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EMR ROI - Prognosis for doctors and hospitals: guarded

Posted by Dan Mazanec, MD on Jun 28, 2016 10:33:54 AM



Installing and operationalizing a new EMR is a major investment for physician practices and health care organizations. Earlier this year, Partners Healthcare, the largest network of hospitals and doctors in Massachusetts, announced it expected to take a $200 million hit to its bottom line over the next three years as it as it implements a new EMR at its sites which include Masschusetts General and Brigham and Woman's hospitals. Beyond the cost of the software and hardware, 600 new employees in addition to multiple consultants are being hired for the training and support needed for the launch. The system also expects to lose revenue as schedules are cut during the roll out of the new EMR. Investing in EMR technology is expected to produce returns in multiple dimensions of patient care. In an era of declining reimbursement and increasing focus on health care costs, it's essential to scrutinize the financial return on these sizable IT costs. 

EMR and Hospital Financials

A new study by Collum, et al examines the impact of EMR adoption on the financial performance of hospitals using data for the years 2007 - 2010 obtained from the American Hospital Association (AHA) and the Centers for Medicare and Medicaid Services (CMS). Since potential financial benefits attributable to the EMR may take time to appear, the authors evaluated changes in total margin, operating margin and return on assets 2 years after EMR implementation. 88% of the hospitals were not-for-profit and 93% were non-teaching. Mean hospital size was 178 beds. The study found that hospitals that moved from no EMR to a comprehensive EMR in all areas of their hospital saw a significant improvement in total margin but no change in operating margin or return on assets. It's been widely suggested and anticipated that EMR would improve financials by reducing unnecessary lab and imaging costs while improving coding accuracy and charge capture. Without improvement in operating margin, it's clear that didn't happen. The improvement in total margin was almost entirely the result of meaningful use incentive payments. Absent this temporary additional revenue, costly investment in EMR technology didn't result in any significant financial return to hospitals. As we move into the era of the Medicare Access and Chip Reauthorization Act (MACRA) in 2017 with steeper incentives and penalties for performance by 2019, the financial impact of new investment in EMR technology deserves careful analysis.

EMR and Outpatient Financials

Studies on the financial impact of EMR implementation in the outpatient setting yield similar findings. A 2011 analysis found it cost $46,569 per physician to roll out an EMR in a large primary care practice network in Texas. A more recent study of 49 primary care practices in the Massachusetts eHealth Collaborative evaluated the 5 year return on investment (ROI) of EMR adoption. Established in 2004 with the support of the American College of Physicians and supported by a $50 million grant from Massachusetts Blue Cross and Blue Shield, the collaborative was one of the largest EHR pilot programs in the U.S. From a purely financial viewpoint, the results aren't pretty. The average physician lost $43,743 over 5 years. Only 27% of practices demonstrated a positive ROI. Practices with a positive ROI increased revenue primarily by increasing patient volume and enhanced coding of charges. Larger practices (greater than 6 physicians) fared better than smaller ones. The study period predates the meaningful use (MU) but the authors noted that $44,000 in MU incentives would barely offset the costs of EMR adoption.  

Another study tracked reimbursement and productivity in 30 ambulatory multispecialty physician practices for 2 years following adoption of an EMR. Reimbursements significantly increased despite a decline in the number of patient visits (18 fewer visits per physician per quarter). The primary reason for positive revenues was an increase in procedures performed (94/practice/quarter) including EKGs, ultrasounds, immunizations, and venipunctures. Increasing revenue by performing more procedures may be  an effective strategy in a fee for service world. It's not a formula for success in a value based health care environment.

Can the EMR really generate a positive ROI in a value-based world? 

Can the EMR contribute to an improved financial performance for physician practices and hospitals? It's possible only with a creative, top to bottom  reimagining of the technology itself. In most settings, today's EMR is primarily a documentation tool with a dab of clunky clinical decision support (CDS) typically provided in the form of best practice alerts (BPAs) or links to guideline documents. Multiple recent studies attest to the low utilization of these versions of CDS by the busy clinician. Requiring innumerable clicks documenting information at times irrelevant to the immediate encounter may support a higher billing code. In today's value-oriented care model that's not necessarily a good thing. Rather than focusing on billing and documentation, the road to an EMR with a positive ROI for health care organizations and doctors begins with a focus on supporting the most cost effective use of clinical resources to achieve the best outcome for the patient. 

Here are a few essential components of the re imagined EMR:

  1. User-friendly documentation in clinician-built real world workflows flexible enough to capture the variability of the individual patient encounter.  Involve clinicians early in the design. Focus on documenting what's really relevant to the clinical decision making and management. 
  2. Seamless integration of timely point of care useful decision support.  Provide CDS that clinicians are likely to access and utilize. Reduce unnecessary testing and treatment.
  3. Encompasses the full continuum of care and all appropriate caregivers. Emphasizes timely and cost effective use of clinicians practicing at the "top of his/her license." Interoperability to ensure efficient and timely communication between caregivers is critical. 
  4. Expanded use of telemedicine for access and post acute disease management as well as patient engagement. Reduce costly ER visits, readmissions, unnecessary office visits.
  5. Measures patient-centered outcomes that matter, not just process. Good outcomes are typically less costly.
  6. Robust analytics to identify most effective treatment paradigms, recognize more vulnerable populations, optimize deployment of clinical resources.

Keeping the "eye on the ball" - the patient - and using the EMR to help organize the care along an efficient workflow that assists clinicians practicing evidence-informed medicine is the best approach to make this substantial investment worthwhile, not only for the bottom line but for patients and doctors as well. 

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About Dan Mazanec, MD

Prior to joining Dorsata in 2016, Dan Mazanec, MD was the Associate Director of the Center for Spine Health at the Cleveland Clinic. Board certified in internal medicine and rheumatology, he has been a leader in the development of the emerging specialty of Spine Medicine. A frequent lecturer at international and national meetings, he has authored more than 70 book chapters and papers. He is an active member of the North American Spine Society with a particular focus on the development of evidence-based clinical guidelines as a member of the Clinical Guidelines Committee and the role of non- surgical care as chairman of the Rehabilitation Interventional Medical Spine Committee. Dan led the development of the Cleveland Clinic Spine CarePath which merges evidence-informed clinical management of spine disorders with patient-entered clinical outcome data focusing on optimizing value. He was the clinical lead for technologic enablement of the CarePath in the EMR and the implementation of the Spine Carepath across the entire Cleveland Clinic Health System.

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