JAMA: EHRs fail to reduce administrative billing costs

While EHRs were implemented with the idea that they would reduce administrative costs, Harvard and Duke researchers found primary care services cost providers about $100,000 annually.
By Jessica Davis
11:28 AM
EHRs fail to reduce administrative billing costs

No evidence was found that EHR systems reduced billing costs related to physician services the studies found.

One of the core reasons the federal government made its push for the adoption of electronic health records was that it would reduce administrative costs. But a new study published this week in the Journal of the American Medical Association found EHRs aren’t getting the job done.

Researchers from Harvard Business School and Duke University examined the use of a certified EHR at a large academic healthcare system, which found estimated costs for billing and insurance-related functions were substantial and varied by the type of clinical encounter.

The team looked at five different patient encounters: discharged emergency department visits, primary care visits, ambulatory surgical procedures, general medicine inpatient stays and inpatient surgical procedures.

[Also: Physician practices bemoan skyrocketing cost of IT maintenance]

The administrative costs accounted for at least one-quarter of professional revenue for certain patient encounters, which researchers said were caused by varying contracts between hospitals and plans, in addition to variants in price schedules.

Costs of billing and insurance-related functions ranged from as low as 13 minutes or $20 per primary care visit to 100 minutes or approximately $215 for an inpatient surgical procedure. That’s about 3 percent to 25 percent of professional revenue, according to the study.

Discharged ER visits cost providers 32 minutes or about $61 and both general inpatient stays and ambulatory surgical procedures cost about 73 to 75 minutes or around $124 to $170, the researchers found.

Overall, the study estimated billing costs for primary care services are about $100,000 per provider, annually.

“We found no evidence that adoption of these expensive EHR systems reduced billing costs related to physician services,” Kevin Schulman, MD, of Duke Clinical Research Institute and Harvard Business School and one of the study’s authors, said in a statement.

To Harvard Business School’s Robert S. Kaplan, co-author of the study, the high billing costs found in the study weren’t caused by wasteful or inefficient processes or “inappropriate use of high-wage personnel to perform low-skilled tasks,” as the health system had streamlined bill-paying functions.

Instead, researchers found high costs associated with EHRs “are the consequences of heterogeneous payment requirements across the multiple payers and health plans contracting with the academic health center.”

Further, in an accompanying editorial, researchers explain that as high as the figures were for this specific health system, the reality is the financial burden will likely be higher for other healthcare providers. The studied health system and physicians share the same billing system, which is not the norm for other organizations.

“We need to understand better how complexity is driving these enormous costs within the system, costs that do not add value to patients, employers or providers,” study co-author Barak Richman of the Duke-Margolis Center for Health Policy said in a statement.

“We hope that this work is the first step toward informing policy solutions that could reduce these non-value-added costs largely hidden within the healthcare system,” said Schulman.

Twitter: @JessieFDavis
Email the writer: jessica.davis@himssmedia.com