The Business Case for EHR
An EHR infrastructure provides substantial opportunities to favorably impact clinical care and improve the bottom line. The most obvious improvements include improving patient safety by reducing incidences of adverse drug events, reducing unnecessary clinical practice variation to enhance clinical outcomes and enabling timely and effective information sharing that leads to quicker and better decisions for care delivery and increases the accuracy of data and revenue capture.
Successful EHR development requires a structured work plan and timeline that includes a comprehensive benefits analysis (identifying both organizational and broader market wins), a project measurement process and plan to address the organizational changes that are necessary to realize anticipated results and benefits.
EHR implementation begins with defined organizational goals and objectives that are tied to discrete elements of the implementation work plan. Discrete elements that must be considered include: a clear understanding of the role that technology plays in achieving organizational goals and objectives, a precise definition of anticipated quantitative and qualitative benefits, sufficient planned technical functionality to support electronic enablement, a collaborative process to assure EHR integration across complex organizations and a road map and timeline for system design and operations re-engineering all to achieve the desired level of integration with realistic expectations about when value will be realized.
Quantitative or Financial Benefits
The first step is to uncover the benefits that provide a financial upside for the organization and also provide additional revenue to help underwrite the EHR effort. These quantitative benefits can be directly measured in the financial statements of the organization, unlike a cost deferment or quality enhancement.
They include:
- Revenue enhancements (revenue capture, pay-for-performance, volume, market share);
- Cost reductions (productivity, utilization, transcription, forms, inventory);
- Cash acceleration; and
- Cost avoidance (cost associated with adverse drug events morbidity, mortality, liability).
Realizing benefits assumes a high level of operational commitment in tandem with full implementation of targeted applications. This commitment may require a re-engineering and standardization of key operational processes before or in parallel with system design and build. Specific system requirements (functionality, integration, interfaces, etc.) as well as transformation enablers (defined accountabilities, roles, infrastructure, processes and mechanisms for ongoing management and maintenance) need to be defined for each benefit (see Figure 1).
Benefits That Reduce Future Costs
There are also quantitative benefits that result from EHR implementation that are not immediately measurable in financial statements. These are usually cost deferments on changes and processes that need to be managed in the present to help avoid cost increases in the future.
An example of such non-measurable financial benefits is the cost of pharmaceutical supplies, which are subject to price increases and represent a substantial and growing cost burden for all medical organizations.
Qualitative or Nonfinancial Benefits
Market pressures to deliver and demonstrate high levels of quality, customer service and financial performance are increasing. Organizations such as the Institute of Medicine (IOM), The Leapfrog Group, Centers for Medicare & Medicaid Services (CMS), Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and others are explicitly defining, demanding and publicly reporting measures of quality. Though qualitative benefits look beyond the numbers at all factors that influence the quality of the services offered by the organization (clinical practices and patient safety) and general personnel and operational issues, many, if not all, of these benefits will generate a significant financial benefit; for example, quality-based pay-for-performance incentives via CMS and some commercial payers.
There are three main aspects of qualitative benefits: clinical quality and patient safety; operational efficiency and effectiveness; and physician and staff satisfaction.
Clinical Quality and Patient Safety
Mechanisms critical to realizing optimal outcomes include reduction of unnecessary clinical practice variation, timely access to information and the ability to communicate and synthesize information to improve decision making (for medical diagnosis and treatment). Technology plays a critical role in enabling this work.
For example, a reduction in medication errors can be supported by implementation of a closed-loop medication use process. This process links together technical mechanisms to reduce prescribing errors (computerized physician order entry, or CPOE), dispensing errors (pharmacy applications) and administration errors (electronic medication administration record and bar coding).
Adding standardization (standardized order sets) creates the vehicle for reducing unnecessary variations in clinical practice such as consistently prescribing the drugs (type and dosage) that correspond to the patient health profile via rules, alerts and reminders (i.e., critical lab values and allergy information) that result both in qualitative and quantitative benefits.
The business value of these qualitative benefits includes reduction of costs associated with adverse drug events (morbidity, mortality, liability), reduction of costs associated with avoidable clinical practice variation (medication use management, reduction of redundant or duplicative testing), enhanced revenue related to improved charge capture and elimination of costs associated with paper documents (forms, transcription, storage).
Operational Efficiency and Effectiveness
The increased standardization of clinical practice, work flow and documentation improves the performance and efficiency of clinical teams and operational departments by increasing accuracy and legibility of patient information and orders, reducing turnaround time for care delivery (orders and results), enabling real-time access to information and interventions, automating checks and balances to monitor adherence to performance criteria and increasing patient throughput and volume (backfill), etc. In addition, reducing the number of manual processes increases productivity and may reduce the number of people in the organization needed to provide requisite levels of quality, particularly the number of agency or contracted employees who tend to have the most negative impact on the bottom line.
Operational management will welcome the improved financial impact resulting from increased efficiencies.
Physician and Staff Satisfaction
Operational efficiency and effectiveness are integrally linked with physician and staff satisfaction.
Standardizing what pops up on the screen when a patient is admitted not only improves the quality of documentation and an organizations services, it also improves the quality of the clinical work experience for physicians, nursing teams and clinical staff. By eliminating redundancies, streamlining work flow and increasing productivity through real-time access to information, less time is spent on manual and often redundant processes, information retrieval, documentation and confirmation calls and the quality of decision making is markedly improved.
Less time spent with paperwork through better clinical processes increases the time that clinical staff spend with patients, contributing both to patient and clinician satisfaction. This is an important factor in any EHR program because many of the benefits originate with and are linked directly to physician practice and work flow. Any successful implementation will depend in large part on physician support of the goals and resulting process changes.
The business value of these qualitative benefits includes elimination of costs associated with paper documents (forms, transcription, storage), reduced incidental overtime and turnover and increased patient throughput, among others.
Magnitude of Benefit
Organizations must consider two key factors when calculating anticipated EHR-related return on investment. The first consideration is that the magnitude of anticipated benefit depends on the scope of planned technology enablement (i.e., emergency department versus acute care versus both ED and acute pharmacy applications versus POE versus both pharmacy and CPOE, etc.) The second consideration is that the magnitude of anticipated benefit depends on an organizations willingness to move beyond the narrow realm of benefits tied directly to implementation of the technology.
Understanding the Relationship Of Benefits to Technology
Whether quantitative or qualitative, benefits associated with information technology implementation are classified into three distinct categories:
- Technology-dependent: Benefits not possible without implementation of technology such as the closed-loop medication use process.
- Technology-enabled: Benefits that can be realized without technology but are accelerated, enhanced and/or sustained by technology (such as standardized order sets or standardized clinical documentation); technology enhances and accelerates the benefits of reducing variation by increasing availability and access and incorporating rules, alerts and reminders to speed and improve the results.
- Technology-independent: Benefits that have little or no direct relationship to technology, such as improving existing processes that help realize efficiencies and reduce costs.
It is our experience that the percentage of total benefit increases exponentially when moving from dependent to enabled to independent. Also clients who pay attention to all three of these categories achieve the greatest return on investment. Often benefits classified as independent from technology are excluded from the EHR business case. But the goal is to generate value (qualitative and quantitative) and create a funding source to finance the transition to an EHR system, so this benefit category can play a critical role (see Figure 2).
Technology-independent benefits may already be on the table or may need to be identified. Often EHR implementation provides the focal point necessary to marshal interest and resources more broadly to cover all three benefit categories.
Leveraging Technology to Create Value
Successful EHR implementation requires the integration of the project goals and process changes with the design, structure and deployment of the information system that stands behind the program. The clinical transformation including the targeted benefits, the streamlined work flow processes, alignment of the physicians and other EHR enablers can create the desired value only if all linked to the information system design (required workflow processes, IT system functionality and operational and physical design).
EHR implementation also requires integrating the ability to drive value and effectively execute the project.While project management focuses on kick off, design, build, test, conversion, train and go-live (often with the primary focus on technology), the ability to reap maximal benefit is contingent upon an organizations ability to drive value by integrating target benefits, work flow process redesign, content development and system deployment, with physician alignment and transformational enablers, (see Figure 3).
Measure and Manage Project Goals
Depending on an organizations view, while all of the aforementioned benefits are important, any one of the benefits may be key to driving EHR implementation. Many people in an organization may be motivated by the qualitative or nonfinancial benefits, but all organizations base an initial decision to pursue EHR on a clear and sober analysis of the costs and benefits.
For the client considering EHR implementation, the process usually begins with the question, What is the ultimate goal? Regardless of the motivating factors driving the decision to pursue EHR, it is important to balance needs with desires and to manage expectations.
Doing so will help the organization develop a clear understanding of what can be achieved with EHR,what is required over and above technology to achieve project goals and when realization of benefit can be expected. Once all of this is articulated, defined and communicated, a detailed implementation plan must be developed, along with a rigorous mechanism for measurement, reporting and accountability for results to ensure that the project remains on track.
To fully realize the desired benefits, EHR implementation requires a high level of commitment and ownership by the clinical staff. Hurdles in the transformation process include:
- Committing to increased standardization (evidence-based order sets, documentation templates);
- Adjusting work flows to optimize EHR benefits; and
- Coping with the initial negative impact on productivity; and
- Need for extensive training and support before, during and after implementation.
On the technical side, EHR implementation also places rigorous demands on information system performance (network and system stability, response time, effective downtime procedures and point-of-care hardware).
Establishing a Collaborative Approach
At the beginning of an EHR program, organizations are often all over the board with departmental overlaps, process redundancies, incompatible legacy systems and inefficient infrastructure management to name just a few issues. A collaborative approach is key to a successful EHR implementation process. Representatives from all involved departments should be involved to articulate their needs and to generate and maintain wide acceptance for EHR implementation.
A complete EHR program may have over a dozen initiatives that both include financial and service quality issues: reducing overtime, drug prescriptions, compliance with patient care standards and managing hospital backfill. To pinpoint areas where EHR can deliver maximum benefits, cost and revenue structures should be analyzed, potential efficiencies identified and current and future costs determined. Differing requirements need to be integrated, and both the potential quantitative and qualitative benefits laid out. Once the clinical teams working on the front lines with patients see what EHR can achieve, the EHR benefits become a driving factor in the positive transformation of the organization.
Summary
Assuring the success of EHR implementation starts with careful analysis of the potential costs and benefits. The quantitative (financial) benefits (dependent, enabled or independent of the implementation of technology) can be directly measured and can provide an exponential increase in benefits when realized together. Qualitative (nonfinancial) benefits focus on service quality, patient safety, personnel and physician satisfaction and operational efficiency and effectiveness, but may also have a significant positive financial effect.
