Exploring the costs
Bookmark and Share

EHR savings may seem distant, but are possible

EHR adoption is an expensive proposition for any practice, and it can be especially difficult for smaller practices. According to the Medical Group Management Association’s (MGMA) report on EHR, financial concerns loomed large for physicians still using paper charts, even as advancing technology paves the way for less expensive options. A majority of the survey respondents said that both insufficient capital resources and the expected loss of productivity were hurdles preventing physicians from adopting EHR.

So, when EHR is touted as a “money saver,” it may seem a ludicrous proposition.

Yet there are recent studies that suggest that despite high upfront costs the right EHR system, one that has been fully integrated and optimized, can actually save physicians money in the long run and increase productivity that can lead to further revenue.

Initial considerations important

One of the first questions dermatologists can ask themselves is whether to buy or lease an EHR system. There are compelling arguments for each, involving personal needs and preferences. Mark Kaufmann, MD, associate clinical professor at Mount Sinai School of Medicine, who also serves on the advisory board for Modernizing Medicine, decided leasing, rather than purchasing EHR software, was more cost-effective and useful for him. He discovered that even when entering into contracts with big-name companies, the future is never entirely certain. “I don’t purchase software anymore from anyone because I did the first time around when I did all my due diligence and bought into a company owned by Microsoft, Pfizer, and IBM. Who would think that wouldn’t last? But it didn’t,” Dr. Kaufmann said.

After this experience, he decided leasing software was the most practical option. “They [EHR vendor] may not last five years; I may not last five years,” he said. Besides the fear that an EHR company might go under or get swallowed by a larger company is the fear that in a world of rapidly changing technology, expensive hardware or software may quickly become outdated.

“I didn’t look at cost because I knew it was going to be expensive one way or the other,” said Mark McCune, MD, a dermatologist in private practice at Kansas City Dermatology in Overland Park, Kan. “What I looked at was over the long-term picture, who’s still going be there on the field playing with me five years, 10 years from now.”

Before committing to owning hardware and software, dermatologists should determine whether they want to spend more money upfront to have a client-server system or pay an on-going monthly fee for an ASP or cloud-based system. Both systems have their advantages and disadvantages; it’s about doing the research and going with the system that makes sense to each dermatologist.[pagebreak]

For smaller practices, a cloud-based system may be more cost-effective. “They generally have much lower upfront costs,” said William S. Underwood, MPH, senior associate for the Center for Practice Improvement and Innovation at the American College of Physicians (ACP) in Washington, D.C. “Rather than paying a large chunk of change at the beginning, you’re charged a monthly access fee, and that helps spread the cost out,” he said. Underwood manages the health IT education efforts of the ACP and leads the research efforts of AmericanEHR Partners.

Federal incentives a prime motivator

The Centers for Medicare and Medicaid Services (CMS) incentive programs have further spurred EHR adoption by offering incentives for demonstrating meaningful use of EHR. Eighty percent of physicians surveyed in the MGMA report who already used EHR intended to participate in the meaningful use incentive program while 63 percent of paper chart users also planned to participate in the incentive programs.

According to the MGMA report, the median capital cost of implementing an EHR system per full-time-equivalent (FTE) physician is $30,000, including software, hardware, cabling, telecommunications upgrades, building modifications, and training. The median operating cost per physician per month is $550, including hardware and software maintenance. Not only has EHR become more affordable, but it also means that it’s possible for physicians to recuperate capital costs through federal stimulus money. 

For Dr. McCune, the CMS stimulus money was his driving force for adopting EHR. “I was not at all enthused about it, but I figured it was now or never if I was going to be able to take advantage of that financial incentive.”

While CMS stimulus money remains an attractive, worthwhile, and important incentive, it’s just one aspect of many in the financial picture. Dermatologists should not hope to recoup their EHR investment through the incentive, let alone profit by it.

Dr. Kaufmann responded, “With respect to the federal incentive money offered through ARRA, I would advise everyone not to implement an EHR in the hopes of making’ $44,000. EHR can only benefit a practice financially by fitting a practice’s workflow and actually increasing efficiency.”[pagebreak]

Disrupting your workflow the least

During the initial period of EHR implementation, dermatologists may notice a decrease in patient volume as they adjust to the time demands inherent with new electronic systems.

“At the beginning, it’s a painfully slow process to get up and running, but once you learn the system and become comfortable with it, you can get back to a reasonable volume of patient flow,” said Dr. McCune. In fact, KC Dermatology was able to return to a normal patient volume in about two weeks without losing much productivity.

Underwood noted that “most physicians take at least three months to return to normal productivity and it can go up to or over six months.”

Nevertheless, achieving productivity expediently is largely dependent on adequate training. The better trained the physicians and staff, the quicker they can return to normal patient volume. A recently released report by the AmericanEHR Partners (www.americanehr.com) suggests “there is strong evidence that clinicians do not receive adequate training to effectively use their EHRs.” Nearly half of the respondents surveyed by AmericanEHR Partners said they had received three or fewer days of training. The survey also indicated that a minimum of one full week was necessary for physicians to feel satisfied with their basic EHR, with even more training needed for additional features.

When asked whether EHR makes dermatologists more efficient, Dr. Kaufmann replied, “I think everyone who has been in practice for more than five years has developed a workflow that works for them. And there’s no computer system that can be molded into that shape. The trick is to find the system that disrupts your current workflow the least. And if you can do that, then you’ve found a winner.”

Thus, while patient volume and therefore billing may drop off initially, there’s much to suggest volume can bounce back with better workflow, if given the proper attention up front.

Inevitable expenses in implementation

“It’s going to be expensive any way you do it,” said Dr. McCune, referring to the cost of implementing EHR at KC Dermatology. Anticipating this, they tempered some of their upfront costs by implementing EHR in a segmented approach. Karen Eggers, practice administrator at KC Dermatology, said, “We trained part of our staff while the rest of us worked the old way, then trained the other part of the staff while the others worked the old way.” By the end of the second week, this segmented approach had the practice running at near its usual pace, she said.[pagebreak]

Part of the reason EHR is costly is that it must necessarily be customized for dermatologists. Both Dr. Kaufmann and Dr. McCune expressed their frustration that there is no dermatology-specific EHR system. ”We’re not the biggest piece of the pie as physicians It’s not like we command the attention of any of these EHR vendors, and it’s very tough to tell them what our needs are and to get them addressed,” said Dr. Kaufmann.

“You end up having to commit to the likelihood that any system you buy you’ll have to customize it yourself,” said Dr. McCune.

Optimization can lead to return on investment

The MGMA report repeatedly indicates the significance of optimizing EHR use. Underwood defined “optimization” as a practice that’s using all of the features within an EHR system, including all the higher-level features. Many physicians who purchase an EHR system don’t actually use many of the functions, he said. In order to see the financial benefits, dermatologists must take advantage of all the advanced capabilities offered through EHR systems.

Physicians who felt they had optimized its use were not only more satisfied with their system, but also noticed either a decrease or no change in operating costs and either an increase or no change in productivity. Forty percent of physicians who felt they had optimized their use of an EHR noted a decrease in operating costs, while 41 percent noted an increase in physician productivity .

“The revenue shifts around a little bit after they’ve implemented an EHR system so that you may see a slight decrease in productivity, but you also tend to increase your accounts receivable as well as the level of coding [i.e., improvements in documentation of the visit and the care being provided] so that the revenue stays the same or increases slightly,” noted Underwood.

“I think the simplest way to look at the return on investment is to do a benchmark of all the costs before, maybe six months before they [physicians] implement an EHR system.” Underwood explained that there are various tools available to help physicians collect and measure this data. With the help of these tools, dermatologists can review all their financial records for a set time before EHR implementation and look at what’s been billed over the past year. He then suggests dermatologists compare and contrast their costs six months or a year after EHR implementation. “Then you can begin to capture the cost of implementing the EHR system,” Underwood said.