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Study reveals potential costs of EHR adoption

December 16, 2010
by News release
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The results of a new study on the complete cost of electronic health record (EHR) adoption for physician practices reveal that inclusive of equipment, software, services, training time and potential lost revenue, physician practices could face total costs upward of $120,000 per physician.

According to the six-month-long study conducted by CDW Healthcare (part of the public sector subsidiary of CDW, LLC), the speed with which a practice fully implements the EHR and shifts to the new, accelerated workflow is critical to reducing the overall cost of adoption. As the primary driver of cost, physicians expect to see patient encounters decline in the year of adoption by an average of 10 percent. Following adoption, however, physician practices will also directly benefit from EHR-based workflow improvements that enable them to see more patients.

"The most important factor in reducing the cost of EHR implementation is accelerating through the workflow changes," said Bob Rossi, vice president of CDW Healthcare. "The quicker practices can reach full adoption, the quicker they will reach the positive side of the cost curve."

The "Physician Practice EHR Price Tag" study is based upon a survey of 200 physician practices that have not yet adopted an EHR throughout the United States, secondary research on physician practice workflow and CDW Healthcare's internal data on EHR solutions.

Overall, physician practices are focused on the costs associated with EHR adoption, citing their primary concerns as hardware/software costs (66 percent), time associated with staff training (52 percent) and workflow readjustment (43 percent). Although physicians' top concern is hardware and software, the study found that year one expenses associated with that category of cost will likely make up just 12 percent of total EHR adoption costs.

In contrast, the study revealed that lost revenue could prove to be a far larger drain on physician practices than hardware and software costs. Physician practices said they expect patient encounters to fall by an average of 10 percent in the first year, equating to a total average revenue loss of more than $100,000 per physician. Although 10 percent is the survey average, nearly 40 percent of respondents said they expect patient encounters to fall by 25 percent or more in the first year, representing the possibility of greater potential revenue loss.

"Survey responses indicate that physicians are worried about the costs of hardware and software components when they should focus on implementing a complete solution that reduces the time lost to workflow changes," said Rossi. "While a typical practice will have a greater investment than expected, the payoff will be significant."

Critically, while physician practices expect to reduce patient encounters in the year of adoption, an EHR-enhanced workflow will continue to enable more patient encounters in all subsequent years. Some studies have estimated this patient encounter increase to be as high as 30 percent. Using a more conservative measure of a 15 percent increase in patient encounters, the "Physician Practice EHR Price Tag" study estimates that practices may be able to gain as much as $151,000 per physician per year in new revenue once adoption is complete.

Based upon a snapshot of the average physician practice's IT infrastructure, opportunities to either speed adoption or reduce costs include:

Upgrade vs. Replace. The average age of physician practice workstations is less than three years, with 20 percent less than one year old, according to the survey. As such, practices may achieve better results by upgrading existing workstations with system memory, drive space, backup processes and wireless access points to extend the lifecycle of existing workstation deployments

Protect yourself. Notably, 30 percent of respondents did not use antivirus software and 34 percent did not use network firewalls. To protect IT investments and patient information, physician practices moving to EHRs will need to significantly improve their security and business continuity profiles

Training. Twenty-two percent of survey respondents indicate that they will spend at least 10 hours training staff to use the new EHR system. Because training programs are included in the cost of many EHR software packages, practices should take advantage of every training opportunity as a way of accelerating adoption

A full copy of CDW Healthcare's Physician Practice EHR Price Tag is available here.