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The Benefits — and High Costs — of EHR Implementation

Posted on April 3rd, 2017

When the ACA was rolled out, it included mandates to implement electronic health records, or EHRs, by 2015 or face penalties. Many private practices waited to implement EHRs because of the high upfront cost associated with them, as well as the amount of hours per physician it took to get them set up, costing the practice revenue because of the time missed with patients. Now that most practices have implemented EHRs, there are studies that show despite the upfront costs hurting the practice’s capital, the investment does eventually produce a return.

At the outset, it is apparent that the upfront cost is saddled with the practice while the benefits are felt by the insurance companies and patients. Insurers save money by reducing unnecessary tests, and patients benefit from better coordination of their care and fewer medical errors.

According to the Agency for Healthcare Research and Quality’s 2011 study,1 the actual cost of implementing EHRs “in an average five-physician primary care practice, operating within a large physician network committed to network-wide implementation of electronic health records, is about $162,000, with an additional $85,500 in maintenance expenses during the first year.” These figures include an average of 134 hours needed per physician to prepare to use EHRs during patient visits, which is a lot of time away from patients.

While that is a large upfront cost of capital and time, the Medical Group Management Association reported in a 2009 survey that efficiency gains from the elimination of paper charts, as well as transcription savings, better charge capturing and reduced billing errors, results in a median revenue increase of $49,916 per full-time physician after operating costs. After five years of EHR use, practices reported a median operating margin of 10.1 percent higher than that of practices in the first year of HER use.

Another study2 has shown the financial impact of EHR implementation has resulted in increased revenues in ambulatory practices. In that study, researchers measured the number of patients seen by each practice, as well as the reimbursements related to those visits, for a period of two years after implementation and then compared it to the period before implementation. This study showed that productivity losses were seen across all specialties to the tune of an average loss in practice productivity of about 108 patients per quarter. Despite this, revenues increased even though there was no evidence found that the practices were upcoding or increasing the reimbursement rates. What they found was that the EHR implementation had a significant impact on reimbursement, with practices billing an average of an additional 94 ancillary procedures per quarter.

The authors of the study ultimately believe that the solution to productivity losses lie within developing the analytics that will be used to facilitate a population health management approach to patient care. They noted, “In this way, they could focus their limited patient encounter capabilities on those patients in which they could have the greatest benefits. This approach would also position the practices to take advantage of value-based reimbursement.”

 

1 Divenere, Lucia, MD. “The Affordable Care Act and the Drive for Electronic Health Records: Are Small Practices Being Squeezed?” MDedge.com. MDedge, 25 July 2013. Web. 1 Oct. 2016.

2 Bassett, Michael. “JAMIA: EHR Implementation Results in Increased Revenues, but Reduced Productivity.” CMIO.net. N.p., 28 Aug. 2014. Web. 1 Oct. 2016.

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