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Cost of Electronic Health Records | |||||||||||||||||||||||||
Cost ReportPurposeThis page was organized to assess the cost of EHR. This page analyzes the cost to the organization and reports per transaction of EHR. If you wish to tailor this page to other circumstances, please click here. Executive Summary
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The operation failed. If this continues, please contact your server administrator. Background on Activity Based CostingWe use Activity Based Costing to estimate the rate for reimbursement of Screening and Brief Intervention. In this method organization's budget is allocated to specific activities. It has two components. First the program's budget is separated from the organization's budget. Then the program's census is estimated. The rate for a service is set as the ratio of the total program expenditure to number of services provided. A number of authors describe how cost of health care programs can be calculated from the organization's budget. [i][vi] In addition, many authors have described how cost of clinical programs should be assessed. [vii][xvi] French and colleagues provide a brief questionnaire that standardizes collection of expenditure data.[xvii][xviii][xix] Their approach allows allocation of an organization’s yearly budget to specific program expenses. Alemi and colleagues have proposed methods of estimating program census, when these data are not readily available. System Specifications
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The operation failed. If this continues, please contact your server administrator. MethodsThe per transaction cost of EHR was calculated by dividing the present value of five year cost of EHR by the number of visits during the same time period. The per year EHR costs was estimated from the organization’s budget. Typically the budget provides cost of personnel, supplies, equipment, buildings and operating costs. To these costs we added the market value of buildings, value of volunteer services and cost of donated equipment. Economic cost of EHR services differs from accounting cost as it includes the value of assets or personal services donated to the program. For example, accounting procedures usually depreciate building costs. This distorts real market value of the asset. To correct for these inaccuracies within the budget, whenever possible the analysis relied on lease value of major assets such as buildings, office spaces, or software purchases. Some organization costs were allocated to EHR services. Sometimes these allocations are clear – as when the EHR licensing fees are separate from other operations. Other times costs of various programs and clinics are mixed together in the same budget and an allocation scheme must be decided upon. Table 2 provides an allocation scheme used by us for various component of the budget.
The cost within many budget categories were allocated to EHR using the following formula: C p, c = (C o,c +C m,c ) E p /E o where:
The key for allocation of organization’s budget to EHR is determination of personnel activities. Clearly some personnel will have dual roles and it is important to ask the percent of time they allocate to various activities. Because of the focus on employee activities, the approach described above is often called the Activity Based Costing (ABC). A key factor in estimation of cost per transaction is the estimation of number of EHR services during the budget time period. Use of EHR changes over time. During the start up period use of EHR is typically low. Use of EHR was estimated based on recent months and projected to the full year to avoid any distortions caused by start up operations. ResultsFor the EHR, we estimated the following costs: The operation failed. If this continues, please contact your server administrator. DiscussionIn this report, we have estimated the cost of EHR. Our estimates are sensitive to assumptions we have made about personnel and other resources needed for EHR over the next five years. Our findings were limited to experience of a single clinic and may not be generalize to other settings and programs. Nevertheless, they provide an estimate of the cost of delivery of EHR within one organization. References[i[ Tolley G, Kenkel D, Fabian R. Valuing health for policy: An economic approach. Chicago: The University of Chicago Press, 1994. [ii] Sloan FA. Valuing health care. New York Cambridge University Press, 1996. [iii] Kenkel D. On valuing morbidity, cost effectiveness analysis and being rude. Journal of health economics 1997, 16: 749-757. [iv] Johannesson M. Theory and methods of economic evaluation of health care. Dordrecht: Kluwer Academic Publishers, 1996. [v] Hargreaves WA, Shumnway M, Hu TW, Cuffel B. Cost-outcome methods for mental health. San Diego Academic Press. 1998. [vi] Drummond MF, O’Brian JO, Stoddart GL, Torrance GW. Methods for the economic evaluation of health care programs, second edition. Oxford: Oxford University Press, 1997. [vii] French MT, Salome HJ, Sindelar JL, McLellan AT. Benefit-cost analysis of addiction treatment: methodological guidelines and empirical application using the DATCAP and ASI. Health Services Research. 2002 Apr; 37(2): 433-55. [viii] Zarkin GA, Galinis DN, French MT, Fountain DL, Ingram PW, Guyett JA. Financing strategies for drug abuse treatment programs. J Subst Abuse Treat. 1995 Nov-Dec; 12(6): 385-99. [ix] French MT, McGeary KA. Estimating the economic cost of substance abuse treatment. Health Econ. 1997 Sep-Oct; 6(5): 539-44. [x] French MT. Economic evaluation of drug abuse treatment programs: methodology and findings. Am J Drug Alcohol Abuse. 1995 Feb; 21(1): 111-35. [xi] French MT. Economic evaluation of alcohol treatment services. Recent Dev Alcohol. 2001; 15: 209-28. [xii] Roebuck MC, French MT, McLellan AT. DATStats: results from 85 studies using the Drug Abuse Treatment Cost Analysis Program. J Subst Abuse Treat. 2003 Jul; 25(1): 51-7. [xiii] Alexandre PK, Roebuck MC, French MT, Chitwood DD, McCoy CB. Problem drinking, health services utilization, and the cost of medical care. Recent Dev Alcohol. 2001;15:285-98. [xiv] Alexandre PK, Roebuck MC, French MT, Barry M. The cost of residential addiction treatment in public housing. J Subst Abuse Treat. 2003 Jun; 24(4): 285-290. [xv] Bradley CJ, French MT, Rachal JV. Financing and cost of standard and enhanced methadone treatment. J Subst Abuse Treat 1994 Sep-Oct;11(5):433-42. [xvi] FrenchMT,McGearyKA.Estimatingtheeconomiccostofsubstance abusetreatmentHealthEcon1997Sep-Oct;6(5):539-44. [xvii] FrenchMT,DunlapLJˆÁ,ZarkinGA,McGearyKA,McLellanAT(1997). A structured instrument for estimating the economic cost of drug abuse treatment. The Drug Abuse Treatment Cost Analysis Program (DATCAP). Journal of Substance Abuse Treatment Sep-Oct; 14(5): 445-55 [xviii] French MT, Roebuck MC, McLellan AT, Sindelar JL (2000). Can the Treatment Services Review be used to estimate the costs of addiction and ancillary services? Journal of Substance Abuse Treatment 12(4): 341-61. [xix] French MT, McGeary KA (1997). Estimating the economic cost of substance abuse treatment. Health Economics 6(5): 539-44. [xx] Alemi F, Sullivan T. An example of activity based costing of treatment programs using time between discharges. Available at http://gunston.gmu.edu/healthscience/NIDA/TreatmentCost.doc This page is part of the Rapid Policy Analysis for Screening and Brief Intervention. This page was last edited on 03/13/2007 by Farrokh Alemi, Ph.D. Send your comments and suggestions to him. |
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