The Costs of Accelerating EHR Adoption

Many studies have demonstrated that Electronic Health Records (EHRs) can improve quality and reduce costs through coordinated delivery of the right care at the right time. The escalating cost of healthcare and the downturn in the economy are the perfect storm to create real urgency for implementing Healthcare Information Technology.

Many clinicians cannot afford EHR implementation. Stark safe harbors help physicians affiliated with hospital systems but do not help unaffiliated clinicians.

An early priority for the Obama administration should be decisive, rapid action to accelerate the adoption of EHRs via broadened Medicare/Medicaid incentives to implement and use Certification Commission on Healthcare Information Technology (CCHIT) certified products. Federal funds are needed to subsidize implementation teams and locally credible EHR champions who inspire and motivate providers at the grass roots level in each State. In order to receive funding, States should have to create EHR adoption services that effectively and efficiently deploy EHRs to achieve low failure rates and meet quality/safety goals. Funds should include direct payment, low interest loans, tax credits, pay for performance incentives, and penalties for delayed adoption. Grant funding, however, is probably not an effective vehicle, since it doesn't give Federal/State governments enough control, nor is it usually focused on sustainability.

How much is needed? Our Massachusetts experience suggests that approximately $350 million is needed to complete the rollout of EHRs in our state - about $50,000 per practicing unaffiliated clinician.

Here are the breakdowns of community EHR implementation costs at BIDMC/BIDPO, the Massachusetts eHealth Collaborative, and the New York Department of Health and Hygiene EHR project.

Costs per licensed user	BIDMC	MAEHC	NYC
Software	5,998	10,800	4,500
Hardware	10,561	17,783	15,000
People	29,641	17,660	16,000
Total	46,200	46,243	35,500

Assumptions:
1) Software costs include only the direct licensing costs for EHR and non-EHR software. MAeHC software costs are higher because several different EHRs were implemented, creating more complexity.
2) The NYC costs do not include non-EHR software
3) Hardware includes practice-level and central-site hardware.
4) People includes direct services from staff, whether vendor-provided or sponsor-provided.
5) These costs are for implementation only. The average annual per physician support costs are roughly $5,500 per user for BIDMC and $6,500 per user for MAeHC.


Further detail:
1) BIDMC includes 300 docs. MAeHC includes 575 docs. NYC includes 1,200 docs.
2) The people costs are not directly comparable, because neither MAeHC nor NYC have accounted for the entire provider-side of the costs of hardware integration. For example, with MAeHC, vendors designed and the hospitals implemented the local ASP environments, but we do not know the labor cost at the hospitals. With the BIDMC project all costs are explicit because the ASP environment was outsourced. The NYC practices are purchasing hardware on their own, so we do not know the exact costs.
3) BIDMC will get some scale benefit once the number of implementations grows. The per user people costs include the design and build of the central site and the cost of the Project Management Office.
4) BIDMC actual hardware costs will probably be higher based on the implementations to date because the practices are purchasing more equipment than original budgeted ­(i.e. more printers, laptops, and tablets for support staff)

As a country, we have enough experience with live implementations to know what needs to be done to implement EHRs and the cost of doing it. The time for grants and experimentation has passed. To borrow a marketing slogan, the time is right to "Just Do it" by providing financial incentives.