Providers Increasingly Dissatisfied With EHRs Despite Heavy Investments, According To Premier, Inc. C-suite Survey

Executives enhance focus on advanced IT, telecommunications and modern clinical equipment. Results also cover healthcare cost drivers, supply chain tactics, provider shortages and other trends.

Charlotte, N.C. (June 02, 2014)-Providers nationwide project increased investments in healthcare information technology (HIT) and telecommunications solutions, as well as modern clinical equipment, according to Premier, Inc.’s (NASDAQ: PINC) spring 2014 Economic Outlook C-suite survey.

Nearly half (49 percent) of the C-suite respondents plan to make their largest capital investments over the next year in HIT, to include electronic health records (EHRs), advanced data analytics and telecommunications, according to survey results. This category was most often cited for the second consecutive year, up from 46 percent in spring 2013 and 45 percent from spring 2012. The acquisition of clinical equipment (surgical, imaging and lab) was cited by 22 percent of executives as the area in which they are planning the largest capital investments, up from 12 percent in spring 2013.

The survey also suggests that 41 percent of respondents are dissatisfied or indifferent in regards to their current EHR systems.

“Hospitals are making necessary investments in infrastructure to meet the demands of this new generation of healthcare,” said Michael J. Alkire, chief operating officer, Premier. “These investments are targeting HIT to provide more connected and efficient patient care, and modern clinical equipment that can deliver improved outcomes.

“What we are hearing increasingly from healthcare leaders is dissatisfaction with their existing EHR systems, often citing cost and difficulty of use,” continued Alkire. “Providers need a solution that integrates clinical, financial and operational data across their hospitals and health systems; the majority of EHR systems cannot do that.”

As a part of its spring 2014 Economic Outlook, Premier surveyed 127 C-suite executives – primarily CEOs, chief financial officers and chief operating officers – from 112 hospitals and health systems of various sizes and types across 32 states. Response rate for the biannual survey was 5 percent with a margin of error of +/- 2.5 percent – 4.1 percent at the 95 percent confidence level.

Additional survey results

Drivers of healthcare costs

Labor is considered the biggest driver of healthcare costs, cited by 42 percent of executives compared to 24 percent six months ago. Healthcare legislation and mandates was also often cited, by 34 percent of executives. In addition, compared to fall 2013, significantly more respondents cited HIT as the biggest driver of costs in their system (27 percent vs. 17 percent).

“With sequestration, Affordable Care Act changes and other legislation, hospitals have been incurring billions of dollars in payment cuts with much more to come,” said Premier President of Supply Chain Services Durral R. Gilbert. “For many providers, barely breaking even under Medicare is equivalent to success these days. To offset these cuts, some health systems have no other choice than to explore staff reductions.”

Improving supply chain performance

Among areas where providers are dedicating the most resources to improve supply chain performance, 42 percent cited product standardization (reducing the number of vendors supplying like products), with one in three executives focused on reducing physician preference item (PPI) costs.

Survey results also suggest providers are increasing non-EHR IT investments to improve supply chain performance. Seventeen percent of executives cited non-EHR IT purchases compared to 11 percent year ago.

“Health systems can no longer depend on one-off changes to drive expenses down. They now need to address variation across their systems,” Gilbert said. “This is a marathon, not a sprint, and it requires connecting cost, clinical and supply chain data and analytics to drive significant change over the long term.”

Provider shortages

The survey also shows that three of four providers are experiencing physician or nurse shortages, with 42 percent experiencing shortages in more than one practice area. Among those experiencing shortages:

• Almost four of five executives cited primary care physician shortages.
• 47 percent of respondents cited specialty physician shortages.
• 28 percent of respondents nurse shortages.
• Additional trends predicted to impact providers in 2014

For the third consecutive year, reimbursement cuts remain the most often cited trend expected to impact providers this year, selected by 69 percent of executives. In addition:

• One of four executives cited provider consolidation, twice as many compared to spring 2012.
• The percentage of executives citing uncompensated care increased for the first time in two years. Twenty-two percent selected this category, compared to 17 percent a year ago and 27 percent in spring 2012.

About the Economic Outlook

Premier’s Economic Outlook highlights emerging economic and industry trends impacting alliance members and the overall industry. The quarterly publication leverages subject matter expertise to build consensus from diverse points of view while highlighting best practices and strategies needed to drive performance improvement.

About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,000 U.S. hospitals and 110,000 other providers to transform healthcare.With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier, a Malcolm Baldrige National Quality Award recipient, plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram, Foursquare and Premier’s blog for more information about the company.

Forward-looking statements

Statements made in this release that are not statements of historical or current facts, such as projected increases in investments in healthcare information technology, telecommunications solutions, and capital equipment generally or through Premier solutions described herein, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as "believes," "belief," "expects," "estimates," "intends," "anticipates" or "plans" to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier's beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside Premier's control. More information on potential factors that could affect Premier's financial results is included from time to time in the "Forward Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of Premier's periodic and current filings with the SEC, as well as those discussed under the "Risk Factors" and "Forward Looking Statements" section of Premier's IPO Prospectus, dated September 25, 2013, filed with the SEC and available on Premier's website at investors.premierinc.com. Forward looking statements speak only as of the date they are made. Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date.

Contacts
Alven Weil, Premier, Inc.; [email protected], 704.816.5797