EMR Benefits: Financial

Dean Sittig, professor at UT Houston's School of Biomedical Informatics, has suggested a new set of criteria for determining ROI for an EMR implementation. Based on Koch's Postulates and Hill's criteria for causation, these criteria are designed specifically for EMR evaluation.

• Must have the hardware and software available before the effect is identified.
  • Need to at least estimate state of affairs before system is implemented…manual review
• Show that clinicians are actually using the system that could produce the effect.
• Show that the effect increases with increasing availability and usage of the system.
• Show that all obvious “alternative explanations” for the effect are false.
• Show the effect goes away when the system goes away.
• Show that a similar effect occurs when a similar system is installed and used at a similar facility.

Achieving ROI from EHRs: The value of various approaches

Modest ROI

Organizations implement the electronic health records(EHRs),then optimize. The chief medical information officer (CMIO) is charged with making the EHR work. Success is measured by whether the project is "on-time" and "on-budget" Lean Six Sigma Is the silver bullet ROIs difficult to calculate and too time-consuming to determine.

Next-Generation Value Realization

Organizations seek to optimize business and clinical result through value realization. Physician leader, such as the chief medical officer and the chief transormation officer, work with the CMIO to be accountable for value. "On-value" and "speed-to-value" will be critical measures of success. Lean will be combined with other methodologies to drive breakthrough innovation, performance improvement, and change. Financial, clinical, business strategy, and IT leaders will work together to create an organization value management strategy and approach.

Strategic Benefits

These offer substantial benefits to the organization, but at some future date. E.g. investments in networking and telecommunications offer significant future strategic benefits, positioning organizations to utilize enterprise-wide patient indexing and EMR or distributed case management technologies as they emerge.

If EMR is fully implemented and functional, the benefits they offer are substantially than a paper records. Some of these benefits are:

• Improvement in quality of patient care
• An increase patient participation in their care (making appoints, refill of prescriptions, limited access to their records.
• There will be an improvement in the accuracy of diagnoses and health outcomes-decrease of some types of medical errors
• Improve care coordination
• Increase practice efficiencies and cost savings

Arlotto (2014) defends the right that EHRs are able to provide organizations the greatest value in the future of healthcare. She argues that this can be accomplished through the involvement of business, clinical, and financial platforms within an organization. As the healthcare industry is transitioning from volume to value based payment, organizations are increasingly depending on IT applications to facilitate the progress. She explains that our current healthcare practices use EHRs as an entity that simply automates the paper record and measure value based on direct cost-benefit analysis, rather than ensuring value realized over the lifetime of the investment. Five commonly mistaken truths are further discussed in order to facilitate the transition for more efficient use of EHR.

Achieving a Positive ROI

A key to achieving a positive return on investment (ROI) when implementing an EHR system is using it for more than meeting meaningful use requirements. A 2013 study conducted by Harvard University researchers showed that many practices that implemented EHRs showed a negative 5 year ROI. Citing only 27 percent of practices which adopted EHRs would show a positive ROI. The reason for this according to their research was that many practices were not using their EHR systems effectively. The practices which showed a positive ROI were able to use their EHR in a way that increased the number of patients they were able to see in a day as well as improving their billing to reduce rejected claims. The practices which showed a negative ROI were mostly still using paper charts heavily even after implementing the EHR system. This resulted in decreased productivity on top of the expense of the system. The most important step practices must take to see a positive ROI on EHRs is to take the time to optimize their use so they can improve efficiency and reduce costs. Since the roll out of meaningful use many organizations and providers are still asking themselves if the use of this technology has improved the delivery and quality of patient care. Value can be defined in many ways and be difficult to measure. With that said organizations need to be fully committed to implementing the technology and follow up with post implementation optimization.

Incentive Programs

In recent years, many providers have factored government incentive payments into the cost analysis and final decision to purchase an EHR. The Medicare EHR Incentive Program provides incentive payments of $44,000 over five years to eligible professionals, eligible hospitals, and CAHs that demonstrate meaningful use of certified EHR technology. There's an additional incentive for eligible professionals who provide services in a Health Professional Shortage Area (HPSA). Medicare eligible professionals who predominantly furnish services in an area designated as a Health Professional Shortage Area (HPSA) will receive a 10% increase in their annual EHR incentive payments.(29)

The Medicaid EHR Incentive Program provides incentive payments to eligible professionals, eligible hospitals, and CAHs as they adopt, implement, upgrade, or demonstrate meaningful use of certified EHR technology in their first year of participation and demonstrate meaningful use for up to five remaining participation years. Eligible professionals can receive up to $63,750 over the six years that they choose to participate in the program. (11)

Beginning in 2015, Medicare eligible professionals who do not successfully demonstrate meaningful use will be subject to a payment adjustment. The payment reduction starts at 1% and increases each year that a Medicare eligible professional does not demonstrate meaningful use, to a maximum of 5%.(29)

The American Reinvestment and Recovery Act law creates two key concepts to determine whether providers qualify for the health IT incentives: they must make "meaningful use" of IT and use a "qualified or certified EHR" (electronic health record). Besides incentives to providers and hospitals, the law also creates $2 billion in health IT funding administered by the Office of the National Coordinator for Health Information Technology (ONC). A significant amount of this $2 billion should lay important groundwork to help providers use health IT meaningfully toward the goals of improving the nation's health. (14)

Financial

By consolidating information across the entire spectrum of clinical operations, from admission to treatment to labs and beyond, EMR allows for:

1. Increase in the pace of information flow including service delivery.
2. Coding/billing accuracy.
3. Better capture of charges.
4. Better documentation of patient encounters.
5. Reduction in overall administrative and maintenance costs of healthcare institutions.
6. Reduction in costs for the patient.
7. Reduction in transcription costs [1].
8. Decrease in malpractice insurance premiums.
9. Decrease in paper consumption has the potential to lead to yearly estimated savings of $1.3 billion in the U.S.
10. Reduction in overtime expenses.

The efficiency of increased information flow and documentation allow for measurable time and cost savings. The amount of time support staff save during patient encounters has been directly demonstrated in a clinical setting [2]. Furthermore, the integration of EMR systems enables for a more consistent application of medical protocols, such as those that provide guidance on the use of specific or expensive drugs. As a result, the availability of information 24 hours a day, 7 days a week, helps to contribute significantly to reduced errors, better decision-making, improved outcomes, and lower malpractice risk. In a study done by Harvard researchers, 6.1% of physicians with electronic records had malpractice settlements, compared to 10.8% without electronic records

Another feature of EMR is the capability to eliminate paper-based informed consents. Paper consents get lost or misplaced very easily and this problem contributes $3.3 billion to the cost of health care in the U.S. due to resulting operating room delays for example. Electronic informed consents also help better reducing liability risk [57].

One financial benefit of improving care through the use of Health IT might be to lower malpractice insurance costs for providers. A number of firms that sell liability insurance for physicians are offering discounted premiums to practices that use EHRs.(Congress of the United States Congressional Budget Office. (2008). Evidence on the costs & benefits of health information technology (). Washington, DC: Government Printing Office.) P. 13

Financial benefits include averted costs and increased revenues, which can be divided into three categories: payer-independent benefits, benefits under capitated reimbursement, and benefits under fee-for-service reimbursement [58].

Meaningful Use

Certified EMRs significantly aid healthcare professionals and hospitals in achieving Meaningful Use measures by means including:

• Pop up alerts to providers reminding them to ask the patient for smoking status, medical history, ect.
• Allowing providers to proactively see how they are doing and compare themselves to their peers

Several EMRs also dramatically increase the chance of hospitals and physicians collecting Meaningful Use money by providing reports to submit proof that those measures were met. When Meaningful Use measures are met and submitted, a Physician can earn up to $44,000 a year for 5 years and avoid paying penalties for not meeting the requirements

Quantitative Benefits

These are financial benefits that are clearly measurable and are attributable to the use of a particular technology. E.g. the use of EMR technology to submit claims has resulted in widely quantified cost savings for provider and payer organizations.

In 2009, the Medical Group Management Association(MGMA) reported the results from surveying 1,324 primary care and specialty practice members. These results found that independent practices reported a median of $49,916 more revenue per full-time physician than paper-based practices. In addition, hospital-owned multi-specialty facilities reported a median of $42,042 more than their paper-based counterparts.[36]

One of the most widely touted financial benefits for physician offices is elimination of transcription services, which can save several thousand dollars per physician, per year. A 2010 article published by the American Health Information Management Association urges practices to realistically gauge their probability of eliminating transcription altogether. Many practices instead opt to retain some transcription, or implement voice recognition software in its place, mitigating the effect of this factor on actual vs expected ROI (10). Voice recognition saves physicians time in their clinical practices by allowing them to dictate notes for transcription either by software or by a human transcriber. In this manner, physicians are able to document accurately in free-text, individual descriptions of clinical conditions, histories, physical exams and plans. Additionally, the traditional discrete text fields of SOAP can be filled out with a greater level of efficiency while maintaining, if not improving, noting quality.

The net benefit from using an EHR for a 5 year period was $86,400 per provider.

Reducing cost

EMR can help hospitals or patients to reduce some redundant tests. For example, EMR could reduce the number of tests conducted at KCH by 7% according estimate by Julia Driessen’s report. A 1998 study at Brigham and Women's Hospital concluded that 8.6% of the tests sampled were redundant, and if those tests were not performed, charges would be reduced by $930,000 annually. (30) A review of studies looking at possible benefits of CPOE found significant evidence of reduced laboratory test ordering in multiples studies [38]. The use of EMRs improved the utilization of radiology tests, which also reduced costs for organizations in the study.

Also, by SWOT analysis performed by Sameer Kumar. He said that nationally applied EMR can reduce paper to maintain medical records about 1.3 billion with a cumulative savings over 15 years of $19.9 billion.

Kuperman et al. (2003) upon reviewing the benefits of CPOE said that a reduction in medication errors would increase hospital savings. They found two studies showing that half of all of medication errors were due to ordering of a drug for which the patient had an allergy and the other half were because of incorrect drug and incorrect dose. (11) During physician order entries standardized computer order sets can assist physicians to select disease-sensitive drug and patient-specific dosing. Computer applications can also send alerts about patient allergies, drug interactions and monitoring of drug levels. In addition to reducing medication errors, EMR can help hospital savings on total drug costs annually by 15% just by recommending alternative drugs in the EMR reminders.

Clinical support alerts and reminders can also assist with offering alternatives to expensive medications and updates on drug dosage recommendations. A clinical decision to utilize a generic drug substitution or decrease a drug dosage frequency from twice a day to once a day can offer additional savings to a healthcare institution, estimated at $16,400 annually per provider Interventions to switch the twice-daily dosing of ceftriaxone to once-d

• Provide users with real time knowledge
• Reduce non-clinical time
• Increase patient doctor time
• Investment Motivationaily dosing at Brigham and Women's Hospital (BWH)resulted in $320,000 in annual cost savings (Kaushal at al, 2006).

Over a 5-year period and determined by the overall size of the particular health system and scope of the EMR implementation, large hospitals can potentially save between $37M and $59M.

In 2012, at the Children’s Hospital in Boston, medical waste in general was reduced by 30% resulting in approximately $1.6 M savings per year [78].

Investment Flexibility

Another potential benefit from an EMR implementation is the increase in available operating budget. Reduce in staff expenses or lower drug and maintenance costs, for example, could significantly impact a hospital or clinic operating budget (Kaushal at al, 2006).

The meaningful use of certified EHR technology is a core requirement for healthcare providers looking to qualify for the incentive payments. In July 2010, the CMS issued the final rules, setting criteria that providers need to meet, and the schedule to meet them, to qualify for the subsidies. (15)

Management Risk Disposition

The following tenets are the willingness to invest in experimental efforts.

• Provide users with real time knowledge
• Reduce non-clinical time
• Increase patient doctor time
• Investment Motivation

To reduce cost, position for capitation/managed care, and gain market share. To enable providers to take advantage of financial incentives, the Health Information Technology for Economic and Clinical Health Act (HITECH) lists related criteria related to "Meaningful Use of EHR technology". [8] In addition, the Centers for Medicare & Medicaid Services, along with the Office of the National Coordinator for Health IT requires that an EHR technology are constituted of the following five pillars as health outcome policy priorities (67):

• Improving quality, safety, efficiency, and reducing health disparities.
• Engaging patients and families in their health.
• Improving care coordination.
• Improving population and public health.
• Ensuring adequate privacy and security protection for personal health information.

Inflow

Total benefits per year are known as the annual inflow (or cash-in). If Anytown Hospital can save $2,500 from chart pull and $2,000 from transportation in the year after implementation, inflow will be $4,500 in the first year. An EHR will bring more benefits to the healthcare organization as the staff becomes familiar with the system and eliminates the initial productivity loss in the following years.

The sum of the annual outflow and inflow is the net cash flow per year.

For example, Anytown Hospital will not realize a financial benefit in the initial year of implementation. The net cash flow in the initial year is -$12,500 ($0 inflow + -$12,500 outflow).