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 recent 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, September 2012). 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.

According to Steven Eastaugh, the author of this article to be published in the February hfm, 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. These long-term costs can vary dramatically depending on which EHR system vendor a hospital selects, with some systems costing up to 200 percent more than others.

Unfortunately, reliably predicting the long-term costs of deploying an enterprisewide EHR system has proven elusive for most hospital CFOs. In this article, Eastaugh discusses factors that are often overlooked but fairly easy to predict. 

To learn more about key drivers of cost overruns during EHR implementation and how to reduce EHR impact on hospital margins, read this article in the February issue of hfm.

Publication Date: Friday, January 18, 2013

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