Is Achieving ROI on EHRs a Reality or Fantasy?

Is Achieving ROI on EHRs a Reality or Fantasy? Expected cost savings and productivity benefits associated with EHR implementation have not materialized. Why Not?

Does anyone in their right mind believe that these are the best of times in healthcare or health IT?

Scratch that.

Does anyone besides Judy Faulkner and Neal Patterson believe these are the best of times? (I mean, everyone knows that Dramatic Transition + Industry-wide Upheaval + Piles of Cash = Satisfaction / Contentment, proving the point mathematically.)

The question: At what cost to overall healthcare improvement do Epic and Cerner (and others, to be fair … except you, Allscripts) reap massive profits?

The short answer: We don’t really know.

While it is generally acknowledged by most (certainly not all, which you know if you’ve spent any time on HIStalk) that the ready availability and automated cross-checking of electronic health records improves care, there is no definitive study showing dramatic clinical improvement, demonstrable return on investment, etc.

Indeed, we now have a number of studies suggesting exactly the opposite:

  • The implementation of an EHR upends organizational structure and often slows down the provision of care.
  • The introduction of an EHR into a dysfunctional organization tends to exacerbate, not alleviate, said dysfunction.
  • Much of the promise of health IT is in interoperability, and the industry is a long way from reaching that goal.
  • Physicians generally dislike most health IT solutions.
  • Patients would rather the doctor look at them instead of the monitor.

This is not to say that healthcare should bring the EHR train to a screeching halt. We know how technology has transformed other industries. We know that paper records are archaic and put patients at risk while asking them to maintain endless patience when the same test has be performed a third time. And we know that electronically is the only way information can be shared in a timely manner.

So, while we may not know what the overall cost of corporate profits are to healthcare, we do know that they are really, really high. You’ve seen the figures associated with Epic contracts.

The truly important point is that the initial value of Epic and Cerner contracts isn’t even a reliable indicator of overall cost. According to a recent study by the consulting firm Katalus Advisors, hospitals that adopt Epic can expect to pay an additional 40-49 percent of initial contract value for “varying upgrade costs.” For Cerner, estimates were a slightly more reasonable 30-35 percent of contract value.

Based on these figures, Duke University Health System and Partners Healthcare can expect to pay an additional $350 million to Epic on top of the $700 million contracts they already signed. UC San Francisco will probably pay an additional $75 million for their Epic relationship.

[See also: The Costly Darkside of EMR Implementations]

Generally speaking, what they will get for that investment is not lower costs and greater efficiency. According to a report by the RAND Corporation that evaluates predictions made by a 2005 vendor-financed RAND study, expected cost savings and productivity benefits associated with EHR implementation have not materialized.

Why not?

In a nutshell: Sluggish adoption. Clinician intransigence. Poor planning and change management. Lack of interoperability.

Other than interoperability, these are organizational constraints, which are the constant in the EHR adoption equation. Which begs the question, why spend multi-millions of dollars—plus as much as 50 percent of contract value on top of that—for systems that are not interoperable and may threaten the financial viability of your hospital and organization?

The simple truth is that EHR systems do not currently offer cost savings equal to purchase price. With some solutions, there’s an uncrossable chasm between sticker price and ROI. And we’re talking about the financial viability of hospitals, here, not breakfast cereal. If those Lucky Charms disappear from the shelves, your kid may throw a tantrum, but nobody will get hurt.

Purchasing an EHR is not like a buying a car that you just get in and drive away. It’s like buying a car that you have to stop and recalibrate every mile with the assistance of the trained experts in the back seat who charge you a fee every time they have to listen to you speak or look under the hood. In this situation, paying less for the car is probably a good idea.

We have the most fractured and expensive healthcare system in the developed world, and the way we’re pursuing health IT adoption is making that worse, not better.  Hospitals and health systems must show some restraint and take control, forcing health IT vendors to behave in a way that at least adds as much value to American healthcare as it takes out in cash.

Dr. Edmund Billings is the Chief Medical Officer at Medsphere where he blogs regularly on healthcare IT.

Image credit: Atlanta Journal Constitution (Lukovich October 10, 2004: sec. 4: 4)

  • http://twitter.com/MD_Solutions/status/291567308013441024/ MD Solutions (@MD_Solutions)

    MD Solutions News: Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/yorhZEhZ

  • http://twitter.com/LemireLindsay/status/291588919944949760/ @LemireLindsay

    Great article! @hitconsultant Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/vIaVMyZF #HITsm #EMR #EHR

  • http://twitter.com/AmanKhanna/status/291594911394975746/ @AmanKhanna

    RT @hitconsultant: Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/2rxffUVZ #HITsm #EMR #EHR

  • http://twitter.com/HIM_HIS_News/status/291609500966850560/ @HIM_HIS_News

    “@hitconsultant: Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/lV9kmyK5 #HITsm #EMR #EHR” #saudi

  • Adrian Gropper

    According to the MIT health economist, Jonathan Gruber, it’s unreasonable to expect the EHR incentives to reduce costs. The EHRs were supposed to facilitate practice innovation but, as the problems with interoperability and lack of physician and patient engagement have shown, the vendor lock-in model driven by the EHR incentives has not had any such effect. Stage 2 and 3 incentives could lead to improved ability to innovate but they will only do this if the EHRs are made more aggressively open to real competition and physician control (in the way physicians control their prescriptions, lab tests and referrals). Unless ONC gets much more aggressive in favor of physicians and patients, the $30B will continue to have paradoxical and frustrating effects.

  • http://twitter.com/medcurial/status/291706419290451971/ @medcurial

    Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/ma1FV3MA via @s_amani #EMR #EHR < Clue: Building for long-term

  • http://twitter.com/Mayn9/status/291894981705220097/ MAYN (@Mayn9)

    Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/eW18r25L via @@hitconsultant #ehr #healthit

  • http://twitter.com/docnieder/status/291908703957942273/ @docnieder

    Welcome to my world. Is Achieving ROI on #EHR a Reality or Fantasy? http://t.co/rPnaxCgy via @@hitconsultant #hcsm

  • http://twitter.com/meanusenetwork/status/291923193260814336/ @meanusenetwork

    Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/NbrCSVu0 #EHR #EMR #healthIT

  • http://twitter.com/Perficient_HC/status/291931559068594177/ Perficient Health IT (@Perficient_HC)

    Is Achieving ROI on #EHR’s a Reality or Fantasy? http://t.co/vVJPrSKi #healthIT #hitsm

  • http://twitter.com/CCdmcrae/status/291972042453049345/ @CCdmcrae

    Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/qhO6kB59

  • http://twitter.com/Sarah_MModal/status/292288997718388736/ @Sarah_MModal

    Well Said! Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/drXWz7js #EHR #ROI #HIT

  • http://twitter.com/hitconsultant/status/292331116231282688/ HIT Consultant (@hitconsultant)

    #EHR Systems Do Not Currently Offer Cost Savings Equal to Purchase Price http://t.co/2rxffUVZ #HITsm #EMR #HealthIT

  • http://www.hitconsultant.net/ Fred Pennic

    Your last sentence sums it up. Thanks for commenting!

  • http://twitter.com/Brad_Justus/status/292390986829672448/ Brad Justus (@Brad_Justus)

    Is Achieving ROI on EHRs a Reality or Fantasy? – http://t.co/vOVcwafL #Healthcare #EHR #HealthIT #HITsm

  • http://twitter.com/erikpupo/status/292392130612174848/ @erikpupo

    RT @Brad_Justus: Is Achieving ROI on EHRs a Reality or Fantasy? – http://t.co/vOVcwafL #Healthcare #EHR #HealthIT #HITsm

  • http://twitter.com/TechurSelf/status/292412381324251136/ Tech urSelf (@TechurSelf)

    Is Achieving ROI on EHRs a Reality or Fantasy? – http://t.co/VsSyvuFe #Healthcare #EHR #HealthIT #HITsm (via @erikpupo)

  • http://twitter.com/drseisenberg/status/292422991709622272/ @drseisenberg

    RT @TechurSelf: Is Achieving ROI on EHRs a Reality or Fantasy? – http://t.co/CNeFnWzl #Healthcare #EHR #HealthIT (via @erikpupo) #HITsm

  • http://twitter.com/kkeshavjee/status/292473309038268416/ Karim Keshavjee (@kkeshavjee)

    RT @hitconsultant: Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/GWUYMYj7 #HealthIT #HealthTech #HCIT

  • http://twitter.com/drnic1/status/292631776965320704/ @drnic1

    Is achieveing an ROI from #EHRs a reality or fantasy..doesn’t look good! #HealthIT #hcr #hcsm http://t.co/aO30zh3B

  • http://twitter.com/swalbers/status/292636480415879169/ @swalbers

    RT @drnic1: Is achieveing an ROI from #EHRs a reality or fantasy..doesn’t look good! #HealthIT #hcr #hcsm http://t.co/aO30zh3B

  • http://twitter.com/LjkMModal/status/292793638726033409/ @LjkMModal

    RT @Sarah_MModal: Well Said! Is Achieving ROI on EHRs a Reality or Fantasy? http://t.co/drXWz7js #EHR #ROI #HIT

  • http://twitter.com/hitconsultant/status/293070701966020609/ HIT Consultant (@hitconsultant)

    What Are the Actual Costs of an #EHR ? http://t.co/2rxffUVZ #HITsm #EMR #healthcareIT

  • http://twitter.com/kafrawley/status/293081533814820864/ @kafrawley

    RT @hitconsultant: What Are the Actual Costs of an #EHR ? http://t.co/2rxffUVZ #HITsm #EMR #healthcareIT

  • http://twitter.com/infomanager/status/293152121325502464/ @infomanager

    Is Achieving ROI on EHRs a Reality or Fantasy?: http://t.co/ybjTAPBh

  • http://twitter.com/CareComms/status/293446019193118720/ @CareComms

    What Are the Actual Costs of an #EHR? – http://t.co/MOjrT9aF via @hitconsultant

  • http://twitter.com/idatallc/status/293449150769537025/ @idatallc

    Expected cost savings and productivity benefits associated with #EHR implementation have not materialized. Why Not?http://t.co/12kMCF5m

  • Chuck Webster, MD @wareFLO

    Inability of current EHRs to reduce healthcare cost is due more to lack of open, transparent, and systematically improvable workflow, than clinician intransigence. To make EHR and health IT workflow more open, transparent and systematically improvable, we must move beyond current structured document-based management systems (open source or proprietary) to less workflow-oblivious alternatives.

  • http://www.hitconsultant.net Fred Pennic

    Great comment Chuck. Thanks for reading.

  • http://twitter.com/eHealthspace/status/353734181647417346/ @eHealthspace

    RT @cmangir: RT @hitconsultant: Is Achieving ROI on #EHRs a Reality or Fantasy? http://t.co/K7O8QAA15C #HITsm #HealthIT