Wednesday, December 3, 2008

The Costs of Accelerating EHR Adoption

Many studies have demonstrated that Electronic Health Records (EHRs) can improve quality and reduce costs through coordinated delivery of the right care at the right time. The escalating cost of healthcare and the downturn in the economy are the perfect storm to create real urgency for implementing Healthcare Information Technology.

Many clinicians cannot afford EHR implementation. Stark safe harbors help physicians affiliated with hospital systems but do not help unaffiliated clinicians.

An early priority for the Obama administration should be decisive, rapid action to accelerate the adoption of EHRs via broadened Medicare/Medicaid incentives to implement and use Certification Commission on Healthcare Information Technology (CCHIT) certified products. Federal funds are needed to subsidize implementation teams and locally credible EHR champions who inspire and motivate providers at the grass roots level in each State. In order to receive funding, States should have to create EHR adoption services that effectively and efficiently deploy EHRs to achieve low failure rates and meet quality/safety goals. Funds should include direct payment, low interest loans, tax credits, pay for performance incentives, and penalties for delayed adoption. Grant funding, however, is probably not an effective vehicle, since it doesn't give Federal/State governments enough control, nor is it usually focused on sustainability.

How much is needed? Our Massachusetts experience suggests that approximately $350 million is needed to complete the rollout of EHRs in our state - about $50,000 per practicing unaffiliated clinician.

Here are the breakdowns of community EHR implementation costs at BIDMC/BIDPO, the Massachusetts eHealth Collaborative, and the New York Department of Health and Hygiene EHR project.



Costs per licensed userBIDMCMAEHCNYC
Software5,99810,8004,500
Hardware10,56117,78315,000
People29,64117,66016,000
Total46,20046,24335,500

Assumptions:
1) Software costs include only the direct licensing costs for EHR and non-EHR software. MAeHC software costs are higher because several different EHRs were implemented, creating more complexity.
2) The NYC costs do not include non-EHR software
3) Hardware includes practice-level and central-site hardware.
4) People includes direct services from staff, whether vendor-provided or sponsor-provided.
5) These costs are for implementation only. The average annual per physician support costs are roughly $5,500 per user for BIDMC and $6,500 per user for MAeHC.


Further detail:
1) BIDMC includes 300 docs. MAeHC includes 575 docs. NYC includes 1,200 docs.
2) The people costs are not directly comparable, because neither MAeHC nor NYC have accounted for the entire provider-side of the costs of hardware integration. For example, with MAeHC, vendors designed and the hospitals implemented the local ASP environments, but we do not know the labor cost at the hospitals. With the BIDMC project all costs are explicit because the ASP environment was outsourced. The NYC practices are purchasing hardware on their own, so we do not know the exact costs.
3) BIDMC will get some scale benefit once the number of implementations grows. The per user people costs include the design and build of the central site and the cost of the Project Management Office.
4) BIDMC actual hardware costs will probably be higher based on the implementations to date because the practices are purchasing more equipment than original budgeted ­(i.e. more printers, laptops, and tablets for support staff)

As a country, we have enough experience with live implementations to know what needs to be done to implement EHRs and the cost of doing it. The time for grants and experimentation has passed. To borrow a marketing slogan, the time is right to "Just Do it" by providing financial incentives.

9 comments:

Brendten Eickstaedt said...

Thanks for the informative post. When you say "per user" do you mean literally per user, or really more per practice. In other words, if there is a practice with 2 docs, would these numbers be doubled?

Thanks again.

unfoldingscene said...

Nice article. Ever since the Red Hat Expo in Boston, this has been a serious interest of mine.

John Halamka said...

By user, I mean "licensed provider". A 2 doctor practice would be double the cost. However, we do not charge for support staff.

Wendell Murray said...

The costs listed are much higher than they need to be.

Software licensing costs can easily be zero through suppliers such as PracticeFusion or open sources suppliers or very low such as the fee charged by Amazing Charts. Fees for any commercial system are open for negotiation due to the large number of competitors for the same business.

The only high cost for hardware that is more or less unavoidable is the cost of tablets which are still quite expensive.

Most systems - whether ASP-types such as Practice Fusion which only requires a web browser or systems that run on an on-site server - only require used equipment or thin clients that cost at most $100-$200 per unit. There is an abundance of good used equipment on the market. Even used servers that have plenty of processing power and storage cost at most $1,000.

Commercial systems tend to be specified using server software from Microsoft that requires ludicrously expensive licenses. There are some that run on Linux (all can be converted) and that use MySQL or other RDBMSs that have no licensing costs. A Linux distribution which is license-free can be used on the client machines even if a Microsoft server product must be used on the server machine.

"Soft" costs for implementation also tend to be excessively expensive with vendors which charge $175-$200/hour of "consultant" time. Knowledgeable "consultants" who are interested in fast, competent implementation rather than generating revenue to cover corporate overhead are available for $100/hour or less with far fewer hours needed.

As a result much of the "people cost" which I assume includes imputed client time, but may not, can be reduced much below the $16,000 to $30,000 range cited with some intelligent research and careful selection of advisors.

There is an abundance of generic information on vendors, on vendor offerings and techniques for evaluation that a bit of research can uncover, although any physician or physician group should hire an independent (i.e. with no financial or other ties to software vendors) advisor to assist in evaluation and implementation. Self-implementation inevitably leads to failure.

Amy said...

What we have done at our facility is to use an EHR that is fully integrated. This has decreased costs tremendously! We are using Epic Systems - inpatient, outpatient, ambulatory and have been for several years. Because we committed to an integrated system and we have not had to purchase any other like systems. The cost per user or practice x 2.5 support staff may be an important factor but most important is picking the right system - for the longterm.

Eddy said...

Are there any Open source EHRs systems that may help lower the cost of implementation?

Lay said...

I looked into electronic medical records for myself and found that MDFI Symbol www.Medefile.com was very affordable and professional.I cannot see why the clinics and all other associates use this company.

thanks,
Joe

b said...

NueMD by Nuesoft Technologies offers its own EMR and has partnerships with many EMR companies. Nuesoft Technologies Inc. is the leading provider of Internet-based medical practice management software and medical billing software

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