Cost of Implementing EHR: Key Budget Components

Healthcare is going through digital transformation, and electronic health records are a vital part of it. The benefits of EHRs are pretty obvious. Still, implementing one requires significant financial investment. That's why healthcare stakeholders must carefully consider the EHR implementation costs.

This article explains the topic in detail, including a clear cost breakdown, factors influencing expenses, and insights into making the best decisions.

Let's start!

Key Takeaways

• Electronic health records are a must-have for healthcare organizations today.
• Custom EHR solutions involve higher initial costs but offer full customization to meet an organization’s specific needs. They provide long-term scalability and better ROI. This makes them a suitable choice for larger healthcare facilities with specialized requirements.
• The total cost of EHR implementation depends on factors like the size of the organization, the complexity of workflows, and specific customization needs. Larger organizations will face higher costs for licensing, training, hardware, and integration.
• In addition to the initial implementation costs, training, and ongoing support play a crucial role in successful EHR adoption.

Let Us Clarify: What is EHR?

An electronic health record (EHR) is a digital system created to store and manage patient health information in a unified and accessible way.

In the USA, the healthcare system has widely adopted EHRs. Namely, over 95% of hospitals and over 90% of ambulatory clinics have integrated these systems.

The following points differentiate an EHR from traditional paper records:

• Real-time access, as medical professionals can access patient data from anywhere
• Secure data sharing, as data is always relevant, safely stored and exchanged
• Advanced analytics for healthcare providers
• Improved accuracy and reduced human errors, as data is consistently updated
• Tools for compliance with regulations for data security and patient privacy

What is the purpose of EHR?

The primary goals of an EHR system are to centralize patient data and improve healthcare service delivery. It is a single source of truth for patient health information, which ensures precision and accessibility for medical professionals.

What are the core functions of an EHR?

Here are the key EHR functions:

• Health information storage. Documents medical information, diagnoses, medications, vaccinations, allergies, and test results.
• Interoperability. Provides uninterrupted information exchange and communication between departments, facilities, and even external organizations.
• Decision support. Enables tools like alerts, reminders, and clinical guidelines to help in decision-making.
• Billing and coding. Optimizes insurance claims and billing processes.
• Patient access. Boosts patient engagement through portals where they can see and monitor their medical records and communicate with providers.

Importance and Necessity of EHR for a Medical Center

For healthcare providers, the EHR adoption is necessary for several reasons:

Better patient safety

EHRs contribute to patient safety as they reduce medication errors. It has become possible due to many smart tools, such as alerts about potential drug interactions or allergies. Additionally, profound records enable precise diagnoses and prevent unnecessary or duplicate procedures.

Operational efficiency

The second benefit EHR implementation brings is much greater efficiency of operations. Efficiency rises as routine tasks such as appointment scheduling, prescription refills, and documentation are automated. Automation saves administrative staff hours of manual labor and allows them to pay attention to more important activities.

Better care coordination

A centralized way of data management is one more prominent advantage that EHRs provide. Such unified systems allow multiple medical workers to interact and collaborate seamlessly on a patient’s care. Constant updates ensure all team members have access to the relevant health information.

Financial benefits

EHRs bring financial advantages as they optimize billing accuracy, provide faster reimbursements, and minimize revenue loss. Electronic records also reduce overhead costs associated with maintaining paper records.

Regulatory compliance and risk management

Electronic health records help adhere to legal regulations by securely storing sensitive patient data. They reduce the risk of fines or penalties for data breaches or non-compliance.

Improved patient engagement

With EHR implementation, patients get access to their health data through user-friendly portals. This improves communication between patients and healthcare providers and fosters trust and satisfaction.

EHR Implementation Cost Breakdown

So, the most interesting part is here. Let’s consider the key components and required budget for implementing an EHR.

EHR implementation costs include various components that range based on the size of the organization, the complexity of the system, and certain customization needs. Implementation costs can be classified into direct and indirect costs. Direct costs relate to on-premises or cloud deployment, while indirect costs include training fees, personnel costs, and unexpected expenses such as security.

Here is a detailed breakdown:

System selection and licensing

The choice between a ready-made and custom EHR solution significantly affects costs:

Ready-made EHR solutions

Ready-made EHR solutions are models that function on a per-provider subscription basis. Their prices range from $100 to $500 per provider per month.

Custom EHR solutions

The main peculiarity of customized EHR solutions is that the development team builds them from scratch. This fact allows the organization to meet its specific requirements, but logically, it adds to costs. Costs usually vary from $50,000 to $500,000 or more for large projects.

Keep reading to see the advantages and disadvantages of each solution in detail.

Hardware costs

The hardware needed for EHR implementation includes:

Workstations and tablets

Employees use workstations and tablets to access the system. The expenses can range from $1,000 to $10,000 each.

Servers

Organizations need servers for on-premises solutions. Pricing for them varies from $10,000 to $50,000.

Networking equipment

Organizations require the equipment, which includes routers, switches, and other IT infrastructure. The cost for these ranges from $5,000 to $15,000.

Integration and data migration

Transferring existing patient data to the new EHR system can be complicated and time-consuming. The cost of data integration and migration can range from $20,000 to $50,000. The final cost depends on the amount and format of the data. There may also be additional costs for integrating third-party applications, such as billing systems or laboratory information systems.

Training and support

Training staff to use the new EHR system is necessary for successful implementation. Training costs can vary from $1,000 to $5,000 per staff member. The exact sum depends on the system’s complexity. Post-implementation support can cost from $5,000 to $20,000 annually.

Ongoing maintenance and upgrades

EHR systems require ongoing costs for updates and maintenance. Annual EHR maintenance costs can reach from $5,000 to $15,000, including security updates and feature enhancements.

So, the cost breakdown is the following:

• Software licensing – $100-$500 per provider/month or $50,000+ (custom)
• Hardware – $1,000-$10,000 per device or $10,000-$50,000 (servers)
• Data migration & integration – $20,000-$50,000
• Training – $1,000-$5,000 per staff member
• Maintenance & upgrades – $1,000-$5,000 per staff member

Factors That Impact EHR Integration Costs

The previous section shows that the price variation can be pretty wide, depending on different factors. Here are the key aspects that significantly impact the total cost of EHR integration:

Size and complexity of the organization

Larger healthcare organizations require more licenses, hardware, and training, increasing overall costs. Additionally, more complex workflows and specialized departments may need customized features.

Customization needs

Customizing an EHR system to meet unique organizational requirements adds to development time and costs. Custom solutions are more expensive but offer better long-term scalability and usability.

Regulatory compliance

Organizations operating in regions with stringent data protection laws may need advanced security measures, such as encryption and access controls, which add to costs.

Third-party integrations

Integrating the EHR software with the existing ones, such as billing and laboratory systems, revenue cycle management, or radiology tools, requires additional development and testing costs.

Implementation timeline

Rushed implementations often incur higher EHR costs due to expedited services, additional hours for training and support, and a greater likelihood of errors requiring fixes.

What Budget You Need for EHR Implementation

The total budget for EHR implementation depends on factors like organization size, system complexity, and specific customization needs. Below is a budget estimation for different types of healthcare organizations:

To sum up, the average EHR implementation cost is the following:

• $20,000-$65,000 for a small practice
• $65,000-$200,000 for a mid-sized clinic
• $200,000-$650,000+ for a large hospital

Ready-Made or Custom EHR Solution: Which Is Better?

For organizations, the important question arises: Should I choose a ready-made or custom EHR solution? Let’s see the pros and cons of each decision!

Ready-made EHR solutions

So, the advantages of a ready-made EHR solution are the following:

Lower upfront costs

In the case of a ready-made EHR system, the estimated average upfront cost is lower for organizations. Ready-made solutions often function based on a subscription or licensing model, so there is no need for large initial expenses. For example, a small clinic using a ready-made EHR like Kareo or Athenahealth can start with a monthly subscription fee instead of spending thousands of dollars on development.

Faster implementation

These systems are pre-designed and ready to deploy, which lets healthcare providers start using them in a few weeks or even days. For instance, small practices adopting a system from an EHR vendor like Epic’s community model or Practice Fusion can be up and running quickly, which minimizes disruptions to patient care.

Suitable for smaller practices with standard requirements

Medical organizations with common needs (such as usual appointment scheduling, patient records, and billing) can benefit from ready-made solutions. For example, a solo practitioner or small dental office may find that a solution like SimplePractice meets all their requirements without overcomplicating processes.

As for the disadvantages, they are:

Limited customization options

Ready-made EHRs may not be suitable for custom business processes or specific needs, which makes it harder to optimize the work of specialized clinics. For example, it may be problematic for a mental health clinic to implement a personalized treatment plan into a general-purpose EHR.

Subscription-based pricing can result in higher long-term costs

While the initial costs are lower, monthly payments can increase drastically as time goes on. A clinic using a subscription-based service like AdvancedMD may end up paying more over five years than it would for a one-time custom solution.

Custom EHR solutions

The benefits of custom EHR solutions are:

Fully tailored to your organization’s workflows

Custom solutions allow providers to design every aspect of the system to fit their processes. For example, a multi-specialty hospital could create a bespoke EHR to streamline referrals, diagnostic workflows, and reporting, ensuring maximum efficiency.

Scalable for future growth

Custom EHR systems can adapt to the specific needs of an organization. These may be the incorporation of new departments or a grown patient base. For example, a healthcare system that is expanding can easily integrate additional modules, such as telemedicine or advanced analytics, into its custom platform. If your company needs professional telemedicine app development services, TechMagic can competently support you in this.

Better long-term ROI

Although costly initially, a custom EHR can reduce reliance on third-party services and eliminate ongoing subscription fees, which saves money in the long run. For example, a huge hospital system can recoup its expenses by cutting down on external licensing costs and boosting operational performance.

At the same time, the drawbacks are the following:

Higher initial EHR costs

Developing a custom EHR requires significant upfront investment in technology, skilled developers, and consultants. A midsize healthcare provider might spend hundreds of thousands of dollars to build a custom system from scratch.

Longer implementation timeline

Tailored EHRs require time to design, develop, test, and deploy.  Often, it necessitates several months to a year or more. For example, a hospital that builds a custom system may experience delays in implementing the system due to complex workflows and significant staff training requirements.

How TechMagic Can Help

At TechMagic, our professionals provide custom healthcare software development. All our solutions aim to meet the unique needs of your organization. We offer:

1. Comprehensive assessment. We analyze your workflows and requirements to design the optimal solution.
2. Custom development. Our developers create scalable, secure, and compliant EHR systems.
3. Seamless integration. We ensure smooth data migration and integration with third-party applications.
4. Training and support. We assist in comprehensive training and ongoing support to ensure a seamless transition.

Wrapping Up

EHR implementation is a necessary investment for modern healthcare organizations. EHRs do offer many benefits. However, the associated EHR implementation costs can range widely based on organizational size, customization needs, and other factors.

Understanding the software costs breakdown and key influencers is important for aligning budget and long-term goals. Partnering with a professional development team like TechMagic is essential for a successful implementation. Contact us to discuss the details or ask your questions.

FAQs

1. How much does it cost to implement an EHR system?

   The EHR implementation costs vary depending on the organization's size and needs. It can range from $35,000 for small practices to $370,000+ for large hospitals.

2. Is EHR integration expensive?

   The EHR implementation costs depend on the amount of data, existing systems, and third-party application requirements. Additional expenses can be related to complex customizations and regulatory compliance.

3. How long does it take to implement an EHR system?

   The timeline for EHR implementation depends on the system's complexity. Ready-made EHR solutions can be implemented in a few weeks, while custom EHR systems may need several months to more than a year.