The TCO of EHR – Long Term Strategies

One key challenges for facilities moving toward EHR implementation is thinking and planning for long term. An EHR implementation is multi-phased and will impact an organization for years to come. Over the last decade, Gartner Research has advocated using Total Cost of Ownership (TCO) as a way of assessing IT costs.[1]

A TCO framework can help leaders consider the long-term challenges and opportunities associated with EHR. This way of thinking can avoid pitfalls of giving improper weight to a vendor’s sticker price while failing to consider the hard and soft costs that stretch across time. Thus we might talk about an EHR lifecycle and the costs associated with that lifecycle.

This lifecycle should include objectives connected with meeting Meaningful Use requirements. To qualify for government incentives medical providers must demonstrate an effective utilization of EHR within the practice through specified data collection and reporting. Unfortunately, the full scope of meaningful use remains unclear. Stage 2 meaningful use requirements were released for review in March and Stage 3 are still being defined. In spite of the uncertainty, this factor must be considered when planning for and measuring TCO of the overall EHR lifecycle.

While all the details are not in place, a long term strategy must consider the direction of meaningful use and anticipate some of the challenges. In a white paper for GE, Don McDaniel[2] recently suggested that even though we may not have all the details, we can make note of certain trends:

• Stage 1, 2 and 3 involve increasing improvements in using technology. This includes both a greater sophistication of tools as well as more effective utilization of medical data collected for decision making.
• Management must become more effective at implementing change within the organization in order to meet the increasing demands.
• Facilities must implement electronic tools for all stakeholders to engage with organization at multiple levels from payment processing, to information exchange, to communications and more.
• Collecting and communicating clinical outcomes is a must. Providers must implement tools that facilitate reporting on multiple levels.

Moving toward a better reporting structure, a more deeply integrated electronic system, and more effective change management team will require time, staff and tools. The hard costs include software and hardware, improved infrastructure, on-site and off site facility expenses, and consulting support. But the same time, the TCO model must also consider the challenges of organizational retraining, staff support, and the temporary shift of mission-critical staff to additional responsibilities.

At the same time, long-term TCO planning must consider the “opportunity value” that EHR brings to the organization. Some of the business improvement possibilities include improved insurance coding and billing, the time-saving impact of streamlined processes, the improve potential for patient, improved appointment follow-ups and more. In the end, the TCO of EHR must include the projected positives of improved engagements between the provider, the patient and the payer.

[1] Defining Gartner Total Cost of Ownership http://www.gartner.com/id=487157>

[2] Don McDaniel. The Total Cost of Ownership of EHR in a Meaningful Use World. http://www.hitconsultant.net/2012/02/03/thought-leadershipthe-total-cost-of-ownership-of-ehr-in-a-meaningful-use-world/>