The Right System for the Right Price: To Avoid EHR Sticker Shock, You Have to See the Big Picture

December 29, 2008
Robert Rowley, MD

ONCNG Oncology, December 2008, Volume 9, Issue 12

The decision to move from a paper-based oncology practice to one based on an EHR system can be onerous and intimidating.

The decision to move from a paper-based oncology practice to one based on an EHR system can be onerous and intimidating, in part because there are literally hundreds of vendors with products on the market, each with different cost structures, feature sets, and ability to connect and share data with other systems. When you also consider the inevitable post-implementation disruption to workflow and volume, and concomitant dip in revenue, the slow rate of EHR adoption in this country makes sense. However, new systems and technologies on the horizon may enable practices to cut through all the clutter and make the transition to a paperless environment much cheaper and smoother.

Numerous studies indicate that EHR system cost remains the biggest barrier to adoption. Because the purchase and implementation of an EHR system represents such a significant expenditure, you want to make sure that your practice derives similarly significant value from it. When deciding which EHR system to purchase for your practice, it is important that you consider not just the sticker price of the software itself, but the true cost of the product, which includes the hardware requirements for the system, ongoing IT support, training, and a host of other factors that add to the cost of creating an e-office.


Deciding upon what kind of software system (hosted versus in-house) you want to implement can be perhaps the most significant determinant of the overall cost. Some of the hundreds of EHR systems have limited functionality— chart creation only, for example. Others are so feature-filled that they overwhelm the user and get in their own way, slowing the physician down rather than helping speed the process along. To help buyers sort through all this, over the past few years, the CCHIT (Certification Commission for Healthcare Information Technology) has developed an exhaustive set of standard functionality, security, and interoperability criteria and certified several dozen systems.

A practice in a particular specialty may want a specific EHR that is tailor-made for that specialty. In oncology, for example, there are several unique workflows that oncologists undertake that might best be addressed by an oncology-specific EHR, rather than by adapting a general-purpose system.

Traditionally, EHR systems have been developed as client-server enterprise software, meaning that you purchase the software from the vendor, install it on your own machines, and upgrade it as new versions are released. With this approach, there is an up-front cost (typically in the $8,000-$16,000 per-physician range for a CCHIT-certified system), and an ongoing update/service cost in the 18%-of-original- cost-per-year range.

Some systems are hosted (meaning you don’t have to install them on your own servers) and are priced as a “lease”—several hundred dollars per physician per month, possibly with an initial set-up fee. These software-as-a-service (SaaS) systems are emerging as a more favored approach for several reasons, including lower up-front software costs, minimal local hardware needs, and more potential for clinical data sharing between subscribing physicians.


If you decide to implement a traditional enterprise system, then you will also need to consider what kind of hardware is required to run your EHR. You will need a server and a local area network (LAN). You will need data backup (onsite and offsite) for your locally hosted data. Depending on the way the software is written, you might not be able to access your system from outside your LAN, which means you will need to enable special security portals (virtual private network, or VPN, connections) in order to access your EHR from outside your office, which adds an additional element of cost.

If you have decided on a SaaS-based system, your hardware needs are much reduced. All you will need is a collection of Internet-connected computers in your office. Performance, of course, will be a function of your Internet connection speed; however, broadband connectivity is pretty much ubiquitous these days. Nevertheless, broadband Internet connectivity is a cost element that must be factored into the overall IT budget.

Implementing a full-fledged LAN with data backups, ongoing security patches, and upgrades is something most medical offices do not have the skill set to carry out. Large group practices or staff-model or hospital-supported systems might be able to hire an IT professional; smaller practices must generally hire outside IT vendors to act as consultants. In either case, one must rely on IT vendors/professionals for network support, as well as vendors for EHR software support. These may or may not be the same vendors.


Once a decision has been made to deploy an EHR, actually transitioning the workflows from paper to e-tools is daunting, confusing, and disruptive. Apart from costs, the second-most- important barrier to EHR adoption is exactly this: disruption in core workflows, and therefore a transient drop in revenue stream as productivity dips during the learning curve of the transition.

EHR design plays a big part here. If the system chosen is cumbersome or the interfaces are overly cluttered and “stiff,” the effect will be to slow one down. Oncologists should be spending their time primarily interacting with patients, not interacting with the EHR system. If the EHR system is designed in a way that matches the workflows an oncologist experiences in the office or hospital, then the learning curve is quick; if the system expects the oncologist to change his/her workflows to conform to the software-flow, then the software is “in the way” and a net-negative.

Good EHR design should allow stepwise adoption of the e-tools. There are multiple workflows encountered in an ambulatory practice: scheduling and check-in; billing; charting, including generating de-novo prescriptions; management of refill requests for patients not being seen today; immunization management; review and management of lab test results; review and management of outside correspondence and documents (usually paper); and internal messaging within the practice, including handling phone calls to/from patients. These are the day-to-day tasks, not counting population-management reporting, review of disease registries, scheduling patients needing disease-management or wellness interventions who have been lost to follow-up, etc. A good EHR system should allow a practice to transition to the e-workflows in whatever sequence makes sense to the individual practice, so the overall transition is less disruptive.


Because of the costs and burdens of e-transition, adoption of EHRs by practicing physicians in any specialty has remained low, to the frustration of many. Not surprisingly, EHR adoption has largely taken place in group practices, staff-model clinics, and hospital-supported organizations; small and solo practices, which is where more than 50% of physicians are deployed in the US today, have had very low rates of EHR adoption (see more on this on page X).

Numerous strategies have emerged to address these concerns. Government encouragement, largely based on the presumptions that EHRs are Enterprise (and not SaaS) solutions, is ongoing. Local networks and IPAs (independent physicians associations) have tried banding together to underwrite some of the costs involved in EHR purchase and implementation (hardware, software, and support), which has been met with variable success. Hospitals have invested in and hosted ambulatory systems, with local connections to favored local physicians, a top-down approach, again with variable success. The fact that multiple types of assistance efforts have taken place would suggest that there is no one-size-fits-all solution, especially when implementing traditional enterprise-type systems. Oncologists should therefore look at the “lay of the land” in their local communities to see what local opportunities might be available.


One can think of the traditional enterprise-type EHR systems as “EHR 1.0” and the newer generation of systems that are more SaaS-based as “EHR 2.0.” Not only are the newer generation of EHR systems less costly to implement (no need for local LAN system, no servers, no data backups, etc), they are less costly to maintain—local IT consultants may not even be needed if the system doesn’t require a full- fledged LAN with servers that require constant maintenance.

EHR 2.0 systems also have the significant structural advantage of hosted data, which means that oncologists can share relevant clinical information much more easily with other practitioners who are also taking care of a given patient. One of the most challenging issues, even with high-end, costly, CCHIT-certified “EHR 1.0” systems is sharing clinical data with colleagues; each practice has its own local database (the e-equivalent of each practice having its own paper chart rack), and transmitting clinical information between consultants remains challenging. With hosted systems, the concept of “one patient, one chart” becomes possible.

The final intrinsic strength of EHR 2.0 systems that are just now emerging is the potential for novel business models. Some of the SaaS systems have a very low monthly service fee. Practice Fusion, for example, is a hosted EHR that is actually free of charge to physician end-users (it is supported by advertising in the product).

It has been claimed in the literature that only about 11% of the benefits in cost savings to the system resulting from EHR use is reaped by the physicians themselves—the rest is reaped by insurers and others who avoid unnecessary or duplicated procedures and tests, not to mention improved patient safety due to legibility and better adoption of evidence-based guidelines and standards. However, it is the physician who has typically borne the burden of the costs. With EHR 2.0, there are emerging, novel ways to move the costs of adoption away from the end-user physician and more into the hands of those who ultimately benefit from it.

The decision of what kind of EHR system to adopt is influenced by local factors, types of support, and long-term view. With the emergence of SaaS-based EHR systems, it is possible to foresee a significant paradigm change in the EHR world, and much more widespread adoption (especially by smaller practices) can finally be achieved.

Robert Rowley, MD, is chief medical officer of Practice Fusion, Inc.