EHR Systems & Cost Transparency in the Healthcare Industry

Peter GroenCost transparency is obviously a big issue in the healthcare industry. Whether it’s the amazing variation in costs hospitals charge patients for similar medical procedures, or the costs associated with acquiring and implementing an Electronic Health Record (EHR) system for a hospital - Why are all these costs often carefully hidden?  Is there something special about the healthcare industry that says – "Let's not talk about how much things really cost."

Apparently, many industry leaders must feel that hospitals boards and patients have no need to know this information.

The good news is that there is a growing movement and tangible steps being taken to expose the wide variation of costs consumers are being charged by hospitals and healthcare providers for medical procedures. See my most recent blog on this subject entitled,  "Open Systems for Consumers Comparison Shopping for Healthcare".  Kudo's to all those working to bring those costs for medical procedures into the 'open'.

Now for the bad news.  Unfortunately, the true cost of acquiring and implementing EHRs for hospitals still remains largely hidden from members of  hospital boardrooms, not to mention the citizens and local governments that often subsidize the operational costs of these facilities.  A quick search of recent news articles and reports on the cost of EHR systems surfaced the following information:

  • In a Forbes Magazine article written by Zina Moukheiber and titled "The Staggering Cost Of An Epic Electronic Health Record Might Not Be Worth It," Moukheiber states that "not-for-profit hospitals or healthcare provider organizations will need every penny of those taxpayers’ dollars [in meaninful use reimbursements], but they won’t cover anywhere near the staggering cost of an Epic EHR." Moukheiber points out "Duke University Health System will shell out $700 million, so will Boston's Partners Healthcare; University of California in San Francisco will pay $150 million," adding that "Customers, such as New Hampshire’s Dartmouth-Hitchcock Medical Center are feeling the pinch. DHMC which implemented Epic last year at a cost of $80 million, expects a weak operating performance in 2012, partly because of expenses related to Epic."
  • According to a recent article from KTOO News, "the owners of Juneau, Alaska-based Bartlett Regional Hospital voted recently to break their contract with Cerner for a new system, rather than incur the expense of implementation." Bartlett is one of the latest U.S. hospital to run into financial trouble while installing a new EHR system.  Implementation of the new EHR would have cost $7.37 million, plus an annual maintenance fee of $1.155 million. Bartlett Regional Hospital is a small 48 bed acute care hospital, with a 12-bed Adult Behavioral Health Facility, and a 16-bed Chemical Dependency Recovery Center.
  • A recent FierceEMR article, titled "EHR transition may be financially risky for hospitals" reports that "Henry Ford Health System's investment in an Epic system was a major factor in its 15 percent decrease in net income from 2011 to 2012. Wake Forest Baptist Medical Center also reported that its adoption of a new Epic system caused it to suffer unanticipated losses and business cycle disruptions."
  • In an article titled "The Costly Darkside Of EMR Implementations," Dr. Edmund Billings points out that the West Virginia Department of Health & Human Resources spent $9 million to acquire and implement the VistA open source EHR system across its 7 hospitals that operate 776 beds in total.  Contrast this with the $92 million spent by West Virginia University (WVU) to acquire and implement a proprietary EHR system in its 7 hospitals that operate 526 beds.
  • In a recent article in Open Health News, Dr. Billings details the catastrophic financial situation facing the 9-hospital MaineHealth system in the State of Maine as a result of their Epic Implementation. While the often cited cost figure for this Epic Implementation is $160 million, Dr. Billing does a financial analysis that shows that the real cost is going to be almost $370 million over the next five years. In a comment to the article, our own Roger A. Maduro points that even this figure is a vast underestimate. Maduro points out that Billings missed the cost of licensing upgrades imposed by proprietary EHR vendors every 18 to 36 months. Adding those "licence upgrade" costs and projecting over six years (to account for two "upgrade" cycles), the projected cost for MaineHealth's EHR is $600 million. It should be noted that the MaineHealth hospital system is very similar to West Virginia's, which, as noted in the note above, implemented the open source VistA system at a cost of only $9 million.

Roger A. MaduroThe cost of acquiring and implementing proprietary EHR systems is staggering. Frankly, I don't see how many of the smaller community hospitals across the country can afford these costly systems from companies like Epic, Cerner, McKesson, Meditech, Siemens, and the like. 

Also - keep in mind that some of the huge sums mentioned in the articles cited above are often just the initial contract values. It’s not uncommon for hospitals to incur other significant maintenance, development and consultant costs over the system life cycle.

Fortunately, a growing number of hospitals are turning to less costly open source EHR solutions. See the spate of recent articles published in Open Health News (OHNews) about the installation and use of the open source VistA system, or one of its derivatives across the U.S. and around the world.

* In the ambulatory care setting, there are other great open source EHR systems available, like OpenEMR, OpenMRS, and OSCAR.

To conclude this brief piece, it was interesting to note the latest news out of the United Kingdom (UK) earlier this week.  It appears the National Health Service (NHS) in England plans on spending over $300 million on exploring the use of open source EHR systems like VistA. According to an official report, they are looking to adopt some of fundamental ideas and building blocks ethos behind VistA's creation, including some technical aspects of VistA along with selected components of other systems, to generate a solution akin to something like ‘NHS VistA’.

Note: This article was updated at 10:00 PM EST on July 3rd to clarify key points and add more relevant material.