R&D MedTech - Bottom Line ROI for EHR
Per Physician $1.7M Bottom Line Return on Investment for EHR
The following is summary table of the estimated cost savings and new revenue possible with the implementation of Greenway Medical’s EHR. While the information is available in many places (including our website) about cost savings, federal stimulus incentives, tax breaks, malpractice insurance discounts and potential new opportunities related to EHR, R&D MedTech thought it would be helpful to put all in one place, so physicians have the opportunity to see it rolled up.
In order to compare “apples-to-apples”, we have calculated these numbers for a single physician. If your practice has multiple providers, then you can easily multiply the number of providers in your practice by the estimates to calculate at your own possible ROI.
To address any critics of the numbers cited, we have provided the links to the sources of our information. Additionally, some may note these are not true return on investment in the sense of accounting terminology, because we have not included the costs of implementing the EHR. However, the cost of our EHR system would usually be less than 5% than the total amount shown here.
| Type of Cost Savings / New Revenue | Average Dollars Per Physician over 5 years |
| Practice Process Improvements | $216,300/$324,835 |
| More Revenue Through Better Coding | $210,000 |
| Malpractice Liability Insurance Discount | $25,000* |
| PQRI Financial Incentives | $50,000** |
| E-Prescribe Stimulus (2009-2010) | $6,000** |
| Medicare/Medicaid Stimulus | $44,000/$63,750 |
| Tax Incentive | $250,000 |
| Clinical Trial Revenue | $500,000 |
| In-House Pharmacy Revenue | $360,000 |
| Total | $1,769,835 |
** Number could be substantially higher based on annual amount of physician's medicare billing which is up to 2% of that number.
Practice Process Improvements: This number ($216,300) was calculated using a Federal Government study that found EHR for a single physician yielded savings in the following way over five years: Year One $-26,600, Year Two $41,300, Year Three $31,400, Year Four $85,100, Year Five $85,100. Thus, the total cost savings for a single physician resulting from EHR is $216,300. However with Greenway PrimeSuite the ROI numbers are even better according to several case studies including one which found savings of $64,967 per year per physician which when multiplied by five years totals $324,835. This number was used since Greenway PrimeSuite is R&D MedTech's EHR software solution.
More Revenue Through Better Coding: A study of fourteen small practices in the September/October 2005 edition of Health Affairs found that each physician could raise his/her revenue by as much $42,000 per year with increased coding levels resulting from implementation of EHR. Thus, $42,000 multiplied by 5 years is $210,000.
Malpractice Liability Insurance Discount: Malpractice insurance carriers are increasingly offering discounts to doctors for using an EHR in their practice. The theory is that the EHR system will reduce risk by helping to eliminate some of the most common reasons for claims within a practice. These often have to do with oversights on patient record reviews (e.g. reading x-rays) or notifying patients of prescription refills. The EHR discounts generally run in the region of 2 – 5% of the premium. (Read more) Assuming a premium of $100,000 per year with a 5% discount is $5,000. (This number could be much higher for a specialty such as OB/GYN where the malpractice premiums may be as much as $300,000 per year.) So the $5,000 of discounted savings in malpractice insurance because of EHR over 5 years is $25,000.
PQRI Financial Incentives: The Medicare Improvements for Patients and Providers Act (MIPPA) made permanent the Physician Quality Reporting Initiative (PQRI), which is a voluntary program that provides a financial incentive of up to an additional 2% of a physician’s Medicare Part B Physician Fee Schedule, if the provider successfully reports on a specified set of quality measures that they provide to patients. Under the 2008 PQRI, more than 85,000 physicians and other eligible professionals who successfully reported quality-related data to Medicare received incentive payments totaling more than $92 million. Individual physicians and other eligible professionals who satisfactorily reported PQRI quality measures data and thus qualified for an incentive payment received incentives amounts from more than $1,000 to over $98,000. For the purpose of calculation of this chart we have calculated a median number of $50,000 so your practice’s results may be higher or lower, but with our EHR the results will be maximized for your practice. Only $50,000 was used because unless the PQRI incentive is reauthorized, this benefit will expire after 2010.
e-Prescribe Stimulus (2009-2010): This number is only based on two years of incentives rather than five years because we assume that most practices will apply for e-Prescribe incentives during 2009 and 2010, but then switch to the full Medicare EHR stimulus incentive described below which is available in 2011. While the government does not quantify the e-Prescribe benefit in dollars but rather provides a ceiling of 2% of the medicare bilings, in the November 15, 2008 issue of Entrepreneur, (Read more) CMS Adminstrator Kerry Weems noted that the average e-prescribing primary care doctor stands to collect between $2000 and $3000 in bonuses for 2009 and 2010. Thus, $3000 multiplied by two years is $6000. Form many practices we believe this number is low and the opportunity to collect more than $3,000 per year is very probable.
Medicare/Medicaid Stimulus: On the Medicare side, healthcare providers who meet the criteria for meaningful use of certified EHRs could receive as much as $44,000 or $48,400 (if the physician is located in an area designated one of health professional shortage. Incentive payments to eligible professionals begin in January 2011 and phase out in 2016. On the Medicaid side, incentive payments are to begin in 2011 and the maximum amount will be $63,750. For the purposes of calculation, we have only included the $44,000 in our total number because there are more physicians eligible for that benefit. However, if your practice is eligible for the Medicaid benefit, the total number would be greater than the $44,000 used here.
Tax Incentive: The American Recovery and Reinvestment Act of 2009 (AARA) amended Section 179 of the Tax Code to increase the small business expense for qualified property to $250,000 through December 31, 2009 with a 50% bonus depreciation. (Read more) Thus, a medical practice can expense the full cost (up to $250,000) of its equipment/medical software purchase that purchased by 12/31/2009. Because this benefit is only available this year, it was only calculated one time.
Clinical Trial Revenue: There is a huge new opportunity for additional new revenue for your practice that was not available with paper records, it will generate huge new healthcare opportunities for your practice’s patients. That revenue stream is leveraging EHR to engage in clinical trials. Our initial case studies conservatively show it may bring a small practice as much as an additional $100,000 per year in revenue with no additional costs. Some case studies show as much as $700,000 for a 2 doctor family practice per year. (Read more) Thus, we multiplied the conservative $100,000 by five years to reach the $500,000 amount in the table above.
In-House Pharmacies: Physicians are typically unaware of the hidden costs of prescription writing. Phoning or faxing prescriptions to the pharmacist, call-backs for non-formulary drugs, inquiries because of illegible handwriting and mandated prior authorization for refills are great time wasters. The average physician spends up to 60 minutes a day dealing with pharmaceutical issues for no revenue. For every three physicians, there is usually one employee dealing exclusively with pharmaceutical issues. This employee is often a nurse whose salary and benefits may reach $100,000 annually. While electronic prescribing may ease legibility and calls to the pharmacy regarding nonformulary prescriptions, the physician does all the work and receives none of the revenue — while often paying for the e-prescribing system. For a practice utilizing an on-site dispensing system and promoting it to its patients, the profit can be substantial. The July 21, 2006 issue of Medical Economics (Read more) described a case study of a single physician in Georgia whose net revenue from on-site pharmaceutical dispensing ranged from $5,000 to $6,000 per month or $60,000 to $72,000 per year of additional revenue. Thus, when multiplying $72,000 by 5 years we generate the number of $360,000 in the table above.
For more information, contact R&D MedTech at 918-682-2285.