Electronic health records require commitment

December 1, 2005

San Francisco — Switching to electronic health records (EHRs) could prove costly and time-consuming for some small medical practices, according to a recent report.

San Francisco - Switching to electronic health records (EHRs) could prove costly and time-consuming for some small medical practices, according to a recent report.

From July 2004 through May 2005, researchers conducted retrospective case studies of 14 small-group or solo primary care practices in 12 states that had been using EHRs for one to three years. Through a combination of semi-structured interviews and reviews of vendor contracts and practice reports, researchers analyzed factors including implementation costs, benefits and impact on practices' quality improvement efforts.

"What was somewhat surprising was the ability of practices to comfortably increase their levels of coding," he adds.

For example, switching from a standard 99213 CPT-4 code for primary care to a 99214, which represents a more complex office visit, could increase a provider's reimbursement by approximately $30 per visit, he explains.

Justifying increase

Because EHRs enabled physicians to document more fully, Dr. Miller says, doctors felt they could justify increasing the level of coding for certain visits.

"That's because they were able to essentially click their way through the various things that they did in their visit and felt more comfortable charging the 99214 code, which might pay $95. If 20 percent of one's visits go from a 99213 to 99214, that's a lot of money," he says.

Initial EHR costs averaged approximately $44,000 per full-time equivalent (FTE) provider annually, with ongoing annual costs of about $8,500 per FTE. For 12 of the practices, initial costs ranged from just more than $37,000 to $63,600 per FTE provider. Researchers attributed this variation to exceptional heterogeneity among small practices' pre-EHR hardware and technical and negotiating skills.

Where data permitted separate estimates, researchers found that software alone represented approximately one-third of overall costs. Taken together, software, training and installation costs averaged just more than $22,000 per FTE provider.

Revenue losses

At the same time, revenue losses attributable to reduced visits during training and implementation ranged from none to $20,000, with an average of $7,473 per FTE provider.

"Most doctors tend to think in terms of hardware and software," Dr. Miller says. "But there are some additional costs like initial lost productivity or time costs that some doctors may not realize can be substantial."

Financial benefits from EHR implementation, on the other hand, averaged around $33,000 annually per FTE provider. Researchers say these benefits came from two main sources - increased coding levels (which accounted for nearly $17,000 per FTE provider annually) and improved efficiency.

"Practices achieved about $16,000 per FTE provider per year on average in efficiency benefits. I would imagine that the same kinds of efficiency benefits could be gained in dermatology practices," he says.

Nevertheless, he emphasizes that in implementing EHR systems, "There is risk involved, because some practices did much better than others. And it wasn't due to the software. In part, it was due to various factors including how adept the physicians were in troubleshooting, reorganizing their workflows and focusing on getting efficiency gains."

No automatic benefits

EHR systems don't deliver benefits automatically from the start, Dr. Miller notes. "The easiest gains tend to be increased levels of coding. The other gains require more thought," he says.