A new leading-edge tool can help providers establish the costs and benefits of investment in EHRs.


When hospitals and health systems evaluate investments in electronic health records (EHRs), they are often hindered by the lack of a standard model for calculating the likely ROI for such initiatives. Historically, providers have been left playing a guessing game. I’m happy to report that this is about to change.

On Jan. 6, the Institute of Medicine (IOM) published a white paper outlining a standard model for evaluation of an EHR implementation. The new model, developed collaboratively by participants in the IOM’s Digital Learning Cooperative and members of HFMA, is designed to allow health system management team members—including CEOs, COOs, and CFOs—to determine the financial impact of implementing and optimizing EHRs and related technologies. It provides a framework for analysis of benefits, expenses, and potential revenue impacts of EHR implementation.

On one level, we’ve been taking “return on information” on faith, said white paper coauthor Jonathan Perlin, MD, in a November 2013 interview with hfm. In the interview, Perlin likened the historical prospect of calculating ROI of EHRs to contemplating ROI on an elevator in a bed tower: “You could formally calculate ROI, but you knew you couldn’t have a bed tower without an elevator, so you just put the elevator in.”

But we’re in a more demanding financial environment now, Perlin said; we can’t take ROI on faith anymore. Plus, as Perlin noted, we have potentially been forgoing accelerating EHR use because we could not calculate the costs or the benefits in a standardized way. Now, with this ROI model, we can. Using this tool, providers will be able to do less “guesstimation” and more rigorous financial analysis.

The ability to more effectively calculate the ROI in EHR technology is truly exciting. At Conway Regional, we—like many—invested in EHR technology in large part due to the incentives to do so and the penalties if we didn’t. Yet we did so without being able to quantify the return and benefits as readily as we would have liked on an investment of such size. I’m hopeful that this new report and model will greatly improve this process for organizations going forward.

We appreciate the contributions of HFMA members who participated in the subgroup that developed the model: Mike Allen, FHFMA, CPA, CFO of Gundersen Health System; Keith Jewell, senior vice president and COO, Franciscan Alliance; Mary Mirabelli, chief project officer, HCA, Inc.; Dominic Nakis, CPA, CFO, Advocate Health Care; Michael D. Rowe, FHFMA, CPA, CFO and senior vice president of finance, Kaiser Permanente Northern California; Rick Gundling, vice president, healthcare financial practices, HFMA; and Chad Mulvany, technical director, HFMA, Washington, D.C. (a report coauthor).

Having a tool that can definitively establish the costs and benefits of EHR implementation is a giant step forward. This reference for business case development will help management teams make the right investment decisions for their organizations. To learn more about this new model and download the tool.

Publication Date: Monday, February 03, 2014