Organizations that wish to improve on their success must take EHR Total Cost of Ownership (TCO) into consideration.
The behavioral healthcare business model is particularly complicated—with ripple effects between providers, payers, technology, and regulation that affect the organization’s bottom line—making TCO difficult to quantify.
The majority of the indirect costs that factor into TCO appear to have one common denominator: legacy software.
Incumbent business solutions lack the adaptability to keep pace with the dynamic business model of behavioral health care, and organizations are having to fill functionality gaps with supplemental training or workarounds, whether additional costs in maintenance or customized releases and, most importantly, forego fleeting opportunities for supplemental revenue.
The good news is several of these aspects of TCO can be mitigated, if not eliminated outright. Modern platform technology enables agencies to rapidly configure workflows, allowing the creation of a robust, yet simplified user experience, while affording the adaptability to stay ahead of changing healthcare regulation.
When it comes to TCO, the devil is in the details. Organizations that wish to bring their TCO down to a manageable level will need to take control of the indirect costs inherent in legacy software by leveraging platform technology.
Look in the Mirror—The EHR Total Cost of Ownership
When was the last time your organization did an honest assessment of your EHR’s TCO?
By TCO, we mean the sum of all EHR-related costs—both direct and indirect. In healthcare, such costs can include:
- Product
- Maintenance
- support
- customization
- consulting
- staff
- operational inefficiencies
- compliance
- fines
- missed opportunities for supplemental revenue
All of which are important to consider when evaluating a new EHR solution. Perhaps an even more important consideration, however, is how the implementation and subsequent years of operation affect the organization’s bottom line.
But the importance of understanding TCO doesn’t only apply to the buying process. Organizations must be mindful of existing costs at all times, particularly in the behavioral healthcare space. Hard and soft ripple effects occur across a network of providers, payers, and vendors, and the regulatory landscape is subject to ongoing revision. The challenge is to reconcile a very fluid business model with quantifiable metrics, or, at the very least, reach a point where the organization can make informed decisions about how best to proceed.
Behavioral health EHRs can either empower or burden the organizations that deploy them. Having a good understanding of TCO in the behavioral healthcare business model is essential to creating a long-term, sustainable business strategy.
Common EHR Evaluation Errors
Maintaining visibility of direct and indirect costs can mean the difference between success and failure for any organization, regardless of whether or not it’s in healthcare. Failing to account for TCO is the first mistake of many well-meaning behavioral healthcare providers, and among many of the most common missteps in planning the financial success of the organization.
EHRs are a significant investment, and leaders want to know they’re making the best possible choice for their organizations. As such, it is often the case that organizations are sensitive to the startup costs of an EHR solution (or enticed by products that are allegedly free).
Startup costs are but one facet in the grand scheme of TCO, and the preoccupation over them represents another significant misstep for plenty of well-intentioned behavioral healthcare providers.
It is important to be mindful of the costs that will be incurred over time, as they inevitably dwarf whatever initial payments were made toward an EHR solution.
That is why organizations must ask themselves:
- What am I going to pay for product support?
- How much am I charged for maintenance fees, upgrades, change responses, or customized releases?
- What kind of functionality gaps exist that I must bridge with human effort?
- How severe will the resulting strain on my HR budget be?
Organizations that achieve the most success are conscious of the bigger picture, and avoid falling into a business model of runaway indirect costs.
There are several opportunities for additional revenue through incentives and grants for organizations that are able to satisfy program requirements. The behavioral healthcare industry isn’t driven by profit, so extra funding means organizations can take additional measures to improve the quality of care within their own walls—and even contribute to the effectiveness of care beyond them. Whether or not an organization is able to take advantage of such opportunities depends largely on how well it can leverage its technology and get data out of its EHR to fulfill requirements. This is precisely why, in keeping in the spirit of TCO, what an EHR can earn for the organization is equally important as what it costs.
The Fallacy of the RFP or RFI Process
Historically, behavioral healthcare organizations have attempted to determine the value of an EHR solution by sending out requests for proposal (RFPs) to multiple vendors. This might appear to be a good way to get a high-level view of how the product will fit the organization’s needs, as the strongest candidates are those that satisfy a detailed list of product requirements
(or at least come close). The truth is this method neither identifies the best solution nor gives the organization any true insight into TCO.
The typical RFP behaves like a questionnaire, with an exhaustive checklist of requirements that are specific to the organization’s unique workflows.
In the end, it is not always the best-fitting product that emerges from the list of candidates so much as the one that can answer “yes” to the most questions.
The key is to insure your vendor of choice is aligned with your strategies and objectives.
Can they:
- Grow with you strategically?
- Are they focused on your service lines?
- Can they be flexible to your changing needs?
- Do they provide something more than the norm?
Furthermore, the allegedly perfect fit is often the result of extensive customization, which invariably causes havoc to any organization’s TCO in the forms of support and custom releases.
It’s the Small Things that Make the Big Impact
Most clinicians and administrative staff aren’t blind to the organization-specific nuances that cause friction in daily operations. Frustration derived from the complex requirements in policy and procedure are simply the reality in operating under the regulatory requirements that health care does. But the inefficiencies of the industry, however, are not only a form of minor annoyance. There are tangible consequences to the organization’s budget, and when taking the TCO of an EHR solution into consideration, they are worth noting.
Clinical Operations
How are forms handled within the organization? Health records have traditionally been
paper-based, and for many, this method is still observed. After all, they are easy to use, easy to change, and, for industry veterans, there is a strong sense of familiarity which helps to keep operations running smoothly. Investment into an electronic system might seem daunting for
a paper operation, but the benefits to TCO are very clear. Paper records can get lost, destroyed in a natural disaster, contain mistakes, and incur supply and storage costs. Additionally, the paper is comparatively more expensive when taking the added data entry and duplication time into consideration. With the current industry trend toward interoperability and data accessibility, these costs will only continue to rise.
Electronic systems are more cost-efficient when compared to paper, but must still be approached with a mindfulness of TCO. For instance, EHRs will usually come with form templates, but how well do those templates serve your workflows? Are they changeable, or are you having to bridge gaps with workarounds to fulfill regulatory requirements? What kind of change process do you have with your vendor if (and more likely, when) a change is needed?
How does the organization handle routing? Not only must information be accessible to care teams, it must be available to further compliance and reporting efforts as well. Are the right people getting what they need? Is the information come in an actionable format, or does it require several hours (or days) of human effort to compile?
Business Operations
The decisions that behavioral healthcare agencies make, whether in the interest of the organization from a care or business standpoint, require data to inform them. How efficiently managers can get access to data in order to draw conclusions and make informed decisions from it depends on the nature of the EHR solution in place. Are managers having to chase records and data across multiple systems, providers, and levels of care to identify business and population needs?
Behavioral healthcare organizations are the closest to at-risk populations, and need population health data to come up with the best care initiatives. Information locked away in decades
of clinical notes does not do this endeavor any good. EHR systems must be able to present actionable data in a timely fashion to avoid placing a significant strain on the organization’s budget.
Compliance
Regulatory compliance might be enough proof that people only get into this business because they truly believe in the cause. The volume of requirements is enough to make any organization, big or small, feel like it is climbing a mountain in cement boots. All humor aside, compliance is a notable challenge for any behavioral health organization, and can result in an increased TCO if not managed carefully.
This is largely because the regulatory climate is subject to ongoing change—particularly during an election year. Consider how an update to existing requirements or brand new initiatives might affect the organization’s budget. Will the software need to be updated? Will the staff require additional training or need to perform extra duties if the EHR no longer automates certain processes? If it comes to it, how quickly can the software respond to a government audit? How well an EHR solution can navigate these challenges will dictate the impact that regulatory compliance has on TCO.
Hardware
One cannot evaluate an EHR software solution without also considering the hardware that supports it. Traditionally, EHR providers will install servers at the customer location or host those servers in their own offsite location. Either option will require humans and hours to operate—exponentially so when dealing with non-cloud architected technologies. Whether the hardware is supported on-premise or hosted offsite, the organization must factor not only the time and resources required to keep systems running but the inevitable, and all too frequent, time and resources required when systems are not running.
In behavioral healthcare, there is obviously a lot riding on the reliability of electronic systems. Few things are as detrimental to care as a system crash. Consider also the extra demands of scheduled maintenance or the occasional upgrade. What kind of impact will it have on EHR uptime? What are the opportunity costs? Are numerous billable hours at stake if, for whatever reason, EHR access is momentarily suspended? These are but a few of the hardware-related challenges that behavioral healthcare organizations must address.
The Common Thread
In examining the many areas of TCO in which behavioral healthcare organizations encounter unexpected costs, a common theme emerges. It is the fundamental nature of software itself.
Traditional software that is hard coded may provide value for your organization through the completion of an intended set of tasks, but changing the way it behaves is slow and costly. Submitting a change request to a vendor subjects consumer organizations to a long development cycle, in which a team of developers must revise the core code in order to satisfy functionality requirements.
This is particularly troublesome for the behavioral healthcare industry, which is required by law to comply with any state or federal regulations that may or may not be imposed on any given year. Due to the lengthy turnaround times for EHR software development,
when it comes to compliance many organizations are in a perpetual state of catch up. Endless implementation prevents them from getting up to cruising altitude, and guarantees the ongoing sinking of funds into training and workarounds. This speaks volumes to the difficulties in keeping TCO at a manageable level, and still, this says nothing about what kind of opportunities for supplemental revenue might be lost as a result.
Legacy software simply cannot keep pace with the industry demands of today. Its inability to change in a timely manner is at the core of TCO management challenges.
Advanced Agency Management Platform —A New Perspective
Many of the aforementioned factors that contribute to TCO can be avoided, though it requires a deviation from the status quo approach to behavioral healthcare EHR procurement and ongoing management.
Consider that much of the contributors to TCO within the behavioral healthcare space are the result of friction between an inflexible business solution and an ever-changing industry landscape.
What is needed now is a solution that is simple, yet robust and rapidly configurable without reliance on highly technical forms of support.
Modern platforms supported by cloud technology have already demonstrated tremendous success in the commercial market. Platforms provide extensible and dynamic data models, enabling the configuration of workflows necessary for their unique organizational needs.
Changes made in the interest of regulatory compliance or in the pursuit of additional funding come much more quickly—not from a team of engineers operating around a development schedule, but from a local administrator.
This emphasis on task completion through a mobile-app-like user experience has been absolutely transformative in the consumer market and broadly in enterprise software, and the principles can now be applied equally to health and human services.
Through platform technology, rapidly adaptive EHR solutions can meet the demands of the ever-changing nature of health care. Costs that are typically incurred in the software model through support, training, compliance, customized releases, and bridging functionality gaps on a day-to-day basis are dramatically reduced.
It is important for behavioral healthcare organizations to base their decisions on a firm understanding of TCO. A less expensive business solution will be a tempting option for any manager having to navigate strict budget constraints, but don’t be fooled; the costs that EHRs impart on the organization go well beyond the buying process, into areas both direct and indirect.
Being fiscally responsible and managing the allocation and distribution of funds is the best way for an organization to evaluate its short- and long-term trajectory.
Organizations that wish to break through the status quo of budget pitfalls resulting from inflexible legacy software solutions must be prepared to take a fresh approach to the evaluation of EHR solutions. Platform technology is just that.
If you’d like to learn more about how the OnTarget Advanced Agency Management Platform can significantly impact the clinical, operational and financial aspects of your organization, visit: