The Impact of EHR Systems on Revenue

Brien Posey, Freelance Writer and Former CIO | 11/12/2013 | 17 comments

Brien Posey
Despite government subsidies and years to make it work, some hospitals and medical practices are still having trouble getting a good return on investment from electronic health records.

The assumption that EHR would magically increase efficiency and pay for itself is proving to be untrue and now CIOs need to step in to make sure EHR doesn't become an expensive mistake.

In the early days of EHR, a 2010 study by the Medical Group Management Association suggested that healthcare organizations that have implemented electronic health record systems were better off financially than those that had not.

This study, which focused on data collected in 2009 from practices that were not owned by hospitals, reported that facilities that had adopted electronic health records had a higher median operating cost of $105,591 per full-time physician (or equivalent) than organizations that maintained only paper records. However, such organizations also had $178,907 higher revenue per full-time position then organizations that strictly used paper records. Once all of the operating costs were taken out of the equation, these facilities reported an average of $49,916 greater total medical revenue after the electronic health record implementation.

However, a 2013 study suggests that the trend has reversed. This study found that over the course of five years physicians on average lost $43,743 after the electronic health record system implementation. Like the first study, this particular study focused on smaller practices as opposed to hospitals. The study went on to suggest that only 27 percent of the practices surveyed had achieved a positive return on investment. Furthermore, according to the study only another 14 percent of the practices surveyed would have yielded a positive result if they had received the meaningful use incentive from the federal government, which would have resulted in a $44,000 cash infusion.

Of course, this raises the question of why some practices were able to increase revenues after the implementation of electronic health record systems, while most lost money. The difference may boil down to the way in which the electronic health record systems were used. Those practices that were able to increase revenue likely use the electronic health record system as a tool for increasing the number of patients that they are able to treat each day, thereby increasing revenues.

The study suggests that those organizations that were able to increase revenues might also have done so through more accurate billing and coding, which resulted in fewer insurance claims being rejected and fewer billing mistakes.

Given that it can cost well over $100,000 per physician in smaller practices to implement an electronic health record system, and that so many practices are losing money, some physicians have sought more creative ways to recoup some of their investment.

Some practices have begun considering using cloud-based extensions of electronic health records system as a way of interacting with their patients. One organization, Hello Health, offers a subscription-based patient portal that allows patients to perform online scheduling and allows them to access their medical information. In some cases, patients can even interact directly with physicians online.

The Hello Health website advertises the patient portal as a tool for generating new revenue. The site suggests that some practices may see revenue in excess of $35,000 per year by using the service.

Even in larger healthcare facilities where economy of scale can reduce the cost of implementing EHR to more like $20,000 to $30,000, cost controls are still required. Whether you add revenue through seeing more patients or through creative means, it is clear that EHR requires a specific examination of the business plan to make sure it pays off. CIOs who also implement better patient flow and billing practices can more easily justify the cost of EHR regardless of the type of facility. Make sure you do something, however, or you might find a bigger bill than you are ready to pay.

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tekedge   The Impact of EHR Systems on Revenue   11/30/2013 11:23:47 PM
The Impact if EHR systems
@ Susan I agree! Maybe that will be the way to go for private small practices that needs to adopt this system!
Susan Nunziata   The Impact of EHR Systems on Revenue   11/30/2013 4:20:31 PM
Re: more questions about EHRs
@jastro: Like so many efforts to digitize information, there will be stumbles along the way. The long view is that EHR and health information exchanges will ultimately improve the quality of healthcare. At least that's the story I'm buying into. This is especially true for patients who are dealing with complex diseases who need a team of doctors and caregivers who are all able to access up-to-the-minute and (hopefully) accurate information about that patient.

But it's going to take a long time and there will be mistakes along the way. We need patience to ultimately help patients.
Susan Nunziata   The Impact of EHR Systems on Revenue   11/30/2013 4:16:54 PM
Re: The Impact of EHR Systems on Revenue
@tekedge: Agree this may be a short-term loss for a long-term gain. It's challenging though, especialy for private-practice physicians who may lack the tech savvy and not have a CIO at their disposal to help them understand everything. They need a "CIO-for-Rent" to help them get thru this, IMHO.

 
SunitaT   The Impact of EHR Systems on Revenue   11/21/2013 1:02:05 AM
Re : The Impact of EHR Systems on Revenue
Why even use EHR systems? Most CIOs see profit in coalition of cloud services with health services. Using the cloud service not only provides user satisfaction, but also spreads cloud education to those people who don't know what is a cloud and how cloud works. The healthcare sector is huge. That being said, it also needs patient management. Cloud is the best way of killing two birds with one stone. 
tekedge   The Impact of EHR Systems on Revenue   11/15/2013 4:05:53 PM
The Impact of EHR Systems on Revenue
My opinion is that EHR will impact practices in a positive way once it is used accurately.  Being able to see more patients in a day is the main advantage of this system. I think once it gets going in a big way it will be more cost effective and easier to maintain ! Just my two cents
Qasim Bajwa   The Impact of EHR Systems on Revenue   11/14/2013 3:28:56 PM
Re: more questions about EHRs
I'm not entirely certain, if Electronic Health Records are to be associated with ROI, I mean consider how much more time you can have on your hands as a Doctor to attend to your patients, now that you don't have to swop through the patients past records. The implementation quite frankly seems like the right panacea that fits. I think a considerable positive impact will be noticeable in the revenues in the future.
Ariella   The Impact of EHR Systems on Revenue   11/14/2013 12:41:58 PM
Re: more questions about EHRs
@HH the government has been encouraging it.  Over 100,000 primary care providers have adopted electronic health records with the help of funding from the Office of the National Coordinator for Health Information Technology (ONC). Providers who "meaningfully use EHRs may receive incentive payments," and so far, $677 million has been paid out to the 62 Regional Extension Centers participation in the Regional Extension Program.
Hospice_Houngbo   The Impact of EHR Systems on Revenue   11/13/2013 6:02:20 PM
Re: more questions about EHRs
All good questions, Pedro. I wonder if the best solution is not to let health care entities decide whether to implement EHR systems or not. We do know that there are benefits adopting EHR technologies and I think the government should keep encouraging healthcare providers implement EHR systems.
CurtisFranklin   The Impact of EHR Systems on Revenue   11/13/2013 3:12:52 PM
Re: more questions about EHRs
@Pedro, I believe that a mandate for standards is included in the ACA -- that's why everyone is all excited about it now. The part I find most fascinating is that, like the rest of the act, the industry has had three years to get ready and yet it  seems that so many offices are now surprised by the requirements. That's just amazing.
CurtisFranklin   The Impact of EHR Systems on Revenue   11/13/2013 3:11:06 PM
Re: how many more patients...
@Sara, that's an interesting question: How much of the waiting time we all hate when we head off to the doctor is due to issues with records? If everything were available instantly and electronically, would it save even a few minutes? I don't know the answer -- but if records are part of the problem then the situation allows for some intriguing solutions.
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