Electronic Health Records Generate a High Return on Investment

Federal and state policy-makers have had their eyes on Electronic Health Records (EHR) for quite some time now. In the last decade or so a realization has swept across the nation. Not only could EHR pose to drastically improve upon our current health care system, but a high return on investment (ROI) could be obtained by implementing such a system. I believe it is this recent insight which caused EHR to push our health care system towards a digital health care system. Now let me show you an example from the state legislation and from my own calculations of EHR savings.

Understanding ROI
Before we get too involved in how EHR can mean a high ROI, it is important to understand exact what an ROI is. A ROI is a calculation of how much an investor can expect to collect after investing money. This is most commonly used when putting money into a savings account at the bank. We put X dollars into the account and in two years we will be getting Y dollars back. The difference between X and Y is our return on investment.

Now the type of ROI in terms of EHR implementation doesn't necessarily deal with getting money back at the end of a set period of time. What I'm talking about is reducing debts and freeing up money that normally would have been depleted in expenses. So basically we're talking about investing money in one area of your clinic in order to save money in another.

Was Minnesota's Decision based on ROI?
I think this same idea of ROIs played a key role in influencing Minnesota's decision to make EHR compulsory. At the end of 2007, Minnesota state legislature finally put into law a series of EHR mandates. These mandates require that all health care claims are to be filed via electronic means by January 2009; all prescriptions for state employees and their dependents must be electronically prescribed by 2009; and "interoperable EHRs", like offered by Future Health, by all physicians and hospitals are required and must be in place by 2015.

This means that by 2015 it will be impossible to be a licensed Minnesota provider without maintaining a digital clinic. What would influence a state into making these requirements mandatory? Well, Minnesota officials have concluded that it is going to end up costing the state less money to fund a seven year transition to mandatory EHR than it is to continue their current paper systems.

Politics Realize the Possibilities of EHR Savings
This decision is critical because it was made far before the offer of federal stimulus money by the current Obama administration. Even before this, the Bush administration consistently referred to the year 2015 as the timetable for making EHR mandatory in hospitals and private practices. President Bush and others mentioned the potential savings by switching to EHR of over $77 billion a year - a number generated by a RAND study on EHR adoption.

Current President Obama released statements prior to election indicating his dedication to investing $10 billion into EHR over the next five years. He cited growing medical errors and the cost of processing paper claims as reasons to switch to EHR. Some reports suggest the cost to process a paper claim is twice the amount to process a digital claim with automatic adjudication.

Even the other presidential runners-ups, like Senator Hillary Clinton and Senator John McCain had their eyes focused on EHR implementation. Sen. Clinton indicated the transformation to a paperless clinic as number two point in revamping our health care system. Sen. John McCain too, mentioned his plans for a "21^st century health care information system".

Politics have been and current still are alive with the possibilities of creating a new model of controlling health care spending by utilizing the improved quality and efficiency of maintaining EHR in a digital clinic.

What does this mean for my clinic?
So, the federal government might save billions in health care costs, but what does this mean for you and your clinic? Well aside from the money saved, private practices can experience an entirely new level of efficiency throughout their practice.  Let me share with you my conservative calculations of the money you can save.

Better Office Management means a High ROI
Let's examine the simple case of your average patient file. According to our math, your clinic could potentially save $2,400 per year in the improved efficiency that comes with managing patient digital records. Don't believe me?

Consider this scenario: For every patient that walks through your clinic door, a staff member is going to have to locate their file; pull it, retrieve it, and then re-file it back into its place. In a perfect no-error clinic, none of these files would ever get lost. Inevitably one of these files is lost or misfiled. This leads to more time spend searching or worse yet, recreating the lost patient's information.

Money Lost in Other Office Areas
This conservative $2,400 doesn't include other costs such as lost time, maintain and purchasing HIPAA-compliant storage cabinets (costing over $1,000 apiece), or the office space lost in storing these bulky cabinets.

Nor does it include the savings accumulated by digitally storing local and outside plain films or MRIs, or in the digital prompts that can lead to a more lucrative patient management, or even in how often you lose time searching through a disorganized file for some piece of information.

Rather than spending minutes per file, per day, your office literally can spend only seconds. With an EHR system in place, there are no lost files, no pulling files, no searching for files, no getting up and walking files from one place to another, and no opening and pulling files apart to clean and organize. That's $2,400 you haven't spent in one year; over $25,000 in 10 years.

Acquire Substantial Benefits with EHR
As you can see, you can expect a substantial return on investment by simply investing a true EHR system into your clinic. In any case, the potential for the single clinician to large-scale hospitals is too big to ignore. The ROI expected from complete adoption of EHR is going to invoke legislative change, which will make digital documentation mandatory in only a few short years. Perhaps this basic example of everyday savings through better digital file management will help you understand the fundamental change EHR can bring to your clinic's efficiency. It's too shortsighted to see the switch to digital as just another cost of doing business. Embracing EHR means an investment in the future - an investment with incredible returns.