Monday, October 27, 2008

The Return on Investment of EHRs

An experienced clinician recently emailed me, lamenting that Electronic Health Records do not have a return on investment i.e. doctors buy them, lose productivity, and do not get paid incrementally to justify the acquisition and use of EHRs.

This is indeed a complex issue. My answer to this clinician is below. I thought you'd find it interesting:

"The challenge is how to calculate Return on Investment i.e. who spends and who gets the return.

The literature suggests the e-prescribing reduces costs for pharmacies, payers, and providers (by reducing the burden on administrative staff to process renewals)

Decision support in an EHR results in better coordinated, appropriate, and less redundant care. However, it may be that the clinician pays for the decision support but the payer benefits from it through reduced claims.

To me, the Healthcare system (payers, providers, patients, employers, labs, pharmacies) achieves a substantial ROI through the use of EHRs which keep patients healthy and thus reduce costs.

To make the equation work, payers, hospitals, pharmacies and other beneficiaries of savings have to gainshare i.e. share the ROI with the providers. At BIDMC, I'm paying 85% of the implementation costs of EHRs for community physicians to better align incentives i.e. doctors do the work, the healthcare system benefits from care coordination and hospitals as one of those beneficiaries can subsidize costs.

Hopefully Medicare will start subsidizing EHRs so that the ROI is better aligned as I suggested in my letter to the President.

Soon, we'll have the outcome from the analysis of the Massachusetts eHealth Collaborative Project, the $50 million dollar BCBS pilot to implement medical records in 3 cities. I anticipate that it will conclude EHRs should be implemented to control costs, however the economics of how to pay for EHRs and encourage their ongoing use may require a novel scheme to 'redistribute the wealth'."
Load disqus comments