Electronic Health Record Implementation Enhances Financial Performance in High Medicaid Nursing Homes

The nursing home (NH) industry operates within a two-tiered system, wherein high Medicaid NHs which disproportionately serve marginalized populations, exhibit poorer quality of care and financial performance. Utilizing the resource-based view of the firm, this study aimed to investigate the association between electronic health record (EHR) implementation and financial performance in high Medicaid NHs. A positive correlation could allow high Medicaid NHs to leverage technology to enhance efficiency and financial health, thereby establishing a business case for EHR investments.

Data from 2017 to 2018 were sourced from mail surveys sent to the Director of Nursing in high Medicaid NHs (defined as having 85% or more Medicaid census, excluding facilities with over 10% private pay or 8% Medicare), and secondary sources like LTCFocus.org and Centers for Medicare & Medicaid Services cost reports. From the initial sample of 1,050 NHs, a 37% response rate was achieved (391 surveys). Propensity score inverse probability weighting was used to account for potential non-response bias. The independent variable, EHR Implementation Score (EIS), was calculated as the sum of scores across five EHR functionalities-administrative, documentation, order entry, results viewing, and clinical tools-and reflected the extent of electronic implementation. The dependent variable, total margin, represented NH financial performance. A multivariable linear regression model was used, adjusting for organizational and market-level control variables that may independently affect NH financial performance.

Approximately 76% of high Medicaid NHs had implemented EHR either fully or partially (n = 391). The multivariable regression model revealed that a one-unit increase in EIS was associated with a 0.12% increase in the total margin (p = 0.05, CI: -0.00-0.25).

The findings highlight a potential business case -long-term financial returns for the initial investments required for EHR implementation. Nonetheless, policy interventions including subsidies may still be necessary to stimulate EHR implementation, particularly in high Medicaid NHs.