The Value of Electronic Health The Value of Electronic Health Records in Solo/Small GroupsRecords in Solo/Small Groups

Robert H. Miller, PhDRobert H. Miller, PhDProfessor of Health EconomicsProfessor of Health Economics

Institute for Health & AgingInstitute for Health & AgingUniversity of California San FranciscoUniversity of California San Francisco

July 19, 2006July 19, 2006

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BackgroundBackground

Policy concern about slow pace Policy concern about slow pace of EHR adoption, especially in of EHR adoption, especially in solo/small groupssolo/small groups <10 billing providers (MDs, NPs, PAs)<10 billing providers (MDs, NPs, PAs) Where 70%+ of physicians practiceWhere 70%+ of physicians practice EHR penetration—10 +/- %EHR penetration—10 +/- %

Limited data on EHR valueLimited data on EHR value Costs, benefitsCosts, benefits

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What are EHR capabilities?What are EHR capabilities? ViewingViewing Prescribing/orderingPrescribing/ordering Messaging internallyMessaging internally DocumentingDocumenting

TemplatesTemplates Point of care remindersPoint of care reminders

Prevention/chronic care templates, remindersPrevention/chronic care templates, reminders Reporting Reporting

Lists of patients needing servicesLists of patients needing services Provider performanceProvider performance

E-healthE-health Assistance for coding for billingAssistance for coding for billing

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What does “value” of EHRs What does “value” of EHRs mean?mean?

““Value” = benefit/costValue” = benefit/cost Benefits: Efficiency + revenue Benefits: Efficiency + revenue

enhancement + quality improvement enhancement + quality improvement (QI) + patient satisfaction(QI) + patient satisfaction

Costs: Financial + time cost + riskCosts: Financial + time cost + risk Value can vary by stakeholderValue can vary by stakeholder

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ObjectivesObjectives

Describe EHR costs, benefits in Describe EHR costs, benefits in solo/small group practicessolo/small group practices

Identify factors affecting costs, Identify factors affecting costs, benefitsbenefits

Outline implications for policyOutline implications for policy

Funding: Commonwealth FundFunding: Commonwealth Fund

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MethodsMethods Cross-sectional qualitative studyCross-sectional qualitative study

Good way to study emergent phenomenaGood way to study emergent phenomena

Random sample of 14 MD practices Random sample of 14 MD practices with EHRs with EHRs Customer lists from 2 vendors (PMSI & A4 Customer lists from 2 vendors (PMSI & A4

HealthSystems)HealthSystems) Multiple selection criteria (e.g., years use, Multiple selection criteria (e.g., years use,

primary care)primary care) 20% response rate; data from 2004-520% response rate; data from 2004-5

Multiple methodsMultiple methods Semi-structured questionnaire for champions Semi-structured questionnaire for champions Observation, structured survey for providers, Observation, structured survey for providers,

reportsreports

Processed, analyzed dataProcessed, analyzed data

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Practice characteristicsPractice characteristics

3.3 full-time equivalent (FTE) 3.3 full-time equivalent (FTE) billing providersbilling providers 2.5 FTE physicians2.5 FTE physicians 0.8 FTE nurse practitioners0.8 FTE nurse practitioners 1-6 billing provider FTEs1-6 billing provider FTEs

Used EHRs for 2.2 years on Used EHRs for 2.2 years on averageaverage

Most: practice management, lab Most: practice management, lab systems interfacessystems interfaces

Reimbursed fee-for-serviceReimbursed fee-for-service

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Financial costs are highFinancial costs are high $44,000/FTE provider initial $44,000/FTE provider initial

$37,000 to $63,600 for 12 of 14 $37,000 to $63,600 for 12 of 14 practicespractices

Mostly hardware, Mostly hardware, software/installation/ training, software/installation/ training, initial revenue losses due to initial revenue losses due to reduced visitsreduced visits

$8,500/FTE provider/year in $8,500/FTE provider/year in on-going costson-going costs Mostly hardware, Mostly hardware,

software/supportsoftware/support

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EHR costs per FTE billing EHR costs per FTE billing providerprovider

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Initial provider time costs are Initial provider time costs are highhigh

More time at work for 4 months More time at work for 4 months (average) (average) One month to one year, up to 2 hours One month to one year, up to 2 hours

per dayper day Providers must change basic Providers must change basic

work processeswork processes Change in documenting especially Change in documenting especially

hardhard Champion had to help make most Champion had to help make most

changeschanges

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Financial benefits can be Financial benefits can be substantial, but varysubstantial, but vary

Average benefits: $33k/FTE provider/yearAverage benefits: $33k/FTE provider/year $7,000 to $56,000 (14 of 14 practices)$7,000 to $56,000 (14 of 14 practices)

Efficiency benefits: $16k/FTE Efficiency benefits: $16k/FTE provider/yearprovider/year Mostly cuts in medical records, transcription FTEsMostly cuts in medical records, transcription FTEs Some saw more patientsSome saw more patients

Up-coding benefits: $17k/FTE Up-coding benefits: $17k/FTE provider/yearprovider/year Big shift in CPT codingBig shift in CPT coding Wide range: $3,000 to $42,000 (10 of 14 practices)Wide range: $3,000 to $42,000 (10 of 14 practices) More complete documentation, more thorough More complete documentation, more thorough

visitsvisits

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Financial gains per FTE billing Financial gains per FTE billing providerprovider

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Coding/revenue comparison Coding/revenue comparison pre-/post-EHRpre-/post-EHR

Actual practice, simulated for Actual practice, simulated for 4000 visits4000 visits

Practice #1, simulation for 4000 visits/provider

Visit codeReimburse-

ment2002

% of Total2004

% of Total2002

Revenue2004

RevenueRevenue Change

99211 36 0.2% 0.3% 304 469 165

99212 50 5.7% 5.0% 11,313 9,926 -1,387

99213 64 70.6% 39.1% 180,826 100,163 -80,663

99214 95 23.4% 55.1% 88,824 209,217 120,393

99215 163 0.1% 0.5% 799 3,443 2,645

100.0% 100.0% $282,066 $323,218 $41,152

# visits = 4000

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Preventive, chronic care QI Preventive, chronic care QI activities limitedactivities limited

Some “automatic” QI benefitsSome “automatic” QI benefits Templates widely used for documentation: Templates widely used for documentation:

13 of 14 13 of 14 Even without active reminders, can help improve careEven without active reminders, can help improve care

BUT…BUT… Few practice set reminders at point of care: Few practice set reminders at point of care:

Only 5Only 5 Reminders based on criteria, affect all providersReminders based on criteria, affect all providers Small # preventive activities/chronic care conditionsSmall # preventive activities/chronic care conditions

Few lists of patients needing services: Only 4Few lists of patients needing services: Only 4 Only 2 with systematic follow-up of patientsOnly 2 with systematic follow-up of patients

Few performance reports: Only 2Few performance reports: Only 2 E.g., HgA1c levelsE.g., HgA1c levels

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So what was the value of So what was the value of EHRs?EHRs?

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Good value for practices—but Good value for practices—but some riskssome risks

Handsome financial payoff for mostHandsome financial payoff for most Pay-back time: 2.5 years (average)Pay-back time: 2.5 years (average) Then $23k/FTE provider/yearThen $23k/FTE provider/year

Better quality of life for some providersBetter quality of life for some providers After initial extra timeAfter initial extra time Home access to chartHome access to chart Some went home early (3) Some went home early (3)

BUT:BUT: Financially risky for some Financially risky for some 2 practices: severe billing problems2 practices: severe billing problems 1 practice: lost _all_ data—no data for weeks!1 practice: lost _all_ data—no data for weeks! 3 practices: 9+ years to payback costs3 practices: 9+ years to payback costs

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What about other practices?What about other practices? Practices can gain from:Practices can gain from:

Fee-for-service (up-coding, more visits)Fee-for-service (up-coding, more visits) Capitation (lower costs, more enrollees)Capitation (lower costs, more enrollees) Pay-for-performance + QIPay-for-performance + QI

Large groups can gain fromLarge groups can gain from Fee-for-serviceFee-for-service Capitation--more large groups have themCapitation--more large groups have them P4P + QI -- more likely to have P4P, systematic QIP4P + QI -- more likely to have P4P, systematic QIAND may have lower EHR costs (economies of scale)AND may have lower EHR costs (economies of scale)

Community Health Centers Community Health Centers disadvantageddisadvantaged Can’t gain from up-coding with flat-rate Medicaid Can’t gain from up-coding with flat-rate Medicaid

paymentpayment Other small practices—same benefits as Other small practices—same benefits as

those in sample?those in sample?

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Smaller value for other Smaller value for other stakeholdersstakeholders

CMS/plans/employers: Higher costs for little CMS/plans/employers: Higher costs for little QIQI Up-coding costs—equivalent to pay-for-use incentiveUp-coding costs—equivalent to pay-for-use incentive

Limited value not surprising—EHR is just a Limited value not surprising—EHR is just a tooltool Inserted into system with defective reimbursement Inserted into system with defective reimbursement

systemsystem Cottage industry: hard to learn and expertise is limitedCottage industry: hard to learn and expertise is limited SO: lack of extensive use of measurement /reporting SO: lack of extensive use of measurement /reporting

capabilities + process redesign = limited QIcapabilities + process redesign = limited QI Future costs could be even higherFuture costs could be even higher

If EHR used as tool for increased marginal utilizationIf EHR used as tool for increased marginal utilization There are some ways to increase valueThere are some ways to increase value

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Some policies can increase Some policies can increase value for allvalue for all

Pay-for-performance (P4P) incentivesPay-for-performance (P4P) incentives Focuses attention on QI, more measurement, process Focuses attention on QI, more measurement, process

redesignredesign Practices would benefit—can better capture, report Practices would benefit—can better capture, report

data, & improve performance with reminders, other data, & improve performance with reminders, other toolstools

Technical/process redesign support programsTechnical/process redesign support programs Can address learning limitations, lack of in-house Can address learning limitations, lack of in-house

expertiseexpertise Doctors’ Office Quality initiatives of CMS QIOsDoctors’ Office Quality initiatives of CMS QIOs

Regional Health Info Organizations (RHIOs)Regional Health Info Organizations (RHIOs) Would improve efficiency, quality for EHR usersWould improve efficiency, quality for EHR users

Research/product comparisonsResearch/product comparisons Would show what “works”Would show what “works”

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LimitationsLimitations

14 solo/small groups14 solo/small groups Potentially more successful than Potentially more successful than

averageaverage Only primary careOnly primary care

Early adopter practicesEarly adopter practices Next layer of MD adopters may differ in Next layer of MD adopters may differ in

successsuccess 2 EHR vendors2 EHR vendors

But not atypicalBut not atypical

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Summary Summary EHR financial costs are highEHR financial costs are high

As are time costsAs are time costs Substantial financial gains are possibleSubstantial financial gains are possible

But gains vary, and risks lurkBut gains vary, and risks lurk Quality gains are limitedQuality gains are limited Value: Good for practices, less for Value: Good for practices, less for

payers/employers /patientspayers/employers /patients Policies can increase EHR valuePolicies can increase EHR value

P4P reimbursement reformP4P reimbursement reform Technical/office redesign support programsTechnical/office redesign support programs RHIOs/community-wide data exchangeRHIOs/community-wide data exchange Research on what “works”Research on what “works”

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Thank you!Thank you!

Robert H. Miller, PhDRobert H. Miller, PhD

Robert.Miller@ucsf.eduRobert.Miller@ucsf.edu