Learn how to plan a budget effectively and realistically for EHR implementation success.

1. The Health Information Technology Community
Electronic Health Record Budgeting
Effective and realistic cost plans for today's implementation and
tomorrow's support and maintenance
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2. Michael Levinger
• President, CEO and Co-founder of The HIT
Community
• 30+ years of experience in the successful
use of mission-critical software including
EHRs and Health Information Technology
• On the faculty of Boston University teaching
a masters degree course on Electronic
Health Records
• Serves as the Health IT “Ask the Expert” for
Pri-Med
• Member of Massachusetts REC workgroup
on Health IT Workforce Development
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3. Welcome!
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4. The HIT Community Services
Create and manage online collaboration solutions
Manage public, sponsored nation-wide online
communities
Consulting services on communications & collaboration
strategies and online social communities & media
Supported by data analytics
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5. Agenda
• Electronic Health Record Budgeting
– Uses of funds
– Sources of funds
• Critical Success Factors
• Questions & Answers
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6. • Put in polling question on where attendees are
in the EHR deployment process
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7. EHR Budgeting
Sources
• Government
• Provider
Performance
• Reimbursement
Uses
• Direct
• Indirect
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8. Question
• How many people have a program budget
already?
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9. EHR Deployment Resources
• People
• Software
• Hardware
• Telecommunication
• Services
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10. EHR Deployment Resources
• People • Clinical Staff
• Software • Administrative Staff
• Hardware • Software Expertise
• Hardware Expertise
• Telecommunication • Project Management
• Services
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11. EHR Deployment Resources
• People • Electronic Health Record
• Software • HIE
• Hardware • Operating Systems
• Security
• Telecommunication • Virus/Threat
• Services • Utilities
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12. EHR Deployment Resources
• People • PC’s
• Mobile – Tablets, PDAs, etc.
• Software • Servers
• Hardware • Telecommunication –
• Telecommunication Routers, Modems, etc.
• Security
• Services • Medical Devices & Connectivity
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13. EHR Deployment Resources
• People • Bandwidth
• High-capacity
• Software • Backup
• Hardware • Voice
• Telecommunication • Data
• Image
• Services
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14. EHR Deployment Resources
• People • Hardware Deployment
• Software Implementation
• Software • Physical Site Preparation
• Hardware • Project Management
• Telecommunication • Process Re-design
• Training
• Services • Support
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15. Potential hidden costs of EHR
• Impact to workflow and patient capacity
• Impact to revenues
• Hassle factor
• Staff impact
• Cost/benefit
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16. ARRA Incentives - Just the tip of the $$ iceberg
• Government incentives
• More patients per day
• Improved practice efficiency
• Practice growth
• “Pay for performance “
• Better coding performance
• Improved contracting
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17. Question
• How many people feel they know the financial
benefits of an EHR?
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18. Government ARRA Incentives for EHR implementation
As much as $44,000 per provider As much as $63,750 per provider
• Must be eligible professionals (NOT • Must be eligible professionals (NOT
hospital-based) that are meaningful
hospital-based) that are meaningful
EHR users
EHR users
• Must meet certain Medicaid volume
• Paid over five years
levels
• Disincentives if don’t deploy EHR • Payment for up to six years
system, payments will be cut
• Up to 85% of the costs for certified
– 1% in 2015 EHR technology and support services
– 2% in 2016
• Some pediatricians can receive up to
– 3% in 2017 $42,500 at lower thresholds
• Lots of “fine print” • Maximum of $21,250 in the first year,
$8,500 in subsequent years, up to a
total of $63,750.over total time frame
• No payments after 2021
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19. More patients/day
• Basic truth: the longer it takes to document a visit, the less money
you make!!
• Example:
– Work from 8-5, see 24 patients, Average $70/patient = $1680/day
– 3 minutes per patient to document = 72 minutes
– 2 minutes per patient= 48 minutes
– 1 minute per patient= 24 minutes
• If documentation can be reduced from 3 minutes to 1 minute..
– you could see 2 more patients/day
– = 10 patients/ week
– = $700/week
– = ~ $30,000/year
BUT – what if documentation time increases?
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20. Improved Practice Efficiency
• Decreased transcription costs
• Decreased billing/coding costs
• Decreased admin process costs
– Managing charts
– Filing lab slips, hospital reports etc.
– Reduced telephone encounters (more self-serve from
patient portal functionality)
• Opportunity to decrease 1-2 FTEs…$30,000-
$50,000
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21. Practice Growth
• Driven by consumerism in healthcare
– Information transparency
– Public perception of technical sophistication
– Improved convenience
– High tolerance for / desire for self service
– Cost consciousness on behalf of the patient => cost
transparency
Example: 10-15% increase
in patient volume can lead
to 10’s of thousands of $$
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22. Pay for Performance
• More accurate data collection
• More reliable data retrieval
• More efficient alerting and reminders
• Private insurance & Medicare/Medicaid
• Potential P4P of $15,000-$40,000 per provider per year
BUT: Can’t get the incentives if can’t document the
performance
AND: Capitation/Accountable Care Organizations will have
more impact in the future
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23. Improved coding
• Use of EMR system coding prompts
• More confident “upcoding”
• Less audit concern
Potential reward….$50,000-$100,000
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24. Improved Contracting
• More insurance company leverage
• More Insurance company responsiveness
• Example … $10-$20 per member per month
$20 x 1000 patients x 12 months = $240,000
Done right, you do well – “the new capitation”
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25. Question
• How many people believe EHR deployment will
“make” their practice money?
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26. So…is EHR adoption worth it?
Costs Sources
• Upfront investment $40,000-$60,000 one- • Government $44,000-$63,750 one-time
time
• More patients per day $15,000-$30,000 per year
• On-going cost $5,000-$10,000 per year
(software, hardware, • Improved practice efficiency $30,000-$50,000 per year
support)
• Practice growth $10,000-$50,000 per year
• Initial lost productivity $50,000-$100,000 one-
(converting from paper, time • “Pay for performance “ $15,000-$40,000 per year
physician and staff
training) • Better coding performance $25,000-$100,000 per year
• Improved contracting $50,000-$240,000 per year
Total over two years $100,000-$180,000 Total over two years $334,000-$1,000,000+
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27. Case Study
Michigan State University
Sparrow Health System
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28. MSU Sparrow Case Study
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29. MSU Sparrow Case Study
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30. MSU Sparrow Case Study
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31. MSU Sparrow Case Study
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32. EHR Budgeting – Success Factors
• All benefits must have a baseline and well defined measurement
approaches.
• Expense reductions must result in budget reductions to the
appropriate accounts.
• Efficiency must show full time equivalent (FTE) reductions or
increased chargeable productivity.
• Future FTE cost avoidance is only allowed if the position is
previously approved in a budget and an account's budget can be
reduced accordingly.
• Cost avoidance must tie to future expenses that are already
contractual bound and budgeted.
• A hurdle rate for return on investment (ROI) will be defined and
measured.
Source: http://www.healthcareitnews.com/blog/building-financial-case-electronic-health-records
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33. THE HIT COMMUNITY
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35. The HIT Community
• Partners with providers, RECs, QIOs and other organizations
• Provides a ready-to-go knowledge and collaboration solution-
Tools / Data / Expertise
• The expertise to succeed:
– Knowledge sharing, collaboration and communication experts -
How to create conversation, engage members, and collaborate to
achieve results
– Expertise in online knowledge, communication and collaboration tools
– Quantify results – healthcare performance measures and data analytics
Voice of the people - Our mission is to help all healthcare
providers through critical healthcare industry inflection points.
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36. Questions?
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