A Tutorial on Activity-Based Costing of Electronic Health Records

Federowicz, Marie H.; Grossman, Mila N.; Hayes, Bryant J.; Riggs, Joseph A.

doi:10.1097/qmh.0b013e3181ccbd71

Cited by 10 publications

(8 citation statements)

References 11 publications

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“…Unit-cost of health services is the cornerstone of privatization policies, tariff setting, financial management, and health economic studies ( 5 ). One of the most important challenges for hospitals is the lack of accurate, on-time and user-friendly databases in both financial and administrative fields.…”

Section: Introductionmentioning

confidence: 99%

Cost Analysis of MRI Services in Iran: An Application of Activity Based Costing Technique

et al. 2015

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Background:Considerable development of MRI technology in diagnostic imaging, high cost of MRI technology and controversial issues concerning official charges (tariffs) have been the main motivations to define and implement this study.Objectives:The present study aimed to calculate the unit-cost of MRI services using activity-based costing (ABC) as a modern cost accounting system and to fairly compare calculated unit-costs with official charges (tariffs).Materials and Methods:We included both direct and indirect costs of MRI services delivered in fiscal year 2011 in Shiraz Shahid Faghihi hospital. Direct allocation method was used for distribution of overhead costs. We used micro-costing approach to calculate unit-cost of all different MRI services. Clinical cost data were retrieved from the hospital registering system. Straight-line method was used for depreciation cost estimation. To cope with uncertainty and to increase the robustness of study results, unit costs of 33 MRI services was calculated in terms of two scenarios.Results:Total annual cost of MRI activity center (AC) was calculated at USD 400,746 and USD 532,104 based on first and second scenarios, respectively. Ten percent of the total cost was allocated from supportive departments. The annual variable costs of MRI center were calculated at USD 295,904. Capital costs measured at USD 104,842 and USD 236, 200 resulted from the first and second scenario, respectively. Existing tariffs for more than half of MRI services were above the calculated costs.Conclusion:As a public hospital, there are considerable limitations in both financial and administrative databases of Shahid Faghihi hospital. Labor cost has the greatest share of total annual cost of Shahid Faghihi hospital. The gap between unit costs and tariffs implies that the claim for extra budget from health providers may not be relevant for all services delivered by the studied MRI center. With some adjustments, ABC could be implemented in MRI centers. With the settlement of a reliable cost accounting system such as ABC technique, hospitals would be able to generate robust evidences for financial management of their overhead, intermediate and final ACs.

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Section: Introductionmentioning

confidence: 99%

Cost Analysis of MRI Services in Iran: An Application of Activity Based Costing Technique

et al. 2015

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“…This gap in the evidence has been noted by critics of the Obama administration's “full steam ahead” approach to national adoption of EHRs (Federowicz et al. ).…”

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confidence: 99%

The Effectiveness of Implementing an Electronic Health Record on Diabetes Care and Outcomes

Herrin

Graca

Nicewander

et al. 2012

Health Services Research

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“…13,15,16 Recently, Marie Federowicz and coauthors advocated the use of "activity-based costing." 17 Such an approach ensures that all relevant costs are included in assessments of the effects of change. It captures not only the costs that traditional accounting methods identify, but also the hidden costs related to changes in practice that occur with the implementation of an electronic health record system or other new technology.…”

Section: Introductionmentioning

confidence: 99%

“…It captures not only the costs that traditional accounting methods identify, but also the hidden costs related to changes in practice that occur with the implementation of an electronic health record system or other new technology. 17 If the goal of nationwide adoption of electronic health records as defined under HITECH is to be realized, clinicians and others involved in decisions about the adoption and use of health IT need accurate and reliable information about the risks, costs, and benefits of the technology. To provide such information, we examined the process of implementing an electronic health record system in primary care practices within a large fee-for-service physician network in north Texas.…”

Section: Introductionmentioning

confidence: 99%

The Financial And Nonfinancial Costs Of Implementing Electronic Health Records In Primary Care Practices

Fleming

Culler

McCorkle³

et al. 2011

Health Affairs

108

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The incentives in the American Recovery and Reinvestment Act to expand the "meaningful use" of electronic health record systems have many health care professionals searching for information about the cost and staff resources that such systems require. We report the cost of implementing an electronic health record system in twenty-six primary care practices in a physician network in north Texas, taking into account hardware and software costs, as well as the time and effort invested in implementation. For an average five-physician practice, implementation cost an estimated $162,000, with $85,500 in maintenance expenses during the first year. We also estimate that the HealthTexas network implementation team and the practice implementation team needed 611 hours, on average, to prepare for and implement the electronic health record system, and that "end users"-physicians, other clinical staff, and nonclinical staff-needed 134 hours per physician, on average, to prepare for use of the record system in clinical encounters. 1 Potential adopters of this technology need information about the financial and other resources required to implement and maintain the systems.We quantified the costs of implementing one system-GE Healthcare's Centricity Electronic Medical Record 2 -at HealthTexas Provider Network, a large physician network in north Texas that provides fee-for-service ambulatory care. Financial costs included those pertaining to purchases of hardware and of software licenses. We also considered the maintenance costs for software licenses, hosting, and technical support for the first year following implementation.We considered nonfinancial costs to be related to the time spent by many parties to bring the system online and into full use. These parties included three groups of people.First was the HealthTexas network implementation team, which consisted of the manager for training and work flow, the senior vice president for disease management and quality, the vice presidents for informatics and for electronic health records and information technology (IT), a project manager, a process improvement consultant, and staff who conducted the workflow analyses and electronic health record training for physicians and clinic staff. This team planned and led the implementation of the system throughout the network.Second were the individual practice implementation teams, which prepared for the practice's implementation through planning, workflow reengineering, and training, and which consisted of "physician champions" chosen to spearhead the implementation at the particular practice, clinical staff "superusers," and office managers. Third were the end users-the physicians, other clinical staff, and nonclinical staff. End users had to be trained to use the electronic health record and had to prepare for its use in clinical encounters-for example, by loading information from patients' paper records.We interviewed key leaders of HealthTexas's electronic health record implementation: the vice presidents for informatics an...

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A Tutorial on Activity-Based Costing of Electronic Health Records

Cited by 10 publications

References 11 publications

Cost Analysis of MRI Services in Iran: An Application of Activity Based Costing Technique

Cost Analysis of MRI Services in Iran: An Application of Activity Based Costing Technique

The Effectiveness of Implementing an Electronic Health Record on Diabetes Care and Outcomes

The Financial And Nonfinancial Costs Of Implementing Electronic Health Records In Primary Care Practices

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