EHR benefits go beyond ROI

Recent study says the new technology won’t lead to instant savings, but can bring long-term benefits to early adopters.

By Bill Kekevian, Senior Associate Editor

A recent survey suggests electronic health records (EHR) may end up costing doctors money in the long run,1 but that doesn’t mean experts are recommending practices don’t implement the new technologies. “EHR is not something that will magically lead to cost savings,” says Julia Adler-Milstein, PhD, an assistant professor at the University of Michigan who led the research. The study was published in the health policy journal Health Affairs. “These systems are expensive to implement; if you want to make gains, you’ll have to make some real operational changes,” she says. New regulations could be especially costly to small, private practices, but it may be those very practices that discover the best opportunities for savings.

This article reviews how EHR can change a practice’s income and how adopting this technology can act as a catalyst for improving practice efficiency.

REALISTIC EXPECTATIONS

Using survey data from 49 community practices in a large EHR pilot study, Dr. Adler-Milstein’s team found the average practice would lose a projected $43,743 over five years on its EHR investment. Only 27% of practices would achieve a positive return on investment (ROI). Federal incentives for meaningful use may not be enough to ensure that practices, especially small, independent ones, will achieve a positive ROI on their EHR investments, according to the study authors. Only an additional 14% would come out ahead if the $44,000 federal meaningful-use incentive is factored in.

Speciality practices fared worse, ending up $50,722 in the hole after five years, whereas primary care practices lost only $29,349. A wide chasm existed between small and large practices. With meaningful-use incentives factored in, 75% of groups with six or more physicians achieved a positive ROI.

The point of the study, Dr. Adler-Milstein tells Ophthalmology Management, was not to portray EHR as a losing proposition. “It’s not just the government trying to push things on doctors,” she says. “I hoped the impact would be to stop seeing EHR as some kind of magic solution. There are many potential benefits, but they could take five to 10 years to realize. We’re in a scenario now where EHR is being over-hyped.”

The take-away from this study, Dr. Adler-Milstein notes, should be that, while physicians cannot avoid the switch to EHR, they need to be realistic. “We’re not going to practice medicine 10 years from now on paper. That’s crazy, but we have to be realistic about what it takes to do that. From a research perspective, we can give a more realistic sense of what it takes to help doctors along that path.”

PRIVATE PAYERS JUMP IN

Opting out of Medicare may seem like a way to dodge EHR implementation, but assuming Washington is the only driver of change may be short-sighted. Although the federal government is currently enforcing the switch, private payers have also been pushing providers toward EHR for years, says health-care consultant, Mike Meikle of Hawkthorne Consulting in Richmond, Va.

“In 2010, four major payers (Aetna, Highmark, UnitedHealth Group and WellPoint) announced programs that could result in additional private-sector incentives for meaningful users of EHRs” he says. “These programs provided additional financial incentives and most require meaningful use objectives to be met to receive incentives through existing pay-for-performance programs.” In 2008, Midwest Medical Insurance Company began offering a credit of 2% to 5% for physician groups that use EHR.

Some state governments have been working with providers to establish EHR implementation. Maryland, for example, passed the State-Regulated Payer EHR Adoption Incentive Program as a result of House Bill 706 Electronic Health Records Regulation and Reimbursement, in 2009. The trend is clear: EHR will become a necessary aspect of running a practice.

HIDDEN EHR SAVINGS

“That $44,000 incentive goes a lot farther in a small-practice setting than in a large one,” Dr. Adler-Milstein says of the federal meaningful-use incentive. “From a policy perspective, it’s difficult to get into some sort of sliding scale, but it does make it so large practices will be in the black more than smaller. That puts the onus on small practices to figure out where opportunities to find savings are, not so much on large practices.” The largest difference between practices with a positive and a negative ROI, the study says, was the extent to which they use EHR to increase revenues.

Peter J. Polack, MD, comanaging partner for Ocala Eye in Ocala, Fla., and author of the book Managing The EMR Jungle: 10 Steps to Ensure a Proper EMR Rollout, offers some advice about where to find those savings. First, a staff properly trained to use an EHR system (or an EHR system customized to fit a practice’s needs) should inherently improve workflow efficiency. Although searching for, pulling and transporting charts may seem to only take a couple minutes each time, multiplying that by the number of patients seen each day can add up to significant time.

Another advantage, Dr. Polack notes, is that the information on EHR charts is legible, whereas handwritten notes on paper may be scrawled quickly and be difficult to read later.

IMPROVED BILLING AND CODING

According to Dr. Polack and Dr. Adler-Milstein, practices that use EHR are realizing savings from improved billing and coding. The new technology can provide better justification for coding, Dr. Polack says.

Dr. Adler-Milstein notes, “We looked at practices that did really well and at practices that lost a lot of money. The ones that did well had figured out how to use EHR to improve revenue. Some of the savings came from improved billing and patient processing, as well as finding savings on staffing costs and getting rid of services like outsourced billing.”

A less apparent but more important benefit is better medicolegal protection because templates ensure appropriate documentation by staff, Dr. Polack says.

“The ability of EHR software to integrate with digital imaging and networked diagnostic equipment” can also improve efficiency in the long run, Dr. Polack says.

Meaningful-use incentives alone may not be enough to ensure practices, particularly small ones, achieve a positive return on investment from EHR implementation, Dr. Adler-Milstein’s study concludes. “There are other compelling reasons to invest in EHR,” she adds, among them gaining improved access to clinical data. “Benefits aren’t immediate or easy, but this is a huge change. It could take five to 10 years to pay off.” OM

REFERENCE

1. Adler-Milstein J, Green CE, Bates DW. A survey analysis suggests that electronic health records will yield revenue gains for some