EHRs And Health IT Projects: Are They Battering Hospitals' Financial Profiles?

Bob Herman | Becker's Hospital Review | January 6, 2014

This past November, Standard & Poor's Ratings Services downgraded the credit rating of Wake Forest Baptist Medical Center in Winston-Salem, N.C., from "AA-" to "A+".

Hospital downgrades stem from various issues, most of which are specific to an individual organization's situation, but they essentially result from two overarching themes: declining margins or rising costs. Wake Forest Baptist officials attributed the downgrade almost entirely to costs associated with the troubled rollout of its Epic electronic health record system. In fact, the project played a major role in the academic medical center posting a $56.6 million operating loss in the most recent fiscal year.

"The ratings change was largely due to the one-time implementation costs and temporary business disruption associated with the installation of a new medical records system at the medical center in the fall of 2012," Edward Chadwick, executive vice president for finance and CFO of Wake Forest Baptist, said in a statement. "The operating impact was greater than anticipated and affected overall fiscal performance for fiscal year 2013."
However, the rating change has not been an irreparable disaster for Wake Forest Baptist — just more of an extended hiccup. S&P analysts said they expect the hospital's operating results will "rebound measurably in fiscal 2014 as management's corrective actions demonstrate results and the disruptive effect of the IT rollout diminishes."