Financial Evaluation And Cost-Benefit Analysis Of Electronic Medical Record (EMR) Implementation At Somerset Medical Center

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Financial Evaluation and Cost-Benefit Analysis of Electronic Medical Record(EMR) Implementation at Somerset Medical CenterUsing the financial evaluation and cost-benefit analysis of the Electronic Medical Record (EMR)implementation at Somerset Medical Center, analyze the potential financial impact of adoptingan EMR system. Based on the information provided, assess the project's viability by consideringthe expected cost savings, return on investment (ROI), payback period, and sensitivity analysis.Additionally, discuss the non-financial benefits that may result from EMR implementation andexplain how they could further enhance the hospital’s operations.Your answer should bebetween 1200-1500 words.

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Financial evaluationAccording to the HealthUSNews,“Somerset Medical Center is a general medical andsurgical hospital in Somerville, NJ, with 250 beds. Survey data for the latest year availableshows that the hospital had a total of 15,417 admissions”. (http://health.usnews.com/best-hospitals/area/nj/somerset-medical-center-6221340)We believe that the implementation of a new EMR system at Somerset Medical Centerfrom the present paperwill result in significant cost savingsfor them.The financial evaluation ofthisproject needstoconsiderallfactors whichwillresult inthesaving of cash for the hospitalonce the implementation has been completed.While it wasdifficult to get the actualproductcostsfromelectronic medical records software providers,-ouranalysiswerecompleted bycollectingthe informationfrom differentmedical publications, as well asEMRcomparableinternet resources.Theestimateswerebased on thesesources.Whilethe accuracy of the estimate can bechallenged,wepreparedthesensitivity analysisNevertheless;the methodology of the analysis issound and supports the conversion by the hospital.“Computers have made the world a small place. Due to their speed, accuracy, memory and othercharacteristics, computers are used in all spheres of life. These machines are used a large scale indifferent sectors, including hospitals.” (http://www.kish.in/effects_and_benefits_of_computerisation_in_different_spheres/).Implementation of EMR will provide cost savings through the following ways:-•Will result in lesser number of clerks, office space and storage area•Significant saving in stationery•Reduction in adverse drug events and saving in transcription cost

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•Clinical decision support system will help in saving in drug utilization, laboratoryutilization and radiology utilization•Improvement in charge capture to certain extent•Due to real time and better internal control, prevailing billing errors will reduce.Accordingto thearticle“Study of the cost-benefit analysis of electronic medical record systemsin general hospital in China.”,(http://www.ncbi.nlm.nih.gov/pubmed/22212632), “Benefits fromusing EMR accrue primarily from savings in new medical record creation, decreased full-time-equivalent (FTE) employees, saving of adverse drug events (ADEs) and dose errors, improvedcharge capture and decreased billing errors” (Li K,Naganawa S, 2012)….The payback period graph presented hereunder shows that this period isless than 4years.The most prudent financial model forcalculating viability of any project isreturn oninvestment. In absolute figures, the below presented ROI graph clears that theproject haspotential:--$80,000-$60,000-$40,000-$20,000$0$20,000$40,000$60,000$80,000$1,00,000Year 0Year 1Year 2Year 3Year 4Year 5PAY BACK PERIODCumulative cash flow

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SummaryIn the manual system, the hospital is incurring certain costs which can be easilycontrolled after EMR implementation. The cost of Chart pulls, which is estimated as $7 per chartcan be reduced to nil. The cost involved in transcription can be reduced by 28%.(http://www.ehealthdc.org/meaningful-use/benefits-of-ehr-adoption/#_ftn1)The implementationwill also result in decreased cases of adverse drug eventsanddrug utilization cost can becontrolled. Utilization of laboratory and radiology can be optimized resulting in cost reduction.Charge capture can be improved and billing error can be reduced to a great extent. EMR will alsoresult in reduction of administrative expenses. The saving in all such expenses, make this projectfinancially viable.Initial cost estimateThere are two categories of costs associated withEMRimplementation.The firstcost isthesystem costs andthe second isinduced costs (Table 1). System costs include the cost of the-$60,000-$40,000-$20,000$0$20,000$40,000$60,000$80,000Initial CostYear 1Year 2Year 3Year 4Year 5TotalRETURNONINVESTMENT

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software and hardware, implementation, training, ongoing maintenance and support. Inducedcosts are those involved in the transition from a paper to electronic system.Initial cost estimate has been done using the information availablefrommedicalpublications(http://www.ncbi.nlm.nih.gov/pubmed/22212632,and from certified EMRtechnology consultanthttp://www.emrapproved.com/cost-estimate-tool.php. We also contactedAll Scripts Healthcare Solution Inc. and American Medical Software to gain an understanding ofcost.Table 1. Costs of Electronic Medical Record System (Per provider in 2013 in US Dollars)Cost ComponentsBase costSensitivityReferenceSoftware license (annual)$7,188$3500-$14000*Implementation$8,500+*Support, audit and reviews$4,000$2000-$8000*Hardware$8,000$4000-$16000*Temporary Productivity loss$35,000$18000-$50000+Annual costs$62,688* http://www.emrapproved.com/cost-estimate-tool.php+ 20% in first month, 10% in second month and 5% in third month+* For initial data immigration $5000 and training $3500The very first cost for the implementation of such system is the cost of the software.There are manyEMRsoftware providers in the US such asAllscrips Healthcare solutions Inc,Partners HealthCare,Acrendo Software, New Wave Software, Inc, American Medical Software,eClinicalWorks, MedQuest, LLC, JMJ Technologies, Inc.,MD Logic,Evolution EMR, OfficeEMR™,ZipChart, InteGreat etc.Ourresearchshowsthatbased on work with more than 50,000 physicians,the best EMR software provider for hospitalis AllscripsHealthcare Solutions Inc.Allscriptsiscertified by the Certification Commission for Healthcare Information Technology (CCHIT).(

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