Economic Impact of Electronic Health Records

Electronic Health Records place a huge financial strain on the stability of healthcare delivery in the United States. Electronic Health Records are a major part of the current healthcare reform. In 2004, President Bush pushed through the initiative that in ten years all Americans would have their medical record in the form of an electronic/digital health record (Kutzin, 2013).  This goal was to ensure that providing healthcare would become cheaper and safer. Electronic Health Records are a part of the national data system which allows healthcare providers access to individual health records at the touch of a keyboard.  Medical errors would be reduced and data collected would be utilized to support safer patient outcomes.  Some 100,000 persons are killed each year by preventable medical errors (Terry, 2013).  Are the benefits of EHR’s worth the ever increasing financial burden on the American taxpayer? Have EHR’s made the delivery of healthcare safer for patients?


Healthcare delivery in the United States is a multi-trillion dollar business.  In 2009, the U.S. Government spent 17.4% ($2.6 trillion) of its Gross Domestic Product (GDP) on healthcare.  Digitizing patient records accounted for $27 billion dollars (Kutzin, 2013).  The American people do not like to consider healthcare as a business.  However, Americans out spend every other country in the world on cost of healthcare per person.  The U.S. spends over $8,000 dollars per person each year (Shaw, 2013).  Healthcare delivery system cannot continue to function without balancing the financial books and reducing the amount of money spent on healthcare (Kelly, 2013).


Recession hit the American economy hard in 2000.  Funding for Health Information Technology for Economic and Clinical Health Act (HITECH) was politically impossible to fund.  In 2009, only 1.5% of all U.S. hospitals had electronic healthcare records. Of that 1.5% only 7.6% of hospitals had working forms of computerized orders, medication records and electronic patient records capability (Verdon, 2014).  Pushing through legislation to mandate Electronic Health Records seemed to be a large uphill battle.  As the recession ended, HITECH provided new incentives with $30 billion dollars from Health & Human Services (Pizer & Gardner, 2011).  This money was provided as a subsidy for hospitals and physicians offices to upgrade their electronic patient records.  Doctors would receive an incentive of $44,000 dollars over a five year period to meet “meaningful use” criteria.  Hospital incentives would begin at two million dollars with additional money incentives based on inpatient numbers and discharges (Morley, Walsh & Wilkins, 2013).  Hospitals and doctor’s offices went into the program knowing that the government incentive program would pay only a portion of the estimated cost.  Hospitals would have to spend at least another $120 billion dollars to make the initial investment work correctly (Verdon, 2014).  HITECH placed mandatory regulations on an escalating scale of completion.  Hospitals and doctor’s offices would not receive one-time payment but have to earn payment after certain stages of completion.  This method would ensure that once a hospital started down the EHR path that they would never be able to turn back. Hospitals would be locked into making more and more sophisticated and demanding alterations to their growing Electronic Health Records system (Diggs, 2012).

Doctor’s offices felt a heavy burden in meeting the mandatory stage requirements of meaningful use.  Doctor’s offices found themselves needing to add new staffing positions.  Current staffing was constructed around providing healthcare and not information technology.  Meaningful use criteria held doctors responsible for meeting all criteria regardless of being within the doctor’s direct control. Failing to meet even one of the core measures would have the potential of denial of all incentive funding (Verdon, 2014).  Records show that larger hospital and larger physician groups had more resources to hire, train and implement the mandatory requirements.  Smaller, private hospital and physician offices were less likely to have fully functioning EHR’s.  Financial barriers, time barriers and technical barriers were more difficult for smaller agencies to overcome (Pizer & Gardner, 2011).


Electronic Health Records (EHR’s) collect information in a digital format and is instrumental in medical billing and statistical data recording.  The less clear picture is whether EHR’s reduce cost and improve quality of care.  Current data indicates that many doctors and hospitals are far behind the curve of purchasing and implementing the mandates of Electronic Health Record’s (Shaw, 2013). Health Information Technology (HIT) monies are available for electronic updates.  As of 2009, 70% of physicians surveyed reported that the monetary investment into EHR’s have NOT been worth the expense (Warner, 2011).

Cost-benefit analysis is an essential part of a viable business.  No business can spend an unlimited amount of money.  Doctor’s offices are finding that they make a huge up-front investment in EHR’s, as well as continued investment in hardware, software, training time and  information technology support staff (Terry, 2013).  Government reports state that a five person doctor’s clinic will spend approximately $160,000 dollars on start-up investment.  Additional $85,000 dollars will go toward yearly maintenance expenses (Kutzin, 2013).

Electronic Health Records have been mandated for the last six years.  Approximately 70% of U.S. hospitals and 50% of physician offices have implemented electronic patient records.  Only now can real data be collected and analyzed to the true test of functionality and success.  Do EHR’s make patients safer and justify the expense?  Physicians report fundamental flaws in how different software provider’s software is not compatible with each other and directly hinders the collection and flow of data. Doctors suffer from €œalert€ fatigue from specific chronic conditions that require large number of check box criteria.  Doctors become more data entry personnel and less medical professionals.  New data is suggesting that doctors hire transcription personnel and take the doctor off the computer screen.  Any cost saving measures of EHR’s is quickly eaten up in the huge administrative costs (Diggs, 2012).


Debate remains between performance of EHR’s and the cost of implementation.  By the year 2016, HITECH predicted that you would have trouble finding a doctor without EHR in their place of practice.  Data collected in 2014 suggests that some 35% of healthcare providers do not even have basic electronic healthcare technologies in place.  Rural, small and poorly funded agencies are lagging behind in the implementation of technology (Morley, Walsh & Wilkins, 2013).  Older doctors are refusing to update and choosing to retire from practice.  A large percentage of the current EHR providers are not adequately equipped to share data with other agencies.  Data is suggesting that Electronic Healthcare Technologies have added between 25-30% costs to healthcare. Current data indicates that patient safety, reliability/access of data and patient satisfaction has not justified the large financial investment in Electronic Health Records (Kelly, 2013).

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