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The Costs of EHRs

By December 17, 2010Commentary

The meaningful use initiative has given huge impetus to the adoption of electronic medical records by physicians.  This is a major project, particularly for smaller offices.  A new brief by CDW Healthcare gives estimates of the costs and benefits of an EHR conversion.  The brief was based on publicly available information from trade associations or other groups and a survey of 200 physician group practices which were not currently using an EHR.   (CDW Brief) One thing that was somewhat astounding is that only 26% of these practices had actually selected an EHR solution–only 16% of the small (1-3 physicians) offices had.  These practices simply aren’t going to be ready in time for the incentive payments next year.

The biggest concerns physicians had about EHRs were the hardware and software costs, followed by staff training time, workflow changes, HIPAA compliance and loss of revenue in the changeover.  These practices had an average of over 5000 patient records which would need to be converted to digital form, which is a substantial task in itself.   CDW estimated that the initial year cost of implementing an EHR, both outlays and lost revenue, would be about $120,000 per physician, with recurring costs of about $30,000 a year.  In subsequent years, it was estimated that productivity improvement of about 15% would add $151,000 per physician in revenue, which if true would likely provide a healthy return on the investment, not counting the meaningful use incentive payments.

Adopting a hosted solution appears to be the cheapest method of EHR implementation.  Interestingly, many of the surveyed practices do not currently have much security, so a hosted solution would solve that issue as well.  Based on other research, it is possible these estimates are too low on the amount of disruption and lost revenue potentially caused to a small practice and may be overstating the potential revenue gain.  It often takes even large, sophisticated practices several years to get their workflows reconfigured and the staff back to even their former productivity.

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