Estimating Cost of an Activity: EHR Farrokh Alemi, Ph.D. Lee Baliton

Course on Project Management Cost of Electronic Health Record Purchase cost Purchase cost True cost True cost

Course on Project Management Cost of Electronic Health Record Software licenses Software licenses Master patient index Master patient index Pharmacy link Pharmacy link Drug-drug interaction decision aid Drug-drug interaction decision aid Laboratory implementation Laboratory implementation Outpatient implementation Outpatient implementation Hardware Hardware Network infrastructure Network infrastructure Yearly support and maintenance Yearly support and maintenance Training Training

Course on Project Management Cost of Electronic Health Record Software licenses Software licenses Master patient index Master patient index Pharmacy link Pharmacy link Drug-drug interaction decision aid Drug-drug interaction decision aid Laboratory implementation Laboratory implementation Outpatient implementation Outpatient implementation Hardware Hardware Network infrastructure Network infrastructure Yearly support and maintenance Yearly support and maintenance Training Training

Course on Project Management Cost of Electronic Health Record Cost of building Cost of building Cost of personnel Cost of personnel Cost of operation Cost of operation Cost of insurance Cost of insurance Cost of management & other overheads Cost of management & other overheads Cost of financing Cost of financing

Course on Project Management Cost of Electronic Health Record Cost of building Cost of building Cost of personnel Cost of personnel Cost of operation Cost of operation Cost of insurance Cost of insurance Cost of management & other overheads Cost of management & other overheads

Course on Project Management Cost of Electronic Health Record Impact on productivity Impact on productivity

Course on Project Management Cost of Electronic Health Record Purchase cost Purchase cost Economic cost Economic cost Impact on productivity Impact on productivity

Course on Project Management True Cost Depend on Many Factors Size of operation Size of operation Number of patients Number of patients Number of clinicians Number of clinicians Location of clinic Location of clinic Property values Property values Network infrastructure Network infrastructure Local area wages Local area wages Management of the organization Management of the organization

Course on Project Management Project Manager’s Cost Estimation Problem True cost are hidden True cost are hidden Cost are over time Cost are over time Cost depend on many factors Cost depend on many factors Cost depend on events outside of organization Cost depend on events outside of organization Scope of project changes over time Scope of project changes over time

Course on Project Management Project Manager’s Cost Estimation Problem True cost are hidden True cost are hidden Cost are over time Cost are over time Cost depend on many factors Cost depend on many factors Cost depend on events outside of organization Cost depend on events outside of organization Scope of project changes over time Scope of project changes over time

Course on Project Management Project Manager’s Cost Estimation Problem True cost are hidden True cost are hidden Cost are over time Cost are over time Cost depend on many factors Cost depend on many factors Cost depend on events outside of organization Cost depend on events outside of organization Scope of project changes over time Scope of project changes over time

Course on Project Management Project Manager’s Cost Estimation Problem True cost are hidden True cost are hidden Cost are over time Cost are over time Cost depend on many factors Cost depend on many factors Cost depend on events outside of organization Cost depend on events outside of organization Scope of project changes over time Scope of project changes over time

Course on Project Management Project Manager’s Cost Estimation Problem True cost are hidden True cost are hidden Cost are over time Cost are over time Cost depend on many factors Cost depend on many factors Cost depend on events outside of organization Cost depend on events outside of organization Scope of project changes over time Scope of project changes over time

Course on Project Management Approaches to Cost Estimation Statistical analysis of cost across organizations Statistical analysis of cost across organizations Unit cost for quantities Unit cost for quantities Bottom up Bottom up Activity Based Costing Activity Based Costing Top down Top down

Course on Project Management Approaches to Cost Estimation Statistical analysis of cost across organizations Statistical analysis of cost across organizations Unit cost for quantities Unit cost for quantities Bottom up Bottom up Activity Based Costing Activity Based Costing Top down Top down

Course on Project Management Approaches to Cost Estimation Statistical analysis of cost across organizations Statistical analysis of cost across organizations Unit cost for quantities Unit cost for quantities Bottom up Bottom up Activity Based Costing Activity Based Costing Top down Top down Some costs maybe missed

Course on Project Management Approaches to Cost Estimation Statistical analysis of cost across organizations Statistical analysis of cost across organizations Unit cost for quantities Unit cost for quantities Bottom up Bottom up Activity Based Costing Activity Based Costing Top down Top down Cost of time of training personnel.vs. Cost of time of employees going through training

Course on Project Management Approaches to Cost Estimation Statistical analysis of cost across organizations Statistical analysis of cost across organizations Unit cost for quantities Unit cost for quantities Bottom up Bottom up Activity Based Costing Activity Based Costing Top down Top down

Course on Project Management Approaches to Cost Estimation Statistical analysis of cost across organizations Statistical analysis of cost across organizations Unit cost for quantities Unit cost for quantities Bottom up Bottom up Activity Based Costing (ABC) Activity Based Costing (ABC) Top down Top down

Course on Project Management Example of Unit Cost of Quantities 1500 patients/day 1500 patients/day 365 days/year 365 days/year $55/Hour pay for Administration $55/Hour pay for Administration 15 minutes/visit 15 minutes/visit $250 reimbursement/visit $250 reimbursement/visit Cost of an EHR Depends on Size of the Operations Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Based on Calaudine Beron’s lecture in 2007

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399 A lot is missing

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399 Building cost

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399 Over head cost

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399 Management cost

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399 Vacation time

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399 Retirement benefits

Course on Project Management Example of Unit Cost of Quantities Costs of TotalYear 1Year 2 Year 3 Year 4 Year 5 Internet/Network 212,00017,6678,833 5,889 4,417 3,533 Software 200,00016,6678,333 5,556 4,167 3,333 Hardware 425,00017,708 11,806 8,854 7,083 Implementation 652,00027,167 18,111 13,583 10,867 Maintenance 15, Training 200,0008,333 5,556 4,167 3,333 Total cost 1,492,00088,16770,999 47,335 35,501 28,399

Course on Project Management Example of Unit Cost of Quantities Jac Valancy Jac Valancy Family physician clinic Family physician clinic How Much Will That EMR System Really Cost? By Jack Valancy, MBA

Course on Project Management Example of Unit Cost of Quantities HardwareDescription Initial Unit costQuantity Year 1 Years 2-5 ServersMain server$12,3241$1,107$1,476 Backup server$11,8741$1,071$1,428 Data storageRAID array$3,5231$315$420 Data backupDAT drive and cartridges $2,1551$0$2,580 Input devicesDesktop computers$9876 Laptop computers$1,5823$282$564 PrintersLaser$1,5451 Inkjet$3592 OtherScanner$2501 NetworkRouter & switches$2,5871 Cable installation$1,5001 How Much Will That EMR System Really Cost? By Jack Valancy, MBA

Course on Project Management Example of Unit Cost of Quantities Hardware Description Initial Unit costQuantity Year 1 Years 2-5 ServersMain server$12,3241$1,107$1,476 Backup server$11,8741$1,071$1,428 Data storageRAID array$3,5231$315$420 Data backupDAT drive and cartridges$2,1551$0$2,580 Input devicesDesktop computers$9876 Laptop computers$1,5823$282$564 PrintersLaser$1,5451 Inkjet$3592 OtherScanner$2501 NetworkRouter & switches$2,5871 Cable installation$1,5001 How Much Will That EMR System Really Cost? By Jack Valancy, MBA

Course on Project Management Example of Unit Cost of Quantities How Much Will That EMR System Really Cost? By Jack Valancy, MBA SoftwareDescription Initial Unit costQuantityYear 1 Years 2-5 Operating systemUnix$2491$0$288 ApplicationsEMR application$12,0001$720$1,440 Interface modules$2,0002

Course on Project Management Example of Unit Cost of Quantities How Much Will That EMR System Really Cost? By Jack Valancy, MBA Description Initial Unit costQuantityYear 1 Years 2-5 TrainingStaff travel$5002 Interface(s)Vendor time$5016 Ongoing data entryScan in data from other sources $8500$2,000

Course on Project Management Example of Unit Cost of Quantities How Much Will That EMR System Really Cost? By Jack Valancy, MBA InitialYear 1Year 2Year 3Year 4Year 5 Date paid01/01/0207/01/0207/01/0307/01/0407/01/0507/01/06 Amount$71,020$7,283$11,984

Course on Project Management Example of Unit Cost of Quantities How Much Will That EMR System Really Cost? By Jack Valancy, MBA InitialYear 1Year 2Year 3Year 4Year 5 Date paid01/01/0207/01/0207/01/0307/01/0407/01/0507/01/06 Amount$71,020$7,283$11,984 Net Present Value $73,973

Course on Project Management Is this cost analysis accurate? Yes Yes No No

Course on Project Management Is this cost analysis accurate? Yes Yes No No

Course on Project Management Is this cost analysis accurate? Yes Yes No No We cannot always be active, sometimes we have to be idle to get ready for next task.

Course on Project Management Is this cost analysis accurate? Yes Yes No No Time before and after a call

Course on Project Management Example of Activity Based Costing Top down Top down Includes costs typically missed Includes costs typically missed No show No show Vacation Vacation Retirement benefits Retirement benefits

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Adm$1,000$119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$200$25 $50 Office supplies$300$100 Insurance$100$12$13$25 Telephone$600$200 Equipment$300$100 Cost per visit11113 Adapted from Schuneman P. Master the 'ABCs' of Activity-Based Costing MANAGED CARE May ©1997 Stezzi Communications Salaries

Course on Project Management Example of Activity Based Costing 240  200  760  Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Pay Adm $1,000  $119$39$337$254$251 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities $200  $25 $50 Office supplies $300  $100 Insurance$100$12$13$25 Telephone $600  $200 Equipment $300  $100 Cost per visit11113 Salaries

Course on Project Management Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Admin$333$40$13$112$85$83 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$220$25 $50 $70 Office supplies$100$33 $34 Building insurance$100$12$13$25 Telephone$700$200 $300 Equipment$1,300$200$400$700 Cost per visit$10$12$4 Example of Activity Based Costing Salaries

Course on Project Management Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Admin$333$40$13$112$85$83 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$220$25 $50 $70 Office supplies$100$33 $34 Building insurance$100$12$13$25 Telephone$700$200 $300 Equipment$1,300$200$400$700 Cost per visit$10$12$4 Example of Activity Based Costing Salaries

Course on Project Management Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Admin$333$40$13$112$85$83 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$220$25 $50 $70 Office supplies$100$33 $34 Building insurance$100$12$13$25 Telephone$700$200 $300 Equipment$1,300$200$400$700 Cost per visit$10$12$4 Example of Activity Based Costing Salaries A cost saving of $1/visit

Course on Project Management Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Admin$333$40$13$112$85$83 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$220$25 $50 $70 Office supplies$100$33 $34 Building insurance$100$12$13$25 Telephone$700$200 $300 Equipment$1,300$200$400$700 Cost per visit$10$12$4 Example of Activity Based Costing Salaries A cost increase of $1/visit

Course on Project Management Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Admin$333$40$13$112$85$83 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$220$25 $50 $70 Office supplies$100$33 $34 Building insurance$100$12$13$25 Telephone$700$200 $300 Equipment$1,300$200$400$700 Cost per visit$10$12$4 Example of Activity Based Costing Salaries A cost increase of $1/visit

Course on Project Management Visits LaboratoryRadiologyDr. ADr. BDr. C Direct$1,500$600$500$400 Payroll Admin$333$40$13$112$85$83 Supervision$2,000$238$79$673$508$502 Advertising$600$200 Rent$1,000$125 $250 Utilities$220$25 $50 $70 Office supplies$100$33 $34 Building insurance$100$12$13$25 Telephone$700$200 $300 Equipment$1,300$200$400$700 Cost per visit$10$12$4 Example of Activity Based Costing Salaries Accounts for all costs Shows impact of volume changes

Take Home Lesson Activity Based Costing is an effective method of monitoring cost of electronic health records