How to budget for a cloud-based EMR system

A practical look at information technology issues and usage

By — Posted Dec. 26, 2011.

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Health information technology consultant Matthew Grob likes to compare implementing an EMR to buying a car. The sticker price might be $15,999, but once tags, insurance, warranties and other incidentals are added, it'll take at least $20,000 to get it out of the lot. And it will take more than $40,000 over the next five years to keep it on the road.

Similarly, many practices think the price quoted to them by their electronic medical records vendor is the total amount that EMR implementation is going to cost the practice. "And then reality sets in," said Grob, a solution partner with the health care consulting arm of EMC. But careful planning and budgeting can keep practices from sending their bank accounts into the red as the result of EMR adoption.

Many practices are discovering that cloud-based systems -- which eliminate the substantial cost of installing and maintaining servers in the office -- can be less expensive. But analysts said that even those require careful consideration based on cost and necessitate that a practice set a budget before signing a contract. With cloud-based systems, the budgeting is not just about what's spent up front -- it's what spent to keep it on the road.

Pre-implementation costs. Many practices choose to hire a consultant to help them through the selection, work-flow analysis and request-for-proposal processes. That consultant also can help guide the practice through the rest of the budgeting tasks.

Practices also should budget for legal counsel. Grob said this likely will not be the regular lawyer who advises them on business and medical matters, but rather someone skilled at technology contracts.

Connectivity. With cloud-based solutions, "You live and die by your Internet connection," Grob said. Practices need to take a careful look at the local broadband service options not just for the cheapest price, but for the most reliable service. They may want to consider implementing multiple broadband connections -- one DSL, one cable, for example -- so there is a backup if one goes down.

Practices also need to assess local area network needs. LANs connect all the devices in a practice to one network, including any mobile devices physicians might use, such as tablet computers or laptops. These networking jobs may or may not be included in the price of the EMR.

Data security. In addition to implementing a system that has been tested for its ability to meet requirements of the Health Insurance Portability and Accountability Act, practices also must protect their networks and hardware with safety features such as firewalls and encryption solutions. Security consultants can analyze the practice for vulnerabilities and recommend needed protections.

Actual cost of system. Even though many cloud solutions are paid for on a monthly subscription basis, there may be a one-time start-up fee. Practices need to analyze carefully how many workstations it will have to determine the number of software licenses it needs. Also, analysts said, practices should keep in mind that cloud-based systems, because they don't require the purchase of servers, don't have the tax writeoffs available that other systems would because of the need for less equipment.

Ongoing maintenance and technical support. Even though many contracts with cloud-based systems include some type of technical assistance, likely by way of a call center, Grob said practices need to compare their own schedules against those of the call center. If a practice is open on weekends and the call center is not, it may need to add additional technical assistance so that it is always covered if the system goes down. Some service contracts have tiered levels of service that can be upgraded, or a third party may need to be added as a backup.

Training. Chuck Clark, chief information officer of Coastal Family Health Center, a community health clinic chain serving the Mississippi Gulf Coast, said expenses associated with training often are overlooked or underestimated. Practices generally must pay not only the travel expenses of the trainers but also an hourly rate. He said practices also might want to add food to the expenditures so that trainees are kept close by during lunch to avoid delays.

A detailed plan of what the training will look like will help practices avoid surprises. Some training programs may require training books at the practice's expense.

Conversion from paper. Lynette Ferrara, partner at CSC's Health Informatics practice, said this expense often is overlooked or underestimated because practices haven't developed a clear plan for the transfer of the records before using the new system. Options may include hiring temporary employees to help scan documents or buying a scanning system to help with the transition. There also might be expenses for document destruction or storage.

Future uses. Before a system is implemented, clear goals should be laid out, and practices need to analyze long-term goals to determine the future costs of meeting them. Practices hoping to qualify for meaningful use, for example, eventually may participate in a health information exchange that requires new software applications or even membership fees. The practice also should think about possible growth and what that will mean to the existing IT infrastructure. Will new work stations be needed to accommodate new physicians or support staff, or will the practice need more software licenses?

The lifespan of existing hardware also needs to be considered. Most desktop computers require replacing every three to five years.

The tricky thing to budget for is the impact EMR implementation will have on productivity. An initial drop in productivity while everyone gets used to the new system can range from a few weeks to several months. How long it takes to return to preimplementation productivity "is directly proportional to how much you invest in training," Grob said.

The primary thing to remember when designing an EMR budget is to "set your own goals, of not just making more money, but improving quality and safety and making sure whatever vendor you choose helps you achieve those goals," Ferrara said.

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