Standard EMR ROI Thrown Out The Window

One of the things that has bothered me most about the $36.3 billion which is estimated to be spent by the government in EMR stimulus money is the affect it’s had on the decision to implement an EMR. The doctors looking at the stimulus money remind of of Scrooge McDuck from my favorite cartoon ever Ducktales. Yes, Scrooge was the one who had so much money he’d go and swim in it. That part of the story is fictional. The part of Scrooge that’s not fictional is the trance that he’d go into when there was the possibility of more MONEY!! That same look seems to have come over far too many people looking at selecting an electronic medical record.

Certainly there are exceptions, but with the announcement of ARRA’s EHR stimulus money it seems like all of the previous benefits of an EMR have been thrown out the window. All people care to think about is “How do I get that EMR stimulus MONEY from the government?” I think this is a huge mistake and will most certainly lead to major problems in the future.

I’ll continue to argue inform people that an EMR should be implemented on its own merits and not with the hopes of a government windfall of cash.

Let’s step back a second and look at a study done in 2003 about the ROI of an EMR system. Here’s a summary of their findings:

The estimated net benefit from using an electronic medical record for a 5-year period was $86,400 per provider. Benefits accrue primarily from savings in drug expenditures, improved utilization of radiology tests, better capture of charges, and decreased billing errors. In one-way sensitivity analyses, the model was most sensitive to the proportion of patients whose care was capitated; the net benefit varied from a low of $8400 to a high of $140,100. A five-way sensitivity analysis with the most pessimistic and optimistic assumptions showed results ranging from a $2300 net cost to a $330,900 net benefit.

Certainly we could discuss the details of this study, but I think the important point is that there’s an argument that can be made for implementing an EMR that doesn’t include EMR stimulus money. We can’t let the EMR stimulus money put us in a trance where we make stupid decisions. If we do, there will be a huge price to pay years later.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

7 Comments

  • Your observations are 100% correct. Free money along with certification directs the Physicians into thinking all EMRs are the same and therfore pick the cheapest EMR soltuion. This also leads towards spening least amount on training and implementation.
    When things don’t work out, they either blame the vendor or the the organization who provided the free funding. I know this from experience in another country. The simulus funding will get more physicians to embrace EMR, but will cause major delays due to many failures.

  • With the marketing push being made by the proprietary vendors (ie…remember the bus tour?) what else are these physicians to think? I have had physicians who have recently retired simply because they couldn’t afford an EMR solution. It’s not about the money, but rather what they do with it. A good, highly effective, certifiable practice management system doesn’t need to cost you an arm and a leg. Practices must be willing to make some changes from the way they operate today, attend all of the training , and most importantly stay current going forward. This is an ongoing obligation and not a one time event.

  • I agree with John at the 50 percent level.

    I agree 100 percent that we should be buying EMRs because we want them and we think they will be helpful. We should not buy them for the money (anyone who does is really stupid because the money is not that much [see below]).

    I think it is time to stop demonizing doctors as being rich with lots of money (this is where I disagree with John 100 percent).

    Some doctors still make good money (eye doctors, orthopedic doctors, cardiologists and radiologists), but many of us are really struggling. The doctors who are struggling the most, family doctors, internist and pediatricians, are the doctors who we all want to implement EMRs. If EMRs cost a lot of money and there is no ROI and it reduces our productivity, we get screwed! The reimbursement money $44,000 per doctor is very important (as an encouragement). We are all small businesses that do not have generous margins of profit. Remember, the $44,000 is about $15,000 per year x 5 years.

    It is time to start thinking of doctors as hard working small business owners rather than rich, fat cats.

    Our small businesses need to be encouraged to implement EMRs and we also need good EMRs to implement. Right now most EMRs are not very good and it is a very risky proposition to purchase and install an EMR because of the cost, the possibility of no ROI and the possibility of decreased productivity which will lead to longer, harder work days or decreased revenue.

    Doctors need some compassion! If everyone in our society worked as hard as most doctors work and everyone in our society had the education that most doctors have, we would have a much better society. We wouldn’t have to worry about the uninsured because more people would have jobs and could afford insurance. We have gotten in the habit of blaming the people who work hard, take risk and innovate. We want to take from the hard workers and give to the people who don’t get an education, who don’t work hard, who don’t take responsibility for their fate!

    [I understand that some people are unfortunate or unlucky and that is why they don’t succeed in our society, but I believe the vast majority don’t work hard or work smart. In my opinion, it goes back to your family’s values and your upbringing. Kids don’t get educated because their families don’t insist that they go to school and learn (it is not the school’s fault or societies fault). You look at different ethnic groups and you can see the difference! I wish all the whiners and complainers would look at themselves, look at their family and look at their community and their culture before they continue to whine and whine and whine! Do something! Take responsbility for yourself, your family and your community and stop whining and complaining and expecting handouts!

  • Thanks for stopping by Dr. Bob. I always love having more and more doctors on the site. It helps to round out the discussion.

    I think we actually agree 100%. I’m totally with you on the fact that some doctors aren’t rich doctors. Although, there is absolutely that view out there and government is keenly aware of the PR problem associated with giving money to the “rich doctors.”

    So, my analogy of Scrooge McDuck doesn’t apply to many doctors who are just trying to make a decent living while reimbursements are falling. We’ll leave those few specialties out of the discussion for now. My point was that I’ve seen far too many doctors get that glazed over look in their eyes when they get the idea of EMR stimulus money in their head. Maybe it’s because of exactly what you’re talking about. Many are essentially small business owners that would greatly benefit from $44,000 worth of stimulus money.

    So, I’m with you all the way in this being a potentially great thing if it goes well for a doctor.

    What I’m trying to do is warn those doctors who you describe as “stupid” because they worry more about the money than all the other factors related to an EMR implementation. Unfortunately, there are far too many of them. I prefer to call them busy instead of stupid, but the challenge is still the same.

    That’s why I’m singing the song of selecting the right EMR and let the $44,000 be a bonus if everything goes well and the government goes crazy. Otherwise, we’re going to be hearing hundreds of stories where doctors implemented an EMR planning and banking on the $44,000 in EMR stimulus money who end up with nothing but an EMR system which they hate to use and for some reason weren’t able to get the ARRA EMR Stimulus money.

    I hope this helps clarify my point of view on it all.

  • Go to Wikipedia and read Productivity Paradox. Software is not the problem. Create the information system using a minimally invasive EMR that allows you flexibility for practice styles and take time to re-task employees and train staff. The ROI is good and will pay for the system, productivity will increase, but not immediately.

    The original articles were written by Eric Brynjolfsson in 1993.

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