Financial Impact of E-Health

By Ben Gerber

It still remains true: the healthcare industry lags behind in technology. Other agencies and services continue to forge ahead using information technology, while patients often still struggle to transfer their own paper-based medical records from provider to provider. The promise of eHealth using technology to improve healthcare services still remains uncertain to many stakeholders. Why should we invest in information technologies when funding could go directly to patient care?

For eHealth to achieve its full potential, it must improve the quality and efficiency of health care delivery while lowering its cost. One prime example of eHealth is the electronic health record (EHR). EHR use has increased significantly increased to 78% by office-based clinicians and 85% of hospitals. Many health care providers consider EHRs to offer better access to patient data, greater data confidentiality, improved documentation, and reduced errors. At the same time, they feel EHRs reduce the cost of transcriptions, chart retrieval and storage, while increasing revenue generation through more efficient billing and improved ability to meet regulatory requirements. Given the Affordable Care Act and HITECH incentives, there is now a substantial increase in EHR adoption and growing meaningful use. However, it still can be challenging for health organizations and providers with limited or non-existent EHR use to accurately determine the return on investment (ROI) on various forms of EHR implementation.

Accurate determination of eHealth ROI is complicated, and depends on factors such as time span and the perspective being considered. For example, who directly receives the cost savings of eHealth? If a health organization delivers health services more efficiently and with fewer employees – the organization itself may realize the financial benefit. However, if technologies provide a patient population with better care, fewer complications from disease, and less expensive screenings, then society as a whole might receive the benefit. Alternatively, when eHealth is implemented, does it take advantage of all of the features it is intended to provide, and does it share data with other systems in place? And do consequent changes from implementation affect other workflow patterns? Other “downstream” impact factors must be considered in determining the overall return on investment, and realization of cost savings may take years.

It is challenging to identify high-quality, comparable case studies where there is high return on investment. One recent published study in the Journal of the American Medical Informatics Association described the financial impact of EHR implementation on ambulatory practices in an academic medical center. Interesting, practice productivity decreased during two years of observation following EHR implementation. However, reimbursements significantly increased, resulting in overall increased revenues. It was felt that practices became more “efficient” – with greater reimbursement received for fewer patients encountered.

Weighing the governmental incentives with anticipated return on investment is a complex endeavor. Soon, Medicare reimbursements will decline, and other incentives/penalties for adoption (or lack of) may become a reality. Still, it remains unclear how much this might influence some providers and practices – as response to pay-for-performance and other incentives tends to be variable. Ultimately, formal study is needed to truly understand the financial impact of eHealth implementation, with consideration of costs from provider, organization, and societal perspectives.

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