Article Date: 7/1/2007

EMR THE REAL COSTS
EMR

EMR THE REAL COSTS

Before you decide that electronic practice-management and record keeping-packages are too pricey, understand the payback for your practice.

Scot Morris, O.D., F.A.A.O. Conifer, Colo.

I hear a lot of reasons why O.D.s can't or won't implement electronic medical records (EMR) and electronic practice management systems (EPMS) technology into their practices. The number one reason: "It's just too expensive for my practice." But, what these practitioners don't realize is how expensive their current paper-chart method is. We have been writing things down on paper literally since we were born, so many mistakenly use the logic, "If it's not broken, don't fix it."

A paradigm shift will occur in how an optometry clinic operates. EPMS is that first integral step in this evolution. Though it would take a voluminous book or weekend seminar to adequately cover the subject of EMR/EPMS, here, we can at least dispel the misconception that electronic office software isn't worth the investment.

How much can I save?

Let's look, conservatively, at the real costs of running an electronic office vs. a paper office both in terms of what practice-management software saves us and what it costs to install and maintain one. Prepare to be stunned!

Scheduling. Undoubtedly, one of the largest areas of congestion in a practice is the scheduling desk. An EPMS allows everyone in the office to access the schedule. Not only does this improve customer service by reducing patient wait times, it also reduces the workload of the front desk and facilitates increased patient-recall reminders, which are automatic. You schedule follow-up appointments in the exam room, and the patient checks out in the optical. This eliminated 0.5 front-desk personnel in my office. Some systems even interface with online scheduling so patients can schedule their appointments in selected spots from the comfort of their own home.

CALCULATED SCHEDULING SAVINGS
0.5 Full-time employees at $13.00/hour $13.00/hour x 40 hours x 50 weeks/year = $15,520/year* = $2,000
Total savings: $15,000 per year or $45,000 over 3 years
* Includes benefits & payroll taxes.

Storage and safety. No more hunting for charts — need I say more? How much is this worth? By my calculations, it costs about $3.71 for every chart in your office, based on the three-year life-span of a chart. So, the average cost of maintaining charts for an office that has about 5,000 charts is around $18,527. How did I arrive at this number?

CALCULATED STORAGE/SAFETY SAVINGS
Print Costs: 4 pages/chart x 12 exams/day at $0.07 per page* = $3.36/chart or $874/year or $2,621 over 3 years
Physical Space: 72 sq.ft. at $22.00/sq.ft. = $1,584/year
Personnel Time: 22 charts x 3 minutes at $13.00/hour = $3,718/year
Total savings: $6,176/year or $18,527 over 3 years
* Includes storage space, print and personnel costs.

First, consider paper, printing, ink and pen costs. Between exam sheets, HIPAA (Health Insurance Portability and Accountability Act) forms, diagnostic device printouts, letters, etc., each chart has about four new pages per year. Second, consider the square footage of the actual physical space it takes to house those charts. The larger the practice, the more wasted space.

Lastly, consider the actual time spent looking for a chart. The average office touches an individual chart about 22 times a day between vision exams, medical visits, contact-lens checks, contact-lens and prescription refills, lab orders and general questions. Then your staff has to refile the chart (hopefully in the correct place). I estimate that the average office spends three minutes building, retrieving and returning every chart that is needed on a daily basis.

Ordering. Many EPMS programs allow automated order processing with various distributors. We order most of our contact lenses while the patient is in the exam room and place spectacle orders before the patient leaves the dispensing area. This process eliminates multiple data entry points, thus reducing the risk of human error. We receive automated order confirmation and can ship orders directly to the patient's home. Many of the systems even allow web-based, online ordering, allowing your virtual office to be open 24/7. This has saved us about six staff-hours per week that we reassigned to other more profitable responsibilities.

CALCULATED ORDER SAVINGS:
6 hours at $13.00/hour = $3,900 annually or $11,700 over 3 years

Communications. Electronic office software also enables you to customize your marketing campaigns directly to your intended target audience. When we have our Eye Expo trunk show, we send a customized e-mail invitation to all our VIPS (Very Important Potential Spenders). Within two clicks, I can search our database for anyone who has spent more than $500 in our optical in the last three years and lives in any specified zip code. So, instead of spending hundreds or thousands of dollars sending flyers to the mass market, we can tailor our marketing campaign specifically to the people we know have spent money in our optical. We estimate this saves us around 2,000 pieces of mail per year and more importantly, reduces the time my staff spends stuffing envelopes and sticking labels on cards.

CALCULATED COMMUNICATION SAVINGS
16 hours/year at $12.00/hour = $192.00
2,000 pieces of mail at $0.53 = $1,060
Total savings: $1,252/year or $3,756 over 3 years

Collections. Since many systems now interface directly with clearinghouses, billing becomes an automatic process that takes place in the exam room, not the front desk or billing department. This has all but eliminated the need for a billing person in our office. What used to take my billing person seven minutes per submission in paper format (about 1.75 hours per day of patients seen) now takes about 1.75 seconds — the time it takes for me to hit "submit." This automatic process also eliminates the costly errors of typos, as well as the time that it takes to figure out where the error is, fix it and resubmit before the grace period ends. Once again, this enhancement eliminates postage and mailing costs. Soon, we will even be able to post incoming claims and EOBs saving even more personnel time.

CALCULATED COLLECTION SAVINGS
Personnel time: 1.75 hours/day at $15.00/hour = $6,562/year
Mailing costs: $0.51 × 15 claims = $7.65/day or $1,989/year*
Total savings: $8,551/year or $25,653 over 3 years
*Includes postage, envelope, print costs.

Coding. Many of the electronic office software has coding alerts that notify you if you've coded too high or low based on the documented history, exam findings and medical decision-making. We estimated in my last practice that we under-coded a minimum of one exam by at least one code level per day. This was figured to be a difference in collections of $24.60/day.

CALCULATED CODING SAVINGS
$24.60/day × 5 days/week x 50 weeks/year = $5,904/year or $17,712 over 3 years

Intangibles. Undoubtedly the most impressive part of EPMS is the ability to access a patient's chart from anywhere within seconds. This precludes us from having to wait to get back to the office to fill prescriptions, look at reports, etc.

We utilize the auto-letter function of our software to create letters to send to the patient's general physician, referring doctors and the patients themselves. We e-fax these letters to the majority of physicians, which saves our time, paper, postage and print costs. Additionally, we ask each patient for their e-mail address so we can send a customized copy of their personal vision-care report right to their computer desktop. Obtaining patients' e-mail addresses also allows us to send electronic recall reminders, as well as individualized marketing throughout the year. We also e-fax our patient's prescriptions to the pharmacy, which prevents patients from losing them and the human error in reading my horrible handwriting. E-faxing also prevents errors in dosing, frequency and patient instructions.

What does EMR cost?

Implementing EPMS software initially has a high price, ranging from $15,000 to $250,000, depending on the size and current level of technology. But, as we have seen, that price is well worth the efforts and both initial outlay of capital and time.

Manpower costs money. Some individuals in your practice may not have the skill set to adapt to a world with no paper. You'll need to hire fewer, but more highly trained people. Though we discussed earlier that you will be able to eliminate many positions in your office, the staff that you do have will command a higher wage and benefits package. This will mean a slightly higher hour cost per person, but the overall hour cost as a percentage of your revenues should remain equivocal and, for many practices, will actually be a cost savings. You'll need the contract services of an IT consultant in addition. (Those of you who are more tech-savvy may be able to perform some of these tasks yourself.) A Microsoft-certified technician will cost you between $50 and $150/ hour. You'll need them most during the initial implementation phase.

CALCULATED H.R. COST:
1st year: 40 hours/week at $100/hour = $4,000
2nd & 3rd year: 25 hours/week at $100/hour = $2,500
Total: $9,000 over 3 years

Hardware needs

Depending on the size of your office and the system that you choose, your equipment needs will vary. Let's look at the must-haves, such as servers, workstations and then some of the ancillary items, such as printers or multi-function devices, inventory management devices, etc. (See "Considering New Technology? Look Before You Leap," page 39.)

Servers. I recommend you have a minimum dual server with dual processors and mirrored redundant hard drives to protect your data from corruption. Your IT person will likely be able to help you save up to 10% of MSRP on these items, as well as point you to equipment that is a stable workhorse with good support. General cost is around $4,000 for the dual servers from a reputable company, such as Dell. I also suggest a clean power back-up surge protector. This will run you about $500.

Workstations. You can now purchase a good quality LCD flat screen for around $200. Decide how many work stations you think you need, and add one (in case one goes down and you need a back-up).

If you're on a terminal server, you'll also need a keyboard and mouse (around $100) and a thin client computer (around $150) for each workstation. Terminal servers are safest in the long-run, but many EMRs don't work well with them. More traditionally, you'll need a desktop computer at each station, which may cost as much as $600 per workstation, standard office software included.

Ancillary equipment. Invest in a high-output, multi-function printer, scanner and copier that has a high-duty cycle. Though the initial price tag may be shocking, it's well worth the investment.

Printer cartridges and drums are one of the most costly office expenses, so invest correctly the first time. Diagnostic equipment interface expenses may range from $500 to $2,000 per interface. Depending on your needs and the software, you may also need to purchase inventory management scanners/printers and associated interfaces, which range from $500 to 2,000.

Storage. It's generally a good idea to back-up your information to a mirrored hard drive at least daily, as well as backing-up on a media, such as a tape drive (about $800). We also use an off-site storage company that downloads our information weekly ($50 per month) so we have a back-up in case of a catastrophe, such as flood or fire.

The software

EPMS. The cost of EPMS software is typically based on the number of active workstations (or seats) needed at maximum utilization. This price can range greatly depending on the software and its functionality. Expect to pay between $1,000 and $2,000 a year for support costs. (Be sure to evaluate total costs by looking at both up-front and annual costs.)

CALCULATED HARDWARE COSTS
Hardware Costs:
Server = $4,000
Power protector = $500
Storage = $800 + $1800 ($50/month over/3yrs) = $2,600
High-end Multifunction unit = $7,000
Inventory Management = $1,200
Diagnostic equipment interfaces = $5,000
Workstations:
Screens: 12 at $200 each = $2,400
Desktop:12 at $600 each = $7,200
Total: $29,900

Ancillary software. You'll also need operating systems, such as Microsoft office (standard with Outlook, Excel and Word at a minimum). Operating systems are typically bundled with your hardware purchase. If you don't already have accounting software, such as QuickBooks, this may be a good time to purchase this as well, since you can usually get a pretty good deal when you bundle.

An additional piece of software that has been a huge time and money saver in our practice: e-fax. It allows us to "print" our documents to a referring doctor's, pharmacy's or patient's home fax machine. Finally, it's crucial to purchase state-of-the-art anti-virus software, complete with a service contract from a reputable company, like McAfee or Norton, for around $900.

CALCULATED SOFTWARE COSTS:
EPMS: 12 seats at $1,000 = $12,000
EPMS support = $2,000/year
Quick Books: $200
E-fax: $240
Antivirus: $900
Total: 1st year = $15,340
2nd & 3rd yr = $2,240
or $19,340 over 3 years
TOTAL EPMS COSTS
Hardware: $29,900 (hardware)
Software: $18,990 (software) = $49,240 over 3 years or $16,413/year

When adding up the numbers and keeping in mind the positive intangibles of implementing an EPMS, I wonder why optometrists, and medicine as a whole, are hesitant to adapt. When we breakdown the true costs of paper vs. EPMS, there is over $73,000 in savings ($122,348 to $49,240) through a three year period. I think it's too expensive not too switch.

Granted, there are other factors you should consider when making the switch from paper to the electronic world, but from a strictly financial point of view, as my mentor Dr. Larry Alexander would say, it's a "No-brainer." OM

Dr. Morris is director of Eye Consultants of Colorado and Morris Education & Consulting Associates. He's a member of the American Optometric Association and a Fellow of the American Academy of Optometry. E-mail him at smorris@eyeconsultantsofco.com


Optometric Management, Issue: July 2007