Are Studies Overestimating the Cost of EHRs?

Screen Shot 2015-09-04 at 9.39.17 AMOn August 6, this article was posted, Are Electronic Medical Records Worth the Costs of Implementation?, in the American Action Forum. The article stated that there is value in the use of EHRs but the cost is significant. They estimated nearly $164,000 for a single physician and over $233,000 for a five provider practice.

I was surprised in 2015 to see this piece. Why? Because they used data from 2009 to 2011 on practices largely using server-based EHRs. The landscape of the EHR market has radically changed in the last 5 years. There are a wide range of more affordable, cloud-based EHRs today, including some that are free.

A free EHR doesn’t mean no cost, but it does make a big dent in the vendor related costs around hardware, software and implementation. This is often true for cloud-based EHRs that do charge a monthly per provider feeas well.

I wanted to take a look at the reality of today’s options compared against what they stated in the article. The study used in the article estimated $85,500 for software and maintenance costs. With a free EHR, these costs don’t exist at all. Even with a cloud-based EHR that was $300 a month, the total cost would be $3,600 per provider. These solutions generally include software, implementation, upgrades, and ongoing support.

The old estimates for hardware are much higher in the study as well. They estimated $68,000. With the considerable lower cost of technology and elimination of the servers from older system, that cost is probably more like $3,000 for a laptop, iPad and wireless router.

Where the study is probably still relevant is in looking at the hidden costs of an EHR. According to the study, thirty-eight percent of total costs are from hidden costs, including:

  1. The staff time spent at the practice for planning, training, and workflow redesign. There is also the time spent entering patient information and scanning charts. If an EHR implementation is to be successful, staff must be adequately trained and it must be implemented well. This requires time and may require cutting back on patient load for a period of time.
  2. RVUs were eight percent lower during the first six months following implementation but rebounded by four percent 12 months post-implementation. Visits per-physician FTE followed a similar pattern, dropping eight percent from pre-implementation levels during the first six months after EHR implementation, recovering to four and a half percent lower than pre-implementation after 12 months.

The thing about these costs is that they may be offset by other cost and time savings, which the article didn’t mention. For example, using patient summary sheets and ePrescribing both can result in a reduction of phone calls into the practice. That is time the staff can use for chart scanning or other implementation activities. The use of an EHR saves up to five to eight dollars per new chart, which is a significant savings for specialty practices that see mostly new patients. If a practice sees five new patients a day, that is a savings of over $6,500 a year. Transcription is often reduced or eliminated as well.

The article also didn’t mention revenue enhancements that can come from using an EHR. One study showed an increase in charges of up five percent. For the average provider that could offset around $15,000 for the first year.

Over time, physician productivity does return to normal levels along with the added savings generated by using an EHR. One study from Accenture suggested it takes about two years for physicians to get proficient. And another showed that within five years a practice increases its operating margins by as much as 10%.

There is no doubt that choosing and implementing an EHR is fraught with potential challenges. And almost everyone is at least a little afraid of change. There are plenty of reasons to take your time choosing an EHR, but in today’s marketplace cost shouldn’t hold you back. And the costs laid out in the American Action Forum article are unrealistic given where we are in 2015.

When I break it down to just cost, my estimate lands at around $33,000 for a single provider not the $163,000 provided in their estimates. And that doesn’t include any of the potential savings that may also result in the first year.

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1 reply »

  1. Well, yeah, you gotta look at baseline, and relative differential — NET cost. Workflow is workflow, whether you’re on paper or digital. Assume a representative yearly active pt panel. Assume schlepping paper charts around the office a mere 5 minutes per pt (charitably) per year (all the way back in DOQ-IT a decade ago we’d done time/motion studies on this at my QIO with some of our clients). Derive a realistic blended, fully G&A/indirect-cost multiplied avg gross labor burden. Do the aggregate annualized arithmetic.

    You can spend an obscene amount on your EHR, but you need not, and some of the fully-featured (and MU-certified) less expensive ones might well come out close to if not fully free, honestly calculated — at least in the outpt setting.