Hospital location, staff skill boost EMR savings

It's confirmed. Electronic medical records can indeed yield marked savings for hospitals, according to a new study by the Kellogg School of Management at Northwestern University that finds these savings depend on both the IT prowess of hospital staff and the institution’s proximity to IT-dense locations. 

The study addresses the debate between two schools of thought regarding EMRs: those who claim the systems can save hospitals money in the long run, and those who hypothesize they end up costing more money in the long run. It turns out, both may be right. 

Collecting data from 4,231 hospitals, the study found that, for many hospitals adopting EMRs between 1996 and 2009, costs actually increased for the institution. However, if the hospital was located in a “strong IT location,” such as an urban region, costs sharply declined after a one-year adoption time period. These costs typically fell below what hospitals were paying for IT services before EMR adoption. 

[See also: EMR sales up 14 percent in 2011.]

Moreover, after three years, hospitals with a strong IT location witnessed a significant 3.4 percent decrease in expenditures after implementing a basic EMR and a 2.2 percent decrease after implementing an advanced EMR.  Hospitals located farther away from IT-dense areas also experienced cost reductions after three years, but not as statistically significant. 

The success of EMR implementation, however, does not depend solely on the technology. Skill also has a say in the matter. Report researchers highlighted staff skill as having a “complementary” effect on the costs of EMRs. For example, costs of system adoption were “mitigated” if the hospital staff had significant software knowledge, and familiarity with using advanced clinical software applications and business software tools. 

“Imagine getting an iPhone without getting someone to help you use it,” said David Dranove, co-author of the report and professor of health industry management at the Kellogg School of Management to American Medical News. “It seems intuitive, but there’s so many possibilities for its use that to get the best out of it, it helps to have two types of people help you. One would be friends and family who already know how to use it," Dranove continued, pointing out the second type as "the technical support that you get from the outside.”

[See also: Health systems underestimate time, cost of EMR rollouts.]

Report officials also point out, however, other researchers who have hypothesized the opposite – that EMR adoption actually precipitates increased spending and may decrease productivity.  

“The Trillion Dollar Conundrum: Complementarities and Health Information Technology,” study was published in August as a working paper by The National Bureau of Economic Research.