Health Information Management

Consider your options, negotiate carefully when moving records off-site

JustCoding News: Outpatient, February 24, 2010

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Space is at a premium for many hospitals. There simply isn’t enough space on most campuses to store all of the organization’s business and medical records.

“You can’t even find a conference room to hold a meeting half the time, let alone where you’re going to store files for 10 years,” says Monica Pappas, RHIA, president of MPA Consulting, Inc., in Long Beach, CA.

The problem of storage is unlikely to go away any time soon. The paper problem is going to be around for a long time as hospitals transition from paper to hybrid to electronic records, Pappas says, noting that many facilities with electronic health record systems (EHR) still store scanned images for a period of time.

Thus, many facilities turn to an outside vendor to store their records. But they should do so carefully, advises Rose T. Dunn, RHIA, CPA, FACHE, FHFMA, chief operating officer of First Class Solutions, Inc., in St. Louis. By taking appropriate precautions and educating yourself before entering into a record storage contract with a vendor, you can protect against hidden costs and other risks.

Consider your alternatives
Before immediately turning to off-site storage, consider that there may be another cost-effective solution for your hospital’s space problem. Buying a warehouse facility is one option, Dunn says. “It may not be on-site or as convenient as calling someone to deliver the records to you, but it can make complete sense to purchase your own warehouse,” she says. “Warehouse space, even environmentally controlled, is cheap.”

Hospitals can store any unneeded items in the space, not just medical records. Many choose to store business office records, extra hospital beds, and other equipment. This can be an especially effective choice if the hospital intends to renovate in the next few years.

In addition, hospitals could choose to scan or microfilm records. The cost of storing a record with an off-site vendor is only less expensive if you keep the records for less than 10 years. For records stored longer, it is often more cost-effective to scan them immediately. So if your retention policy is to keep records for 10 years and you are only able to store records on-site for one year, there is probably going to be a marginal difference in cost, Dunn says. “And that doesn’t take into account the added benefits of scanning—that you have the records immediately available by any user,” she adds.

If your retention policy is longer than 10 years, scanning may very well be the most cost-effective answer. And consider that you need to keep some records far longer than 10 years. “If you are a children’s hospital, you have to keep those much longer—usually four to seven years after the age of majority,” Dunn says. “Absolutely, scan those puppies.”

Take appropriate precautions
If storing your records with an off-site vendor is your best option, enter into a contract carefully. Start by increasing your negotiating power. The more you have to store, the more likely you are to ensure better pricing, says Pappas. So collaborate within your organization. Store your business records with the same vendor, for example. Or consider involving physician practices or medical office buildings associated with your hospital. By storing the records together, you may be able to increase your ability to negotiate with a vendor.

When selecting vendors, visit them on-site. If the vendor doesn’t permit it, question it, says Pappas. “Most vendors aren’t going to let you into the bowels of their organization because they have records from multiple facilities,” she says. “But most of them will give you some kind of access to their general location to see how they do things and the systems they use.” And if they don’t, you can find a vendor who will.

This gives you a chance to verify that the vendor’s storage area is environmentally controlled and maintained. “For instance, you may find out it is dirty, that there are walls that are leaking, that there is poor lighting, and other things that could lead to the records being damaged or misfiled,” Dunn says.

You should also ensure that the record storage area is secure. Your medical storage vendor is a business associate and must abide by HIPAA regulations according to the HITECH Act. The vendor must also comply with Joint Commission (formerly JCAHO) regulations.

Dunn advises taking advantage of a site visit to check on items such as access and backup procedures and system security and surveillance. In addition, verify that the vendor appropriately trains its employees on HIPAA, has a designated privacy and security officer, and has a disaster plan in place, she says. The vendor should also have security measures in place to protect records from damage, loss, and tampering. And the vendor should have a notification process in place to notify you in the event of a potential breach.

Negotiate contract terms
Vendor contracts can be confusing, but overlooking discreetly worded provisions can lead to unexpected costs later on, Dunn says. Start by ensuring that you will be able to remove your records permanently without any financial penalties.

When you have records in storage that you no longer need to retain because they have met their statute of limitations, you will want to destroy them. You should not be charged to go in and purge those records permanently from the shelves. “Clearly, if you ask the storage company to do that purge for you, then there may be purging charges,” Dunn says. “But there should be no additional fee above the labor charges involved for going in and pulling records off the shelf and any destruction costs that the vendor might incur.”

In addition, many vendors recycle the paper after they shred it at the time of destruction and get paid for it. If you determine that your vendor receives compensation for the shredded paper, consider negotiating for lower destruction fees, Dunn suggests. “If they’re going to get paid for that paper, then why should you be charged?”

Also, be sure you fully understand the vendor’s refile policy. Some vendors refile records at the end of your storage area, adding to the filing inches consumed by your records and leaving a gap where the record was located instead of refiling the record where it originally came from. It may cost you more if your vendor does the former, because vendors charge by inch of linear space. “So you may be charged for the additional inches because not all vendors properly account for the gaps and deduct them from the total filing inches consumed,” Dunn says.

It is also crucial to make sure you have access to your records. You may have to arrange to get to your records with your vendor, and you may need the vendor to escort you, but you should be permitted to personally access your records, Dunn says. “Many vendors want to be the only ones who can go to the records and pull them, because then they get a pull fee. And then when you return [the records], they get a return fee. So try to get a provision in the contract that allows the HIM department to go in and access their own records. This is particularly beneficial when you need to file a single item in the record in a very specific place.”

For example, you may simply need to insert an amendment into a record that doesn’t need to be pulled from the shelf and brought back to the hospital. An HIM staff member should be able to visit the record and place the amendment in the file, Dunn says.

Use resources wisely
Storing only what is necessary is critical to keeping costs low. “If any of us sat down and tried to figure out how many pounds of paper we ever stored, we would be appalled,” Pappas says. “And HIM is always the largest user, so you have to own it and do what you can.”

Get in the habit of carefully labeling everything going into storage. Many vendors don’t require you to put the date of destruction on boxes, says Pappas. So records could sit on shelves at the storage facility for much longer than necessary—and the vendor will be happy to bill you for that space.

In addition, consider the costs of retrieving records and share those numbers with other departments. “HIM departments have some responsibility to be innovative and to educate their users about what things cost. When we tell the ER it costs $35 to bring a stat record over, they’re appalled,” Pappas says.

When they know the true costs, the ER physicians are more likely to consider whether the record is really necessary, she says. For example, if a patient was at the hospital in the past year, enough information on that patient might already be in the data system.

“Most organizations have some amount of electronic information. So if I have lab results or radiology results or transcribed reports available, then I have some key pieces of the record and I don’t need to bring over the whole medical record from storage,” Pappas says.

Also, check whether the storage facility has someone on staff capable of locating and faxing certain parts of a medical record (e.g., an operative or pathology report) to you, as opposed to sending you the entire record, says Pappas. Expect a charge for it, but it may be less expensive than shipping the entire record.

In addition, understand the costs of linear versus vertical storage, and do your best to choose the most cost-effective methods. For example, many hospitals may send file cabinets full of microfilm or pathology slides to off-site storage, and there are different fees for this, says Dunn. “Vertical storage can be more expensive because it takes up a footprint on the floor and the vendor can’t store anything above it,” she says.

Be sure to keep track of how many boxes of records (and the dimensions of those boxes) you store off-site and check your invoices monthly to verify that the numbers add up. For example, if you haven’t sent new records to the vendor in the prior month, the invoiced charge for inches of storage shouldn’t change, Dunn says.

Ask for additional services
You may be able to negotiate with your vendor to include certain services in your contract, says Dunn. It certainly never hurts to ask. In addition to storing and retrieving records, she recommends that you check whether the vendor has the ability to:

  • Pull, copy, and mail records via bonded courier or certified mail to recovery audit contractors and other external auditors—and do so within a designated time frame. This will mean the records don’t have to come all the way back to your hospital first. “But make sure the vendor is trained properly to make copies of exactly what you want them to copy and that there’s some log of what it is they sent and when they sent it,” Dunn says.
  • Provide scanning services at competitive rates. The vendor’s prices should be even more competitive because the records are on-site. After scanning, you may need to pay for destruction fees.
  • Segregate your organization’s storage area from its other clients’ space. The vendor may try to economize on the cost of storage, but there’s a cost of doing business, and having a segregated area makes sense for healthcare facilities, Dunn says.
  • Provide a log of records received on initial intake. Sometimes there is a charge, but if you provide the vendor with an electronic file or an electronic way for it to capture that information (e.g., a bar code), the cost should be minimal, Dunn says. She also suggests asking the vendor to provide periodic inventories at no charge thereafter.

In general, ask plenty of questions and be sure you understand the details of the contract. “I think most vendors respect a customer who asks questions,” Pappas says. It is appropriate to ask to see where your records will be stored. You also need to know how you’re going to communicate with the vendor, and you should be guaranteed a timely response, she says.

Editor’s note: This article was originally published in the March issue of Medical Records Briefing. E-mail your questions to Senior Managing Editor Andrea Kraynak at

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