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EHR Spending Continues, But Jury Still Out on ROI

Scott Mace, for HealthLeaders Media, March 13, 2014

Because the bar code process worked the first time, "the nurses were not going to do some of the common workarounds that might otherwise lead to unsafe care," she adds.

Although Virginia Mason chooses not to focus on ROI, Kaplan does share that because of the combination of Virginia Mason Production System's redesigned Toyota-inspired workflows, underpinned by EHR technology, "at least double-digits [of] millions of dollars have been saved."

"We've been on this EHR journey for more than a decade," Anderson says. "EHRs are not in their infancy but are probably in their teen years, and are not fully developed the way that they will need to be in the future to manage new ways of looking at value and population health. We've made a conscious decision not to be a developer, but to work with vendors, so that we don't get out of sequence with the rest of the country. We continue to work closely with Cerner to move to more mobile applications with them, and we will continue to push them in that direction."

Enabling improvement and value

Take the EHR's ability to manage a population and add its capacity to stop duplication of radiology, lab, and genetic tests; to suggest less expensive medications to a prescribing physician; and to track readmissions at scale, and the savings add up, says Marlon Priest, MD, executive vice president and chief medical officer at Bon Secours Health System, a Marriottsville, Md.–based not-for-profit Catholic health system that reported 2012 total net revenue of $3.4 billion and owns, manages, or has joint-venture oversight of 19 acute care hospitals across six states, along with long-term care, assisted living, and retirement communities.

"If you use the EHR right, the record will remind you that Mrs. Jones has a Foley catheter on day one, she had a procedure yesterday, and by protocol it should come out on day two," Priest says, "but it often gets left in because nobody looks under the sheets."

Reduce the amount of time those catheters are left in, and it is possible to realize cost savings from exchanging a hip replacement with no infection for the same procedure with an infection, Priest says.

"Did the electronic health record do it all? It didn't do all of it, but we never argued that," he says. "We argued that the record makes your ability to recognize and transform care better. But we started our transformation journey just before we started our electronic record journey."

In Bon Secours' case, that journey began in 2006 with the assembly of order sets and care plans, "things we know we need to do, that we've never really been able to do in paper well," Priest says. "Let the EHR be an enabler."

As for hard numbers, Priest says, "We've spent to date probably $350 million total, and if I do the math, we've got our money out of it."

In 2012 alone, Priest's team was responsible for generating $50 million in savings through ConnectCare, Bon Secours' EHR. He estimates the savings in 2013 could be $60 million.

A small example illustrates why. Nurses starting blood transfusions, IV fluids, or chemotherapy are supposed to record both the start time and stop time of treatment. A DRG fee gets paid regardless of the stop time, but that only covers the drug itself, not its administration.

Now suppose that the procedure takes place during a shift change. In a paper-based record system, the new nurse is reluctant to record a new stop time for fear that the first nurse already recorded a stop time and that the entry of a second stop time could have the appearance of double-billing for the administration. In that paper system, if no stop time is ever recorded, the administration billing cannot occur, and the hospital leaves money on the table. If, instead, all the recordkeeping is captured electronically, the transfusion/administration stop time always gets captured, which allows for an accurate billing of the administration, Priest says. "We built a system so no matter how many times people record the stop time, it took the first one," he says.

Net revenue gained from this change in just one of Bon Secours' markets was $1 million per year, Priest says. Overall revenue increase in 2013 due to better coding and documentation compliance will top $25 million, he adds.

Coordination around the C-suite has been essential to transforming Bon Secours through technology, Priest says.

At the start, Bon Secours President and CEO Richard Statuto and Priest realized the system had the cash to go any number of ways. They realized they wouldn't be gaining much market share just by adding hospital capacity.

Instead, Bon Secours drove clinical and financial innovation by assembling multigenerational teams and tackled critical issues. In the clinical setting, sepsis was the first target and the EHR was key to defining, measuring, and communicating the problem throughout the care team, Priest says.

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2 comments on "EHR Spending Continues, But Jury Still Out on ROI"


D.P. Smith, MD (3/17/2014 at 10:10 PM)
It appears to me that our smart medical leaders have been hoodwinked by the IT industry into adopting EHR's without outcome studies to prove their effectiveness(in saving money and improving health care outcomes). A great example of government/industry collusion in order to extract more tax dollars for the IT industry and govt. bureaucrats. DP Smith, MD

Ann Monroe (3/15/2014 at 10:59 AM)
2 thoughts: I wonder what the ROI calculation was when telephones were first installed in healthcare organizations... Also, the true benefit and ROI on coordinated care will only happen when the primary care offices are fully linked in. The Iora example shows the true potential, but as long as this movement is hospital centric, it will fall short of cost and quality benefit to patients, payers and providers alike.