HCA Holdings 2012 Annual Report Download - page 78
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HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Electronic Health Record Incentive Payments (continued)
EHR technology for the applicable period. However, unlike Medicaid, this initial payment amount will be
adjusted based upon an updated calculation using the annual cost report information for the cost report period
that began during the applicable payment year. Thus, incentive income recognition occurs at the point our
eligible hospitals demonstrate meaningful use of certified EHR technology for the applicable period and the cost
report information for the full cost report year that will determine the final calculation of the incentive payment is
available.
During 2012 and 2011, respectively, we recognized $336 million and $210 million of electronic health
record incentive income related to Medicaid ($89 million and $87 million) and Medicare ($247 million and $123
million) incentive programs. At December 31, 2012, we have $113 million of deferred EHR incentive income,
which represents initial incentive payments received for which EHR incentive income has not been recognized.
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 recognizing the
expenses may not correlate with the receipt of the incentive payments and the recognition of revenues. During
2012 and 2011, respectively, we incurred $80 million and $77 million of operating expenses to implement our
certified EHR technology and meet meaningful use.
For 2013, we estimate EHR incentive income will be recognized in the range of $200 million to $225
million and that related EHR operating expenses will be in the range of $110 million to $130 million. Actual
incentive payments and EHR operating expenses could vary from these estimates due to certain factors such as
availability of federal funding for both Medicare and Medicaid incentive payments and our ability to continue to
demonstrate meaningful use of certified EHR technology. The failure of our ability to continue to demonstrate
meaningful use of EHR technology could have a material, adverse effect on our results of operations.
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