Healthc Inform Res.  2013 Sep;19(3):205-214. 10.4258/hir.2013.19.3.205.

Cost-Benefit Analysis of Electronic Medical Record System at a Tertiary Care Hospital

• Choi JS
• Lee WB
• Rhee PL

• KMID: 2166699
• DOI: http://doi.org/10.4258/hir.2013.19.3.205

Abstract

OBJECTIVES
Although Electronic Medical Record (EMR) systems provide various benefits, there are both advantages and disadvantages regarding its cost-effectiveness. This study analyzed the economic effects of EMR systems using a cost-benefit analysis based on the differential costs of managerial accounting.
METHODS
Samsung Medical Center (SMC) is a general hospital in Korea that developed an EMR system for outpatients from 2006 to 2008. This study measured the total costs and benefits during an 8-year period after EMR adoption. The costs include the system costs of building the EMR and the costs incurred in smoothing its adoption. The benefits included cost reductions after its adoption and additional revenues from both remodeling of paper-chart storage areas and medical transcriptionists' contribution. The measured amounts were discounted by SMC's expected interest rate to calculate the net present value (NPV), benefit-cost ratio (BCR), and discounted payback period (DPP).
RESULTS
During the analysis period, the cumulative NPV and the BCR were US$3,617 thousand and 1.23, respectively. The DPP was about 6.18 years.
CONCLUSIONS
Although the adoption of an EMR resulted in overall growth in administrative costs, it is cost-effective since the cumulative NPV was positive. The positive NPV was attributed to both cost reductions and additional revenues. EMR adoption is not so attractive to management in that the DPP is longer than 5 years at 6.18 and the BCR is near 1 at 1.23. However, an EMR is a worthwhile investment, seeing that this study did not include any qualitative benefits and that the paper-chart system was cost-centric.

Keyword

Electronic Medical Record; Cost-Benefit Analysis; Benefit-Cost Ratio; Net Present Value; Payback Period

MeSH Terms

Adoption
Cost-Benefit Analysis
Electronic Health Records
Electronics
Electrons
Hospitals, General
Humans
Investments
Korea
Outpatients
Tertiary Healthcare

Figure

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  Figure 1 An outpatient encounter in the clinic room.

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  Figure 2 The cost shifting. EMR: Electronic Medical Record.

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  Figure 3 The cash flow of the paper-charts and the Electronic Medical Record (EMR) system.

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