Typical measures aren't enough to capture the real value. Quality care is good business, hospital leaders insist.
As the rush intensifies to meet mandates for more health care information technology, hospitals must ensure they are getting solid returns on IT investments. Calculating accurate ROI, however, can be difficult.
The problem is, hospitals typically measure ROI from a business perspective—cost, revenues or operating efficiencies—but many benefits of clinical applications fall into quality and safety realms that do not easily translate into dollars.
"If the project is strategic in nature or a government mandate, ROI calculations are limited," says Denver Health Chief Information Officer Gregg Veltri.
To reach a keener understanding of IT value, investment rationale should center on clinical benefits, says John Frownfelter, M.D., chief medical information officer, inpatient services, Henry Ford Health System in Detroit. But even then, measurement tools are lacking.
"We know electronic health records are the right thing to do, but we don't have the data to predict how this will improve clinical processes or outcomes," he says, adding that hospitals generally don't prove either the business or clinical case well for clinical applications, though both are inextricably linked.
"We should measure clinical ROI in terms of measurable impact on patient care," Frownfelter says. For instance, his institution implemented a communication tool to increase the percentage of hospital calls to physicians that are answered in real time; completed emergency department calls to on-call physicians are now up 38 percent, a four-fold increase.
A recent investment in a clinical surveillance tool at the University of Kansas Hospital is another example. Bob Page, president and CEO, says the system generates alerts by monitoring information entered into the EHR. Algorithms for early detection of sepsis is one of the first conditions implemented.
Page says the hospital's IT investment decisions are embedded in a philosophy that quality care is good business. "Correct treatment the first time and avoidance of errors is blended equally into bedside care and IT," he says.
The University of Chicago Medical Center also tends not to use financial ROI as a metric when evaluating IT. "Our emphasis is on how well the technology will support organizational goals and strategic initiatives," says David Miller, executive director, application systems at the medical center.
IT ROI is sometimes obvious. Computerized provider order entry, for instance, reduced by 20 percent the turnaround from pharmacy order to drug administration, Miller says. The medical center also eliminated 15 radiology department FTEs within 30 days of implementation of voice recognition software.
Parkview Adventist Medical Center, Brunswick, Maine, recently abandoned its costly best-of-breed niche solution approach for everything from admissions to radiology in favor of a $2.1 million single-vendor solution that, for one, lets staff log in to all applications using a single password. CIO Bill McQuaid says his IT staff of six installed 23 applications and interfaces, including biometric sign-on, in less than six months.
"Parkview physicians now spend much less time logging in and out of applications," McQuaid says.
ROI for business IT is usually easier to measure. In the five years since implementing a $750,000 application to ensure proper insurance assignment, billing and rebilling, Denver Health netted an additional $24 million.
"IT has become the enabler for the business of health care here," Veltri says.
Regardless of ROI, hospitals feel pressure to adopt innovative technologies.
Baptist Memorial Health Care Corp., Memphis, Tenn., was forced to rethink the scope of its EHR implementation plan, which originally included only six of its 14 hospitals. EHRs are now planned for all 14. "While cost is a factor, improved patient safety guided this decision," says Robert Gordon, executive vice president and chief administrative officer.
One way to save money on IT is with free or low-cost open-source applications, a strategy attractive to county hospitals.
"Open source was our only alternative, since we can't afford commercial systems," says Paul Hensler, CEO of Kern Medical Center, Bakersfield, Calif. Hensler believes more hospitals should go open source.
"There seems to be a perception that since open-source EHRs are free, they're ineffective," he says. They not only are effective, Hensler adds, they may also help Kern Medical Center turn a profit.
Douglas Page is a freelance writer in Pine Mountain, Calif.
This article first appeared in the June 2010 issue of H&HN magazine.