HCA Holdings 2012 Annual Report Download - page 54

Our operations could be impaired by a failure of our information systems.
Any system failure that causes an interruption in service or availability of our systems could adversely affect
operations or delay the collection of revenues. Even though we have implemented network security measures,
our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering.
The occurrence of any of these events could result in interruptions, delays, the loss or corruption of data,
cessations in the availability of systems or liability under privacy and security laws, all of which could have a
material adverse effect on our financial position and results of operations and harm our business reputation.
The performance of our information technology and systems is critical to our business operations. In
addition to our shared services initiatives, our information systems are essential to a number of critical areas of
our operations, including:
• accounting and financial reporting;
• billing and collecting accounts;
• coding and compliance;
• clinical systems;
• medical records and document storage;
• inventory management;
• negotiating, pricing and administering managed care contracts and supply contracts; and
• monitoring quality of care and collecting data on quality measures necessary for full Medicare payment
updates.
If we fail to effectively and timely implement electronic health record systems and transition to the ICD-10
coding system, our operations could be adversely affected.
As required by ARRA, the Secretary of HHS has developed and implemented an incentive payment
program for eligible hospitals and health care professionals that adopt and meaningfully use certified EHR
technology. HHS uses the Provider Enrollment, Chain and Ownership System (“PECOS”) to verify Medicare
enrollment prior to making EHR incentive program payments. During 2012, we received Medicare and Medicaid
incentive payments for being a meaningful user of certified EHR technology and recorded incentive income of
$336 million for the year.
We have incurred and will continue to incur both capital costs and operating expenses in order to implement
our certified EHR technology and meet meaningful use requirements. These expenses are ongoing and are
projected to continue over all stages of implementation of meaningful use. The timing of expenses will not
correlate with the receipt of the incentive payments and the recognition of incentive income. During 2012, we
incurred $80 million of operating expenses to implement our certified EHR technology and to meet meaningful
use. If our eligible hospitals and employed professionals are unable to meet the requirements for participation in
the incentive payment program, including having an enrollment record in PECOS, we will not be eligible to
receive incentive payments that could offset some of the costs of implementing certified EHR technology.
Further, eligible providers that have failed to demonstrate meaningful use of certified EHR technology in an
applicable prior reporting period will be subject to reduced payments from Medicare, beginning in federal fiscal
year 2015 for eligible hospitals and calendar year 2015 for eligible professionals. Failure to implement and
continue to demonstrate meaningful use of certified EHR technology could have a material, adverse effect on our
financial position and results of operations.
Health plans and providers, including our hospitals, are required to transition to the new ICD-10 coding
system, which greatly expands the number and detail of billing codes used for inpatient claims. Use of the
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