1. Copyright 2008. Medical Group Management Association. All rights reserved. Track 1: EHR Implementation and Adoption September 9, 2008 AHRQ Annual Conference 2008 Bethesda, MD David N. Gans, MSHA, FACMPE Vice President Practice Management Resources Medical Group Management Association Impact of Electronic Health Records on the Financial Performance of Medical Group Practices

2. Copyright 2008. Medical Group Management Association. All rights reserved. 2 Impact of EHR on Medical Practice “One accurate measurement is worth a thousand expert opinions.” Rear Admiral Grace Hopper

3. Copyright 2008. Medical Group Management Association. All rights reserved. Learning Objectives Understand how Electronic Health Records affect the economic performance of medical group practices: in the perception of medical practice administrators who describe how electronic health records impacted their practices by cross sectional comparison of medical groups with and without electronic health records by longitudinal assessment of practices that implemented an electronic health record in the past two years 3

4. Copyright 2008. Medical Group Management Association. All rights reserved. Name, credentials Organization Date 4 Perception of medical practice administrators who describe how electronic health records impacted their practices

5. Copyright 2008. Medical Group Management Association. All rights reserved. MGMA 2007 Electronic Health Record Survey Survey frame of medical practices that responded to a 2005 national information technology survey Voluntary response by medical practice administrators 570 practices responded describing their health record system, including 285 practices that had an electronic health record

6. Copyright 2008. Medical Group Management Association. All rights reserved. Summary of Study Findings 1.The study identified 285 practices where EHR implementation is in process or is fully implemented. 2.Respondents described increased operating costs, reduced productivity, and other surprises and challenges during the first 6 to 24 months of the implementation 3.After the first 6 to 24 months, the benefits of EHR adoption exceeded costs and most practices wondered how they ever conducted business without an EHR

7. Copyright 2008. Medical Group Management Association. All rights reserved. Types of EHR

8. Copyright 2008. Medical Group Management Association. All rights reserved. Perceived Impact of EHR on Practice Costs 8

9. Copyright 2008. Medical Group Management Association. All rights reserved. Perceived Impact of EHR on Practice Productivity 9

10. Copyright 2008. Medical Group Management Association. All rights reserved. Testimonials on EHR Return on Investment We are definitely receiving a ROI on our EHR but during the first year it cost us much more than it saved us. Physician productivity is actually higher but they used it to get out of the office earlier (quality of life) versus actually seeing more patients. Expensive to start, but ROI should be under three years. It is the only way left to significantly impact practice expenses. A robust EHR, carefully selected and painstakingly implemented can be a huge benefit. It’s ROI includes reduction in staff, increased billing, faster A/R, better documentation and patient safety and pay-for-performance initiatives.

11. Copyright 2008. Medical Group Management Association. All rights reserved. Name, credentials Organization Date Cross sectional comparison of medical groups with and without electronic health records 11

12. Copyright 2008. Medical Group Management Association. All rights reserved. MGMA Cost Survey Report Survey frame of MGMA Medical Practices Conducted annually with similar questionnaire format and definitions since 1979 Voluntary response by medical practice administrators 2008 report based on data submitted by 1695 medical practices, representing the financial performance of 29,215 FTE physicians 2008 report included information from 544 practices with an electronic health record

13. Copyright 2008. Medical Group Management Association. All rights reserved. Cross Sectional Analysis Identify medical groups with an EHR and practices with a paper medical record Categorize practices by specialty and ownership Determine the mean for key revenue and expense measures Use the T-test to measure significance

14. Copyright 2008. Medical Group Management Association. All rights reserved. Impact of EHR on Multispecialty Groups 14

15. Copyright 2008. Medical Group Management Association. All rights reserved. Impact of EHR on Physician-Owned Multispecialty Groups with Primary Care Only 15

16. Copyright 2008. Medical Group Management Association. All rights reserved. Impact of EHR on Family Practice 16

17. Copyright 2008. Medical Group Management Association. All rights reserved. Impact of EHR on Cardiology Groups 17

18. Copyright 2008. Medical Group Management Association. All rights reserved. Impact of EHR on Orthopedic Surgery Groups 18

19. Copyright 2008. Medical Group Management Association. All rights reserved. Name, credentials Organization Date Longitudinal assessment of practices that implemented an electronic health record in the past two years 19

20. Copyright 2008. Medical Group Management Association. All rights reserved. Longitudinal Analysis Identify family medicine and multispecialty with primary care groups that indicated the practice installed an EHR in 2006 and reported information for the 2007 Cost Survey Identify if practice also participated in the 2005 Cost Survey Determine the change in revenue and expense for each practice To control for environmental change, perform the same calculation for family medicine and multispecialty with primary care groups that indicated the practice had a paper medical record.

21. Copyright 2008. Medical Group Management Association. All rights reserved. Mean Two Year Change in Financial Performance for Primary Care Practice Mean Two Year Change in Financial Performance for Primary Care Practices that Installed an EHR in 2006, Compared to Similar Practices with a Paper Medical Record Paper Medical Records/Charts Electronic health record system Total medical revenue per FTE physician$38,852$ 53,010 Total support staff cost per FTE physician$15,060$ 6,779 Information technology equipment cost per FTE physician$ (338)$ 1,816 Professional liability insurance cost per FTE physician$ (753)$ (1,523) Total operating cost per FTE physician$ 29,543$ 34,521 Total medical revenue after operating cost per FTE physician$ 6,603$18,410 N=24 9

22. Copyright 2008. Medical Group Management Association. All rights reserved. Name, credentials Organization Date Observations 22

23. Copyright 2008. Medical Group Management Association. All rights reserved. Observations Allowing for sufficient time for installation and change in processes, practices with an EHR appear to have: Greater revenue Increased expenses More profit Than practices with paper medical record The difference may be significant, but more study is needed.

24. Copyright 2008. Medical Group Management Association. All rights reserved. mgma.com David N. Gans, MSHA, FACMPE Vice President, Practice Management Resources Medical Group Management Association dng@mgma.com 24 Questions?

25. Copyright 2008. Medical Group Management Association. All rights reserved. About MGMA Our mission… To continually improve the performance of medical group practice professionals and the organizations they represent MGMA has 22,000 members… Who manage and lead 12,500 organizations With 270,000 physicians

26. Copyright 2008. Medical Group Management Association. All rights reserved. Biographical Summary: David Gans David N. Gans, FACMPE Vice President, Practice Management Resources Medical Group Management Association Mr. Gans administers research and development at the Medical Group Management Association (MGMA) and its research affiliate, the MGMA Center for Research. In addition to his management responsibilities, Mr. Gans serves as the association’s staff resource on medical group practice management. He is an educational speaker, author of a monthly column in MGMA Connexion, and provides technical assistance to the association’s members in all areas of practice management. Mr. Gans received his Bachelor of Arts degree in Government from the University of Notre Dame, a Masters of Science degree in Education from the University of Southern California, and a Master of Science in Health Administration degree from the University of Colorado. Mr. Gans is retired from the United States Army Medical Service Corps in the grade of Colonel, U.S. Army Reserve. He is a Certified Medical Practice Executive and a Fellow in the American College of Medical Practice Executives. Address:Medical Group Management Association, 104 Inverness Terrace East, Englewood, CO 80112 Phone:(303) 799-1111, ext. 1270 E-mail:dng@mgma.com 26