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Healthcare organizations should consider support costs, upgrade fees, and other long-term costs of EHR systems in determining the total cost of ownership.
As the nation's healthcare system transitions from volume-based payment to a system of payment for value, provider organizations are scrambling to acquire electronic health record (EHR) systems to help improve, track, and report patient health outcomes.
But at what cost?
A September 3012 survey of hospital CFOs by an independent research firm indicates that CFOs rarely construct a total-cost-of-ownership model to independently project total life cycle costs for large capital IT purchases ("Discovering the True Cost of Electronic Health Record Purchases: An Initiative For Hospital Finance and Operations Executives," Katalus Advisors). This finding and anecdotal evidence suggest that many hospital executives and boards may be considering only the initial cost of acquisition and annual maintenance when they review EHR system bids.
For an EHR system, total cost of ownership includes not only the initial software and infrastructure costs and annual maintenance, but also the ongoing cost of additional licenses, upgrade fees, and support costs including staff FTEs dedicated to the application. Per the survey, these long-term costs can vary dramatically depending on which EHR system vendor a hospital selects, with some systems costing up to 300 percent more than others (see the sidebar on page 67).
Key Drivers of Cost Overruns
Unfortunately, reliably predicting the long-term costs of deploying an enterprisewide EHR system has proven an elusive goal for most hospital CFOs. Two factors- the number of required support FTEs and the fees charged for major software upgrades- are often overlooked but fairly easy to predict. Depending on which EHR vendor a hospital selects, these costs alone can produce a differential of nearly 38 percent in operating margin, or $2.3 million in annual operating costs for the average 350-bed hospital.
For organizations unable to develop complete total - cost- of - ownership analyses vendor by vendor, analysis of required EHR support personnel and upgrade fees provides a good proxy for comparison of ongoing, post -implementation costs.
Suppori requirements. HIMSS Analytics, the not-forprofit research arm of the Healthcare Information and Management Systems Society (HIMSS), collects a wide variety of information from its hospital members (www.himssanalytics.org). Here, data sourced from HIMSS Analytics on EHR...