H.R. 3014, The Small Business Health Information Technology Financing Act

As adopted by the “American Recovery and Reinvestment Act” (also known as the stimulus package) stimulus package, physicians will be required to adopt a health information technology (Health IT) system by 2015 (to avoid any penalties). Congress and the Obama Administration believe that Health IT system would reduce costs by improving quality of care, avoiding duplicate tests, providing better care coordination,and reducing medical errors.

There is concern that the adoption of Health IT might jeopardize the financial security of solo and small practices. Data gathered from the some medical associations indicates that the average intial cost of a Health IT system is $32,000 per physician. In addition, there are costs associated with training personal to navigate new software programs, and maintenance and upgrades that average approximately $18,000 annually. This means that the initial cost of adoption an average Health IT system could be as high as $100,000, a considerable expenditure for small practices.

In order to help small practices comply with the health IT adoption requirement, Rep. Kathleen Dahlkemper (D-PA), Chair of the Regulations, Healthcare and Trade Subcommittee of the House Small Business Committee, has introduced the “Small Business Health Information Technology Financing Act” (H.R. 3014). This legislation would create a new loan program for the purchase of Health IT by eligible health care professional in solo or small group practices. Under the Small Business Act (P.L. 85-536), a small practice is defined as a practice having a total income less than $10 million per year.

The loan guarantee program would provide a 90 percent guarantee and loan amounts up to $350,000 for any single/professional and up to $2 million for any group. The fee imposed by the borrowers could not exceed 2 percent of the guaranteed portion of the loan.

The legislation would also allow borrowers to defer payments on the loan from one to three years. Should the legislation become law, the loan program would start after the release of the definition of “meaningful use" of electronic health records (EHR) by the Secretary of Health and Human Services, a process currently underway in the Office of the National Coordinator for Health Information Technology. The loan program and would "sunset" five years after that point (no loan would be guaranteed after 5 years after meaningful EHR use requirements have been determined).