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EHR Spending Continues, But Jury Still Out on ROI

Scott Mace, for HealthLeaders Media, March 13, 2014

The first goal, in 2007, was modest—to save $4 million annually by reducing the costs caused by avoidable charges due to sepsis. "As a $3 billion company, it's pocket change," Priest says, but nonetheless, "everybody thought it was a great idea." And the efforts continue.

"Six months into the year, nobody is on target. Finally the CFO and I wrote a communication to the unit CEOs: 'Guys, this is 10% of our bonus this year. This is an expectation the board has, and you know they're going to ask us to talk about people who died, so why don't we get on with it.' They hit the number."

Still, at many providers, the balancing act is to provide these kinds of EHR-driven savings without cannibalizing systems that still rely on fee-for-service for the bulk of their revenues, until they reach the tipping point and switch entirely to value-based care.

"You've got to have a way to give docs a chance to make the same amount of money that they were making last year, but doing something better for their patients," Priest says.

Part of the answer is surrounding those doctors with a knowledgeable healthcare informatics team. "We just hired a young man who was a surgeon and gave up his career entirely to get a master's in health information, because he was convinced this was the next wave," Priest says. "He's doing a lot of our decision-support work now. He's beginning to put together technical people, particularly pharmacists and nurses, to think about care."

When EHRs collide

Mergers and acquisitions of hospitals and healthcare systems—a trend that shows no signs of slowing down—can confound the gains an EHR can achieve. Incompatible EHRs in a merged organization must either be ripped out and replaced by the acquiring system's EHR, or integrated through health information exchange technology or enterprise data warehouse technology. Neither course is easy, as many technology leaders can attest.

Virginia Mason's stand-alone growth enables it to have a clearer picture of the value of its IT enhancements. "Most of our growth has been organic growth," Kaplan says. "Where people may not have had the same sort of systems, we just integrated them into our Cerner platform."

One place where multiple EHRs exist today, and will continue to do so for some time, is North Shore-LIJ Health System, which reported 2012 total revenue of $6.6 billion and includes 16 hospitals and nearly 400 ambulatory physician practices.

"Most of our hospitals are either deploying or have deployed Allscripts' Sunrise suite," says Michael Oppenheim, MD, vice president and chief medical information officer of North Shore-LIJ. "Most of our medical group is deploying Allscripts Enterprise." Two hospitals that joined the system were already using the McKesson platform when acquired by North Shore-LIJ.

"Because of the scramble to get all of our hospitals that are still on paper onto the core platform, at this point those two hospitals are continuing to move forward with their McKesson deployments," Oppenheim says.

To leverage interoperability between the different vendors' EHRs, North Shore-LIJ is also deploying InterSystems health information exchange software.

This HIE software's notification capabilities can alert primary care physicians when one of their patients has arrived at an emergency department or a specialist somewhere in the system, Oppenheim says.

"It's been very effective at getting the practice to communicate with the hospital," he says. "It's also raised a lot of interesting questions that we're struggling with around the volume of patients who are using the emergency departments during business hours and could potentially be handled in an office."

In the final analysis, whether ROI is measurable or not, whether it is sufficiently fast or not, many healthcare leaders agree that the EHR remains the essential platform that will drive the Institute for Healthcare Improvement's Triple Aim: improving patient experience of care, improving population health, and reducing the per capita cost of healthcare.

"We know the consequences if we don't make the investment," says Lloyd Dean, president and CEO of Dignity Health, a 21-state network with FY 2013 net patient revenue of $10.5 billion, 39 acute care hospitals with 8,400 beds, 9,000 active physicians, and 55,000 employees.

"We know that in the current systems, the fact is that system A doesn't talk to B, patients have to input data multiple times, physicians have to wait to get critical data to help make decisions in terms of the patient care; we know also that we get into rebilling and we get inefficient information if we don't change the status quo," Dean says.

"If you look at moving data to a place where either the patient, the physician, the clinical team, [or] the provider teams can make decisions, then it's a good investment. I think we absolutely have to continue."

Like any system implementation, some providers have had immediate successes while others have not, Dean says.

"Some people have stumbled because the planning, the system, or the culture environment wasn't right, or the software just did not do what it had hoped to do," Dean says. "But is that sufficient enough to throw the whole system out, or to condemn the investments that we're making in EHRs? I think not. There are enough pilot indications that say it is scalable."

Reprint HLR0214-2


This article appears in the January/February 2014 issue of HealthLeaders magazine.


Scott Mace is senior technology editor at HealthLeaders Media.
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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.