EHR Adoption and ROI: An April Fool’s Joke or more March Madness?

March is now behind us and some of us are kicking ourselves for not picking Florida Gulf Coast to go deep in the NCAA Tournament. Who knew?

 

College hoops aside, have you seen the latest figures from CMS regarding the EHR incentive program? Through the end of February over $12.5 billion dollars had changed hands, including over $4 billion paid to physicians and other eligible professionals. And, get this, over 3,200 nephrologists are now counted among those collecting the HITECH meaningful use incentive.

 

One of the reasons Congress created the HITECH Act was to minimize a perceived barrier to widespread EHR adoption—the financial barrier. But what is the actual financial impact of EHR adoption from the perspective of the medical practice? I took a brief respite from the Madness known as the NCAA basketball tournament to explore this question.

 

Welcome to Brackettville, stay as long as you can

 

Bates, Green, and Adler-Milstein, writing in last month’s edition of Health Affairs attempt to shed some light on this question. Using a combination of survey data and cost information supplied by the Massachusetts eHealth Collaborative, the authors examined a wide diversity of practice settings and determined revenue and expenses for these practices during 2005 (pre-EHR) and 2008 (post-EHR). They did their best to identify both costs incurred and savings realized, specifically as a result of EHR adoption. It should be noted that this group of practices was motivated by receiving full financial support both for the purchase of their EHRs and for implementation support. The support was made possible by $50 million received from Blue Cross and Blue Shield of Massachusetts. Also, recognize this pilot took place well before the HITECH Act became law in 2009. Nonetheless, I think the results of their findings are worth a look.

 

Vander Blue drives coast-to-coast…Marquette wins by a point!

 

The study included 16 primary care and 33 specialty care practices. Practice size was segmented into three groups: 1–2 physicians, 3–5 physicians and 6 or more physicians. The authors examined five-year ROI calculations at baseline, without the HITECH incentives and under the assumption the physicians in the practices each collected the $44,000 Medicare incentive during those five years. Costs incurred by the Collaborative were attributed to the practices as though the practice itself had purchased the EHR and paid for the support. Their principle findings are displayed in the table below. The table displays the percentage of practices projected to achieve a positive five-year ROI after adopting an EHR.

 

	Without HITECH Incentive	With $44,000 HITECH Incentive
All Practices	27%	41%
Primary Care	25	56
Specialty Care	27	33
1-2 Physicians	26	33
3-5 Physicians	21	36
≥ 6 Physicians	38	75

 

Aaron Craft, step back 3…it’s good! Ohio State advances

 

Adler-Milstein et al took a closer look and tried to tease out what separated the practices that did better financially from those that did not. Recognizing the challenges presented by subset analysis, the authors reported the following: The largest factor separating those practices with a positive ROI from those with a negative ROI was a revenue increase (as opposed to a reduction in expenses). On average, practices in the study with a positive ROI saw per-physician revenue increase by just over $114,000 during the five- year study period, whereas physicians in the practices that did not “break even” post EHR adoption experienced a much smaller revenue increase over the same five-year period (roughly $9,000). The authors identified several reasons for the substantial revenue increase in the positive ROI cohort:

1. Ten percent of the practices reported increased efficiencies that allowed their physicians to see more patients per day post EHR adoption.
2. 18 percent of the practices reported increased revenues through improved billing, which resulted in fewer rejected claims and more accurate coding of work performed.
3. The positive ROI cohort also realized substantial savings by reducing the need to outsource dictation and billing services (when a practice management system accompanied the EHR). The positive ROI groups saved just over $100,000 per physician over five years related to these two services, the negative ROI groups saved roughly $13,000 during the same period of time.
4. Positive ROI practices were able to reduce support staff following EHR adoption to a greater extent than the negative ROI practices.

Florida Gulf Coast makes history…dances into the Sweet Sixteen!

 

Has the HITECH Act succeeded in reducing the financial barrier to EHR adoption? I think it is difficult to tell. EHR adoption is certainly on the rise and ONC has set some ambitious goals for this year (50% of eligible providers and 80% of hospitals achieving meaningful use by year’s end). But the financial question is complex, and financial outcomes are unlikely to be the sole driver of EHR adoption. The authors of this study have examined the question from the perspective of the medical practice. I think CMS and ONC, on the other hand, would take a different perspective, examining the impact of EHR adoption on the value of health care delivered, where value = quality ÷ cost. Of course quality is much more difficult to objectively measure than cost, and cost in this case is costs incurred by the purchasers of health care.

 

I think we will see more robust analysis of the financial picture in the years ahead. Has EHR adoption resulted in a positive financial result for your practice? Let us know by answering our survey. Oh yeah, and let your significant other know, there’s only one more weekend of Madness. No fooling.

 

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