Electronic medical records (EMRs) have been touted as one of the solutions for healthcare’s cost and quality problems. But why haven’t we seen more benefits from EMRs?
Disconnect Between Costs and Benefits
The simple answer is that there is a disconnect between those who have to pay for EMRs and those who benefit from them. For example, many (if not most) national health reform proposals call for investing billions of dollars in EMR systems claiming that EMRs will save the healthcare system lots of money. However, these savings projections hide many important factors related to the timing of any potential savings, and how different stakeholders would be affected. Three specific questions should be asked about investment for any new technology such as EMRs:
- What are the direct and indirect costs and savings for the innovation?
- What are the expected time-frames for each of these effects?
- How do each of these effect different stakeholders?
For EMRs the answers to these questions are:
- There is a very large upfront costs for hardware, software, training, and converting paper records into an electronic format. Installation costs in outpatient settings have been estimated to be $40,000-50,000 per physician. In addition, clinical specialties that see patients more episodically (like surgeons), may find it easier to convert to EMRs than clinicians whose patients have chronic conditions (like diabetes) where it is important to have their long-term medical information in the EMR.
- EMRs can increase physicians’ billing revenue by enabling them to provide more accurate and complete information to payers, and thus get paid for more of the services they are actually providing and have fewer claims returned because of insufficient information. (Clinician’s increased revenues would also represent increased costs for payers.)
- EMRs ability to increase the efficiency of processing payments could reduce the staffing needs for clinicians and payers.
- EMRs can reduce the need for repeating tests when patient’s medical records cannot be found. This would result in savings for payers and patients, but might also result in lost income for the clinicians that provide those tests and related services.
The table below illustrates how each of these effects of EMRs falls into different types of costs and saving for different stakeholder groups:
Direct & Indirect Costs & Savings by Stakeholder Groups for EMR Adoption
|Stakeholder Group||Direct Costs||Indirect Costs||Direct Savings||Indirect Savings|
|Training CostsLoss of Revenue
|Increased Payments Due To Better Billing||Reduced Staffing
|Ability to Profile
|Less Time Spent
and Going to Repeat
One of the significant challenges of EMR systems is convincing people (particularly physicians and payers) that they will have real benefits that are worth the costs. Two articles have questioned the size and scope of benefits EMRs can produce: Linder et. al. in the Archives of Internal Medicine from July 2007 found that EMRs didn’t correlate with better quality indicators based upon a national survey of ambulatory care sites. The other was a April 2008 perspectives piece by Hartzband and Groopman in the New England Journal of Medicine. They noted that EMRs can “force doctors to give “standard” rather than “customized” care,” and concluded that, “We need to make this technology work for us, rather than allowing ourselves to work for it.”
Recent EMR Adoption Initiatives
Recognizing these potential pitfalls of EMRs, two recent initiatives to increase EMR use in doctors’ offices are taking different approaches – one in the State of Massachusetts and the other by Medicare:
The Massachusetts program is funded primarily by $50 million from Blue Cross and Blue Shield of Massachusetts to a non-profit third party organization (Massachusetts eHealth Collaborative) that is providing direct funding and technical assistance to three pilot areas in the state. The Massachusetts pilots are also being evaluated as they are implemented. (More about that below.)
In contrast, Medicare’s demonstration program will pay physician practices for installing EMR systems based upon the number of Medicare patient they see, and it also ties future year payments to reporting of quality information (year 2) and then being able to demonstrate actual quality improvements (years 3, 4, and 5). Medicare has called these additional requirements as “Pay for Reporting” for year 2, and “Pay for Performance” for years 3, 4, and 5.
The challenge for Medicare’s demonstrations is about money. With estimates of more than $40,000 per physicians for installation and training for a new EMR system, physicians may take a Missourian “show me” attitude – or maybe it’s more Jerry Maguire “show me the money” attitude. However, the Medicare demonstration projects are not guaranteed money and the payments are made retroactively. According to Medicare’s Acting Administrator in April:
“…the total potential payment over the five year course of the demonstration is up to $58,000 per physician, up to $290,000 per practice. And again the degree to which a practice scores on the Clinical Quality Measures and scores higher on the Office Systems Survey will determine the level of incentive that they get. Also I want to point out that, again, payments are retrospective and practices can, again, use the funds as they feel appropriate for their practice.”
Part of the reason Medicare is structuring it’s demonstration this way is because under Federal law it must be budget neutral so that the demonstration’s costs will be offset by savings to the Medicare program.
Before looking at how the value of EMRs are being evaluated, it is worth mentioning the EMR system used by the Veterans Administration’s health program. The VA’s VistA System is reported to be clinically useful , but it does not support billing which is a big problem for non-VA users. That is the primary reason why although the VistA system is free, it hasn’t been adopted by non-VA users.
Evaluating the Value of EMR Adoption
Massachusetts’ EMR initiative was started based upon the widespread belief that EMRs can produce overall clinical and economic value. However, as noted above, there have been some analytical and academic questions raised about this general premise. To demonstrate the clinical and economic effects of the EMR pilots in Massachusetts, their initiative has at least six components to evaluate the economic and clinical value by measuring both quantitative and qualitative outcomes. These are being rolled out in a logical fashion, and are summarized below:
Evaluations of Massachusetts EMR Pilot Projects
|Evaluation||Stakeholder Group||Value of Outcomes|
|Survey of Office Staff||Physicians Offices||
|Patient Experience Survey||Patients||
|Economic Claims Analysis||Physicians Offices||
|Utilization Analysis of EMR and HIE* Benefits||Payers||
|Quality Data Analysis:
* HIE: Health Information Exchange – a system being implemented in coordination with the EMR pilots to enable physician offices to have access to all of a patients’ medical information from all clinicians within the community.
Source: Conversation with Micky Tripathi, President and CEO of Mass eHealth Collaborative, and Mass eHealth Collaborative Spring 2008 Newsletter