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Electronic Medical Record Systems: Know the Total Cost of Ownership

July 1, 2007
by DANIEL J. CAVOLO, MBA
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Like other IT, EMR systems have basic expenses. But what other financial outlay should you expect with implementing this new technology?


So, you have decided to join many other organizations and begin the search for an electronic medical record (EMR) system. Now what? Before purchasing an EMR system, you must first determine what the total cost of ownership will be specific to individual software systems. This not only includes the first year's software, implementation, and infrastructure costs, but should also include the costs for ongoing support and licensing, as well as for ongoing basic IT support not integrated with software support. The total cost of ownership will vary depending on the type of EMR system purchased.

The first step toward implementing an EMR system is to establish your facility's “technology baseline” by evaluating its current technology, including PCs, servers, network hardware, application licensing agreements, network wiring, electrical wiring, and current IT support operations. This technology must be documented, reviewed, and assessed to ensure that the current technology environment can support an EMR system. You will need to know which infrastructure components will require an upgrade—and the price of upgrading these—before purchasing an EMR system.

Often administrators start the EMR vendor selection process by inviting vendors into their facilities to demonstrate their software systems. Software demos should never be the first step of selecting any technology vendor, especially for EMR. Vendors will often tell you the total cost of the software only, and facilities may take this number to be the bottom-line cost of the project. The price of the software is not the bottom line; administrators must also determine the hardware, network, infrastructure, electrical, and other expenses specific to their facilities. On average, the software outlay for an EMR system represents less than 50% of the total cost of an EMR project's first year of operation.

Determining Total Costs

Vendors often have different infrastructure requirements specific to their systems, and these are not included in an EMR system's software cost. The variable cost related to the project is for the software and software training itself. Since systems vary in cost and functionality, buyer beware when it comes to software—you get what you pay for. Most expenditures listed below need to be included regardless of the EMR software vendor you select.

Basic Costs

Most EMR vendors only quote the costs associated with the following:

  • Software licensing costs charged to use the vendor's software.

  • Software training costs charged by the vendor to train your users on its software system—not to train your staff on how to use a PC.

  • Implementation costs charged for hardware purchased from the EMR vendor. These charges do not include implementing hardware purchased from other vendors for EMR, e.g., new PCs, routers, switches, and wireless network equipment. The vendor will often assign a project manager to supervise the project tasks related to the software side only. Hire or appoint your own project manager/director to manage the complete project, represent your facility's best interests, and deal with all vendors involved.

  • Ongoing support fees to support the vendor's software for the life of the contract, which do not include the costs to support your facility's other applications. The EMR vendor does not become your IT support vendor for daily break/fix support.

Detailed Costs

Most EMR vendors do not include the costs associated with the following with their quote:

Hardware. New “network drops” for staff (e.g., nursing stations) will require a PC for EMR and network infrastructure installation. Also, cables, switches, and routers will need to be installed for the wireless network. The server, PCs, and electronic handheld devices will include operating system licensing and installation fees. All hardware used for EMR must be connected to a backup generator through a battery or UPS (uninterruptible power supply) to ensure the system is available during a power outage.

Software. Facilities may prefer to have their current financial and pharmaceutical systems interface with the new EMR system. Some vendors offer this service at no charge, but this only means the vendor will not charge for its work on the interfaces. Financial and pharmaceutical software companies will charge you to build an interface. Before signing any contracts for an EMR system, receive a written confirmation from the EMR, financial, and pharmaceutical vendors that their software will interface with the new system and have each vendor provide an estimate. If the vendors will not interface, you can set the proper expectations with staff and create a new process flow related to billing. If possible, avoid customizing any EMR system to meet your facility's vocabulary. The more you customize now, the more the system will cost to support later. Remember, EMR is only a tool, and customization kills financially!

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