March 14, 2014

Rex Hospital to spend $28 million on EPIC software this year

Rex Hospital will spend $28 million on EPIC electronic medical records software this year, significantly cutting into a projected profit.

Rex Healthcare received an “AA-” score from the Standard & Poor’s rating firm, an increase from the previous year and the Raleigh hospital’s highest credit rating since the 1990s.

S&P noted that Rex, which is owned by the UNC Health Care System, is in a growing market, has the leading market share in Wake County, and posted a $40 million operating profit in the 2012-13 fiscal year.

But the rating firm also said the hospital system is expected to eke out a $1.2 million profit in the current fiscal year as it absorbs major financial outlays. The UNC health care system is in the midst implementing a complex electronic medical record software system that’s scheduled to go live this summer.

Rex’s portion of the systemwide bill for the EPIC software will come to $28 million this year, S&P said in its report this week. Large hospital systems typically pay several hundred million dollars to install and operate the software.

Rex also subsidizes the operations of the UNC Physician Network, a group of about 130 doctors that is part of UNC Health Care and generates revenue for the organization by referring patients to Rex and UNC specialists, services and labs. In 2013, Rex contributed $13.7 million to the UNC Physician Network, S&P said.

Higher credit ratings translate to lower borrowing costs. S&P’s “AA-” score indicates a “very strong capacity to meet financial commitment.”

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