# Presentation: 723161

*Kevin Vigilante, MPH, MD, Booz Allen Hamilton *
*Aparna Higgins, MA, Booz Allen Hamilton *

## Agenda

- EMR Adoption in the Physician Small Practice Setting
- Financial Aspects of EMR adoption
- Insights from Site Visits
- Framework for Modeling Adoption
- Summary

- Disclaimer:  This presentation does not represent the views or policies of any agency in the U.S. government

## Most Physicians are Not Using EMRs, Especially in Small Practices

- Practices between 1-9 physicians account for over 80% of physicians
- In practices larger than 9 physicians, adoption rates are significantly higher

| Practice Size
(# of Physicians) | 
% Using EHR | % Distribution of Physicians in Sample (n=3,360) |
| --- | --- | --- |
| 1 | 13.0 | 35.3 |
| 2-4 | 16.2 | 39.9 |
| 5-9 | 19.9 | 12.8 |
| 10-19 | 28.7 | 7.1 |
| 20-above  | 38.9 | 4.9 |

***88%***

- Source:  Burt and Sisk, 2005

## What Factors Are Relevant to Adoption of Electronic Medical Record in Small Physician Practices? 

- Project Title:
- 	Assessing the Economics of Electronic Medical Record (EMR) Adoption and Successful Implementation in  Physician Small Practice Settings
- Purpose:
- 	Clearly understand the economic and non-economic variables relevant to the successful implementation of an EMR in the physician small office setting
- Contractor:  Moshman Associates & Booz-Allen-Hamilton

## There are “Modifiable” and “Non-Modifiable” Factors Associated with Adoption Reported in the Literature

- “Non-Modifiable” Factors
- Practice Characteristics
- Physician Characteristics
*Non-modifiable characteristics can be correlated with costs and benefits*
- “Modifiable” Factors
- Perception of Barriers and Benefits

## Practice Characteristics Such as Size and Type of Practice and Ownership Are Reported to be Related to EMR Adoption  

|     Practice Characteristics | Burt & Sisk | Audet et al. | Gans et. al |
| --- | --- | --- | --- |
| Size of Practice | + (s)* | + (s)* | + |
| Type of Practice
Primary care vs. specialist | 0 | + (s)* | NE |
| Scope of Practice
Single vs. multi-specialty | 0 | NE | NE |
| Ownership of Practice | + (s)* | NE | NE |
| Source of Revenue (Influence of different payers and managed care contracts) | 0 | NE | NE |
| Mode of Compensation
Salary vs. non-salary | NE | + (s)* | NE |
| Metropolitan Status | 0 | NE | NE |
| Geographic Region of US
Northeast, Midwest, South, and West | + (s) | NE | NE |

| Legend: |
| --- |
| NE = characteristic not examined in survey |
| 0 = no correlation |
| + = pos. correlation, with no stat. significance |
| - = neg. correlation, with no stat. significance  |
| + (s)* = pos. correlation, with stat. sign. at 95% |
| - (s)* = neg. correlation, with stat. sign. at 95% |

- Practice Characteristics Such as Size and Type of Practice and Ownership Are Reported to be Related to EMR Adoption

## Physician Characteristics Such as Age and Specialty are Reported to be Related to EMR Implementation  

| Physician Characteristics | Burt & Sisk | Audet et al. | Gans et. al |
| --- | --- | --- | --- |
| Specialty of Physicians
Specifically defined specialty | + (s)* | NE | + |
| Gender of Physician | 0 | 0 | NE |
| Age of Physician | -^ | 0 | NE |

- Physician Characteristics Such as Age and Specialty are Reported to be Related to EMR Implementation

| Legend: |
| --- |
| NE = characteristic not examined in survey |
| 0 = no correlation |
| + = pos. correlation, with no stat. significance |
| - = neg. correlation, with no stat. significance  |
| + (s)* = pos. correlation, with stat. sign. at 95% |
| - (s)* = neg. correlation, with stat. sign. at 95% |

- ^60+ yo had negative correlation

## Based on Physician Surveys, There Are Many Physician Perceptions Relating to Barriers and Benefits of EMR Adoption

- Benefits and barriers are categorized into three groups:
- Financial
- Technical
- Practice

## Physicians Reported Both Financial Barriers and Benefits Relevant to EMR Adoption

| Lack of capital investment
Maintenance costs
Complex contracts
Lack of time |
| --- |

| Improved charge capture
Reduced transcription costs
Reduced staff expenses
Increased revenues |
| --- |
|  |

**Barriers**

**Benefits**

## Physicians Reported Many Technical Barriers Related to EMR Adoption

- Difficulty or inability to evaluate and select EHR
- Concern over the technical ability to use an EHR
- Lack of training
- Creating a migration plan
- Meeting technical/clinical requirements/usability
- EHR solutions are fragmented
- Lack of uniform standards (including terminologies)
- Risk of vendor going out of business
- Mistrust of vendors
- Lack of support

## There Were Many Reported Physician Perceptions Relating to EMR Adoption

| Concerns over privacy
Lack of evidence of effectiveness
Don't see value
Difficult building a strong business case
Concern over loss of productivity
Technology burdensome
Lack of support from  practice physicians |
| --- |

| Physician champion
Improved decision making
Access to information
Decreased medical errors
Clinical guidelines
Increased patient volume
Improved workflow
Improved drug refills capabilities
Eliminate/reduce chart pulls 
Decrease phone call turnaround time
Improved customer service
Increased time with patients
Improved quality of life |
| --- |

**Barriers**

**Benefits**

## Agenda

- EMR Adoption in the Small Physician Practice
- Financial Aspects of EMR adoption
- Insights from Site Visits
- Framework for Modeling Adoption
- Summary

## There Are Many Reported Cost Components Relating to EMR Implementation 

|  | Wang, 2003 | Miller, 2004 | AAFP Vendor Survey | Gans, 2005 |
| --- | --- | --- | --- | --- |
| Type of Costs | Financial Costs per Physician
(6-Yr Cum) | Financial Costs per FTE Provider (1-Yr) | Financial Cost over 3-Year Period (EHR Stand-Alone System, Average Total Cost for Three-Physician Practice) | Financial Costs per Physician Estimated by Survey (no timeframe noted) |
| Acquisition Costs | $42,900 | $43,405 | $49,837 | $33,000 |
|   • Hardware | $12,301 | $12,749 | $20,590 |  |
|   • Software | $8,527 |  | $15,794 |  |
|   • Software training and installation |  | $22,038 | $3,020 |  |
|   • Workflow redesign, training, and    
    paper-electronic chart conversion | $3,400 |  |  |  |
|   • Productivity loss during 
     implementation | $10,667 | $7,473 |  |  |
|   • Other implementation costs |  | $1,145 | $1,998 |  |
|   • Technical/network system support | $7,994 |  | $3,151 |  |
| Annual Costs3 (recurring) |  | $8,412 | $2,642 | $18,000 ($1,500/mo.) |
|   • Software maintenance and support |  | $2,439 |  |  |
|   • Hardware replacement |  | $3,187 |  |    |
|   • Internal IS/external IS contractors |  | $2,047 |  |  |
|   • Other ongoing costs |  | $739 |  |  |

## Financial Benefits Are Reported to Accrue to the Physician Office and  Healthcare System

|  |  | Wang, et al., 2003 | Miller, et al., 2005 |
| --- | --- | --- | --- |
| Benefit Category | Benefit | Financial Benefits per Physician for EMRs
(6-year cumulative) | Financial Benefits per FTE Provider for EMRs per Year (estimated after year 1) |
| Clinical Utilization  | Drug savings | $55,384 |  |
|  | Reduced radiology use | $13,332 |  |
|  | Reduced laboratory use | $3,855 |  |
|  | Drug utilization |  |  |
| Patient Safety | Reduction in ADEs | $7,430 |  |
| Workflow Efficiency | Chart pull savings | $12,988 |  |
|  | Transcription savings | $11,690 | $5,334 |
|  | Personnel savings (excl. transcription savings) |  | $6,759 |
|  | Paper supply savings |  | $1,051 |
| Revenue Cycle | Reduction in billing errors | $12,207 |  |
|  | Improved charge capture | $12,368 |  |
|  | Increased revenue from increase visits |  | $2,664 |
|  | Increased coding levels |  |  $16,929 |

## Financial Benefits of Implementing EMRs Are Reported to Accrue Within 1-2 Years

|  | Wang 2003
Per Physician (*6 year cumulative) | Miller 2004
Per FTE Provider | Gans 2005
Per Physician |
| --- | --- | --- | --- |
| Implementation Costs | $42,900*/6 Years | $43,405 | $33,000 |
| Recurring Costs/Year | - | $8,412/year | $18,000/year |
| Benefits | $49,253*/5 years | $32,737/year | - |
| Physician Net Benefit |  |  |  |
| Net Benefit/Year | $1,058/year 
(6yr avg) | $23,000/year | + within first year |
| Benefits Accruing Outside of the Physician Practice |  |  |  |
| Benefits/Year (6 yr avg) | $13,333/year | - | - |

## One Report Showed the More Advanced the EMR the Greater the Net Benefits

| Basic EHR | Intermediate EHR | Advanced EHR* |
| --- | --- | --- |
| On line chart with: 
- Clinical note documentation 
- Results viewing | Basic plus:
- Electronic prescribing with: 
- Adverse drug prevention capability 
- Alternative drug suggestion | Intermediate plus:
- Lab order entry with testing guidance
- Radiology order entry with test guidance
- Electronic Charge Capture |
| ($18,200) 
Net Cost | $44,600 
Net Benefit | $86,400 
Net Benefit |

- * Wang et al. (2003)

## Functionality and Usability Variations Have Been Shown to Affect Cost/Benefits

- Within functionality categories there are varying levels of sophistication (e.g., the level of decision-support in medication ordering, alerts, and provision of guidelines)
- Different functionalities have different implications for performance as well as for costs and benefits – Wang (2003), Nebeker (2005)
- Usability also has implications for performance, costs, and benefits
- Usability can have a significant influence on physician use of an EMR
- Usability does not appear to be well measured, assessed or reported on in the literature

## Degree of EMR Adoption Reported in the Literature Appears to be Inversely Related to Functionality

- Gans, 2005

| EHR Feature/Capability | Percent Adoption by Practice Size |  |  |  |
| --- | --- | --- | --- | --- |
|  | ≤ 5 | 6–10 | 11–20 | 21+ |
| Patient demographics  | 99 | 99 | 99 | 100 |
| Visit/encounter notes   | 98 | 96 | 99 | 98 |
| Patient medications   | 96 | 97 | 98 | 98 |
| Past medical history | 95 | 95 | 99 | 95 |
| Problem lists | 94 | 93 | 94 | 96 |
| Laboratory results | 89 | 87 | 94 | 97 |
| Radiology/imaging results | 75 | 72 | 87 | 89 |
| Tracking immunizations | 80 | 72 | 64 | 75 |
| Drug interaction warnings | 79 | 75 | 81 | 84 |
| Drug reference information | 76 | 80 | 78 | 79 |
| Drug formularies | 62 | 64 | 67 | 68 |
| Clinical guidelines & protocols | 64 | 62 | 71 | 64 |

****** ****EMR Functionality**

****** ****Adoption**

## Agenda

- EMR Adoption in the Small Physician Practice
- Financial Aspects of EMR adoption
- Insights from Site Visits
- Framework for Modeling Adoption
- Summary

## Site Visits Where Used to Explore/Confirm Literature Findings for the Development of the Economic Framework

| Site Specialty | Number of Physicians | Practice Location | Geographic Description | Implementation Status |
| --- | --- | --- | --- | --- |
| Pediatrics | 1 | Chicago, IL | Urban (large) | Will Adopt |
| Family Medicine | 5 | Wilmington, DE | Urban (medium) | Will Adopt  |
| OB/GYN | 1 | Jesup, GA | Rural | Adopted – 3 yrs. |
| Ophthalmology | 2 | Indianapolis, IN | Urban (large) | Adopted – 3 yrs. |
| Family Medicine | 4 | Murfreesboro, TN | Urban (medium) | Adopted – 5 yrs. |
| Cardiology | 2 | Sheboygan, WI | Suburban | Adopted – 2 yrs. |
| Internal Medicine & Pediatrics | 6 | Laurel, MD | Suburban | Adopted – 2 yrs. |
| Pediatrics | 3 | Bridgeport, CT | Urban | Adopted – 7 yrs. |

## The Research And Decision-Making Process Not Reported by the Sites as a Barrier to EMR Adoption

- In sites with multiple physicians, the physician lead was able to achieve unanimous buy-in from all the physicians in the practices
- In all cases, sites reported that all staff were very satisfied with the system post-implementation, including staff members who were initially reluctant
- In all cases but one, the physician lead had prior experience with EMRs
- Practices relied on a uniform set of sources to obtain information on EMRs:
- Reviewing the literature
- Attending conferences or trade shows
- Consulting their respective specialty societies (e.g., AAFP)
- Speaking with peers and colleagues
- Visiting independent or reference sites
- Practices typically evaluated multiple EMR vendors prior to selection
- The majority of the sites did not believe the research on EMR research and decision-making process to be a barrier to adoption

## Functionality and Costs Reported by the Sites Where Consistent With Those Found in the Literature 

- The five visited sites demonstrated EMRs with very similar user-interfaces with the following list of functionalities:
- Scheduling
- Documentation
- Order Entry (although level of sophistication varied)
- Patient history
- Report generation
- Basic decision support (e.g. drug interaction, dosage restrictions)
- Practices spent between $15K to $80K on the purchase of software which included a practice management system in most cases
- On-site training and implementation were included in the purchase price of the systems
- Practices varied in terms of ability to negotiate with vendors
- All practices needed 3-6 months prior to becoming fully operational

## The Sites Reported Achieving Benefits From EMR Adoption

- Impact on Workflow Efficiency (e.g. streamline lab and prescription ordering and results retrieval)
- Improvements in employee satisfaction/MD quality of life improvements.
- Personnel and other cost savings, and chart room storage savings (e.g., reduction in staff by 1.5 FTE; business office converted to exam rooms; elimination of transcription)
- Improvements in charge capture
- Two sites demonstrated an increase in coding and billing rates/collections
- Several of the sites noted that the improved ability to document through an EMR allows the physicians the confidence to code properly without fear of audits
- Some of the sites noted a discount on malpractice insurance rates as a result of adoption

## Improved Availability of Information Was Reported by Sites as Improving Medical Decision-Making

- Impact on Quality:
- While all sites felt that the EMR enhanced their decision-making abilities, they attributed this to the availability of data on patients
- None of the sites cited a reduction in medical errors or the ability to rely on the system for any decision support
- Practices did cite enhanced quality of patient care
- Many sites further cautioned that having reasonable expectations for adoption of EMRs is a critical success factor

## Site Visits Confirmed Findings in the Literature While Providing Additional Insights 

- The visits to the sites confirmed the findings from the literature and confirmed our hypotheses
- Physicians are influenced by costs and benefits when adopting EMRs
- Benefits are financial and non-financial in nature
- Costs of EMR adoption include research and selection costs as well as initial productivity losses
- Previously accumulated human capital may be a significant factor in EMR adoption
- Prior experience with EMR
- Knowledge and experience with computer-related technology
- Multi-disciplinary education and training (e.g. medicine and electrical engineering)
- Physicians face uncertainty in the selection process
- Information from a variety of sources plays a key role in the decision process

## Agenda

- EMR Adoption in the Small Physician Practice
- Financial Aspects of EMR adoption
- Insights from Site Visits
- Framework for Modeling Adoption
- Summary

## A Framework for EMR Adoption Could Provide Insight to Policymakers

- Framework for adoption combines
- Microeconomic models of technology diffusion
- Social Network Theory

## There Are Several Components of the Model for EMR Adoption

- Focus on small practice level adoption behavior
- Small practices are driven by considerations of costs and benefits associated with a new technology
- Decision Timing and Uncertainty – there is uncertainty regarding costs and benefits of new technology that influence the timing of a decision
- Uncertainty Regarding Obsolescence – in a addition to uncertainty regarding the valuation of a currently available technology, there is uncertainty regarding the development and arrival of new technology
- Risk Preferences - how one handles uncertainty and thresholds of comfort in the face of uncertainty varies among individual practices
- The role of information in altering uncertainty is critical

## Proposed  Economic Framework is Based on a Set of Key Elements Affecting EMR Adoption  

- Review of EMR literature and the data from site visits provided a set of key elements that affect EMR adoption
- Physician motivators for adoption
- Varying EMR functionalities
- EMR costs and benefits
- Existence of human capital
- Role of uncertainty
- Importance of information

## Agenda

- EMR Adoption in the Small Physician Practice
- Financial Aspects of EMR adoption
- Insights from Site Visits
- Framework for Modeling Adoption
- Summary

## Summary

- There are significant gaps in the survey and cost benefit literature
- The survey literature is limited, standardized definitions of EMRs are not used and correlations with different levels of functionality are not made
- Lack of uniformity when characterizing EMRs
- Lack of distinction between adoption and use
- Variations in sample size and response rates
- Correlations to physician and practice characteristics generally emphasize non- modifiable characteristics – such as size, location, specialty, age, and others
- There is no detailed and comprehensive adoption survey that correlates different levels of functionality with costs, benefits and financial characteristics of the practice
- There is no detailed survey that captures the factors important to the decision to adopt and implement
- There is no detailed survey of non adopters/deferred adopters

## Summary

- There is also a lack of robust empirically derived evidence on the costs and benefits associated EMR adoption
- Existing cost-benefit studies are based on simulation models that rely on expert opinion and extrapolation from literature sources
- At the time of this study, there was a single retrospective evaluation of EMR costs and benefits in 14 practices
- Such a lack of evidence can create uncertainty and result in deferred adoption

## There are Many Points of Failure or Opportunity to the  Successful Implementation of an EMR

- Non-Adopter

- Adopter

- Characteristics
- -financial
- -technological
- -practice

- Research EHR
- -EHR functionality
- internal preparation
- evaluate vendors

- Ready to Adopt

- Acquire
- -select vendor
- -negotiate
-   contract
- - training

- Ready to Buy

- Ready to Implement

- Continue to Use

- Higher risk of failure

- Lower risk of failure

- Implement
- Transition
-   from paper
- Continue
-   learning

## There Are Many Interesting Questions

- Limited evidence suggests that financial benefits are greater than costs.  Why does the literature cite cost as the primary barrier to adoption?
- Lack of capital?  Level of uncertainty/risk?
- Is the EMR market mature enough to reduce perception of product uncertainty/risk?  Is the functionality sufficient?
- How significant will medical school-residency training with EMRs be in adoption?

## Questions?

- Helga Rippen, MD, PhD, MPH, Office of the Assistant Secretary for Planning and Evaluation, HHS
- Kevin Vigilante, MPH, MD, Booz Allen Hamilton
- Aparna Higgins, MA, Booz Allen Hamilton

## Select References on EMR

- Audet AM, Doty MM, Peugh J, Shamasdin J, Zapert K, Schoenbaum S. Information technologies: when will they make it into physicians' black bags? Medscape General Medicine 2004;6(4). (Accessed October 17, 2005, at _[www.medscape.com/viewarticle/493210](http://www.medscape.com/viewarticle/493210)_)
- Burt CW, Sisk JE. Which physicians and practices are using electronic medical records? Health Affairs 2005;24(5):1334-43.
- Ford, E. W., Menachemi, N., Phillips, M. T, Predicting the adoption of electronic health records by physicians: when will health care be paperless? in the J Am Med Inform Assoc, 2006 Jan-Feb, vol 13, pp 106-12
- Gans D, Kralewski J, Hammons T, Dowd B. Medical groups' adoption of electronic health records and information systems. Health Affairs 2005;24(5):1323-33
- Miller RH, West C, Brown TM, Sim I, Ganchoff C. The value of electronic health records in solo or small group practices. Health Affairs 2005;24(5):1127-37.
- Wang SJ, Middleton B, Prosser LA, et al. A cost-benefit analysis of electronic medical records in primary care. American Journal of Medicine 2003;114:397-403.