How to calculate Meaningful Use’s ROI

Just to make sure we are all turned to the same page in our Cliff Notes on Meaningful Use, today’s conversation is, “There is no “R” in ROI.”

Are you familiar with the Abilene paradox?  It is a paradox in which a group of people collectively decide on a course of action that is counter to the preferences of any of the individuals in the group.  It involves a common breakdown of group communication in which each member mistakenly believes that their own preferences are counter to the group’s and, therefore, does not raise objections.

I think it occurs more often than we think.  Try to recall the last meeting you attended in which you really disagreed with something that was said.  Chances are you knew some of the others in the meeting well enough to know they also disagreed.  The reason you know they also disagreed is because you had discussed the topic.  However, none of you raised your disagreement during the meeting.  Why?  Because you did not want to rock the boat.

It is similar to a pseudoconsensus.  Pluralistic ignorance.  These create a bystander effect—people are more likely to speak out about an issue when they are alone with someone than when others are present.

After further consideration I think we must consider the very real possibility that there is no ROI for Meaningful Use.  I write this in all sincerity.  Healthcare executives march in lock-step or group think to achieve the myth of finding an ROI for Meaningful Use.  The ROI is healthcare’s quest for the Holy Grail, albeit without the Monty Python sound track.  They cannot proceed without one, so they set the target, figure out what data will demonstrate that they have hit it, and disregard the reams of data that does not support the ROI.

What if the government came out with a standard stating all hospitals ought to buy, install, and use a fifty million dollar transplant device that also flosses the patient’s teeth?  This initiative is “optional”, but the government will pay the hospital a two hundred thousand dollar rebate.  There are several types of transplant flossers—the ones that deliver that fresh mint taste cost extra.

If we were having a business discussion about the ROI for the transplant device, healthcare executives would be foaming at the mouth about how impossible it would be to calculate an ROI, and rightly so.  They would argue all hospitals are different, they have different cost structures, the devices are all different.

The standards for Meaningful Use are arbitrary.  The standards were developed by people who do not need to meet an ROI.  There was no mandate in the development of those standards to create standards which when met would yield an ROI.  Any attempt to force an ROI will naturally differ in a number of ways:

  • by provider—size, structure, offering, geography
  • by their interpretation of Meaningful Use
  • by which EHR they implemented
  • when they began the implementation
  • how well they implemented the EHR

Somebody somewhere may hit a positive ROI on Meaningful Use, just like somebody playing darts may hit a bull’s eye.  Any positive ROI will be accomplished more out of chance, and from having fit the data to a predetermined ROI rather than measuring the ROI against its true impact.

Implementing an EHR can be very good for a hospital.  However, it should be a business decision for the hospital based on the same set of business rules the hospital would use to justify any other large expenditure.  If the hospital achieves an ROI it will not be because of having followed an arbitrary set of standards.  Any ROI for an EHR will come from having done it correctly.  Hitting the figure any other way means two things; it was a coincidence, or you are in for trouble down the road.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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3 thoughts on “How to calculate Meaningful Use’s ROI

  1. Paul, True what you are saying about Abilene paradox. I was in a HITOC meeting and lets say it was interesting. There was no mention of Patient-Centric care or PHRs. But I somewhat disagree about Meaningful Use (MU) ROI. First, If hospitals want the ARRA money they will have to sign the term sheet. If they don’t like the terms, it is simple don’t sign up. Any investor including the Gov has goals as part of the terms. If the gov didn’t have MU then everyone would be unhappy about that, also. One of the reasons I like MU is because it helps the provider to get a better RHproduct from the vendors. There are a lot of EHR systems on the market today that have been built with no clinical knowledge. These need to be weeded out.

    Lets talk about one of the five requirements for Meaningful Use; engaging the Patient and their family or the provision by which facilities must provide electronic copies of personal health information to consumers within 48 hours. The easiest and cheapest way do achieve this is use of a PHR. I am not suggesting providers and hospital purchase tethered PHR, there is definitely no ROI in the use of those, no Economy of Scale. But, utilize a commercial PHR such as HealthVault or Dossia as the Mayo clinic has provide a much better opportunity for ROI. Tethered-to-payer PHRs and Third-party PHRs/PHDR such as Dossia and HealthVault show a steady-state net value of $11 billion annually states Pamela Lewis Dolan, amednews

    This is a great discussion and I am glad you brought it up. Next lets talk about NHIN.

    Jeff Brandt
    http://www.comsi.com

    Starting in 2013, hospitals will be paid according to a Medicare Hospital Value Based (VBP) program payment schedule. Patient satisfaction has been added to the criteria of payment reimbursements. Providing PCHR can play a major role in providing patient satisfaction.

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  2. Great, concise yet very informative article. After I read your articles, I was browsing through the websites of a few EHR vendors and that is where I found this pretty efficient ROI calculator, so thought of sharing it with you all.
    http://www.waitingroomsolutions.com/wrs/emr-ehr-roi-calculator

    I think ROI is very important factor that should be duly considered when look achieve a ‘meaning use’ out of a EHR solution. Though one may get vendors providing ‘meaning use’ at a lower cost, their ROI / savings through the use of their EHR might be pretty low when compared to costlier initial investment. Found a pretty useful ROI tool that is pretty customizable and easy to use. It also accounts for the different specialty EHR’s too.

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    • Thank you for commenting. I think that makes sense for small practices, but I can’t see ROI even being a reasonable conversation for a hospital. DC develops arbitrary figures that have to fit 4,200 hospitals, and we haven’t yet seen the stage 2 and 3 requirements.

      Like

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