Calculating ROI for CPRs - return on investments for computerized patient records - Industry Trend or Event

Health Management Technology, May, 1998 by Karen Sandrick

Despite a lack of consensus on how to measure return on investment, institutions are tallying substantial gains in productivity, reductions in paper and printing expenditures, and increases in revenue with computer-based patient records.

Just about everyone agrees that the computerized patient record (CPR) is a great clinical vehicle. But it's hard to convince the guys in the green eye-shades to spend hundreds of thousands or millions of dollars on CPRs without demonstrating the hard-dollar revenue or savings potential.

And calculating return on investment is extremely difficult. There is no one-size-fits-all method of measuring value because each organization has its own business objectives.

For example, the Wasatch Internal Medicine Clinic in Salt Lake City has a 50-50 Medicare/managed care population of about 36,000. It is interested in increasing the accuracy of coding, not only to save physicians' time but to increase the average charge per patient visit.

Primary Care Faculty Practice at Maimonides Medical Center, Brooklyn, wants to help physicians meet the documentation requirements of its major managed care organization in order to raise capitation premiums and increase reimbursement for physicians by between $5,000 and $7,500 a year in that market.

Then there is the question of how to measure business targets.

"The CPR can give quick and easy access to the client, reduce the amount of ongoing maintenance, improve patient satisfaction and potentially employee and physician satisfaction, and increase productivity. How do you measure these?" asks Jane Griffin, president of Systems Techniques, a consultant firm in Atlanta. "Will you measure them with patient or employee satisfaction surveys, reduced number of records with incomplete information, decreased office waiting time, or less redundant laboratory testing?"

And the timing has to be right.

"It takes almost a year before you have an accumulation of data across your whole population of patients and can show benefit," says Sue Reber, vice president, MedicaLogic, Beaverton, Ore.

Even institutions that can point to significant dollar savings have not done a painstaking financial analysis of the effect of the CPR. MacNeal Health Network in the western suburbs of Chicago was able to increase patient visits by 39 percent by converting medical record storage space into patient exam rooms after it introduced the CPR in 11 of its 30 ambulatory care centers.

Vice President and CIO David Printz acknowledges, however, that "we have not done the rigorous study that supports us as we continue to roll out the CPR in our other centers."

According to Lou Eddins, CPR project manager for Cox Health Systems in Springfield, Mo., demonstrating dramatic and system-wide returns from her organization's CPR is only a few years away.

"By the year 2001 we will have at least two years of clinical data electronically captured in many of our clinics," she says. "I think we then will be in a position to answer just about any question about our ambulatory physician community and determine our outcomes. We will be able to pull serious information, such as the HEDIS data elements we are meeting or the types of antibiotics that produce the best outcome at the least cost."

In the meantime, Eddins and others are cautious about calculating the ROI from the CPR.

"I know people want these calculations, and I'm sure you can fit in an algorithm or a mathematical formula to do it. But I want to be real about it," she says.

And despite the lack of a full-blown ROI analysis, institutions around the country are tallying gains in productivity, reductions in paper and printing expenditures, and increases in revenue.

Here are three examples of how different organizations measure ROI for their CPRs.

Cox Health Systems: improving productivity

Cox Health Systems' three hospitals and 46 clinics serve approximately 500,000 people in southwestern Missouri and Arkansas. The system currently has 13 clinics and 90 health care providers on its CPR and five more clinics are in transition.

Since it introduced the CPR in the fall of 1995, Cox has witnessed significant productivity gains, including:

* fewer total numbers of transcriptions or less paid out in monthly transcription costs, leading to a $600 per month savings at each site;

* fewer actual chart pulls from the central storage area, at a savings of between $4 and $9 per pull; and,

* reduction in administrative staff sup port, saving up to $40,000 annually over the life of one clinic.

One of the largest of Cox' ambulatory care sites -- Diagnostic Clinic -- installed the CPR in February of 1996. As a result of the CPR, the nine-physician primary care practice reduced the provider-to-office staff ratio by a third. In the first year of the CPR, Diagnostic Clinic added one physician and let two administrative positions -one in billing and the other in medical records -- fall to attrition. The resulting annual savings: $60,000.

Diagnostic Clinic also slashed external copying expenditures by 75 percent, cut the average number of charts pulled by staff from 403 per day to 188, a drop of 54 percent, and it streamlined the posting of patient visits to accounting from 2.65 to 1.72 days.