EHR vs. ROI: Is it Worth it?

Written By: John Cosenza

In 2009 the Health Information Technology for Economic and Clinical Health Act (HITECH) initiated a large-scale implementation of Electronic Health Record (EHR) systems. Despite broad consensus EHR systems can significantly improve healthcare performance and patient outcomes while reducing costs, many healthcare facilities resisted the incentive. According to Julia Adler-Milstein, Carol E. Green, and David Bates,

“The primary barriers to adoption have been financial: most physicians have cited lack of capital and uncertain return on investment as substantial hurdles” (Adler-Milstein, Green & Bates 562).

Government initiatives have certainly encouraged adoption but existing literature reports mixed results on the financial benefits. Such implementations are often “fast-tracked in an effort to meet meaningful use requirements, typically restricting providers from realizing a clear return on investments” (KPMG Institutes). However, almost one decade after the introduction of HITECH, sufficient time has passed to more accurately assess a correlation between EHR implementation and a ROI.

In “Return on Investment in Electronic Health Records in Primary Care Practices: A Mixed-Methods Study”, Yeona Jang, Michael Lortie, and Steven Sanche analyze this correlation in primary care practices. According to the authors,

“the implementation of EHR systems within primary care practices is seen as particularly complex, with physicians and other staff in primary care practices citing obstacles such as difficulty in adapting to the significant changes in workflow and the time commitment required to learn to use the new software while prioritizing patient care” (Jang, Lortie, Sanche 1).

Despite these obstacles the sampled primary clinics typically recovered their investment within an average of 10 months; primarily due to a drastic increase in patient visits with improved “active-patients-to-clinician-FTE and active-patients-to-clinical-support-staff-FTE rations” post implementation (Jang, Lortie, Sanche 3). Moreover, the ability to quickly process claims enabled all but one clinic to report an increase in annual net revenue. However, this study focuses solely on primary care clinics and is therefore limited. If other healthcare settings are analyzed they may not necessarily bare similar results.

In fact, certain healthcare organizations including M.D. Anderson attribute the annual loss of revenue and layoffs to EHR implementation; recently the University of Texas M.D. Anderson Cancer Center announced its plans to eliminate at least 1000 jobs through layoffs and retirements. According to Cara Smith of the Houston Business Journal,

“The institution’s financial woes started when it rolled out a new electronic health records system in March. The nonprofit cancer hospital anticipated the system would create an initial loss in productivity as the users – physicians and mid level clinicians – started using the system. To combat that, the institution bolstered its cash reserves and staffed additional contractors and part-time personnel to create a smoother transition” (Smith).

The cuts in staff are expected to save M.D. Anderson approximately a $120 million a year with the hopes off countering the costly implementation of the EHR system; a system which could have cost M.D. Andersen somewhere in the realm of $100 – $200 million or more.

New York City Health + Hospital Corporation (NYC HHC) experienced similar issues to M.D. Andersen since implementation of their new EHR system in 2013; the original contract and subsequent maintenance over six years cost NYC HHC an approximate $764 million. Since implementation, a number of C-suite execs have been fired and replaced due to poor budgeting and a series of unforeseen delays. More recently

“In the last six months, the system has also juggled recent layoffs of 70 positions dubbed ‘redundant managerial level, non-clinical’ positions, as well as changes in leadership”(Sanborn 1).

A single ROI narrative is difficult to establish because circumstantial differences across the healthcare spectrum result in disparate outcomes. Underlying differences including facility type, facility size, the specific practice or field of care, staff size, and EHR products themselves all play a role in determining a ROI. However, there is a universal factor that most authors and healthcare information technology experts agree upon.

This universal factor is the ability of healthcare practices and facilities to optimize their EHR systems to the utmost extent. The studies reveal the most successful facilities and practices are those systematically raising the bar of EHR innovation. Indeed,

“Some clinics seem to be more innovative than others in using EHR in their practices to achieve significantly better operational and financial results. The analysis suggests that a clinic’s ability to take advantage of EHR to support process changes has a significant effect on the time required to achieve cost recovery from an investment in EHR” (Jang, Lortie, Sanche 6).

Julia Adler-Milstein, Carol E. Green, and David W. Bates, authors of “A Survey Analysis Suggests That Electronic Health Records Will Yield Revenue Gains for Some Practices and Losses for Many” similarly argue,

“When we examined what distinguished practices that were able to achieve a positive ROI from those that were not, we found the largest difference was that successful practices used their EHR system to increase revenue to a greater degree. Our study suggests the adoption of an EHR system can have a markedly positive financial impact, particularly for practices that effectively leverage their systems” (Adler-Milstein, Green & Bates 566-568).

Heather Haugen, vice president of Healthcare Provider Solutions at Conduent, 2017 HIMSS Conference attendee, and the creator of the Breakaway learning methodology echoes the same notion. In an interview with Show Daily: The Official News of HIMSS 2017, she states, “the commitment of organizations to really get the outcomes they expect from their EHRs is what we’re trying to achieve now. It’s our focus today in healthcare” (Haugen 11).

These experts suggest a positive ROI is likely to depend on a facility’s commitment to leverage their EHR systems in new and innovative ways for years to come; not simply after go-live. When considering EHR adoption physicians and administrators typically think of short-term outcomes. This mindset discourages pockets of medical community leaders from realizing the financial benefits are a complex and long term endeavor and, in turn, do not focus on developing long term strategies. Indeed, Haugen argues “many organizations look at the initial cost of implementation but fail to consider the long-term resources needed to sustain and leverage an EHR” (Haugen 11).

Designing a long-term plan meeting the specific needs of a facility is often a greater obstacle than the lack of funds. However, as noted above, partnering with the right EHR vendor that presents a financially feasible system is equally important. Ultimately,

“practices and health systems must complete an arduous journey to revise care delivery processes so that they can leverage the full capabilities of Health IT” (Berger 20).

When this arduous journey is visualized and effectively put into action in accordance with specific needs, even the most financially challenged healthcare facilities can implement the right EHR system and experience a positive long-term ROI.

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Adler-Milstein, Julia., Green, Carol E., & Bates, David W (2013). “A Survey Analysis Suggests That Electronic Health Records Will Yield Revenue Gains for Some Practices and Losses for Many.” Health Affairs Vol.32, No.3, (2013).

Berger, Eric (2013). “Electronic Health Records, Promises Promises: Experts Advise Patience for Return on Investment.” Annals of Emergency Medicine, Vol.62, No.1 (2013).

Haugen, Heather (2017). “Getting the Most out of Your EHR Implementation and Adoption.” Show Daily: The Official News of HIMSS 17, 2017.

Jayanthi, Akanksha (2015). “Execs fired as Cost of Epic EHR Rollout Grows at NYC Health and Hospitals.” Health IT & CIO Review, 8/21/2015.

Jayanthi, Akanksha (2016).”What’s the Deal With NYC Health + Hospitals’ EHR Transition? 9 Things to Know.” Health IT & CIO Review, 3/25/2016.

KPMG Institutes (2017). “Beyond Implementation: Optimizing EHRs to Realize Results.” Healthcare & life Sciences Institute, Feb. 8th (2017).

Sanborn, Both Jones (2017). “NYC Health + Hospitals Delays Next Phase of $764 Million Epic EHR Implementation.” Healthcare Finance, 2/16/2017.

Smith, Cara (2017). “M.D. Andersen to cut 1,000 Jobs in Houston.” Houston Business Journal

Yeona, Jang., Lortie, Michael A., & Sanche, Steven (2014). “Return on Investment in Electronic Health Records in Primary Care Practices: A Mixed-Methods Study.” Journal of Medical Internet Research, Vol.2, No.2 (2014).