The Cost Of CPOE Systems

1
The Cost Of CPOE Systems Other IT Patient
Safety ActivitiesIn Georgia HospitalsSteven
D. Culler, Ph.D.Rollins School of Public
HealthEmory University AHRQ Annual
ConferenceJune 6, 2005
2
Research Team

• Emory University Members
• Steven D. Culler, Ph.D.
• Adam Atherly, Ph.D.
• Kenneth E. Thorpe, Ph.D.
• Kimberly J. Rask, MD, Ph.D.
• Partnership for Health and Accountability
  Members
• Anne Grabois-Davis, BSN, MPA
• Sandra A. Walczak, FACHE, MBA, MHA
• Vi Naylor, RN, MN
• Funding Support
• Grant Number 1U18HS11918 from AHRQ

3
Presentation Outline

• Cost of CPOE Systems
• A. IT Survey of Georgia Hospitals
• B. CPOE Implementation Plans
• C. Cost Assumptions Cost Estimates
• Costing Other IT Patient Safety Activities
• A. Survey Methods
• B. Cost Components
• Costing Issues Associated with IT Infrastructure

4
Georgia IT Survey Methods

• State-wide survey All 130 acute care community
  hospitals
• Survey study period August November 2003
• Response rate Approximately 55 of hospitals
  (75) completed surveys
• Survey Topics
• CPOE Plans
• Hospitals IT infrastructure

5
CPOE System - Definition

• A CPOE System must include
• systems that intercepts medication errors at the
  time of the order
• physicians enter via computer
• orders are integrated with other patient
  information, including laboratory
• automatically checked for potential errors

6
Current and Planned CPOE Systems by Hospital Bed
Size
7
Cost Estimates

• We would like to thank the Eclipsys Corporation
  for their help in generating the baseline cost
  estimates.

8
Key Cost Assumptions

• Basic System will be used for 7 years
• First year investment cost depends on the
  hospital bed size and patient care activities.
• Hardware cost and professional service cost all
  occur in the implementation phase.

9
5 Cost Components

• Core CPOE System (moderate sophistication)
• Additional Functions
• Software Fees
• Other Hardware Required
• Professional Services
• - Implementation
• - Integration
• - Training

10
Ball Park Estimate of the Cost of a CPOE System
(in Millions of 2003 s)
11
Component Cost Sharefor the Typical Hospital
Cost for the Average Hospital 3,250,000
12
Component Cost Shareby Bed Size
1.7 million
6.4 million
11.3 million
13
Component Cost Share Urban or Rural Location
Average cost Rural 2 million vs. Urban 4
million
14
Estimating the Cost of Patient Safety Activities

• Survey Method
• Goal Collect cost information on a hospitals
  three most important patient safety activities
• Pilot survey Convenience survey of 15 hospitals
• Survey study period Fall 2004
• Major cost components identified by hospitals
• Capital investment
• Labor cost by type of personnel
• Material and supply cost

15
Patient Safety Activities

• IT Based Activities
• Bar Coding
• Prevention of Medication Error
• Lab results and documentation
• Patient ID systems
• Pharmacy Systems
• Prevention of Medication Error
• Compliance
• Non-IT Based Activities
• Falls Programs
• Wound Care Protocols
• JCAHO Measures
• CQIP Guidelines
• HIPPA Compliance

16
Cost of Patient Safety Activities

• IT Based Activities
• IT system costs are by far the major cost
  component
• The majority of labor costs are non-medical
  personnel
• Non-IT Based Activities
• RN LPN salaries are the major cost component

17
Cost Issues To Be Addressed

• Who is the right person to interview about cost
  of patient safety initiatives?
• Investment costs vs. operational cost
• Current year vs. life of the project
• More than one department involved
• Does it make sense to attempt to separate patient
  safety costs from the cost of patient care?

18
Cost Issues To Be Addressed

• What should we do about costing indirect
  costs/benefits associated with patient safety
  initiatives?
• Lost patient revenue associated ADE and other
  patient safety errors (re-work revenue)
• Labor costs associated with changing job
  requirements
• Will patient safety initiatives change hospital
  occupancy rates and patient market share?

19
What does the Future Hold?

• Will IT infrastructure and patient safety
  improvements be dictated by JCAHO and other
  stakeholders as compliance issues or result from
  market competition for patients over health care
  quality issues?