EHRs and Beyond: Technology to Lower Overhead Costs

September 26, 2011

Shelling out cash for tech stuff like portals to kiosks and EHRs can be financially stressful. Here’s a guide to understanding which technologies can really cut your costs.

The process of conducting and administering medical tests and getting lab results back to patients sounds easy enough. But it was anything but at Walnut Lake OB/GYN three years ago.

Physicians at the West Bloomfield, Mich.-based practice would conduct exams and order lab work, and then keep folders of all the various tests they ordered, recalls Michael Salesin, a physician at the practice. As hard copies of lab tests would come back, nurses would file them diligently into these folders. But because lab results would trickle in slowly, and nurses were already backed up, patients would often have to wait several weeks to get results.

"Sometimes the files would build up and patients would start calling, so we literally had to pay overtime for our nurses just to be able to manage all that paper," says Salesin. "Once the pile was complete, nurses would put the chart[s] and all of the results on my desk. So there would be days where there would be nothing on my desk, and other times there would be two feet of paper on my desk."

Three years ago, the practice invested a few thousand dollars into a Cerner patient portal, which could send and receive lab reports electronically. Today, the portal is praised for a reduction in overhead costs including labor and more than $4,000 in annual office supplies that more than trumps its initial investment.

"There's a huge financial advantage, but for us, the money is a small part compared to the quality of life change that this has allowed," Salesin says.

Practices everywhere like Salesin's are inundated with overhead costs. But the idea of using technology to lower them has made some balk, as technology in and of itself can be a daunting upfront investment for a cash-strapped practice.

But as the experience of some practices demonstrates, purchasing technology can have a significant impact in lowering overhead expenses. Plus, many small technological upgrades your practice can make to lower overhead costs are less than an afternoon lunch at a fast food restaurant.

Tech dollars lower costs

Technology comes with great promises, but investing in it is an expensive proposition for most practices.

According to our 2011 Technology Survey, conducted from January to March 2011, 63 percent of independent practices and 45 percent of hospital-owned practices said the cost to implement new technology was their biggest stressor.

Here's the good news: Many practices that invested in new technology within the last three years - from patient portals to kiosks to EHRs - were able to reduce their largest overhead costs (think labor ) and smaller ones too (think paper, printer ink, and stamps).

At Walnut Creek OB/GYN, a patient portal allowed the practice to reduce front-desk staff by two full-time employees as well as all overtime labor costs, and the aforementioned supply costs.

"The intangible is the patient satisfaction, the physician quality of life," says Salesin.

New Beginnings Pediatrics, based in Norwalk, Ohio, uses an Internet-based claims clearinghouse (in conjunction with an EHR) to help them flag inaccurate insurance data on patients that had resulted in costly claim denials for the practice. The result is cleaner outgoing bills, more timely reimbursement from insurers, fewer denials, and a reduction in the billing staff-to-provider ratio by 56 percent.

"The increased efficiencies we got have resulted in a reduction of accounts receivable and a reduction in labor costs," says physician Glenn Trippe, president of the multi-location practice, adding that the practice was able to take on additional patients without expanding in the billing department."

Marietta Miller, administrator of Georgia Kidney Associates, a nephrology practice in Marietta, Ga., also stressed increased efficiencies as one of the key benefits of investing in a new technology - seven patient kiosks at the practice's main location and its three satellite sites - to make checking in easier on staff and patients.

"Prior to implementing the kiosk, our check-in process, like everybody else's, was sign-in sheets," says Miller. "We have about 150 patients a day coming into our main office, so you can imagine people were standing in line to sign onto our sign-in sheet. There was a lot of congestion."

Within months of spending a couple of thousand dollars for the kiosk - a tabletop device which Miller says is the size of your average computer monitor - the practice's claims denials went down. Because the kiosk could connect with each patient's insurance information, the practice started collecting the appropriate copays for medical services at the time of service.

"The person who checked eligibility doesn't have to do that anymore," says Miller, adding that the staffer was reassigned to work on physician referrals and other tasks in the billing department (so the practice didn't need to hire another person as it grew). Miller's experience is no surprise to healthcare consultant Laurie Morgan, of Capko & Co.

"One of the things that we see that is costing practices a lot of money is not taking upfront payments," says Morgan. "And that turns into collection costs."

For practices hesitant about making larger technology investments, namely EHRs, which can reach into the six-figure dollar amount or higher, consider the experience of Lifetime Medical Group, a multi-location practice with 18 sites in Buffalo and Rochester, N.Y.

In 2007, the practice traded its transcriptionist service for a digital voice recognition system, which amounted to a savings of several thousand dollars per year. Shortly thereafter, the practice spent a little over a million dollars in EHR-related expenses. Then, it lost additional money for the first two months as physicians took on lighter patient loads. But the investment paid off within three years, says president Mark Cohen.

Thanks to the EHR, two of Lifetime's branches were able to start participating in New York state's managed-care medical home program, a pilot that allows the practice to be paid for performance. "If we're able to keep patients healthier, if they don't go to the emergency room as much, that decreases our overhead because we keep more of the capitated money."

Additionally, the practice lowered its overhead costs of paper ($8 per patient for charts) and labor (three full-time medical record staff).

"We were able to move two [of those staff members], and now we have one medical record person full time," Cohen says.

Virtual solutions

If you're not ready to pull out the company wallet for a big piece of technology quite yet, consider tapping into cyberspace to lower overhead costs.

One of the easiest costs to lower, says Morgan, is marketing.

"Many practices are still spending money on Yellow Page ads," says Morgan. As an alternative, the consultant suggests registering your practice to an Internet site such as Google Places, which will help your practice get noticed during Internet searches (i.e.: "Primary-care doctor New York City"). Morgan also advises adding links to your profile that will increase your visibility (such as to your HealthGrades doctor ratings page).

If you don't have a website for your practice yet, you could be missing out, says Morgan.

Creating a website can cost as little as $10 a month (or in the low four figures for a professionally-designed site) and can include staff bios, downloadable forms (to save patients time in the waiting room), FAQs, and disease-related information. Plus, when new patients search for a practice in your neighborhood, your website is more likely to show up in search engines, and entice new clients to bring you their business.

"Having your own practice website saves you from needing to have staff to answer questions." For practices with a website, Morgan recommends spreading the word about your practice through social media (like Facebook for example) or through having a blog that links to your website. Doing this communicates to patients that physicians at your practice are experts when it comes to their health-related concerns.

Speaking of communication, another easy, inexpensive (and often free) way physicians can cut costs is by using e-mail to communicate non-sensitive health information (such as schedule changes or prescription refills) with patients. By doing this, your practice will be able to cut down on time staff uses to answer and return phone calls, says Morgan. Just make sure if your physicians use this method of communication that they keep HIPAA privacy and security rules in mind (meaning, sensitive information such as lab test results shouldn't be sent via unsecured e-mail).

"Physicians are often afraid of allowing patients to communicate," says Morgan. "But it can be beneficial."

Spending your money wisely

Consider renting. Practices that can't afford to spend lots of money on an in-house EHR software system and infrastructure upgrades - or even $2,000 on something like a kiosk in the front office - should explore technology that requires a monthly fee instead of an upfront investment. Using a virtual, or cloud-based, EHR, for example, might be ideal for a small practice that can't afford costly in-house installation. "Renting is becoming a much more viable option," says Ronald Cline, a physician consultant at Nashville-based QHR, adding that a practice can rent anything from web portals to practice management systems or EHRs.

Consider long-term benefits. Before you buy anything, you probably know you need to consider both the return on investment as well as your financial system. Cline suggests practices consider both how a new piece of technology will actually make a process (like check-in) better, and whether staff will be able to adapt to the new technology. "You can buy the best technology there is, but people aren't going to change," says Cline. "The same people will be pushing the buttons. If they're not up to standard now, they're not going to do better just because they're pushing new buttons."

Examine your practice's weaknesses. Unsure about what to buy first? Try looking at surveys or benchmark data (from organizations like the Medical Group Management Association) to see where you stand in relation to the average. "We always recommend you start looking for the pain points, going through all of the operations at the practices, all the waste," says Morgan.

Go for the easy upgrades. Sometimes making a small change to existing technology can make an instant improvement to your overhead costs. "If a copier or fax machine is slow, are you really saving money by not upgrading if an employee is spending an extra 30 minutes a day on a task?" says Morgan. "Sometimes the answer isn't new technology, but it's fixing a process, or more often asking, 'are you getting the most out of the technology you have?'"

In Summary

Overhead costs got you down? Technology, from big stuff like EHRs to small stuff like patient portals - can help you lower them.

• Many practices that invested in new technology over the last three years were able to reduce their biggest overhead costs (labor), and smaller ones that add up (paper, printer ink, stamps).

• Using a patient portal can help send and receive lab reports electronically.

• Using an Internet-based claims clearinghouse in conjunction with an EHR can help flag inaccurate insurance data.

• Trading paper for an EHR can help lower overhead costs.

• Practices not ready to shell out big bucks for new technology should consider a few Internet-based services, such as Google Places, or social media outlets, to save money on print marketing.

Marisa Torrieri is associate editor at Physicians Practice. She can be reached at marisa.torrieri@ubm.com.

This article originally appeared in the October 2011 issue of Physicians Practice.