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October 24, 2005

Add It Up — The Unexpected Costs of EMR Implementation
By Neil Versel
For The Record
Vol. 17 No. 22 P. 16

When preparing to install an electronic medical record, keep in mind that there’s bound to be a few unanticipated bills to pay.

After Trinity Health completed the installation of clinical and administrative information systems at Saint Mary’s Health Care in Grand Rapids, Mich., in October 2004, a small complication was discovered.

A wireless network did not work properly in one part of the 324-bed hospital because the rooms, which originally housed radiology equipment, had walls sheathed in lead.

In the grand scheme of things, the problem was minor. Yet, it highlights a truism about automating healthcare: There really is no such thing as plug-and-play electronic medical records (EMRs). Unanticipated, unplanned, and even some hidden costs are bound to show up during a hospitalwide technology implementation.

“There often is a misalignment between what provider organizations expect to achieve and what they actually will achieve,” says Robert Seliger, president, CEO, and cofounder of Sentillion, a systems integrator and vendor of electronic security software for healthcare, based in Andover, Mass.

“I think these are inherently complex systems to create,” Seliger says of hospital information systems, which have to account for multiple workflows. “This is not automating the production line in a factory that produces widgets.”

According to Seliger, who chairs HIMSS’s committee on integration and interoperability, hospital administrators planning for EMRs must take into account different types of patients, the type of care each patient needs, and many different caregivers.

“There are many, many needs,” Seliger says. “It is difficult to meet all of these needs uniformly.”

As it turns out, Trinity Health, a Novi, Mich.-based network of Catholic hospitals, spent plenty of time planning the Saint Mary’s technology rollout.

Trinity Health is four years into a long-term, $280 million effort, called Project Genesis, to bring advanced technology to 23 hospitals. Roughly 18 months to two years before implementation, Trinity conducts a detailed technical inventory of the facility to determine what kind of hardware will work best, where to put computers, and numerous ergonomic considerations.

In fact, the organization has designed special metal boxes for computers outside patient rooms to replace the ubiquitous chart boxes for paper records. The boxes even have a small hole in the side so users can reach the computer’s reset button.

“It’s been a cumulative learning process,” says Paul Browne, Trinity Health’s senior vice president and chief information officer. “We left ourselves plenty of room to learn leading up to go-live.”

The small glitch with the wireless technology highlights the difficulty of creating a foolproof information technology (IT) plan for a hospital.

“These aren’t easy problems to solve,” Seliger says.

“It is rarely the case that one takes an analog process and automates it,” he explains. “When we automate things in healthcare, we are changing processes.” Therefore, healthcare organizations have to budget for change management.

Proper planning helped things go smoothly for Evanston Northwestern Healthcare (ENH), a health system based in Evanston, Ill. that spent $30 million over a three-year period to create a paperless environment in its three hospitals and dozens of outpatient clinics.

ENH was the first multihospital system to choose Epic Systems Corp. as its primary vendor for inpatient IT. The Madison, Wis.-based company, which has since won a massive contract to provide EMRs to the entire Kaiser Permanente organization, previously had focused on ambulatory systems.

Thus, the installs at physician offices were somewhat routine. “They had a very mature product on the ambulatory side,” according to Nancy Semerdjian, ENH senior vice president for medical informatics.

Inside the hospitals, ENH actually was the first to use Epic’s pharmacy and emergency department (ED) software. “They were kind of literally writing code the day before we went live,” says Chief Information Officer Thomas W. Smith. Flexibility on the part of the health system’s personnel helped make the last-minute changes as painless as possible.

Still, many healthcare providers seem afraid to be assertive with technology partners. Seliger, who has been in the IT business for more than a quarter century, says, “I have never been asked, ‘Do you test your products?’”

A simple query like this should lead to a deeper line of queries about who designs the tests and how the vendor documents testing results, Seliger says.

He also recommends that hospital officials ask tough questions about the financial viability of vendors, especially those that are privately held. Products may be used for 10 to 15 years. Will the company still be around to support what they sell?

Seliger says the most common reason Sentillion gets called in to integrate systems is that a project was not meeting its expectations—usually the consequence of insufficient change management.

Factors that providers should consider include the inherent complexity of a hospital environment, the need to retool workflows, and the urge to try to save money in a business that cannot tolerate cutting corners. “You can’t build mission-critical systems for mission-critical industries like healthcare and skimp,” Seliger says.

For proper change management, Seliger recommends having a long-term, phased plan to reengineer workflows and advocates regular reviews of business objectives in EMR projects.

“Establish a relationship with the vendor so there’s skin in the game until they go live,” Seliger tells hospital clients. He says Sentillion charges a fixed fee so the company assumes the risk for cost overruns. “Most vendors rely on the fact that you will come back to them for service fees.”

Ken Howard, executive vice president for acute care sales at A4 Health Systems, a vendor in Cary, N.C., that provides clinical software to physician practices and hospital EDs, has a general formula for determining IT expenses.

He says approximately one-third of the cost comes from the software license, another one-quarter to one-third from hardware, and at least one-third from implementation. Implementation almost invariably involves customization and project management expenses, he says, and these costs can fluctuate from department to department within a health system.

For example, Howard says ED installations generally have high costs to interface with other hospital systems since emergency patients often need care across multiple medical specialties and admission orders must tie into the hospital’s registration system.

“The ED itself is more like a hospital within a hospital,” Howard says. “What we’re doing is building a single medical record of everything that happened to you from the moment you entered the hospital.”

In the case of a hospital merger or the replacement of a laboratory, imaging, or management system, there will be more expenses to interface the EMR. A4 charges by the hour for such work. Others may negotiate a flat fee per job.

Then there are the personnel requirements.

Getting staff ready for the technology at ENH required more than 100,000 man-hours of training, and ENH had to develop 51 different in-person and online classes for various users to take. “Just the mechanics of preparing the courses took a lot,” Smith says.

Although the project largely was successful and ENH is virtually paperless today, health system executives did underestimate staffing needs.

“The biggest issue was the amount of people it took to get things done,” Smith says.

When the project started, ENH planned on adding two extra people to existing IT staff for each of the six or seven software modules being installed. “That was not enough,” says Smith. “We were way short.”

Thus, ENH had to bring in pricey IT consultants and—roughly halfway through the three-year project—ENH increased its own IT staff. The organization has added more technical personnel since the installation finished in late 2003.

The massive amount of training also took more human resources than planned. “We had estimated 10 trainers up front. We ended up with probably 20 FTEs [full-time employees] at one point,” Smith says.

During training, staff will be taken away from their regular jobs. “You may have to supplement with temps or overtime during training,” says Margret Amatakayul, president of Margret\A Consulting, an EMR consulting firm in Schaumburg, Ill.

“There might even be some training on basic computer skills,” Amatakayul cautions. She says many older clinicians—nurses more often than doctors, at least in hospital environments—may never have learned to type or work a mouse.

For the nursing staff, hospitals should be prepared to pay for training of “supervisors,” technology-savvy nurses willing to help other nurses learn the system—a kind of a train-the-trainer approach, according to Howard. “We’ve found with physicians, that does not usually work so well,” he says.

Educating such people—whom Trinity Health calls “superusers”—can be expensive, and their roles may constantly evolve. Among the easily overlooked responsibilities of these superusers is to make sure other clinicians remember to plug in portable computers when they are finished using the devices so the batteries can recharge.

“We found out that we need more superusers,” Browne says.

After a few installations, Trinity was able to figure out ratios of superusers to physicians, nurses, pharmacists, and laboratory technicians that seem to work well across the hospital network, but Browne says it took a good deal of trial and error.

Hospitals should also budget for training space and even some remodeling when they plan large IT projects. “You know there are going to be training costs, but where are you going to do that?” Amatakayul asks.

“Where are you going to put the devices in the nursing area?” Amatakayul explains, “Even if you are using tablets, you still have to put them somewhere when you’re caring for patients.”

Likewise, the space and staffing issues come up when technology actually comes online.

For Trinity Health, each technology rollout requires a command center with 20 to 50 IT and clinical people working 12-hour shifts for two weeks after go-live. “The intent is to provide support to the clinicians right at their elbows,” Browne says.

These people require work areas, telephones, computers, and nourishment. “We’ve consumed a lot of food during this process,” Browne says.

“We do recommend that when they go live that they put extra staff on each shift,” Howard says. He says supervisors should not be expected to care for patients for approximately three to five days after the system goes live while they are helping others work with the new technology.

Even with clinicians receiving hands-on help from peers, institutions need their own IT support staffing. “Once a hospital goes live, you get lots and lots of calls,” Howard says. “Every one of our hospitals has a help desk. We insist.”

Implementation planners also need to be aware that the nature of those calls has changed, and should plan accordingly.

“Because hardware and software is more sophisticated that it was five, 10 years ago, we get more calls on the technical side than on the ‘I’m stuck, help me figure out how to do this’ side than we used to,” Howard explains.

Howard says expenses for ongoing maintenance and training typically run approximately 20% of the initial software license fee, since staff does turn over and software does get updated. New software often necessitates more powerful hardware.

“Even now, we still have trainers on staff,” Semerdjian says.

Vendors have annual user meetings, where customers can meet other users and share ideas and IT strategies. “We encourage hospitals to send at least one or two people to our conventions,” Howard says.

Other unexpected costs arise, according to Amatakayul, because information management professionals and health system executives sometimes avoid talking about the “transitional, hybrid record,” the dual paper and electronic systems hospitals usually run in parallel during an EMR rollout.

Plan on having many clinicians wanting to print out electronic records for various reasons. Since each electronic report often goes on a separate sheet of paper, the volume of paper generated may actually increase with an EMR. “The files get much bigger,” Amatakayul says.

Similarly, as EMRs become more powerful and data-rich, the size of computer files can balloon. This, plus the sheer volume of e-mail a hospital generates, can quickly eat up hard drives. “The cost of storage is going down, but the size of the stuff we have to store has gotten so enormous that the cost of storage management is going up,” Amatakayul says.

At ENH, the decision to go paperless meant that many documents and forms from insurers, referring physicians, and other sources had to be scanned. “We had no real idea of how much hardware and people it would take,” Smith says.

Another issue was the number of in-hospital workstations required, in light of the fact that the technology gave clinicians remote access to patient records from any computer with a Web browser. It seems as if adjunct providers, such as dietitians and social workers, showed a preference for visiting the hospital over viewing information from home.

“People were in the habit of coming in to view records,” Semerdjian says. “Socialization is part of medicine.”

According to Smith, the health system ended up with twice as many computer carts on the floors than planned.

“We hadn’t come up with a process for evaluating hardware usage,” Semerdjian says. “Make sure you put that in place. Immediately after we went live, we were getting e-mails saying things like, ‘We need two more computers in the ED.’”

Semerdjian notes that the IT people quickly discovered that there is no such thing as loaner equipment. “One of the things you learn in hospitals is that if you give it, you never get it back,” she says.

— Neil Versel is a journalist in Chicago specializing in healthcare information technology.

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