Biting the EMR Bullet

How much will it really cost your practice to “go live”?

BY LESLIE GOLDBERG, ASSOCIATE EDITOR

The biggest obstacle for EMR adoption by ophthalmologists is the perceived initial decrease in productivity and increase in expense they must take on at a time when reimbursements are declining. As noted by one respondent to a recent survey we conducted, if there is “no chance of imposing a ‘technology fee’ on patients to defray the cost of EMR, this is, quite simply, a very poor business move.” Many others agree. But while this statement may be true, government mandates are going to make it nearly impossible to avoid purchasing a system — and the sooner the better in terms of monetary incentives for implementation.

This article will help you estimate the costs — both expected and hidden — that you will encounter in your quest for the right system, and also explains what the government currently considers “meaningful use” of EMR (its stipulation to qualify for federal incentives) and how this affects your EMR purchase.

What are Your Needs?

Budgeting for an EMR system cannot easily be done at the outset, as vendors use different standards to determine exact pricing: the number of physicians in a practice, concurrent users, the number of computers that will have the software installed and the amount of customization required are just a few.

You'll get more accurate pricing quotes from vendors if you do a thorough needs assessment before you start looking at systems. Your assessment should include the functions you are looking to address, such as record management, reporting, integration with your diagnostic instruments and interoperability with other medical practices and facilities. The more you know about your practice's needs, the easier it will be to narrow down the number of EMR packages to review.

An online article titled “The EMR Software Maze — Where to Start,” written by Michael D. White, provides the following insights (visit www.ophthalmologymanagement.com for a link to Mr. White's article):

1. Looking beyond today's needs, going five years out, what are your critical requirements?
2. Many medical practices select “Best of Breed” products, says Mr. White. “Software ‘A’ may be used for billing, software ‘B’ for scheduling, software ‘C’ for medical records and software ‘D’ for e-prescribing.” Each software solution carries its own maintenance agreement, technology needs, and hardware and operating system requirements in addition to integration or interface issues. The cost of managing multiple medical software solutions can grow substantially.
3. Don't buy the wrong software for the right price, or the right software for the wrong price. Find the right EMR software solution, and then negotiate a price you can handle.
4. Due to the HITECH Act of 2009 (the Health Care Stimulus Incentive), thousands of medical practices will be purchasing EMR software at an increasing rate. The backlog for implementations is growing, and could potentially jeopardize your first year's stimulus incentive, says Mr. White.
5. It is in your best interest to look at both a specialty EMR software solution as well as a general EMR software solution, adaptable to most specialties. For example, a software solution may have all the pieces you need for success, but with a user interface that is cumbersome, difficult to use and time consuming. It's the user interface you have to work with on a daily basis, so factor that into your evaluation.

Outing the Hidden Costs

There really is no such thing as a plug-and-play EMR system. Unanticipated, unplanned and hidden costs are bound to show up. The hidden cost of decreased physician and staff productivity while the system is being implemented is one of ophthalmologists' greatest concerns.

“EMR appears to be good in theory,” wrote one respondent to our recent survey. “The reality is I used one for several years but the costs, time (much more time spent to document a patient encounter than with paper) and loss of revenue due to decreased efficiency forced abandonment of the system.”

Additional costs that you may not be aware of include network and software maintenance, annual service fees, data transfer costs and fees for report generation. While it is no surprise that you will incur the cost of the software system you purchase, a practice moving from paper charts to an EMR implementation will also likely need to grow its computer network dramatically. Most physicians do not account for the ongoing IT implications and support needs when converting from paper to electronic records. In addition to computers, a practice might need printers, scanners and routers or other networking gear. Also, some EMR systems require you to purchase a server expressly for use with the system; others allow you to use your existing infrastructure.

When proposing a system, many vendors offer an application service provider (ASP) system, which relieves users of the burden of maintaining in-house servers. In this case, you are more likely to be charged either a flat monthly fee or a per-visit usage fee.

You may also be responsible for other fees such as training and enhanced support, although the vendor may include those costs in the price quote. Software updates are usually included in ASP pricing, but some vendors may charge you for them. Make sure you ask up front.

In “Hidden Costs of an EMR Imple mentation” by Art Gross (also linked at ophthalmologymanagement.com), the author advises that network maintenance requirements may include verifying data backups, security patch deployment, software upgrades and preventative maintenance. The HIPAA Security Rule and HITECH Act requires that a network be secure, audited and provide access to patient information. These requirements mean additional expenses.

Upgrade pricing may also vary. Check vendor contracts to see how often upgrades will occur and how much they will cost. In addition, you may incur data transfer fees. When you import existing data, vendors will often charge you for an extra step of cleaning and preparing the data for the new system.

Lastly, you may be charged an exit fee if you choose to leave the EMR vendor you are currently using. When abandoning the service, this fee covers the expense of exporting your data so you can move it to a new system.

Expected Costs

Below is a compilation of the known costs — or at least the tangible costs you should familiarize yourself with before making an EMR purchase. In order to get a better idea of the expenses you will incur by adding EMR, a number of vendors were asked to respond to questions about the biggest adoption costs. We have attempted to gather information from both large and small vendors who offer general and/or subspecialty EMR packages.

■ Hardware and Software Costs
A key difference in the upfront cost for an EMR is the hardware requirements associated with client/server installations. EMR software hosted by an ASP has a smaller upfront cost because you are basically leasing the software licenses on a subscription basis. ASP systems are also referred to as “software as a service” (SAAS) or Web-based. ASP hosting models appeal to medical practices that wish to save on the upfront costs and hardware requirements of a client/server architecture, and instead prefer to make smaller payments indefinitely.¹

Medflow offers clients both the ability to host their own server, thus keeping all of the data and network communication local to the practice, or to opt for an externally hosted service. The advantage of a hosting service is better appreciated by smaller practices; the server is offsite and sits somewhere in a secure location and is physically managed by a third party company. The software updates, backups, upgrades and all maintenance of the servers are completed by this third-party company. This spares practices the upfront investment for the server hardware and third-party Microsoft software that would normally be needed, but there is an ongoing monthly charge, typically priced by provider, for this company to support the above efforts and tasks. The additional consideration for a hosted solution is the telecommunication requirements; make sure you have the appropriate bandwidth to support the application locally in the clinic if you do opt for this solution.

VersaSuite provides its users with a hardware spec sheet; those who need to upgrade or purchase new gear are directed to one of its hardware partners — Dell or HP — to purchase at a discount. The company also offers clients the ability to host their own server if they have the proper IT infrastructure or will host the network for the user.

Ifa provides hardware specifications to clients for servers and workstations. The company also provides a Web-based solution, but does not advise it as a solution across the board. In addition, Ifa builds customized Web-based data-center solutions, such as cloud-computing services for integrated back up and data storage for large implementations.

■ Licensing Fees
The license agreement is the backbone of the relationship between the practice and the vendor. The scope of the license controls what you are buying. It determines how many computers you can install the software on, how many people may use the software, and/or in how many physical locations you may install the software.²

Medflow's EMR is priced out by provider licenses, says Jim Messier, vice president of sales and marketing. The company does not restrict the number of users for a given provider. There are two levels of licensing available: full time is for 21 hours or more per week and part time is for 20 hours or less. There is no difference in functionality, only the price.

NextGen also has a licensing fee billed by number of providers. Clients can buy a standard licensing fee run from a client server or a hosted environment. They also offer a comprehensive SAAS model that is hosted and available for a monthly fee.

VersaSuite's EMR-only system is priced at $5,000 per physician. Any concurrent users are $2,000 per license. So, the fee for two doctors and eight users is $10,000 for the doctors and $16,000 for the concurrent users.

The Ifa system is based on a connectivity-licensing model. A team of Ifa employees performs an on-site systems analysis. From this, an architectural integration blueprint is designed showing how all the hardware, software, databases, testing and imaging devices are connected together into a cohesive clinical workflow. A license fee is applied to each connection, whether it is a workstation, a server, a gateway, an OCT or a practice management system. The customer pays for actual functionality, not a given number of individuals.

■ Service Contracts
Another item that can add up over the life of your EMR is your service contract. Medflow's system comes with an annual service support agreement. This covers all services for the system once a client is up and running — phone and Internet support, all updates and upgrades are supported. Upgrades are done each quarter and the normal process for this would be an email notification and then a confirmation.

ManagementPlus's maintenance fee can be paid quarterly, semi-annually or annually. Any customization is quoted on an hourly rate, except for EMR, which is included in the initial purchase price. The company typically does not charge for government-regulated updates.

NextGen has no charge for updates. It has a service contract for support and maintenance, which customers can pay for monthly, quarterly or annually.

VersaSuite's annual maintenance and support fee is 18% of the total software cost.

Basic support covered under Ifa's monthly/yearly runtime license fee includes unlimited hotline support, remote support via modem or Internet connection, updates to the software such as appropriate clinical medical records modules and various data tables on a relevant quarterly or annual basis, including conformance updates to existing, standard governmental requirements.

■ Training Fees
EMR software is a major application and requires that most users learn multiple new software functions. This takes time. Initial training is often conducted in a tight timeframe once a system is installed; users may find that they need additional training.

Medflow factors training into each proposal. This is based upon the number of providers, users and locations. “We have calculated an algorithm that will give us the number of hours based on our experience and past implementations,” says Mr. Messier. “Obviously, if you are a single doctor the burden for training is a little bit more than if you are part of a group practice.”

Compulink offers three training options: (1) free unlimited online access to a catalog of 85+ pre-recorded courses, (2) live, one-on-one Web-based training (delivered over WebEx) which is billed per hour, and (3) on-site training, which is billed per day.

ManagementPlus's training fee is billed per day/per trainer. If two trainers are required due to staff size, the training fee is doubled.

VersaSuite's training is charged per day and is based upon the user's needs and what the organization buys — whether it is EMR, PM, etc. The going rate is $1,000 per day plus expenses.

During their site analysis, Ifa determines the number of days required to train everyone using the system. Certified trainers prepare a customized training curriculum, often in cooperation with the customer. The training plan may include a variety of methods, from one-on-one training with key personnel to a train-the-trainer educational concept.

■ Interfacing With Diagnostic Instruments
There are many different ways of connecting equipment to your EMR system, depending upon the manufacturer and the device itself. Much of the equipment in place today is considered “legacy,” meaning that it has minimal chances of integrating on its own into a network. Special hardware and software becomes part of the installation to connect these devices into an EHR network.

Recently DICOM, a standard that has been around for many years in radiology, cardiology and orthopedics, has found its way into the eyecare domain. DICOM is an image format standard but when implemented together with Integrated Healthcare Environment (IHE) workflows, it becomes an extremely valuable tool by which all diagnostic devices can connect into an EHR and provide the highest degree of data integrity. “Going forward, vendors will have to make a commitment to interoperability and to support the DICOM and IHE standards established in ophthalmology,” says Mr. Messier.

Medflow charges for device interface on a device-by-device basis. Each has to be physically connected, tested, validated and then integrated to the network and EHR. “Medflow will actually go onsite twice during an implementation process; first to do a ‘readiness assessment’ where a field engineer travels to a site with a laptop computer and goes from device to device to verify its ability to communicate with the EHR. Once this is completed, the device is restored to its original state,” says Mr. Messier. “Prior to the go-live date the engineer will travel again to the site and physically make the connection of all devices into the EHR network.”

Compulink's interfaces are priced per instrument and range from $350 to $1,000 depending on the instrument.

All Ifa digital device interface licenses are lifetime guaranteed — even if an updated model replaces the device. Within its connectivity license model, the company guarantees that all digitally capable, government compliant ophthalmic devices will be integrated into the EMR, HIS and PMS programs. Ifa also guarantees that its users will have full integration of all standard ophthalmic devices, assuming the cooperation of all vendors of ophthalmic devices. Its system is also IHE compliant.

Sticker Shock

“The five-year itemized cost of our not-yet signed EMR contract will be $3.1 million in software, hardware and additional personnel in a 22-doctor group practice with multiple offices,” said one survey respondent. “After on-site visits to several ophthalmology practices using EMR, two things are clear: (1) Significantly decreased productivity for one year, and perhaps equal or slightly less productivity afterwards; (2) huge expense in the first five years,” he wrote, calling it “a classic lose/lose scenario for ophthalmology.” That certainly seems to be the prevailing perception among non-users, both large and small. Some vendors offer flexible payment options and other financial assistance to help allay concerns.

For instance, Medflow says that it has “a great relationship” with US Bank and is thus able to offer attractive financing options. As an exclusive business partner with Allscripts, Medflow also has some leverage that allows it to receive favorable rates and programs that will minimize the cash output up front. Users will start to make full payments in sync with the federal stimulus payments and money you would expect to receive based on the HITECH act.

To make it easier for practices to overcome concerns about upfront costs when adopting EMR, Compulink offers a two-year deferred payment plan.

NextGen also offers financing through US Bank. For additional information on their different financing options, visit www.nextgen.com/offers.

ManagementPlus offers 90 days same as cash and a 12-month, no-interest financing plan.

Generally speaking, vendors are well aware that sticker shock can prevent practices from embracing EMR to its fullest and are amenable to finding areas of payment flexibility. The consensus opinion is that skimping on the system's features as a cost-saving strategy leads to frustration, limited EMR use and productivity declines that might have otherwise been avoided.

Meaningful Use

“With so many current systems and no firm government standards issued, I would hate to make a $70K decision only to find that the software isn't government approved and the vendor has abandoned ship,” writes one of our survey respondents. What is the government's response?

To encourage adoption and utilization of EMR systems, Congress set aside $19.2 billion as part of the American Recovery and Reinvestment Act to encourage doctors and hospitals to move quickly to adopt “qualified and meaningful use” systems. According to a recent analysis³ of the HITECH provision of the stimulus plan, EMRs must meet the following criteria for certification:

• electronic prescribing (e-prescribing)
• exchange of information to enable improved health care (portability)
• reporting of clinical quality information.

Under the “meaningful use” criteria, doctors who satisfy the implementation requirements are eligible for bonus payments starting in 2011 (Table 1). At this time, these incentives are related only to a provider's Medicare reimbursement. Commercial payers have not publicly indicated their plans to follow suit. Medicaid panelists may also be eligible for an additional $20,000, depending on individual state mandates.

As part of the American Recovery and Reinvestment Act, healthcare professionals who implement certified electronic medical record systems are eligible for bonus payments, starting in 2011, in accordance with the above schedule.

More than 70% of the incentive money will be disbursed within the first two years, beginning in 2011. Doctors who also adopt PQRI and e-prescribing can earn an additional $6,000 to $8,000 annually. Those who do not adopt EMRs by 2015 will be penalized by a 1% to 2% reduction in Medicare reimbursement rates.

The EMR systems used by physicians must comply with the National Health Information Network (NHIN) guidelines and the Certification Commission for Health Information Technology (CCHIT). Guidelines for the latter have been established for general medicine, but those for subspecialties such as ophthalmology are not expected to be released until 2011. The NHIN guidelines are not set to be released until 2014, which is well after the reimbursement begins. While these issues are being worked out, some EMR companies are preparing now for what they expect CCHIT guidelines to be.

Those practices not ready for adoption should note that the existing requirements to qualify for the federal incentive expire in 2012, with tighter rules expected (shorter timelines and harsher penalties, for example) when the 2013 standards are published. Thus, it is crucial that current and potential users begin active utilization of approved systems as soon as possible.³

The Devil's in the Details

Recreating in digital form the workflow that each practice has developed organically over the years is no easy feat. Prospective EMR users should not expect any system to work “out of the box” in precisely the way you are accustomed, and as a consequence, the price of such a conversion is ultimately going to be a function of what you intend to accomplish with the system.

There are many different components of EMR expenses. Some are expected, others are not. Some are avoidable, others are not. Some are subsidized, others are not. But for a project as ambitious, important and — yes — inevitable as this one, you must take the time to educate yourself on all aspects of these costs before making such a long-term and expensive commitment. OM

References

1. MDS Medical. http://www.mdsmedicalsoftware.com/emr/asp-hosting.php. Accessed March 11, 2010.
2. Physicians News Digest. Accessed March 11, 2010. http://www.physiciansnews.com/business/806.html.
3. Morris S, Gaddie B, Real Concerns About Healthcare Reform. Optometric Management. 2010:43-45.