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ROI vs. EHR Implementation Costs — Is It Really Worth It?

Record keeping applications have found a static place in many different industries these days. Supply […]

Record keeping applications have found a static place in many different industries these days. Supply chain systems and customer relationship management, for example, certainly benefit from a more structured data control process. The medical business is different from most other industries, however. As EMR platforms gain in popularity, primary care physicians and small practices are asking an obvious question given the initial cost of EHR implementation. Do the savings and benefits really justify the cost?

There is no simple answer to that question in part because the technology is still growing. Cost-benefit studies are showing promising return on investment probabilities and real cost cutting advantages for medical practices willing to jump on the EHR bandwagon.

Health IT is Making Its Mark

As the country’s attention shifts to the rising cost of medical services, health IT is taking the lead with clinically focused  EMR software  in hopes of gaining control over that escalation. Implementation offers some distinctive benefits:

  • Improved productivity
  • Enhanced patient satisfaction
  • Better quality of care
  • Improved security over prescribed medication
  • Augmented compliance efforts

But what about the cost factor? Return on EHR implementation related investment is not easy to quantify, especially given the long-term measurement requirements and somewhat intangible criteria in patient care. The mandated Meaningful Use compliance is part of the federal metric system and offers some measurable factors, explains the  Journal of the American Medical Association. It is hard to put a price tag on the more prolific bonuses like patient satisfaction, however.

Healthcare organizations need to pay specific attention to some basic concepts.

  • EHR is a total business management system not just a computer database.
  • At some point, EHR will become a necessity at the federal and state levels in order to participate in data exchanges, take advantage of financial incentives and avoid penalties.
  • EHR is a capital expenditure that may not realize benefits for a year or more after the initial implementation.

Let’s Talk about EHR Implementation Costs

There are both visible and hidden costs associated with electronic medical records implementation, states EMR Industry. After the initial cost of hardware, there is recurring software licensing fees and upgrades. There will be some down time or slowing as the staff adapts to the new operational standards. Medical businesses will need either on site or third-party IT personnel to run backups, do routine maintenance and manage patient security in addition to the start-up labor costs.

Better Medicine Means a More Stable Business

EHR is really about improving the medicine. The goal is to streamline clerical procedures for better record keeping, data exchange and practice workflow. An earlier  2006 study  looked at the effect of an enterprise-wide EHR system for the Veterans Health Administration and found an improved efficiency of 6 percent per year. This included:

  • Reduced test redundancy both within the practice and with consulting specialists and medical facilities
  • Lower billing inaccuracies
  • Elimination of transcription costs
  • Better risk management with lower malpractice insurance premiums
  • Elimination of paper storage on and offsite
  • Improved office space usage

Coordination of Care

Coordination of care is one of the most practical benefits of EHR implementation, especially for patients with chronic disease. What used to require a fax machine and time is now a seamless process with advantages for both the patient and medical practice. A  2011 study  published in the New England Journal of Medicine provided evidence that EHRs improved the quality of care in a multi-provider arena focused on diabetes management.

EHR eliminates some of the silo thinking in the medical community. The radiologist has patient history, vital signs and test results when evaluating a scan, for instance. Specialists already have a full patient history in front of them during a consultation, along with any labs the primary care doctor ordered. Physicians within the same practice see the diagnosis, tests and treatment plan ordered by colleagues when doing a follow up.

Electronic medical records  improve metrics used to gauge quality of care and predictive modeling, as well, reports  Clinical Informatics. Even public health organizations have data to assess the needs of the community at large.

So, What is the Return on Investment for EMR Software Implementation?

The quantitative benefits outweigh the expenditure. Medical practices can look forward to improved revenues through increased consults, growing patient pools and financial incentives while seeing a long-term reduction in operating expenses.

A 2009 study by the Medical Group Management Association probably best puts it into perspective. Of the over 1,300 medical professionals surveyed, the independent practices reported revenue increases averaging around 49,916 dollars per physician after switching over to EHR from a paper-based practice. That is strictly revenue and doesn’t take into account the reduction in operating costs. Clearly, EHR implementation is a cost cutting, practice building solution for even small medical offices.


Alok Prasad

Alok Prasad is the founder and President of RevenueXL Inc., which provides small and mid-sized clinics with a one-stop shop for medical solutions including Electronic Medical Records Software, Medical Coding, Coding Audits, and Medical Billing services. He writes on topics of relevance and importance to Physicians across different specialties.

RevenueXL has been in the business for over 8 years and enables its clients to accelerate their revenues by using a unique blend of process knowledge, mature and proven technology and business solutions, and some of the most gifted individuals that allow us to deliver exceptional quality and value.

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