Understanding the true costs of an EHR implementation plan

Electronic health record (EHR) systems are expensive. Just ask any physician who has implemented one. The up-front costs can be enormous, depending on the type of EHR. And other commonly unanticipated costs exist that every physician should account for, including information technology (IT) support, additional hardware, training, and over-time pay, just to name a few.

When creating a project budget, start with costs outlined in your vendor's request-for-proposal response and the system/support agreement (that is, the end-user license agreement [EULA] you signed with your vendor). System costs encompass your capital expenditure for hardware, software, installation, training, and ongoing maintenance.

Generally, these costs are anticipated and scheduled before you even sign the EULA. Physicians' practices vary so greatly, however, that additional equipment and IT support are common when implementing an EHR system.

It's next to impossible to estimate what all the induced costs will be, even for vendors, because they don't know how your practice actually operates and you've never installed one of their EHRs before. So it's not uncommon for practices to find themselves in over their heads pretty quickly, requiring them to invest more capital and hire more staff than they originally planned.

COST UP, REVENUE DOWN

Thirty primary care physicians (PCPs) are participating in the Medical Economics EHR Best Practices Study, which began in January and will continue for 2 years.

Recent Medical Economics surveys have been tracking unanticipated (out-of-pocket) costs by the study's physicians. Some of the findings:

Averaged across all 30 practices, out-of-pocket expenses in the first 6 months of an implementation reached $6,516.

In a similar study published in the March 2011 issue of Health Affairs, 26 primary care practices in North Texas implemented an EHR across their medical network. The researchers considered the hardware/software costs, as well as the staff members' time and effort to complete the implementation.

They determined that a typical multiphysician practice would spend about $162,000 to implement an EHR, with $85,500 for first-year maintenance costs. They also estimated that the implementation teams spent approximately 611 hours "preparing for and implementing" the EHR system. The end-users (defined as the physicians, clinical staff members, and nonclinical staff members) required 134 hours per physician to become familiar enough with the EHR that they could comfortably use it with patients. (For more information about this study, see http://www.MedicalEconomics.com/Texasstudy.)

As a general rule, during the EHR implementation period (which can last more than a year depending on the hardware/software installation, staff training, and data integration), you can expect to see up to 50% fewer patients in the same period of time.

Simultaneously, you may have to increase your staff, or approve significant overtime for your existing staff members, just to get everyone home for dinner. That's not even considering the extra time you need to invest to learn the new systems.

And that's just from the cumulative effect of a 1-minute slow down per patient per day. That doesn't take into account all the other ongoing reductions in workflow efficiencies, such as severe increases in the time it takes for your staff members to register patients, update their records, and process the billing. And that's assuming the EHR functions correctly even at a slow pace.

Do you have a contingency plan if the billing module malfunctions? It has happened. It all adds up to reduced dollars flowing into the practice and increased dollars flowing out for an extended period of time.

The revenue decline poses financial trouble for many practices. As part of the budgeting process, consider taking out a small business loan in anticipation of covering the gap in lost productivity inherent with most EHR implementations.