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EMR ROI (Return on Investment)
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Sample EMR ROI Study
A Return on Investment (ROI) or Cost-Benefit Analysis study should be performed before any type of technology is purchased for a healthcare organization. This is especially true for Electronic Medical Record (EMR) software where the cost benefits can vary greatly from installation to installation.
We performed our cost-benefit analysis on a hypothetical single doctor medical office using industry averages from various sources. Our hypothetical office sees 30 patient per day, from a patient base of 2500 active patients. We will use an assistant to physician ratio of 3 to 1 and our office receives 100 phone calls per day of various natures (prescription refills, new appointments, billing inquiries, etc.).
Costs
Software License
EMR license prices range from $1,000 - $25,000. Where an average license for a FULL/TRUE EMR usually starts at $10,000 and a where a light/entry level EMR usually starts at around $1,000.
Implementation
Implementation costs are usually billed hourly at a rate of $75-$150 per hour. Average implementation time per provider is 35 hours. Where 10 hours are used for customization, 25 hours for training and 10 hours for computer/network setup. This becomes exponentially lower as more physicians are added. For our example, we will use an hourly rate of $100 per hour.
Hardware
Where most physicians have a 3 to 1 assistant ratio, we’ve suggested 1 Tablet PC for the provider, 3 workstations for the assistants and a Server. Tablet PC = $2,500, Workstation = $1,000, Server = $2,000.
Support & Maintenance
Ongoing support costs will be incurred from both an annual support contract with the software vendor for updates and technical support and the increased need of hardware/network support through a local IT representative.
Benefits
Improved Coding
Down-coding and poor charge capture can both be improved through an EMR?s E&M Coder. A study by Medical Economics magazine estimated that a physician who is regularly down-coding may be losing $40,000 to $50,000 annually. A study done by Partners Healthcare System found an increase of 1.5%-5% in overall billing simply through improved charge capture. For our example, we will use a conservative improvement rate of 2.5% to factor in a reduction in down-coding errors resulting in an increase in income of approximately $25,000 per year.
Transcription
For offices using a transcription service at the industry standard of $1000 per month.
Chart Management
Chart Management costs can be reduced through lower chart creation costs, lower chart storage costs and fewer chart pulls. The cost to create a new chart is estimated at $2/chart and the cost to pull a chart is $5 according to a study done by Partners HealthCare Clinic. For this example we will assume that there are 50 chart pulls per day including the 60% average for non-visiting patients. We will use a lower estimate for the cost of each chart pull @ $3 and assume that we will only reduce our chart pulls by 40% the first year and not be paperless for 3 years. For the cost in searching for missing charts we will use a conservative estimate of 25 minutes per day in looking for misplaced charts. 240 days X 25 minutes = 100 hours per year.
Prescription Refills
A study done by Journal of Healthcare Information Management showed that the time spent doing an Rx refill can be reduced from 15 minutes to 3 minutes. At 7 refills per day, that would be savings of 84 minutes per day.
Capitated patient cost savings
According to a study published in “The American Journal of Medicine” the benefits of clinical decision support resulting in the reduction of ADE’s, lab and radiology tests and the ability to offer alternative medications showed that a conservative estimate of $29,000 could be saved per year by year 2 of the EMR implementation.