Title: Return on Investement: Is it possible to calculate Lessons from real life''
1Return on InvestementIs it possible to
calculate?Lessons from real life..
- Joshua Lee, MD
- Physician Lead, Information Systems
- UCSD Healthcare
2Overview
- Current methodology in calculating return on
investement in both order entry and online
documentation - Case studies in cost reduction/revenue generation
- Brigham and Womens Hospital
- Dartmouth Hitchcock Medical Center
- UCSD Healthcare
3Traditional ROI Methods/Asssumptions
- Reducing error through computerized or der enty
reduces cost - More appropriate ordering results in reduced
pharmacy costs - Drug substitution
- More appopriate dose/frequency
- More online documentation results in reduced
transcription costs and reduced medical records
personnel expenditures
4Error Prevention and Cost
- Most work has been done to demonstrate reduced
error and hence reduced adverse event from
implementation of CPOE - Estimates of increase in LOS by 2.2 day and
expense by 2,012 for each adverse drug event - Use of a simulation model preventing errors at
prescribing, transcription and administration
showed aggregate reduction in ADEs by 26
Bates, D et al. The Costs of Adverse Drug Events
in Hospitalized Patients JAMA 277 307-17,
1997. Anderson, JG. Evaluating the Potential
Effectiveness of Using Computerized Information
Systems to Prevent Adverse Drug Events. JAMIA,
228-232, 1997
5Ways in which to project savings
- From "Will Electronic Order Entry Reduce Health
Care Costs?" Birkmeyer, C. and Lee, J. Effective
Clinical Practice, March/April 2002. 567-74.
6Nephros Evaluating Efficacy
- Attempt to have order entry take into account
altered renal function - Undertaken at Brigham/Womens long track record
in CPOE - Outcome measures
- Appropriateness of dose with adjustment in
either dose amount or frequency - Length of Stay
- Total Hospital and Pharmacy Costs
- Use of a cross over design so no longer a
projection but rather prospective design
intended to see if proper orders resulted in
improved cost utilization
7Nephros Process Outcomes
- 97,151 orders written on 7,490 patients with
known renal failure - Of those 14,440 orders with at least one
modification of either dose or frequency
Chertow, GM and Lee, J et al. Guided Medication
Dosing for Inpatients with Renal Insufficiency.
JAMA. 286(22) 2839-44, 2001.
Plt0.001 for both
8Nephros Clinical OutcomesChertow, GM and Lee, J
et al. Guided Medication Dosing for Inpatients
with Renal Insufficiency..
- Overall length of stay reduced from 4.5 days to
4.3 days (statistically significant at p.009)
but clinically relevant? - No reduction in overall hospital costs or
pharmacy costs - Challenge of ascribing reduction in costs as
even if one drug cost reduces, need to show
reduction in overall pharmacy expenditure/patient
9Med Substitution for Cost SavingsMA Fischer, DH
Solomon et al. Arch Intern Med. 2003 163
2585-2589
- Attempt to measure if pre-programmed alert to
covert patient from IV to bioequivalent oral
dosage would effectively change practice - 11.1 decrease (p.002) reduction in defined iv
daily dose - 3.7 (p.002) increase in defined po daily dose
- No sig change in overall pharmacy costs
10If not OE what then?
- Reduction in hard costs through online
documentation - Need to demonstrate first true reduction in
transcription lines and hence costs - Need to account for additional hardware, training
costs and loss of productivity with new
deployment of documentation tool
11Deployment of mobile wireless laptops at
Dartmouth-Hitchcock
- Small pilot of 5 surgeons, each provided with
mobile wireless laptop to replace desktop - VS/Meds placed by ancillary staff
- Analysis only of notes online
- Laptops twice the cost of desktops
- Full FTE to support wireless program
- But, once in place, refusal to return to prior
workflow!
89
22
12What is real institution to do?
- Medical groups and hospitals need to make IT
decisions based on increasing public demand for
electronic records and evidence of OE
implementation - Immature market and lack of prospective data
makes these decisions fraught with conjecture - Need a reproducible strategy that takes into
account unique features of home institution and
the expected benefits of the new information
system/electronic record
13How we did itA UCSD Case Study
- 400 bed tertiary care beds across two hospitals
- 300,000 annual ambulatory visits in 7 sites, gt30
clinics - 268 FTE and 500 total physicians
- Recognized need for a comprehensive ambulatory
electronic health record - Needed to justify budget for State of CA
- Needed to justify expenditure by med group
14Step I AssumptionsCosts/Resource Identification
- Compile all human resource elements
- Physicians by raw number and FTE (price dependent
on billable FTE) - Clinical support staff
- Administrative support staff
- Compile costs of dictation, new manual chart
creation, ongoing chart maintenance, ongoing
chart movement costs - Determine ongoing hardware, software and
operations human support needs - Allows for projected costs by month of
deployment then with adoption the expected
savings accrued
15Step IIHow long does it take?
Adoption curve valid if rate of adoption either
by successive clinic deployment Or by successive
feature deployment notes, orders, charges.
16Step IIIMatrix of cost balanced with savings
- With each successive month, does adoption of that
part of the EMR result in a hard savings? - Example if 10 of 268 FTEs (25) are using the
online note editor with savings of 3/visit with
avg 24 visits/day? 7525 (1875/day or
56K/month!). Then need to merge with outlay
costs of the HER. - Reduction in transcription does not always
translate into staff reduction - New roles for medical records and billing
abstraction personnel
17Step IVAggregate Savings
18Step VAggregate Costs
19Step VIDetermine what NOT to measure
- The vast majority of expected cost savings are in
the realm of process improvement - Very SOFT to measure, but in the realm of
- Improved test ordering
- Reduced phone time for ancillary staff
- Pay for performance is next on horizon
- UCSD chose to include neither in ROI
20Step VIIDo final balances
- What is the year in which expenditures are
superseded by savings? - What is the net present value of the project?
- The result of (Savings-Costs) adjusted for
current rate of inflation - What are the relative contributions of hospitals
and medical groups? - Accrual of benefits not always equal
- Recouping transcription expense accrues to
medical group. - Increased compliance laboratory ordering
augements both professional and technical fees
(pro fee to med group, facility fee to hospital)
21Aggregate CostsWhat you take to finance
committee.
22Take Home Messages
- The current data on true savings is soft at best
- Process improvements do not always translate to
cost savings - The best calculations come from careful
compilation of data about your institution - IT is increasingly the expected Cost of Doing
Business