MD Anderson Epic Implementation Led to Financial Decreases

Adjusted income at MD Anderson dropped by $160.5 million as a result of an Epic implementation and other projects.

Clinical productivity at University of Texas MD Anderson Cancer Center took a sizeable hit to its adjusted income in the buildup to an Epic implementation completed in March 2016. Documents from a recent meeting of the UT System Board of Regents indicate that the top-ranked cancer hospital saw a $160.5-million decrease in adjusted income “primarily attributable to an increase in expenses combined with a decrease in patient revenues as a result of the implementation of the new EPIC Electronic Health Record system (EHR).” Compared to the same period in the previous year, that represents a 56.6-percent decrease, according to figures presented to the health system’s Finance and Planning Committee earlier this week.

Those same documents provide insight into the decline in adjusted income: "Expenses increased due to the following: salaries and wages and payroll related costs increased due to an increase in fulltime employees, salary increases and increased premium sharing rates; professional fees and services increased as a result of increased consulting expenses primarily related to the EPIC EHR project; and depreciation and amortization increased as a result of the completion of several large projects such as the Zayed Building, which was placed into service in February 2015, and the EPIC EHR system, which was placed into service in March 2016, as well as various other facility management and software projects."

As the explanation makes clear, the Epic EHR implementation was one of many significant one-time projects at the cancer hospital (e.g., new construction). All told, MD Anderson reported $326.5 million in adjusted income (excluding depreciation and amortization expense), which represented 12.5 percent of revenues. MD Anderson officials, however, are optimistic that the financial impact of the Epic implementation and other capital projects is only temporary and that it will return to previous levels as the cancer hospital transitions to EHR optimization and other enhancements and refinements...