Cost estimates vary greatly, but when all aspects are included an EHR implementation can cost $30,000 to $40,000 or more per physician. A September 2009 survey by Physicians Practice reported total start-up costs of approximately $12,000 to $32,000 per provider, with total other costs of $6,000 to $10,000 or more. Fortunately, financing options, incentive programs, and the return on your investment make affording an EHR easier.
EHR costs include upfront costs at implementation, annual or recurring costs (which include maintenance), and cover software, hardware, and service:
|Software costs in addition to EHR program (client/server or ASP model)||
|Hardware costs (client/server model)||
|Service costs (any model)||
When your practice purchases HIT software, it actually acquires licenses to use that software. It is common to pay for the number of licensed professionals in your practice.
Start-up costs usually include software licenses, hardware, implementation and training, practice management interface or software, e-prescribing module or software, technical support, and other required costs or fees to get started.
You can anticipate additional costs, which may include scanning software, data conversion expenses, basic interfaces, voice recognition software, and reporting tools.
Be aware that an acquisition price is an incomplete indicator of a system’s full cost, so ask about possible future costs when considering a vendor contract.
When researching EHR costs, make sure that any contract clearly specifies the following:
|EHR software||The cost related to the EHR product, licenses and hosting fees (if applicable).|
|Bundled modules||The specific additional modules and their cost to support all necessary functions to achieve meaningful use. These may include other modules of the vendor or other companies, such as a practice management system, immunization registry, clinical decision support, e‐prescribing software, patient portals, etc.|
|Updates||Provisions for updating the EHR as Meaningful Use Stages 2 and 3 requirements are identified.|
|Implementation support||Vendor services, including up-front planning, system configuration, installation, testing, project management, and go‐live support.|
|Training services||Scope and cost of training services (including costs of travel, if any).|
|Annual support & maintenance||Costs of components of annual support based on specified levels of service.|
|Data conversion||Specifics and cost of support for converting existing paper or electronic data to the EHR.|
|Data ownership||Who owns the data? In what form and how will you get the data if you change to a different EHR in the future? What data elements (medications, problem lists, lab results, etc.) are available in human‐readable format at termination of the contract?|
|Data recovery services||Vendor services that include backing up data off-site and data recovery. How often will this process be tested?|
|Hardware||Specifications for the hardware needed by the EHR.|
|Interfaces||Requirements and cost of interfaces with labs and other entities to exchange data.|
|System security||Specifications for meeting HIPAA privacy and security standards.|
(Table adapted from California Academy of Family Physicians' Guide to Working with the HIT Regional Extension Center Program.)
Fortunately, RI REC’s Vendor Marketplace has pre-qualified EHR vendors and service consultants with demonstrated success, pre-negotiated contracts, discounted pricing, and trained staff. The Marketplace provides you with an unbiased, structured way to review and compare the cost and functions of products and services to determine the EHR software and technical services that are the best fit for your practice.
- Bank loan - many banks offer low-interest loans to practices implementing EHRs. These loans require a down payment and usually have 3- to 5-year terms. Some local banks offer special loans for physicians adopting EHRs.
- Line of credit - a line of credit gives your practice liquid capital as needed, not unlike a credit card. You’ll have a spending limit and pay interest on any outstanding balance. The benefits of a line of credit include no down payment and no interest if you don’t carry a balance. Using an entire line of credit to purchase an EHR may not be a good choice, however, as it ties up all of your reserve funds.
- Lease - leases are the most common way of paying for health IT because they don’t require a down payment and offer quick approvals and flexible payments.
There are two lease options: finance and true. In a finance lease, you own the product at the end of the term. However, there’s no early repayment option and the interest rate may be higher than on a loan or line of credit.
Under a true lease, you don’t own the EHR at the end of the lease, although most contracts include a fair-market-value purchase option at the end of the term. Your situation will determine the lease that’s best for you. True lease payments are generally lower because you aren’t buying the EHR over time. Finance leases save you end-of-term purchase fees and make affording an EHR easier. As always, discuss your options with a leasing agent and your accountant to determine the best approach.
- Cash - be cautious about buying an EHR with cash. Only do this if you have an extremely strong, profitable cash flow.
In small- and medium-size practices, calculating a precise return on investment is difficult, because indirect costs are difficult to track and allocate to particular projects. The widely quoted rule of thumb is that practices recover their acquisition costs in 18 to 24 months. The cost recovery and subsequent improvement in practice profitability result from a series of process improvements that EHR capabilities facilitate.