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H H S Department of Health and Human Services
U.S. Department of Health and Human Services
Health Information Technology

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How can a Return on Investment arise from an EHR implementation?

Demonstrating a return on investment from an EHR implementation is oftentimes challenging and may be even more difficult for smaller practices.  In addition to the costs directly associated with the EHR, such as purchasing and licensing fees, there are also costs that may not be as easy to recognize and calculate.  These costs reflect the effect of the EHR implementation upon productivity, especially the initial changes in the practice including change management, transitions in workflow, and other time constraints associated with electronic versus paper records.  Also, providers and staff may spend time and money to adapt the EHR system to specific needs and preferences within the practice.  Therefore, there is a need to for EHRs to demonstrate an ability to generate a return on investment (ROI).

Despite these costs, a research study published in Health Affairsgo to exit disclaimer concluded that achieving a return on investment is a realistic goal even for smaller practices.  According to this study, practices were able to cover the cost of the EHR in approximately 2.5 years and then received an average of approximately $23,000 per year per full-time employee in net benefits.  This study also notes that much of the ROI consisted of efficiency gains and increases in revenue.  The increases in revenue arose primarily from more accurate higher level coding, but some providers also were able to see additional patients due to time saved from using an EHR.  ROI from an EHR implementation is also demonstrated in a case study of Eden Park Pediatrics (PDF - 33KB),go to exit disclaimer a five physician practice located in Lancaster, PA. Eden Park Pediatrics was able to see a return on investment from increased cost-efficiency resulting from reduced reliance on a transcription service and office staff and from integration of its EHR and practice management software.  These gains have enabled EHRs to demonstrate ROI, however, they arise mainly from improvements in practice efficiency rather than improvements in quality metrics.

The Health Affairs study mentioned above emphasizes this notion through its juxtaposition of the finding that EHRs did not create ROI from improvements in quality with the fact that providers primarily cited quality improvement as their reason for implementing EHRs.  To encourage ROI from quality improvements, the authors of the study suggest the institution of pay-for-performance and technical support measures.

The incentives provided by Meaningful Use can also provide implementers with a return on their investments. The maximum total payment is $63,750 over no more than a 6-year period. Eligible professionals may receive up to 85 percent of the net average allowable costs for certified EHR technology, including support and training. Eligibility is determined by Medicaid patient volume.  Non-hospital-based pediatricians with at least 20% Medicaid patient volume will receive two-thirds of the incentive amounts while those with Medicaid patient volume greater than 30% will receive the full incentive amounts.

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