The Price of Progress: Can Technology Replace Your Staff?

Published: Wednesday, Feb 13, 2008
Prominent among the many benefi ts touted by proponents of electronic health records (EHRs) is cost reduction. The installation of an EHR system, the argument goes, can decrease spending on materials, reduce the incidence of medical errors, and automate activities that would otherwise require paid staff employees to perform.

It is the last of these approaches that has engendered the most controversy. Often, eliminating the cost associated with employee activities means eliminating (ie, firing) employees. Although this idea may produce economically appealing results in theory, in practice, many physicians are reluctant to part with good employees in the name of economics alone. On the other hand, declining reimbursement and the ever-rising cost of doing business have many practitioners scrambling to save money wherever they can. Which brings us to our (literal) $100,000 question of the day: can technology replace your staff ? And our carefully considered, and definitive answer? It depends.

The Origin of Savings

Before elaborating, it will be helpful to describe the specific ways in which EHRs and related technology can theoretically reduce labor-related costs. These points are probably somewhat familiar:

• Transcription: EHRs with built-in speech recognition functionality can allow automatic transcription, reducing or eliminating the cost associated with outside or in-house transcription services. Scott Irwin of the EHR provider NextGen (, who describes transcription as the “low-hanging fruit in the ROI world,” posits that a good electronic record system should be able to reduce transcription costs by 80% in one year and 100% in two.

• Coding, Billing, and Scheduling: Each of these processes can be automated, allowing staff ers to perform more important functions or to be eliminated altogether; if the average physician requires four assistants to handle these and similar tasks, suggests Irwin, an EHR system can reduce that number by one or more.

• Chart Maintenance: Reducing expenses associated with paper chart maintenance—which include the cost of the labor required to pull, file, copy, and maintain the integrity of hundreds of charts each day—is the Holy Grail of the EHR industry. It is in this area that technology has the greatest chance to make an immediate financial (and spatial) impact.

In Victoria, TX, a two-person asthma/allergy practice found itself in the market for a more efficient EHR when its previous provider, digiChart, decided to focus on Ob/Gyn practices. The practice installed an automated telephone system, eliminating the need for a front desk staffer to handle incoming calls. The practice also implemented a new electronic system that eliminated the need for constant handling of medical records and facilitated scheduling, billing/collections, and other tasks.

When two of the six staff members originally employed by the practice left, the practice’s efficiency had increased so dramatically post-EHR implementation that only one part-time employee was needed to replace them. This translated to an annual cost reduction of roughly $70,000. For more on this story, read Carolyn P. Hartley’s excellent article in the June 12, 2006 edition of For the Record.

On a larger scale, Health Management Technology reported on the case of Spokane Internal Medicine, a nine-provider clinic in Washington state that handled nearly 600 patient charts per day. Three full-time equivalents (FTE) were required to manage the clinic’s chart room. Implementing an EHR allowed Spokane Internal Medicine to reassign these three FTE to other roles, and to eliminate extraneous FTE, reducing its FTE-to-provider ratio from 4.4:1 to 2.64:1.

In January 2004, Scott Barlow, MBA; Jeffrey Johnson, MD; and Jamie Steck, MBA, published an analysis titled “The Economic Effect of Implementing an EMR in an Outpatient Setting” in the Journal of Healthcare Information Management. Barlow, et al. conducted a detailed study of conditions at the Central Utah Multispecialty Clinic (CUMC), a nine-location, 59-physician group, in the first year after the clinic adopted Allscripts’ TouchWorks EHR.

Among their key findings:

• Before installation of the TouchWorks system, 10.2 FTE were required to manage the estimated 100,000 charts CUMC handled each day. During the year—although the Clinic added thousands of new patients and doubled the number of physicians on staff — requests to the chart room fell by more than 35%. Th is allowed for the elimination of two FTE, with further reduction expected.

• By creating all new records electronically, the Clinic, with 20,000 new patients per year, would save $160,000/year in labor and supply costs for creating new paper charts.

• RNs and medical assistants working in the Clinic system were able to spend significantly less time (1.2 hours/day) handling paper records using TouchWorks.

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