The Financial Benefit of EHRs: A Tale of Two Studies

A recent study led by a University of Michigan researcher shows that the use of electronic health records, as compared with traditional paper records, can reduce outpatient care costs by roughly 3 percent.

The research team, led by Julia Adler-Milstein, PhD, an assistant professor at the University of Michigan in Ann Arbor, examined healthcare cost data across nine Massachusetts communities between 2005 and 2009: three where physicians had widely adopted EHR systems, and six control communities where adoption was not nearly as widespread.

The researchers calculated the healthcare costs in these communities, and estimated a savings of $5.14 per patient per month, or about 3 percent, in the communities where EHRs were prevalent.

"On the whole, it’s about what I expected," says Dr. Adler-Milstein about the study’s results. She had predicted that EHRs would help avoid some duplication of tests and radiology services and better coordinate care delivery, but "these changes wouldn’t lead to huge healthcare savings by themselves," she says.

Not that these changes necessarily led to financial benefit for the physicians who implemented EHR systems. Another study, also led by Dr. Adler-Milstein, investigated the return on investment for the practices that had implemented EHR systems in the three Massachusetts communities, and were shown to have reduced healthcare costs.

For this study, Dr. Adler-Milstein surveyed the practices to determine the costs and savings that they incurred following EHR implementation.

For example, results showed only about half of the practices were able to stop buying paper medical records (and realize the associated savings) a result of adopting an EHR system. Overall, the majority of practices were not able to realize enough savings to overcome the costs associated with EHR adoption. After calculating the five-year ROI, researchers found that the average physician would lose $43,743, and only 27 percent of practices achieved a positive ROI on their EHR systems.  

"The other study focused on total healthcare costs,” says Dr. Adler-Milstein. “This study takes a different perspective and tells a different story, the story about what happened to the doctors' bottom lines" following EHR implementation, she says. 'There was huge variation — some fared well, and some lost some money," she says, "and the ones who lost money were the ones that couldn't figure out how to make the changes they needed to make, couldn’t figure out how to use EHRs to achieve the savings needed to offset costs."

To Dr. Adler-Milstein, the two studies taken together reveal an opportunity for all providers using EHRs. In the same communities, she saw both the opportunity to provide care at a lower cost using EHRs, and whether that opportunity was realized.

"Some practices [in the communities] were using the EHRs to transform care," says Dr. Adler-Milstein, using the technology to deliver coordinated, efficient care, with the byproduct of lower costs. "And some just transferred to an EHR system without realizing more goes into effectively using EHRs than just having the technology," she adds.

For all healthcare providers, having new technology like an EHR system should prompt reflection about how to use the system to both win for the patient and win for themselves. "All organizations should look at the way they’re operating [their EHR systems] to make sure they’re coming out in the black and using their systems to improve care," she says, "These studies show that both can be achieved."

More Articles on EHRs:

Providers Have Received $15.5B in EHR Incentive Payments
46 Statistics on Physicians, EHRs and Meaningful Use
How to Save Money on EHR Implementation for Affiliated Physicians

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