Title: Core Menu Item Return on Investments3.amazonaws.com/rdcms-himss/files/production... ·...

Contents Executive Summary ......................................................................................................................................................................1

1. Local Problem Being Addressed and Intended Improvement ............................................................................................2

2. Design and Implementation ...............................................................................................................................................2

3. How Health IT Was Used ....................................................................................................................................................3

4. Value Derived/Outcomes....................................................................................................................................................3

5. Lessons Learned ..................................................................................................................................................................5

6. Financial Considerations .....................................................................................................................................................5

Appendix A ...................................................................................................................................................................................6

Title: Core Menu Item Return on Investment EXECUTIVE SUMMARY The Mount Sinai Medical Center (MSMC), located in New York, New York, is an internationally recognized medical teaching, patient care, and research facility. MSMC is in the final stages of implementing an ambulatory and inpatient electronic health record (EHR). Since beginning the ambulatory implementation of the EHR in 2006, MSMC has documented an enormous amount of hard and soft return on investment (ROI) evidence. More importantly, the long-term benefits of this new “backbone of our care” (as characterized by CEO, Kenneth Davis, MD) are even greater. The new EHR enables new reimbursement models, improvements in safety and quality, and accelerated research and innovation. Measuring ROI of the EHR was not a key consideration at the beginning of the EHR journey. This was partly because the budget was approved incrementally in relatively small amounts (Figure 1, Appendix A), and because the EHR was viewed as essential infrastructure, not a revenue generator. As the budget surpassed the $100 million mark, however, the board thought it would be prudent to have a retrospective review to measure the value derived from the investment. In fact, hard and soft ROI turned out to be substantial. The ROI analysis was conducted retrospectively over five years which created challenges in terms of the accuracy of the data pre go-live. Hard ROI to date has surpassed $20 million with over $17 million coming from reductions in transcription costs and savings from reduced supplies and management expenses for paper medical records. Projected hard ROI through year 2020 is expected to surpass $108 million and will include savings achieved from medical records offsets of $56.5 million, sun-setting of pre-Epic legacy systems resulting in projected savings of $18.7 million, and projected revenue from the Centers for Medicare and Medicaid (CMS) Incentive Programs of $33.4 million. Soft ROI was derived from a mix of inpatient and ambulatory setting issues and activities assessed between 2007 and 2011. Included in soft ROI are: a) average monthly hospital collections which increased by $27 million per month from 2007 to 2011; b) ambulatory patient visit volume increase by over 390,000/annual; and c) Emergency Department (ED) average facility charges increased by over $2 million between 2009 and 2011, when ED billing was actually expected to drop due to the migration away from a best-of-breed ED system. Successful Meaningful Use Stage 1 incentives accounted for $8 million in incentives captured with an additional $24.4 million available for Stages 2 and 3. The total ambulatory and inpatient program has a budget of $127.5 million between the years of 2007 to 2013.

HIMSS 2012 Enterprise Davies Award Return on Investment

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1. LOCAL PROBLEM BEING ADDRESSED AND INTENDED IMPROVEMENT The decision to implement a system-wide EHR proved to be among the most expensive and high-risk investment decisions in MSMC’s history. The operational complexity of an AMC and faculty practices challenged the capabilities of the entire organization. Intended improvements included:

• Transform MSMC, on a number of levels, through the use of a fully integrated EHR • Improve safety, quality, and efficiency using the EHR’s features and customization capabilities • Eliminate legacy information technology platform expenses • Eliminate non value - added workflow processes: redundant ancillary tests, medication administration errors, and re-

admissions • Identify process improvement opportunities • Pinpoint opportunities for optimization redesign

Other improvements were meaningful but were not part of the initial investment goal. They included:

• Improve revenue cycle through reductions in denied claims, decrease accounts receivable days, and increase Emergency Department (ED) charge capture

• Maximize performance incentive opportunities through incentive programs that include: Physician Quality Reporting System (PQRS), eRx, Meaningful Use, and Epic Good Install Discount

Intended improvement did not include higher revenue and reduced costs (i.e. ROI) and this led to a post-live measurement of ROI that was very challenging. Emergency Department billing was an exception, where research alerted the ED to expect a permanent drop in billing as the ED converted from a best-of-breed ED system to EPIC, unless ED administrators worked hard to find the underlying cause of this anomaly and find a way to rectify it.

2. DESIGN AND IMPLEMENTATION Measuring ROI of the EHR was not a key consideration at the beginning of the EHR journey. This was partly because the budget was approved incrementally in relatively small amounts (Figure 1, Appendix A), and because the EHR was viewed as essential infrastructure, not a revenue generator. MSMC conducted a literature search to get initial insight into the ROI measurement process. The literature showed that the healthcare industry is still grappling with several aspects of EHR ROI measurement, and that EHR ROI study is still fairly nascent.1 The literature did show that Mount Sinai would need to devise its own ROI model and go through the challenging process unique to their setting. For example, recognizing that the ROI process was beginning after go-live, and realizing pre-Epic baselines were not readily available. A third party consulting group was hired to do the ROI analysis. The steps included:

• A broad range of operational interviews and review of vendor documents (such as Epic’s Key Performance Indicators) were conducted to inform the team of where useful measurements might occur

• Metrics spreadsheets were produced to be completed by operational owners • These spreadsheets were distributed to the appropriate owners and called for the input of both pre-live (baseline)

and post-live values for the metrics • Operational owners populated the spreadsheets to the best of their ability and constraints of availability of historical

data (manual or electronic) • The ROI findings were summarized into a presentation format

A second round of ROI work was conducted by IT senior management to refine the numbers

• More data inquiries to operational owners and knowledge of the organization was used to revise the numbers • ROI numbers were further substantiated using benchmarks from the vendor

The ED took special steps to not incur the negative financial experience of their ED peers in other health systems which were also converting from best-of-breed ED systems. The approach used was to take a sample set of corresponding patient records from both the legacy system and the Epic test system, and send these records to the ED’s third party billing company to be coded. The resulting claims were compared, and where Epic produced lower E and M codes, the root cause was investigated


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and the Epic build was modified where appropriate. The final outcome demonstrated an initial drop in ED revenue of 10 to 15 percent in first three months, then the pre-live revenue performance commenced. In the end, ROI and benefits from the above activities were grouped into the following categories: hard ROI, soft ROI, research/innovation benefits, and intangible benefits. The benefits turned out to be substantial.

3. HOW HEALTH IT WAS USED MSMC installed Epic’s ambulatory suite in 127 of its physician practices and virtually all of the Epic clinical modules in the hospital. MSMC’s legacy revenue cycle management (RCM) solution was retained. A key criterion in the selection of the EHR was the ability to use off-the-shelf technology to develop clinical trial research innovations such as predictive modeling (and associated physician adoption) and integration with MSMC’s genomics database program, eMERGE. These criteria were all fulfilled (and more), producing the “soft ROI” of higher mortality, higher vaccination rates, few sepsis deaths, higher core measure scores, and higher patient satisfaction. To meet the near-term financial ROI goal of capturing the CMS Meaningful Use Stage 1 incentives, MSMC’s Epic system had to meet Stage 1 attestation requirements of 15 core objectives, five of 10 menu objectives, and six of 44 clinical quality measures as specified by CMS. The system’s unified database, rich functionality, almost limitless ability to implement customized clinical decision support (CDS) and predictive modeling, resulted in several intangible benefits noted in Figure 2, Appendix A.

4. VALUE DERIVED/OUTCOMES To identify early quantifiable hard savings, MSMC’s approach focused on the highest impact items that included: a) discontinuation of legacy information technology platforms; b) decreased paper supplies and document management; c) reduced health information management staff; and d) reduced transcription costs. A summary of these savings is shown in Figure 2. Hard ROI using just these high-level metrics has surpassed $20 million to date.

Figure 2: Summary of Hard ROI

Soft ROI was predominately collected in conjunction with the implementation of Epic in the ambulatory setting (although some hospital metrics were included). While the soft ROI (Figure 3) cannot be attributed solely to the Epic EHR implementation, the data are consistent with results from other organizations that demonstrate improvements in charge capture, documentation quality, coding quality, outpatient reimbursement, and reduced payment denials.


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Figure 3: Soft ROI

Soft ROI can also be found in the improvement of virtually every safety, quality, and efficiency metric since the implementation of the EHR. As an example, Figure 4 shows the improvement in value based purchasing (VBP) quality core measures.

Figure 4: Improvement in VBP Core Measures

From the outset, the ability of the EHR to support the research and innovation agenda of MSMC was a key part of the EHR selection criteria. It was important that the EHR not only gave researchers access to a rich longitudinal database of clinical data but also had a track record of supporting the needs of extramurally funded projects. More importantly, Epic allowed researchers and informaticists to use off-the-shelf Epic development tools to build and trial innovative clinical interventions. This allowed innovation not only at MSMC, but made the innovations easily replicable across all Epic institutions. A number of these innovations, such as the iCPR, eMERGE Hepatitis screening, and acute pain management studies are summarized in Figure 5. At least $2.5 million in grant funding and at least four peer-reviewed articles are a direct result of and have been supported by the Epic EHR capabilities.


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5. LESSONS LEARNED Determining the ROI from an EHR is part art and part science. The industry is still grappling with determining consistent methodology for measuring ROI. However, MSMC clearly demonstrated the CEO’s vision that the EHR was the infrastructure upon which many innovations related to patient care and healthcare reform depended. While evaluating the ROI, lessons learned included:

• It may be better to position the endeavor as Benefits Realization (BR) vs. ROI so that the organization can understand the true value of their investment

• BR work can quickly become unwieldy and overly complex if a tight, straight-forward methodology is not used • The intent of BR must be understood first; it can include hard/soft ROI, intangibles, strategic enablers, or a

combination of all the above • Attempting to document baseline data after go-live is very difficult • Operational ownership is key; only they can derive value from the implementation of new tools; however, it can be

difficult to get their time and motivation to collect data needed for the project. • It is imperative to establish baseline and target metrics prior to EHR implementation • Consulting firms that are being used to establish benefit realization must understand the institution they are working

with and must have an accurate grasp on the right metrics to baseline. • With the establishment of the Program Management Office, ROI/Value Realization is part of the core project

methodology moving forward with all projects.

6. FINANCIAL CONSIDERATIONS Hard ROI to date has surpassed $20 million. By 2020 it is expected to be $108 million as shown in Figure 6, Appendix A. Soft ROI is calculated in the many millions of dollars. Meaningful Use incentives will bring $32.4 million to MSMC. The total budget of the implementation was $127.5 million.


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APPENDIX A

Figure 1: Epic Budget


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Figure 5: Intangible Benefits


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Figure 6: Hard ROI Projection by Year ($000s)

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