Financial Impact of Electronic Health Record’s Use Is Considerable

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October 25, 2010 (New Orleans, California) — Medical practices that have implemented an electronic health record (EHR) system report better financial performance than those that have not, according to a new report by the Medical Group Management Association (MGMA). Results were announced here at the MGMA 2010 Annual Conference.

The findings come from the newly released Electronic Health RecordsImpacts on Revenue, Costs and Staffing: 2010 Report Based on 2009 Data, and were derived from a survey of 1324 single- and multispecialty medical practices. Comparative data with and without EHRs were documented, detailing total medical revenue, total operating costs, revenue after operating costs, provider costs, and net practice income or loss.

Questionnaires were mailed to 10,842 practices; 1,944 responded and 1,324 were met the criteria for analysis.

Dave Gans, vice president of innovation and research for the MGMA, who participated in the analysis, said that “EHRs provide a benefit to the patient and the physician by providing information in a way that will optimize patient care, and a benefit to the practice of a positive bottom line.”

Independent practices — i.e., those not owned by a hospital or integrated delivery system (IDS) — using EHRs reported on average $49,916 more in total net medical revenue per full-time equivalent (FTE) physician than practices still using paper records. Although these practices reported higher average expenses per FTE physician — $105,591 — they still had a median revenue $178,907 greater per FTE physician, the survey found.

The same pattern was observed in hospital/IDS-owned practices. Multispecialty practices that were hospital/IDS-owned and used EHRs reported an operating margin that was $42,042 more than the margin reported by those using paper records.

For example, a 12-member family practice group in California experienced a 15% increase in fee-for-service collections per visit with automated charge capture and integrated coding compliance features; a 50% reduction in office supply expenses by eliminating chart materials, charge tickets, and other preprinted forms; and a 10% reduction in labor costs ($100,000) in the first year of implementation, reported Rosemarie Nelson, MD, from the MGMA Healthcare Consulting Group, which is headquartered in Englewood, Colorado.

In addition, benefits grew as independent practices gained experience with their systems. After 5 years of EHR use, the average operating margin was 10% higher than it was during the first year of EHR use.

Respondents from independent practices indicated that the highest costs for EHRs occurred in the first year after installation. After 5 years, staffing for information technology per FTE increased slightly (0.13 to 0.15 people), but FTE medical records staff per physician diminished by almost half (0.34 to 1.9 people), which saved money.

Implementation Still a Challenge

“The bottom line was that practices with EHRs made more money. There are many variables, but on average revenue increased more than operating expenses, resulting in greater margins and higher profitability,” said William F. Jessee, MD, president and CEO of the MGMA.

“The potential of improved financial performance should be an encouragement for many organizations to purchase and use an EHR. Physicians adopting these technologies can also earn up to $44,000 in Medicare incentives. This is good news for practices contemplating [switching] to EHRs, although we still believe that satisfying the ‘meaningful use’ criteria and therefore qualifying for these incentives will be challenging.”

Robert Tennant, senior policy advisor for the MGMA, elaborated on the barriers that physicians face in implementing EHRs. “The existing challenge, regardless of satisfying the meaningful use criteria, is how to pick the right system — not the one earning you the $44,000 but the one that is right for your practice — how to train the staff, how to keep up productivity while implementing the system, issues of going ‘live’. It’s the challenge of designing your meaningful use program, of tracking your patients, documenting the number for whom you are e-prescribing (to meet the 40% threshold), and so forth,” he said.

With regard to the survey results, it’s not clear whether the use of EHRs increases revenue, or whether better performing practices might be the ones using EHRs, Mr. Tennant noted, but he added that, “from my perspective, it doesn’t matter. You are venturing down the same road. If you want to be successful as a medical group, the evidence points toward your having an electronic system.”

The researchers and commentators have disclosed no relevant financial relationships.

Medical Group Management Association (MGMA) 2010 Annual Conference. Presented October 25, 2010.


Caroline Helwick

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