Electronic Health Records: Money Pit or Bang for the Buck? The Economics of EHR

Electronic Health Records: Money Pit or Bang for the Buck? The Economics of EHR

Guest post by David Farrell, PA Consulting Group.

In the past decade, academics and industry experts have published conflicting reports on whether electronic health records (EHRs) actually save money. Recent studies based on large, historical data from diverse providers suggest that EHRs haven[i]’t decreased costs[ii] [iii]  – contrast this with cost benefit analyses published back in 2003 that predicted EHRs would save around $15,000 to $20,000 per primary care physician per year[iv][v]. In addition, multiple vendors, academics and industry experts have published positive case studies on how EHR provides a positive return on investment or saves money in areas such as billing and staffing costs.

So why the divergence? Are providers simply not achieving what we expected in 2003? Are the positive case studies overly selective? Is it a case of what’s true for some is not true for all?

EHRs actually enable more productivity and satisfy more demand, and this is what drives cost. For providers, this also means driving up revenues.

Supply and Demand

One reason healthcare costs have not uniformly decreased is that more (efficient) supply from EHRs leads to more demand.

Firstly, consider the Jevons Paradox: energy efficiency leads to greater consumption (e.g. as air conditioning becomes more efficient and affordable, more air conditioners are purchased.) Taking a healthcare analogy, data center capacity has grown exponentially and EHR functionality has improved in recent years. In response, providers are storing larger amounts of detailed patient data and accessing greater capabilities. For example, providers are integrating IT and medical devices for real time patient data monitoring, storage and beyond. Additionally, a 2012 study supports this theory in that physicians ordered 40 percent to 70 percent more radiology exams with EHRs than with paper records. The efficiency and capability of EHRs (supply) have driven up the demand.

Secondly, I’ll paraphrase Parkinson’s Law: work expands to fill the time available. Demand for services in (public) healthcare will always outstrip the supply. This is because there is a backlog of patients waiting for currently available services and once this backlog is cleared, expectations of what should be provided will increase. It is therefore important to recognize that current health care reforms may not automatically decrease costs with EMRs in place, as demand will then increase too.

Increased demand means increased cost.


So if cost doesn’t uniformly decrease with EHRs, does anything improve? Productivity does. A 2009 Wisconsin Medical Journal Study[vi] found that physician productivity increased about 20 percent and remained at that sustained level of productivity following EHR implementation. This means that more patients were seen on a given day. Not bad, considering the average wait time to see a physician in the U.S. is 20 days.

Increased productivity, however, leads to increased costs.

Payers vs. Providers

Another way to explain the divergence may lie in who we’re actually talking about. Do we mean payers like Medicaid/Medicare or providers like primary care physicians or hospitals? Studies often reference cost but fail to discuss revenue increases that an EHR system delivers to providers. Seeing more patients means more revenue to providers. In addition, providers with integrated EHR and billing benefit by eliminating billing errors and enabling better revenue protection. Payers, however, don’t share these financial benefits as more procedures means their costs are rising.  Indeed, payers may not realize the full cost savings of EHR until providers move away from pay-per-procedure to quality based payments.  Quality based payments of course, are next to impossible without the enabling reporting capabilities of EHR systems.

So when we talk about the cost of EHR systems, it’s important to distinguish who we’re talking about. In addition, when comparing pre- and post-EHR situations, instead of simply asking: “What’s the cost?” we should also be asking “What do we get for this cost?”

David Farrell is an IT strategy specialist at PA Consulting Group, focusing on project management and strategy for healthcare providers. He has worked with accountable care organizations and county-run hospitals on both U.S. coasts, assisting clients in building business cases, managing project benefits and forecasting the long term infrastructure impact of EHR. 


[i] Physicians Electronic Access To Patients’ Prior Imaging And Lab Results Did Not Deter Ordering Of Tests , Journal Of Health Affairs, 2012, http://content.healthaffairs.org/content/31/3/488.abstract

[ii] Hospital Computing and the Costs and Quality of Care: A National Study, American Journal of Medicine,2010 http://www.pnhp.org/sites/default/files/docs/AJM-Himmelstein-Hospital-Computing.pdf

[iii] Electronic Medical Records: Lessons from Small Physician’s Practices, iHealth Reports, 2003  http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/E/PDF%20EMRLessonsSmallPhyscianPractices.pdf

[iv] A Cost Benefit Analysis of Electronic Medical Records in Primary Care, American Journal of Medicine, 2003, http://www.amjmed.com/article/PIIS0002934303000573/fulltext

[v] Implementing an Electronic Medical Record at a Residency Site: Physicians’ Perceived Effects on Quality of Care, Documentation, and Productivity, Wisconsin Medical Journal, 2009, http://www.wisconsinmedicalsociety.org/_WMS/publications/wmj/pdf/108/2/99.pdf

Better, Safer Healthcare Stories Are Inspired By Technology

Better, Safer Healthcare Stories Are Inspired By Technology

Guest post by Steven Jackson, chief operating officer, ExperiaHealth.

Every patient story is unique with engaging plots, complicated characters, emotional twists and turns, but more often than not there is a recurring theme.  Somewhere in the healthcare narrative there are gaps in communication. In fact, according to the Joint Commission, an estimated 80 percent of medical errors are caused by breakdowns in communication.

Whether the disconnect is between internal and external care teams, a patient and a nurse, or in my case, a family member and a physician, any missed or misunderstood care directives can leave the patient and the health system vulnerable.

I was certainly feeling vulnerable when I arrived home after taking my son to the doctor and met my wife immediately at the door asking, “What did the doctor say?” As I recollected the physician visit and details of my dialogue with the doctor, I quickly realized I wouldn’t have all the answers she wanted to hear. I remembered most of the instructions, which I paraphrased quite succinctly. However, my wife, who is a very caring mother with a fondness for details, wanted to know exactly what the doctor said.

A similar story was told by a colleague. He described how his father was discharged from a local hospital after suffering a heart attack. At discharge, while tired and stressed from being in the hospital, his father and mother were given 30 minutes of clinical, complex information detailing his post-hospital care and medication needs. Later, when the couple tried recalling the discharge instructions to relay to my colleague, they each remembered the directives very differently – a misunderstanding that put his father at risk for an adverse event.

The CDC reports that nine out 10 adults who receive medical advice find it incomprehensible and do not know what to do to take care of themselves – creating a revolving door for institutions.

Stats and stories like these, as well as looming penalties for performance, are driving the development of innovative healthcare applications and patient portals that improve patient and family engagement, understanding and compliance of discharge instructions and other care directives. These same technologies are also improving patient safety and satisfaction, ultimately driving HCAHPS scores up and avoidable re-admissions down.

Cullman Regional Medical Center in Alabama recently reported a 63 percent increase in HCAPHS scores for questions related to discharge communication and a 15 percent reduction in re-admissions after re-engineering its discharge process using the Good to Go solution by ExperiaHealth. Good to Go blends multimedia technology with healthcare best practices to engage caregivers, patients and families in the care plan during and after a hospital stay.

During hospital discharge, Cullman Regional caregivers use smart devices and the HIPAA/HITECH compliant Good to Go application running on the device to capture “live” care instructions at the patient’s bedside. After the discharge session, the nurse asks the patient to listen to the captured communication, and a dialog between the caregiver and patient occurs to clarify any confusion. This conversation is also captured by the application, adapting discharge instructions in the patient’s own words and breaking down health literacy barriers. The recorded audio instructions are then made available 24/7 for the patient, family or a subsequent caregiver to listen to and review from any landline phone, mobile device or computer using unique login credentials.

In addition to audio instructions, caregivers use the solution to attach instructional videos, images and documents and post those educational resources on the patient’s personal Good to Go website to improve compliance and reduce risks. For example, if a patient has congestive heart failure, a caregiver can use the solution to capture images of baseline swelling in the patient’s leg to help him or her monitor and manage their condition. Follow-up appointments and medication lists can also be managed in one location via the patient’s personalized Good to Go website.

With access to live care instructions and multimedia education, a couple can leave the hospital feeling secure about the discharge plan, and a father can be confident replying to an inquiry by his wife after their son’s physician visit. Hospital caregivers can also feel better because they can use the solution’s monitoring tool tracks if and when patients access their instructions, allowing Cullman Regional to gauge compliance and identify potential risks for bounce backs. This valuable information also plays a vital role in performance analytics and patient follow-up call management available via the Good to Go solution, which helps unify quality, safety and satisfaction initiatives.

By taking advantage of technology already in use and at the fingertips of caregivers, patients and families, hospitals like Cullman Regional are creating impressive last impressions and extending care beyond the hospital walls. And while technology cannot replace human interaction, it can certainly help enhance the exchange and create market differentiation as well as lasting loyalty – especially for those patients whose journeys were safer because there were no communication gaps along the way.

Healthcare stories with seamless transitions are the ones with the best endings.

Preparing for Coordinated Care: An HIT Framework

Preparing for Coordinated Care: An HIT Framework

Guest post by Jordan Battani, managing director of CSC’s Global Institute for Emerging Healthcare Practices.

There’s a sea change underway in healthcare in the United States, an effort that’s focused on addressing the challenge to improve healthcare quality and outcomes for patients and the population at large, while at the same time controlling and reducing healthcare cost inflation. It’s no small task, and there is no shortage of opinions about how best to make the changes that will be required.

At the core of the discussions, however, is a general understanding that a fundamental change in the traditional orientation to healthcare, and healthcare financing is required. Episode focused, fee-for-service medicine has led to a systematic bias against coordination and collaboration.

The need for change is particularly acute in a world that is increasingly defined not by acute episodes of illness and injury, but by the constant demands placed by the burden of managing the impact of chronic disease. Transformation requires an expansion from the traditional focus on patients and episodes to include populations and the entire care journey experience from wellness, through illness and back again.

In short, an expansion:

The core competency in this new orientation is the ability to practice coordinated care and to manage the financial arrangements that support it. Medicare, and many commercial health plans, refer to this competency as “accountable care.”

Practicing in this new environment requires the ability to expand care beyond the traditional boundaries of a linear provider to patient interaction during a discrete episode of acute illness or injury. In a healthcare landscape characterized by long-term chronic disease, healthcare must include the patient’s lifestyle, environment and long-term personal health risk factors in care planning, delivery and management.

Delivering that care plan cost effectively using complex clinical technologies and innovations requires coordinating and integrating the activities and information from multiple care settings and many different providers. Financing a coordinated care delivery system requires expanding payment for activities beyond fees for the services rendered for a discrete episode to include compensation for the effort and the value delivered from collaboration, coordination and integration across the continuum of settings and providers.

Not surprisingly, the tools and capabilities required for practicing in the era of coordinated care are more complex and far reaching than those required in the traditional episode-based fee-for-service model.

Successful coordinated care requires:

In an environment characterized by multiple, conflicting and interlocking mandates and transformation requirements it’s a difficult task to take on a new set of organizational and technology strategies, and tempting to focus instead on meeting the deadlines and details of the individual programs and requirements.

There is no single road map to success and the timeline, priorities and projects for each organization will vary based on their circumstances. The only certainty is that under the current set of clinical quality, patient safety and financial pressures and requirements, organizations that fail to develop and demonstrate coordinated care capability risk long-term clinical and financial failure.

Jordan Battani is the managing director for CSC’s Global Institute for Emerging Healthcare Practices, the applied research arm of CSC’s Healthcare Group. Battani has a strong professional track record in leveraging technology solutions to deliver business value.

Trends in Doctors Accepting Patient Emails

Trends in Doctors Accepting Patient Emails

Guest post by John Sung Kim, CEO of DoctorBase.com.

As been reported here and many other industry publications – patient use of mobile health apps is skyrocketing. So why can’t we email our doctors yet?

Early statistics

Since 2010, vendors of patient communications applications have seen a gradual uptick in healthcare providers who accept email from patients, but they are often for special circumstances and providers generally do not make their email address available to their entire patient tablet. When asked in an informal survey of 500 small to medium sized practices (SMB defined here as one to seven doctors in a single location) the top three reasons for not accepting patient email in 2011 were:

1)     Lack of reimbursement

2)     Potential to divest the practice of traditional in-office revenue

3)     Security issues

In the same survey when asked how many doctors offered their email address to their patients the respondents indicated –

1)     All my patients – less than 3%

2)     In special circumstances – more than 22%

3)     Rarely – more than 74%

4)     If they were paid for their email response time – 46% said they would accept email from their general patient tablet if the reimbursement came direct from patients and bypassed payer paperwork.

That same survey in 2012 yielded as the top three reasons for not accepting patient email —

1)     Lack of reimbursement

2)     Potential to divest the practice of traditional in-office revenue

3)     Security issues

When asked how many offered their email address to their patients the respondents indicated –

1)     All my patients – less than 6%

2)     In special circumstances – more than 37%

3)     Rarely – more than 56%

4)     If they were paid for their email time – 66% said they would accept email from their general patient tablet if the reimbursement came direct from patients and bypassed payer paperwork.


The lack of reimbursed time continues to be the primary concern for providers as they wrestle with the increasingly mobile and digital world of communications, with divesture of traditional in-office revenues as a close second. One thing not mentioned in the stats above was that “HIPAA compliance and security concerns” was a distant third behind economic factors in both annual surveys.

While we saw the explosion of smartphone sales from 2011 to 2012, the number of doctors offering their email address to their general patient tablet grew very little (about 3%) while the biggest gain was in doctors who offered their email in “special circumstances.”

From this sampling we can potentially infer that economic forces – not security – is the primary driver in doctors offering their patients email services. And who can blame them – would we work for free?

Sampling limitations

Most of those surveyed were small to medium sized (SMB) group practices that ranged from specialties such as OB/GYN to Internal Medicine. As such, the statistical significance is more relevant to this segment of the provider market. As well, the patient communications industry is in its infancy and coming regulatory changes with HIPAA Omnibus 2013 and Meaningful Use Stage 2 may affect provider behavior in the next 24 months. Surveys conducted using Surveymonkey.

The inventor of the first Cloud-based contact center and founder of Five9.com, John Sung Kim is the current CEO of DoctorBase.com – the leading provider of mSaaS (Mobile Software as a Service) that allows healthcare providers to easily monetize mobile communications with patients.

Medical Students Using Mobile Devices Continue to Get Better Results In their Studies

A tremendously interesting and probably important experiment has been taking place at the University of California, Irvine since 2010.

Since then, the university has been using iPads to improve student learning and the program is successful. Specifically, the med students that are part of the program that is using the mobile devices are getting better results, developing apps for the technology and even working to improve healthcare.

Named the “iMedEd Initiative,” all of the students enrolled in the college’s med school received iPads with their textbooks already loaded on them. According to the report, as featured on TabTimes, “The iPads offered access to lecture podcasts, patient records and recorded data from digital stethoscopes, bedside diagnostic ultrasound units and a variety of other medical devices.’”

“UC Irvine reports that students taking participating in the program scored on average 23 percent higher on their exams than previous UC Irvine medical school classes, but such has been the success of the roll-out that some students are even hoping to utilize the iPad to improve healthcare across the globe,” the site reported.

One group of medical students at the school formed the “iMedEd Innovators Group” to discuss which new technologies that could be used at the medical school, and even partnered with the Donald Bren School of Information & Computer Sciences to hold a “Med AppJam” session in the aim of building iPad apps specifically for healthcare, resulting in 19 specialized iPad healthcare apps being developed by more than 100 participants at the school in just 10 days.

Other students are now looking at how pairing the iPad with a portable ultrasound unit could improve healthcare and medical education in other countries where the technology is not so readily available.

The results of this program, however, are not unique. In fact, the site Mashable recently reported that students who use touch technology, like an iPad, in the school setting advanced more quickly than those who did not use them and pair this with the fact that there are more than 2 million tablets being used in schools – a number that will increase dramatically as the technology becomes more accessible and affordable.

Clearly, it’s time for more of us to embrace the technology like they have at UC Irvine. It’s certainly a valuable tool inside the classroom, and as many of you know, it’s a valuable solution in the practice setting as well.

As technology moves, so do we and the world as we know it. With the benefits we’re seeing here, it’s clear to see that we’ve only just begun.

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