Scott Joslyn is CIO of MemorialCare, a five hospital system based in Huntington Beach, Calif., that signed on for an Epic (Verona, Wis.) EMR in 2004 - and recently decided to incorporate the revenue cycle as well. MemorialCare has 3,200 community physicians that it plans to link to its electronic record. Healthcare Informatics Senior Editor Daphne Lawrence spoke with Joslyn about managing expectations and balancing the bottom line.
DL: When you proposed Epic to the board, did you have to demonstrate any hard ROI?
SJ: When we went to our board in early 2004, after a substantial planning effort, one of the things they were imposing on any capital investment, certainly any one of the size we were talking about, was a return. And as you probably know, the returns on EMRs are sometimes difficult to outline and certainly difficult to capture. But the board was looking for diligence and thoughtful analysis on where we were expecting to get benefits. So we identified 23 or so measures of various kinds that would be impacted as a result of the EMR investment. About 11 or so had real tangible dollars attached, and there were others that we knew were valuable, but we couldn't attach a number to.
Nevertheless we had expectations, for example, that nursing satisfaction would improve and that would have an impact on retention and turnover. We see nurses coming out of school expecting to use an EMR and we think that will grow over time, but we can't measure that. But on the tangible side, we expected to save real money in forms, paper and printing costs. We forecast on a $62 million investment, $9.2 million projected per year return. That was for 1,500 beds in five hospitals. I don't want to call it a bargain, but it's less than you might typically spend and it's what we felt was believable. If we were careful, we could get it done for that, and that was what we thought we could afford. And we thought that with that investment, we'd have a return of a little less than $10 million a year. And though that resulted in a negative return, we would be on the hook to at least try and capture that savings, be it through case mix or anything else. We continue to look at those costs. In the case of transcription costs, for example, it's fallen way down and we've saved a dramatic number in labor.
DL: Are you finding other cost savings you hadn't thought of?
SJ: For one thing, given the stimulus package, we had no idea that this would qualify us for federal funding. We believe, as the rules exist today, that we could qualify. It is predicated on HIE, and frankly, that infrastructure isn't in place. We participate in a local RHIO, but if you think about the government's intent, with everybody plugging into a backbone, we're exchange-ready. We have a certified system and we exchange data now with the local RHIO, so we're ready for 2011 and what other rules they may impose. We do CPOE, reporting out of the system - it's meaningful use by any stretch of the imagination, so we're pretty sure we'll qualify. That's not savings per se; that's a benefit that will probably come in one door as the Medicare reimbursement rate goes out the other. But it's better than losing by not having anything.
I think the whole point is there has been the tendency to say that EMRs are a cost of doing business, there really is no return. And so unless somebody really forces you down the path to look for value, you won't look for value. You'll worry about getting it implemented and not necessarily look for savings the way we had to. We had to come back and talk about our promise to the board.
DL: Your board sounds pretty unique.
SJ: Well, I think they wanted management to be disciplined, and we took it there. We believed we were doing this for a reason, and we should be able to get a return. We wrote in the budget expected savings. And that put some pressure on the CFO and local management teams to go back and take a look at where we expected to get value and look for other opportunities. It's just a matter of the thought process. We have not gotten all the value we thought we were going to get, and we've gotten some of it in unexpected areas.
DL: Such as?
SJ: The paper savings were more than expected, almost $3 million. And we don't have transcribing errors anymore because we do very little transcription. We are a community hospital and these are physicians that are not our employees. So it's a lot about enticing, encouraging them, and having them lead a lot of these efforts. Because, as you know, they can vote with their feet.
DL: Are you using Stark to put product in their offices?
SJ: We are. It's a relatively slow uptake process. We have that for probably slightly more than 40 physicians. One of the clinics is a children's clinic, and the bulk of our admissions to our children's hospital come via the clinic. The clinicians there are just so wowed by their ability to feed the inpatient stay, and for that matter, as patients make their way from the clinic for whatever reason, the clinicians on the inpatient side are able to get a complete sense of that patient. So we have that continuity of care.
DL: Well that's the goal.