hitc cost budgeting webinar 4.19.12

©2012 The HIT Community, LLC. All Rights Reserved. 1

The Health Information Technology Community

Electronic Health Record Budgeting

Effective and realistic cost plans for today's implementation and

tomorrow's support and maintenance


Michael Levinger• President, CEO and Co-founder of The HIT

Community • 30+ years of experience in the successful

use of mission-critical software including EHRs and Health Information Technology

• On the faculty of Boston University teaching a masters degree course on Electronic Health Records

• Serves as the Health IT “Ask the Expert” for Pri-Med

• Member of Massachusetts REC workgroup on Health IT Workforce Development


Welcome!


The HIT Community Services

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Manage public, sponsored nation-wide online communities

Consulting services on communications & collaboration strategies and online social communities & media

Supported by data analytics


Agenda

• Electronic Health Record Budgeting– Uses of funds– Sources of funds

• Critical Success Factors• Questions & Answers


• Put in polling question on where attendees are in the EHR deployment process


EHR BudgetingSources• Government• Provider

Performance• Reimbursement

Uses• Direct• Indirect


Question

• How many people have a program budget already?


EHR Deployment Resources

• People• Software• Hardware• Telecommunication• Services




• Clinical Staff• Administrative Staff• Software Expertise• Hardware Expertise• Project Management




• Electronic Health Record• HIE• Operating Systems• Security• Virus/Threat• Utilities




• PC’s• Mobile – Tablets, PDAs, etc.• Servers• Telecommunication – Routers,

Modems, etc.• Security• Medical Devices & Connectivity




• Bandwidth• High-capacity• Backup

• Voice• Data• Image




• Hardware Deployment• Software Implementation• Physical Site Preparation• Project Management• Process Re-design• Training• Support


Potential hidden costs of EHR

• Impact to workflow and patient capacity • Impact to revenues• Hassle factor• Staff impact• Cost/benefit


ARRA Incentives - Just the tip of the $$ iceberg

• Government incentives• More patients per day • Improved practice efficiency• Practice growth• “Pay for performance “• Better coding performance • Improved contracting


Question

• How many people feel they know the financial benefits of an EHR?


As much as $44,000 per provider• Must be eligible professionals (NOT

hospital-based) that are meaningful

EHR users

• Paid over five years

• Disincentives if don’t deploy EHR

system, payments will be cut – 1% in 2015

– 2% in 2016

– 3% in 2017

• Lots of “fine print”

As much as $63,750 per provider• Must be eligible professionals (NOT

hospital-based) that are meaningful EHR users

• Must meet certain Medicaid volume levels

• Payment for up to six years• Up to 85% of the costs for certified

EHR technology and support services• Some pediatricians can receive up to

$42,500 at lower thresholds• Maximum of $21,250 in the first year,

$8,500 in subsequent years, up to a total of $63,750.over total time frame

• No payments after 2021

Government ARRA Incentives for EHR implementation


More patients/day• Basic truth: the longer it takes to document a visit, the less money

you make!!• Example:

– Work from 8-5, see 24 patients, Average $70/patient = $1680/day– 3 minutes per patient to document = 72 minutes– 2 minutes per patient= 48 minutes– 1 minute per patient= 24 minutes

• If documentation can be reduced from 3 minutes to 1 minute..– you could see 2 more patients/day– = 10 patients/ week– = $700/week– = ~ $30,000/year

BUT – what if documentation time increases?


Improved Practice Efficiency

• Decreased transcription costs• Decreased billing/coding costs• Decreased admin process costs

– Managing charts – Filing lab slips, hospital reports etc.– Reduced telephone encounters (more self-serve from

patient portal functionality)

• Opportunity to decrease 1-2 FTEs…$30,000-$50,000


Practice Growth

• Driven by consumerism in healthcare– Information transparency– Public perception of technical sophistication– Improved convenience– High tolerance for / desire for self service– Cost consciousness on behalf of the patient => cost

transparency

Example: 10-15% increase in patient volume can lead to 10’s of thousands of $$


Pay for Performance

• More accurate data collection• More reliable data retrieval• More efficient alerting and reminders• Private insurance & Medicare/Medicaid• Potential P4P of $15,000-$40,000 per provider per year

BUT: Can’t get the incentives if can’t document the performance

AND: Capitation/Accountable Care Organizations will have more impact in the future


Improved coding

• Use of EMR system coding prompts• More confident “upcoding”• Less audit concern

Potential reward….$50,000-$100,000


Improved Contracting

• More insurance company leverage• More Insurance company responsiveness• Example … $10-$20 per member per month

$20 x 1000 patients x 12 months = $240,000

Done right, you do well – “the new capitation”


Question

• How many people believe EHR deployment will “make” their practice money?


So…is EHR adoption worth it?Costs Sources

• Upfront investment

• On-going cost (software, hardware, support)

• Initial lost productivity (converting from paper, physician and staff training)

Total over two years

$40,000-$60,000 one-time

$5,000-$10,000 per year

$50,000-$100,000 one-time

$100,000-$180,000

• Government

• More patients per day

• Improved practice efficiency

• Practice growth

• “Pay for performance “

• Better coding performance

• Improved contracting

Total over two years

$44,000-$63,750 one-time

$15,000-$30,000 per year

$30,000-$50,000 per year

$10,000-$50,000 per year

$15,000-$40,000 per year

$25,000-$100,000 per year

$50,000-$240,000 per year

$334,000-$1,000,000+


Case Study

Michigan State UniversitySparrow Health System


MSU Sparrow Case Study


EHR Budgeting – Success Factors• All benefits must have a baseline and well defined measurement

approaches.• Expense reductions must result in budget reductions to the

appropriate accounts.• Efficiency must show full time equivalent (FTE) reductions or

increased chargeable productivity. • Future FTE cost avoidance is only allowed if the position is

previously approved in a budget and an account's budget can be reduced accordingly.

• Cost avoidance must tie to future expenses that are already contractual bound and budgeted.

• A hurdle rate for return on investment (ROI) will be defined and measured.

Source: http://www.healthcareitnews.com/blog/building-financial-case-electronic-health-records


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Questions?

hitc cost budgeting webinar 4.19.12

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