A family practice uses an EMR to turn spiraling overhead costs into a cash flow “swing” of $1.2 million per year.

Like many other practices across the country, Falls Family Practice in Cuyahoga, Ohio, was feeling the pinch of spiraling costs and shrinking reimbursement. Since there was no hope that public or private payers would increase fees in the near future, Falls Family realized that the only way to increase profitability was to reduce expenses.

A family practice uses an EMR to turn spiraling overhead costs into a cash flow “swing” of $1.2 million per year.

Like many other practices across the country, Falls Family Practice in Cuyahoga, Ohio, was feeling the pinch of spiraling costs and shrinking reimbursement. Since there was no hope that public or private payers would increase fees in the near future, Falls Family realized that the only way to increase profitability was to reduce expenses.

To that end, the practice launched the search for an electronic medical record (EMR) system with the goal of not only reducing expenses and uncovering strategies to increase revenue, but also finding ways to help staff work smarter for the benefit of their patients.

Problem

The 13 physicians affiliated with Falls Family deliver a wide range of family practice and general medical care to 75,000 active patients. When we were a paper-based practice, we typically spent between $4-5 per chart for the 1,000 new charts created each month. Plus, we were paying $16,000 per month in transcription fees, and investing $24,000 per month for 10 staff members to create, pull and refile paper charts. In addition, 2,500 square feet of office space, costing $2,000 per month, was dedicated to storing medical records.

The paper chase was also interfering with productivity and quality of care. Each morning, 50-100 charts would be waiting for physicians’ signatures or review. During the day, an equal number would be pulled and required action of some sort. These activities diverted physicians from providing direct patient care and during the hours each of these charts sat in a “pending” pile, vital patient information was unavailable if needed.

Solution

After much discussion, we determined that an EMR would allow us to achieve the desired overhead savings and support our goal of providing optimal care. I served as a committee of one and launched the search for technology starting in November 2003.

I initiated the search process by narrowing a comprehensive list of EMR vendors to only those that commanded a significant percentage of market share. In my experience, I had found the vast majority of new or very small vendors fail, so I wanted to ensure the vendor we chose would be around to provide long-term support. Our physicians also wanted to work with a vendor that was committed to customizing the system to meet our future needs.

After making an initial cut, I brought my colleagues in to preview about five systems, and we networked with peers at professional conferences. We also attended user group meetings hosted by the top contenders so we could speak directly with practices that had implemented various systems. Because we are doctors and not IT experts, we found it difficult to distinguish among the seemingly subtle benefits each system offered. Therefore, we relied upon the day-to-day experience our peers had accumulated.

Ultimately, our practice selected NextGen EMR because of the flexibility it offered. While many of the top systems provided similar functionality, most seemed to “shoehorn” physicians into rigid workflow processes. We found the NextGen system, which is based on a comprehensive menu of prebuilt templates, could easily be customized to reflect the preferences, styles and habits of our individual physicians. The fact that templates were already constructed and ready to use would be a tremendous time saver. We also appreciated the fact that we could easily tailor the system for our own needs. For instance, we could create lists of the most frequently used diagnosis codes for each physician, and tailor a preferred encounter “flow” that guided the performance of common procedures like abdominal or heart exams.

Implementation

Once the purchase decision was made, we were live on the EMR within six months. During that period, hardware selection proved to be the biggest challenge. Our physicians had requested that the EMR be run on mobile tablet computers. However, our offices are headquartered in a hospital, and the facility’s internal systems generated interference that triggered ongoing hardware malfunctions. We ultimately decided to adopt personal computers with fiber optic connectivity.

We decided not to scan paper charts into the new system. Instead, we treated each encounter as a service provided to a new patient. This eliminated the work and expense involved in transferring current patient records from one system to the other.

In preparation for go-live, we provided comprehensive training to the medical assistants and the vendor supplied onsite “shadow” assistance during the first few days of implementation. Most of our physicians are young and exhibit well-developed computer skills. Therefore, we had few problems transitioning from paper to electronic records. In fact, we were able to adapt the system into our daily workflow within a couple of days. Our practice experienced no drop in patient volume or individual productivity during implementation and roll out.

Results

After implementing the EMR, we were able to eliminate transcription costs altogether. Two full-time positions, previously dedicated simply to opening new charts were cut, as were six filing positions. We created seven new exam rooms in the space previously occupied by medical records, transforming a cost center into a revenue center.

To date, the financial impact of adopting the EMR has been significant. We estimate saving about $50,000 a month—or $600,000 a year—in overhead due to the reduction in staff, elimination of transcription and decreases in paper supplies. At the same time, we increased revenue by $600,000 a year. We recently added five new physicians who generate extra income without increased overhead like new billing, scheduling or filing personnel. Physician productivity has likewise increased by approximately 20 percent thanks to the time saved that had previously been dedicated to dictation, records review and redundant chart signing, as well as increased patient flow-through with the addition of exam rooms. All told, we experienced a positive cash flow “swing” of $1.2 million per year after implementing the EMR.

In addition to these outcomes, our practice has realized:

 • Significant savings in malpractice insurance premiums. Because all physician work was documented electronically, we negotiated a 50 percent reduction in premiums—from $400,000 a year to $200,000. Cuyahoga is situated in an area of the country where we have abnormally high malpractice premiums. As a result, we found we were paying exorbitant rates, even though we had not had a lawsuit in nine years. After adopting the EMR, we hired an attorney to present information about how we delivered care. Because of the exemplary documentation we are able to demonstrate with the EMR, our risk was deemed to be low and our rates were greatly reduced.

Participation in clinical studies. Clinical and demographic information is saved as discreet data elements in the EMR, so we can easily identify patients eligible for clinical trials. Our physicians are able to use Crystal reports to extract detailed information relevant to clinical research. For instance, a pharmaceutical company was conducting a study on one of its antibiotics. Though it was FDA-approved, the medication was causing a high incidence of skin rashes. We were able to participate in a program, working with our current patient base, to monitor side effects of the drug. We did not have to seek out new patients or alter our approach to treating infection; we simply tracked our usage of this particular antibiotic, documenting and reporting any incidence of skin rash. The pharmaceutical company told us they preferred working with practices that use EMRs because of the high integrity of the data. In the end, participation in this study generated $200,000 in additional annual income.

 • Pay-for-performance bonuses. We are able to track and report on process and outcomes measures in order to qualify for P4P funds. We have qualified for incentives because we successfully launched disease management and prevention programs. We worked closely with one payer to track patient compliance with scheduled appointments, adherence to care plans and medication regimes, and follow-up on required screening services and lab work. Because of the analysis we are able to provide, this payer has been able to verify our quality improvements. In response, the carrier has rewarded our efforts, noting that our initiatives enhance patient satisfaction, improve quality of care, and reduce emergency department and hospital costs they otherwise would have been required to reimburse.

Interestingly, our attention to process and outcomes improvement also has had a positive impact on the relationship we have with our patients. They’ve noted that our physicians are conscientious about making sure patients understand both their condition and care plan. Patients also appreciate our reminders about appointments, exams and lab tests because it signals our commitment to their well-being.

Conclusion

We could not be happier with the results we have experienced through the use of an EMR. The cost savings have been significant, and we have been able to take advantage of strategies for revenue enhancement that would have been beyond our reach in the past.

The technology we adopted was very easy to implement, and our physicians made the transition from paper to electronic records seamlessly, primarily because we were able to configure the system to reflect and enhance our established workflow processes. More significantly, the system provides us with tools to deliver not only superior patient care but also, a superior patient experience
as well.

A. Hugh McLaughlin, DO, founded Falls Family in 1981 and currently serves as its managing partner. Contact him at [email protected]

For more information on the NextGen EMR, www.rsleads.com/705ht-205

May 2007

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