EHR ROI: a case study

I recently heard an interview of John Cougar Melencamp during which he discussed what it was like writing a song to be used by Chevy.  The song, Our Country, proved to be one of his most successful commercial ventures.  The interviewer asked him what it was like having Chevy as a record producer.  To me, his answer was filled with meaning.  Melencamp answered, “Chevy was a better record producer than Columbia ever was.”  When asked why he said, “When they said they were going to do something, they did it.”

From what I’ve seen, that statement underscores the difference between EHR that portend to meet Meaningful Use and Certification, and the small handful that actually deliver an ROI to your business.

Let me present you with a real-life example, an EHR ROI case study.  The data shown on these graphs is real.  It was developed by analyzing how many times a certain provider moves patient charts.  It starts at the chart room, is touched many times until it gets to the doctor, and is touched many more times prior to being refiled.  Charts are handled more than fifteen discrete times and undergo more than fifty unique manual processes.

This chart shows the 5-year cumulative cost benefit of implementing the specific EHR.  It does so by calculating costs around the Average Handle Time (AHT) of each time the chart is touched.  To reinforce the point, AHT per touch was calculated at 3 minutes, 2 minutes, and 1 minute.  AHT also includes spent time walking around; to the printers, the copiers, the scanners.  To the chart racks, back to the desk, to another clerk.

The interesting thing about walking time, and AHT, is the clerks are being paid to exercise even though their walking and copying do not add any value to the patient’s chart.  That’s where the ROI lays.  Without a good EHR—one that creates savings—your business costs are overstated by having a dozen or more people sitting, standing, walking, talking, copying, filing, processing, two-hole punching, stacking, inserting, writing notes, and refiling.  What happens to all of those ‘ing’activities if you install a good EHR?  All of the value from those activities still takes place, but it occurs in a fraction of a second.  It appears on your screen in much the same way that 60 Minutes is plucked off a satellite and appears on your television.

The purple line shows the total five-year cumulative cost of implementing this EHR.  The vertical axis shows dollars.

There used to be a management style practiced by Ivy-League MBAs called Management by Walking Around (MBWA).  A good EHR is like being able to multiply MBWA by negative one.  It cancels out all of the walking and all the other ‘ing’ activities that incur costs without adding value.

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3 thoughts on “EHR ROI: a case study

  1. Mr. Roemer:

    (yawn) The problems that I have with your analysis on ROI based on chart pull times are:

    1) At my office I use a combination of a cheap “basic EMR” + paper record. The amount of clerk touch time is minimal.
    2) Writing into the paper record is much quicker than with any EMR. This is important, as physician time is more valuable.
    3) Even if the above 2 points weren’t true, the COST of the “enterprise” EHR far offsets anything that one gains from increased “touch time” of the paper record.
    4) Add to that the COST of the HITECH Act mandated reporting associated with a certified EHR and then the cost increases drastically, up to an average of $60000.00 per year per physician (using very conservative numbers) as I calculated in my column at http://www.hcplive.com/primary-care/mdng-primarycare/PC_Medicare_HIT_mandate

    Sincerely,
    Al

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    • Not sure if my post caused your yawn, or you are simply tired.

      Clearly, one blog does not allow for the variations of every provider’s practice. This post probably impacts those whose practices exceed 50 physicians and 100 staff. The cost savings I mention do not even include savings gained from not having charts at the actual clinics, just their warehousing and retrieval. Regarding your second point, I agree fully. On point three for example, if the enterprise has 20 people whose job is to merely get the chart to and from the physician’s office–without adding any clinical value to the chart, and the fully loaded cost those people is $45,000 a year, getting rid of the need to have paper charts, reduces those costs or makes them go away–perhaps $900k a year saved.

      I love your fourth point. The group in the case study is implementing an EMR that will not pass Meaningful Use and will not be certified. It was designed not to meet them. It is focused on making it easier and more efficient to run the practice, and it does not define its strategy around DC.

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  2. Pingback: ICMCC News Page » EHR ROI: a case study

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