this effort is to improve outcomes, reduce medical errors, standardize clinical care, share patient information, and provide remote retrieval of patient data, all in a secure environment. That’s no small task when there is a shortage of qualified IT professionals.
Joining the Party
Most of the national IT staffing providers have expressed interest and are already participating in the space. Even smaller niche IT and healthcare staffing firms are joining the party. Staffing firms are playing a key role in properly installing, training and optimizing facilities’ software toward the “meaningful use” requirement set forth in Recovery Act that facilities must achieve by 2015 in order to avoid penalties.
Opportunities abound in this space for direct hire, contract/temp and solutions work. Due to a shortage in talent, gross margins appear to be strong in this space (typically between 25 percent and 35 percent). Further, vendor management systems and managed service providers are not playing meaningful roles in this area. Due to their absence and the niche nature of EMR, small and midsize firms have the opportunity to gain market share as well. It is boiling down to the firm that owns the talent also owns the order.
In addition to providing healthcare IT workers, some IT staffing firms are branching out into other health-related fields, opening divisions that support the placement of nurses, therapists, pharmacists and other healthcare clinicians. Conversely, some predominately healthcare staffing and life science staffing firms are getting into healthcare IT placements.
In addition, firms are seeing opportunities in related training, consulting, and data services. Once a relationship is established with a hospital or other healthcare organization, staffing firms have figured out ways to leverage their contacts, contracts, and talent.
$40 Billion Market
It is difficult to pinpoint the exact size of the healthcare IT and related staffing markets; however, according to RNCOS, a global research firm, the entire U.S. healthcare IT industry will grow by about $40 billion through 2014. This represents a 24 percent compounded annual growth rate. Meanwhile, new research from MarketsandMarkets, a global research and consulting firm, indicates the U.S. electronic EMR market alone is poised to reach $6 billion by 2015. A significant portion of this spend will be related to labor in the design, installation, training and optimization of the systems.
The spend for healthcare IT staffing will go up proportionally with the installation of new systems. EMR software company Cerner recently reported first-quarter revenue was up more than 30 percent. Next Gen, another publicly traded EMR software firm, reported revenue rose 24 percent in its first quarter and said it believes the momentum is building for further growth. This just substantiates the need for healthcare IT workers.
Industry insiders are concerned about the talent shortages. According to a 2010 survey from College of Healthcare Management and Executives (CHIME), the top concern of hospital CIOs was insufficient staffing levels or capabilities to meet the demand. Currently there are about 108,000 IT professionals in the EMR area. According to Healthcare Information and Management Systems Society (HIMSS), U.S. hospitals will require an additional 40,000 healthcare IT workers by 2015. Factoring in the needs of physician offices, the total additional healthcare IT workers needed will reach about 50,000. Meanwhile, CHIME estimates there will only be approximately 10,000 new graduates entering the field in 2018, barely making a dent in the need for talent. Clearly, there is a huge gap between demand and the supply of workers.
Call to Action
Given the huge gaps in talent, what can staffing firms do to prepare themselves? Here are some of my suggestions.
DEVELOP A PLAN. The first step is to design a plan that meets both your financial expectations as well as your ability to execute. To find the right spot to begin or further expand is important, especially considering the wide range of choices.
If you are new to the segment or are just beginning to explore it, I would first turn to HIMSS. The organization has a rich set of data for research, topics and tools, professional development, conferences, and events.
PICK THE RIGHT ENTRY POINT. Most firms are finding that they need to pick a specialty, which is usually centered on which set of software platforms (Cerner, Epic, GE etc.) to support at the client’s site. Healthcare IT labor is in such small supply that trying to support multiple platforms would be a daunting task. Pick one or a few software platforms to build your talent database around. Also, you will need to determine early on your operating model and what segments to serve (direct hire, staffing, solutions, etc.). You will also need to evaluate your internal staff to determine whether you have the talent in-house to successfully execute.
RECRUIT & RETAIN. Finally, I suggest you spend the greatest amount of effort setting up your recruiting and retention models and plans. You will need to answer for both the client and workers: “How does your firm differentiate its services in terms of talent acquisition and retention?” The orders are out there; however, the workers are not.
Despite the obvious gaps that a staffing firm can fill, it’s not going to be easy to grow the healthcare IT business. Staffing firms need to be creative and think out of the box to meet these challenges. Here’s a look at some pitfalls that lie ahead.
FINDING TALENT. The most significant barrier to implement healthcare IT, according to a recent survey, is the lack of staffing resources. With the shortage of workers being such an issue, how you meet that challenge will determine how you can grow your revenue. Some firms are involved in supporting training where others have successfully tested clinicians for aptitude in IT and have arranged for the client to participate in the onboarding and training of these workers.
JUST A BUBBLE? Is EMR another IT Y2K bubble? Could EMR be a bubble that will burst when 2015 arrives and many of the systems are at the “meaningful use” stage? Possibly, but I don’t believe it’s likely. With the shortages that currently exist, and with the expected number of new, qualified workers entering the market, the gap does not narrow sufficiently. In addition, the numbers I have been discussing do not account for home healthcare and other healthcare delivery channels. Therefore, these estimates are lower than what will likely occur.
CHANGING SPECS. Finally, once the systems are up and running, there are planned changes to the standard specifications that will require the systems to improve functionality and security. For example, as of Oct. 1, 2013, all providers (hospitals, physicians and related) who conduct electronic health transactions and are covered by HIPAA must use the ICD-10 code sets. ICD-10 allows for more expansive and granular reporting of medical diagnosis and inpatient procedures as opposed to the current ICD-9 codes.
SECURITY CONCERNS. Healthcare IT professionals, when surveyed, have indicated that an internal breach of security is their primary concern regarding the security of data at their organization. And their concern is not without merit, as approximately 25 percent of respondents to Healthcare Information and Management Systems Society’s 2011 CIO survey indicated that their organization has experienced a security breach in the past year.
Healthcare IT and EMR are currently the fastest growing segments of the U.S. staffing industry and are expected to continue to grow. From a macro perspective, the room for growth is fueled by a couple of factors: the United States’ desire to contain healthcare costs and improve outcomes backed by meaningful use incentives as well as the anticipated shortages of talent.
Dealing with talent shortages is the staffing industry’s forte. Who better to find and onboard the talent than experienced staffing agencies that have dealt with similar challenges over the years? It is an exciting time to be in staffing. And rewarding as well to be a part of an ecosystem that can improve the quality and reduce costs within the U.S. healthcare system.
Greg Palmer is the former CEO of Remedy Temp Inc. and founder of GPalmer and Associates, a management consulting firm focused on the staffing industry. He can be reached at email@example.com.
Widespread adoption of EMR technology by physicians and hospitals is a signature goal of the government’s Health Information Technology for Economic and Clinical Health (HITECH) Act. The U.S. Recovery Act, of which HITECH is a key component, is designed to improve the quality of healthcare while making the healthcare system more efficient. The Centers for Medicare and Medicaid Services have created Medicare and Medicaid EMR incentive programs that will provide incentive payments to eligible professionals, hospitals, and critical access hospitals as they implement and “meaningfully use” certified EMR technology.
Reasons Behind the Growth in EMR
According to a recent Health Information Management Systems Society report, approximately 78 percent of healthcare facilities are not fully compliant. Here’s how and why they are being forced to move forward:
Improving patient care is the primary objective in this effort. It has been proven that with better documentation, and timely, coordinated and accurate access to information, healthcare providers improve patient outcomes and have significantly higher rates of success with substantially fewer reports in terms of failure.
Improving efficiency and containing increasing healthcare costs are also important objectives of this effort. Healthcare currently accounts for about 20 percent of the U.S. gross domestic product, and it’s growing at a rate of 3 percent to 5 percent greater than inflation. Areas that will be affected include billing, scheduling, patient and doctor access, encoding, claims, and patient satisfaction.
Congress has pledged more than $20 billion in incentives to help healthcare institutions offset the high costs associated with going from paper to electronic formats. The Centers for Medicare and Medicaid Services (CMS) has established incentives for early adopters. With a $17,500 per bed incentive for a hospital to obtain “meaningful use” compliance, a hospital with 100 beds has incentives worth $1,750,000.
If the carrot doesn’t work, the stick might. The incentives expire by 2015, at which point all healthcare institutions that are not compliant with respect to “meaningful use” will be subject to a 1 percent to 5 percent penalty for Medicare and Medicaid reimbursements. The dollar amounts involved in the penalties is creating a sense of urgency.