Special article
A cost-benefit analysis of electronic medical records in primary care

https://doi.org/10.1016/S0002-9343(03)00057-3Get rights and content

Abstract

Purpose

Electronic medical record systems improve the quality of patient care and decrease medical errors, but their financial effects have not been as well documented. The purpose of this study was to estimate the net financial benefit or cost of implementing electronic medical record systems in primary care.

Methods

We performed a cost-benefit study to analyze the financial effects of electronic medical record systems in ambulatory primary care settings from the perspective of the health care organization. Data were obtained from studies at our institution and from the published literature. The reference strategy for comparisons was the traditional paper-based medical record. The primary outcome measure was the net financial benefit or cost per primary care physician for a 5-year period.

Results

The estimated net benefit from using an electronic medical record for a 5-year period was $86,400 per provider. Benefits accrue primarily from savings in drug expenditures, improved utilization of radiology tests, better capture of charges, and decreased billing errors. In one-way sensitivity analyses, the model was most sensitive to the proportion of patients whose care was capitated; the net benefit varied from a low of $8400 to a high of $140,100. A five-way sensitivity analysis with the most pessimistic and optimistic assumptions showed results ranging from a $2300 net cost to a $330,900 net benefit.

Conclusion

Implementation of an electronic medical record system in primary care can result in a positive financial return on investment to the health care organization. The magnitude of the return is sensitive to several key factors.

Section snippets

Study design

We performed a cost-benefit analysis of electronic medical record usage by primary care physicians in an ambulatory-care setting. The primary outcome measure was net financial costs or benefits per provider during a 5-year period. The model was framed from the perspective of the health care organization, and the reference strategy was the traditional paper-based medical record. All costs and benefits were converted to 2002 U.S. dollars (27).

Data on costs and benefits came from primary data

Results

In the 5-year cost-benefit model (Table 3), the net benefit of implementing a full electronic medical record system was $86,400 per provider. Of this amount, savings in drug expenditures made up the largest proportion of the benefits (33% of the total). Of the remaining categories, almost half of the total savings came from decreased radiology utilization (17%), decreased billing errors (15%), and improvements in charge capture (15%).

Discussion

Our analysis indicates that the net financial return to a health care organization from using an ambulatory electronic medical record system is positive across a wide range of assumptions. The primary areas of benefit are from reductions in drug expenditures, improved utilization of radiology tests, improvements in charge capture, and decreased billing errors. Benefits increase as more features are used and as the time horizon is lengthened. In sensitivity analyses, the net return was positive

Acknowledgements

We would like to thank Marc Overhage, MD, Homer Chin, MD, Barry Blumenfeld, MD, and Tejal Gandhi, MD, who joined three of the coinvestigators to serve on our expert panel.

References (54)

  • Jones N., http://www.eihms.surrey.ac.uk/abbott/IT-EDUCTRA/html/p415_h.htm Telematics systems in primary care. Accessed...
  • http://www.rcgp.org.uk/rcgp/information/publications/information/rcf0007/Rcf0007.asp The Royal College of General...
  • Taking the Pulse: Physicians and the Internet. New York: Deloitte & Touche;...
  • J.G. Rawitz et al.

    Justifying costs of computer software purchases

    Healthc Financ Manage

    (1990)
  • M.W. Davis

    Reaping the benefits of electronic medical record systems

    Healthc Financ Manage

    (1993)
  • K. Renner

    Electronic medical records in the outpatient setting (part 1)

    Med Group Manage J

    (1996)
  • K. Renner

    Electronic medical records in the outpatient setting (part 2)

    Med Group Manage J

    (1996)
  • N. Pliskin et al.

    Spreadsheet evaluation of computerized medical recordsthe impact on quality, time, and money

    J Med Syst

    (1996)
  • A. Khoury

    Finding value in EMRs (electronic medical records)

    Health Manag Technol

    (1997)
  • D.N. Mohr

    Benefits of an electronic clinical information system

    Healthc Inf Manage

    (1997)
  • A. Bingham

    Computerized patient records benefit physician offices

    Healthc Financ Manage

    (1997)
  • R. Nelson

    Computerized patient records improve practice efficiency and patient care

    Healthc Financ Manage

    (1998)
  • K. Sandrick

    Calculating ROI for CPRs

    Health Manag Technol

    (1998)
  • K. Didear et al.

    CPR success stories

    J AHIMA

    (1998)
  • L. Zdon et al.

    Ambulatory electronic medical records implementation cost benefitAn enterprise case study

    Healthc Inform Manage and Syst Soc

    (1999)
  • A. Ury

    The business case for an electronic medical record system

    Group Pract J

    (2000)
  • E.A. Pifer et al.

    EMR to the rescue. An ambulatory care pilot project shows that data sharing equals cost shaving

    Healthc Inform

    (2001)
  • Cited by (0)

    View full text