Return on Investment (ROI) has been difficult to quantify for physician practices’ adoption of Electronic Health Record (EHR) technology. A new study published by the Medical Group Management Association (MGMA) sheds new, significant data on this question. The report reveals significant financial benefits to practices resulting from using EHRs – nearly $50,000 improvement in operating margins were seen among EHR-using practices, compared to paper-based practices.
The traditional view had been that most of the savings to the healthcare system resulting from widespread EHR adoption accrued to places outside the physician practice (who encumbered the burden of purchase, installation and implementation of the EHR in the first place). Health plans stand to gain, based on reduced cost-of-care resulting from efficiencies of interoperable health IT – reduction in duplicated lab and imaging testing, better conformance to standards-of-care – and, goes the speculation, this should result in downward pressure on health insurance premiums in the market. Good for public policy, not for necessarily for the practicing physician.
Other technologies, like the latest in diagnostics or therapeutics, directly result in revenues to the providers of such services – there are CPT codes for the use of these kinds of technologies, and thus (in a fee-for-service environment) their use is rewarded. Not surprisingly, physicians have been quick to embrace these kinds of new tools. In fact, the explosion in diagnostic and therapeutic technologies has often been cited as a principal driver of the double-digit healthcare cost inflation seen in the past decade.
EHR use, on the other hand, does not result in top-line revenue to a physician. There is no CPT code for using an EHR. It is viewed as a cost burden – an increase in overhead – which must be offset somehow. The image conjured up in a sentinel article in the New England Journal of Medicine by David Blumenthal and John Glasser in 2007 is “that of a waiting room full to bursting, a crashed computer, and a frantic clinician on hold with IT support in Bangalore.” Small wonder that EHR adoption has been slow!
Set against this backdrop, EHR benefits for clinicians have been indirect, and have been phrased as ROI arguments. Does using an EHR result in sufficient in-office efficiencies to be worth the burden? What has been the experience to date? The MGMA study offers new and quantifiable insights into this question.
In 2009, the MGMA surveyed 1,324 primary care and specialty practice members (by definition, all group practices). It found that independent practices had a median of $49,916 more revenue after operating costs per full-time physician than paper-based practices. Hospital-owned, or delivery system-owned multi-specialty practices had a median of $42,042 operating margin more than their paper-based counterparts.
The main place where these efficiencies were seen was in staffing costs – median IT staffing per full-time physician added 0.13 FTEs (full-time equivalents), while medical records staffing per physician fell 44% from 0.34 to 0.19. Similar reduction in transcription costs added to the savings seen by EHR-using practices.
The bulk of the EHR systems implemented by MGMA member group practices have been legacy, locally-installed EHR systems. In other words, the full brunt of up-front costs, server-system and local network installation and maintenance, were encumbered by these practices. They needed to add IT staffing to maintain these things. Even so, they reported significant improvements in operating efficiency.
Web-based technologies (especially free ones), which have enjoyed rapid adoption by many small and solo practices, were not heavily implemented among MGMA-member medical groups in the 2009 study. The elimination of many of the EHR costs by these emerging web technologies would tip the scales even further. If the amortized overhead costs from local hardware are lowered by adopting a web-based solution (only needing to invest in web-connected computers and a broadband Internet access, but not servers, local networks and data backup), then the margins could be even higher. Further, the net 0.19 FTEs of health IT personnel cost (per FTE physician) may also vanish, as the maintenance of local servers and networks is no longer needed.
The result from web-based solutions? The near-$50K (per physician) improvement in operating margins reported in the MGMA study may actually be better, when a web-based EHR is utilized. It will be interesting to see if subsequent MGMA studies, which might try to distinguish between locally-installed vs. web-based EHRs, demonstrate this with new numbers.
Robert Rowley, MD
Chief Medical Officer
Practice Fusion EMR
