As we move forward in a more digitally-inclined and technologically-dependent era, 38% of medical companies and organizations have enlisted EHR optimization as their top priority of capital investment for the next three years.
It’s no wonder that EHR systems are now considered as the driving force in moving forward in medical operations because of their efficiency and increased productivity of employees.
We can never overstate the fact that EHR systems and their implementation and optimization are part of the core strategic plan for future developments as well as the capital and budgeting processes in healthcare institutions.
Despite the benefits and positive impact that EHR brings to the table as far as development is concerned, there is still a growing fear and anxiety amongst investors as to how to properly study the capital investment that EHR system entails or the budgeting process which these medical companies have to build around.
Budgeting EHR and Knowing Its Costs
With this in-depth article, we will run down and address the issues related to EHR capital investment and building a budget that’s wrapped around it, that includes:
- Justifying the cost of an EHR
- Positive Impact of an EHR system
- Compiling EHR costs
- Making a constructive and accurate EHR budget
We will also give you a sample price of some EHR systems that are available in the market.
With that said, let’s get things started:
Justifying the cost an EHR
Let’s just face it – while EHR is a dependable and advanced operating system moving forward, there is still anxiety and uncertainty about whether the system is worth investing, more specifically if the margins are too thin.
To provide you some helpful tips, when you decide to get into an EHR investment, it must fit into the short-term budget planning of the practice.
However, it doesn’t mean that putting all your focus on investing in an EHR requires the practice to fulfill it as a regulatory requirement.
Rather, when budget and finance is properly managed, one can expect great results and significant benefits in investing in an EHR system, like:
- Improved service delivery
- Reduction of operational costs
- Guaranteed increased revenue
In order to get the buy-in of the potential investors and decision-makers of the organization, one must have a strategic plan to present the positive impact in investing in an EHR entails and why it is justifiable to have an additional capital placed into this for the budgeting.
For one, one may highlight the cost-benefit analysis in a particular practice that includes the improved service, customer care, efficiency and productivity of employees, and quality results.
One has to include the short-term and long-term projections for the ROI.
Finally, to get the nod of the decision-makers, one has to include an in-depth analysis that includes the total ownership for short-term and long-term timelines so that those financing the investment could project the EHR-related costs.
Positive Impact of an EHR system
The initial investment for an EHR may come at a hefty price and it will cover the cost for approximately 2.5 years.
On the flip side, after the long wait, the medical institution will save an average of approximately $23,000 per full-time employee per year in net benefits.
You can never discount the positive and tangible effects that an EHR can contribute to the operations system especially when leveraged properly.
There are further pieces of evidence to show that and there are studies to back up these tangible effects.
- Increased rate of efficiency and productivity
- Improved quality care and customer service
- Increase in waste reduction
- Guaranteed lesser medical errors on patient profiling
- Better organizational systems (accounting system, and operational benefits)
- Better societal results
In light of all this, given the right perspective, it gives decision-makers a reason why it is justifiable to put in capital investment in an EHR system and why this is beyond just financial benefits as well.
While it is easy to take note of the massive great benefits of an EHR system, it is still undeniable that this is a tedious and challenging task to take especially in convincing the financial investors on why this is a justifiable cost.
The reason for this is budgeting processes takes time especially for matters concerning EHR-related systems and drafting a return of investment is a strenuous task especially if not leveraged and managed well.
If I decided to invest in an EHR, there are two tools that one should utilize and take note of:
- ROI – ROI is a popular term for most but to explain it clearly, it’s a projected calculation of the most tangible financial returns and benefits that can be expected over a period of time compared to the expenses that will be inculcated in optimizing and implementing the EHR system or other programs.
- EHR Cost-Benefit Analysis – A more in-depth study and analysis compared to ROI, but whichever tools will be used, it is highly important to include the forecasted direct expenses and indirect costs that can impact the investment program of an EHR system. The EHR Cost-Benefit Analysis allows investors to see not just the tangible costs and benefits but also the indirect ones.
The most frequent and general question asked when investing in an EHR is “how much does it cost?”
This is the most common question and one can only expect a generic answer to this and project managers dreading, “it depends.”
You absolutely don’t want to get that single phrase answer.
It’s better to be more specific about what you’re really asking and looking for so that you can expect a more detailed and clarified answer.
So, to answer the “it depends” concern, getting into an EHR system and its costs really depends on the longevity of its usage and to what practice it is intended for.
And for price comparisons, it would be challenging to identify such without fully indicating and studying the variables that can affect the costing and pricing of an EHR, such as:
- the specific features a practice is looking for and what it specializes in
- add-on features in the system like patient profiling and practice management
- cloud system or premises deployment
- upgrade of hardware to support the software
- the scale of the installation
With the goal of coming up with an extensive budgeting process, one cannot rely on just an imaginative and unclear “out of the box” price for an EHR system optimization.
Rather, it must be based on long-term, specific and well-analyzed figures, and cost estimates.
In doing so, one of the most efficient processes in calculating long-term costs involves getting the figures of the total cost of ownership (TCO).
A TCO analysis is a comprehensive and full assessment of the costs that will be accumulated over a period of time, which indicates all the accounting and financial costs which are represented by short-term or long-term projections and direct and indirect expenses.
Part of compiling the costs of an EHR is also knowing and understanding the type of EHR deployment method which is either a cloud system or on-premise.
Part of the costs lies on these as one should factor in the method of the software development for the EHR.
For example, a five-year projection of TCO for an on-premise method versus a cloud-based system would have a massive difference as a cloud-based system would cost roughly about $58,000 while an on-premise option would only cost about $48,000.
But on the flip side, the upfront costs of a cloud-based method are slightly lesser compared to the office-based option where the cloud system is priced at $26,000 while its comparison is priced at $33,000.
But, the investment of an EHR system is more than just the upfront costs and long-term expenses or the differences in the methods.
When studying the TCO analysis, there are other reasons that should be factored in once decided to invest in the EHR.
One should study and consider the reliability of the system, hardware investment, cost of implementation, optimization and maintenance of the system, and security which weighs heavily in the cost estimates that can determine the decision making of investors.
And finally, the total cost of ownership (TCO) estimates should be knowledgeable of the implementation of the system that includes the setting up and launching of the EHR.
What is the cost of an EMR/EHR software implementation?
Another commonly asked question is the one stated above.
As explained, implementation costs would vary and it would highly depend on the duration and implementation plan of the practice.
There are other variables that should also be considered in this.
That’s why it’s not as easy to come up with an average cost of an EHR implementation.
However, several cases studies and examples have shed some light on this and provided more insight to get the right perspective on the implementation costs.
For example, Health Affairs in its initial study has stated that it would cost them a whopping $162,000 to implement a multi-physician practice for an EHR system.
For maintenance alone, they would roughly spend $85,500 for the first year alone.
The bottom line for this is, the higher and the larger scale it is for the practice, medical institutions should be ready to spend a larger sum of money as well for EHR implementation.
For larger community hospitals, initial expenses would shoot as high as $5 million, and others even having to spend a lot more than $20 million just to implement the EHR.
What are the hidden costs of an EHR optimization?
In every project, the cost of breakdown is really important to have a clearer picture of the financial figures that the investment entails.
For an EHR implementation, the budgeting process should include costs such as:
- software licensing
- maintenance costs
- consultation and training
- labor expenses including overtime fees
- hardware (usually for on-site method)
There are also indirect costs that should be taken note of such as:
- decreased revenue
- lost of employee productivity
- minimal patient visits
When all of these variables are factored in, these can create more comprehensive budgeting and could have an impact on the overall implementation of the EHR budget process.
Compiling EHR Costs
The budgeting process of an EHR implementation is a lot different compared to the normal operating costs of a practice.
There are a number of uncertainties that need to be accounted for and if left out, it can result in budgeting mistakes along the way.
However, when the budgeting is approached in a methodological manner and an in-depth analysis is included such as the potential contingencies, the problem of having a flawed budget may be avoided significantly.
The budgeting should include at least these minimum components and not less than the following:
- Hardware – these include all the technical aspects such as printers, computers, scanners, and other equipment needed for the implementation
- Software – the system and its optimization, additions, and potential upgrades needed in the future
- Assistance – the people working such as IT contractors, maintenance team, legal support, installation and training, and team, project managers, and so forth.
- Training – the cost for assistance to train clinical and admin staff
- Contingencies – productivity of employees, short-term and long-term revenues, and patient-related gains and losses.
Pricing of Popular EHR Systems
As promised, we want to wrap up this article with some pricing examples provided by service providers in the market.
We have given you some points to consider when coming up with a budget for an EHR system implementation.
Now, to give you an idea of how much these service providers cost and which do they really cater to, we’re giving you some samples to take a look into.
- Epic – EPIC EHR systems focus on larger community hospitals. Their starting price begins at $1,200 and that’s only for their self-hosted solutions. For larger organizations and clinics, their offering price is $500,000. One thing to take note of is that EPIC does not offer a free trial for their potential clients, but they can provide a free demo which will be done by their sales representatives.
- Cerner – Cerner is the largest EHR system vendor in the market and it offers both the cloud-based method and the office-based implementation. It includes 50 specialty products that clients can choose from. For their cloud system, its service and maintenance only cost a minimal amount of $25 and will vary depending on the features and advanced systems that the client would request. Just like EPIC, they do not offer a free trial for their potential clients.
- CareCloud – Carecloud specializes in a cloud-based system and has features like Practice Management, Revenue Cycle Management, and Patient Experience Management. Their pricing starts at a reasonable price of $349 and extra fees will be added for add-on features.
- eClinicalWorks – eClinicalWorks is another software development in the market, and can offer various features such as practice management software, patient engagement, care coordination, and population health tools. For its implementation, optimization, and maintenance, it only costs $449 per month. Similar to others, they also do offer a free trial for their clients.
- Allscripts – Allscripts is more targeted to small and medium healthcare facilities. They also have features like revenue cycle solutions, population healthcare tools, and other important ones. For their pricing, one must contact their company to inquire about the information.
With all of that said, this article should serve as a guide on your budgeting process in investing and implementing an EHR system.
This will give you a thorough understanding of price estimates for the development of your EHR projects.