Austin Holmes HPM 6058 Dr.

Tahara Silver Lake Memorial Hospital Overview: Silver Lake memorial is a 150 bed acute care private for-profit hospital located in the Los Angeles Area. It offers both inpatient and outpatient services in all major specialties, and includes an emergency medicine department. The hospital also has clinics which offer services to the underserved population of Los Angeles. Recently, the hospital has experienced declining profits due to reduced medicare and medi-cal payouts. Silver lake is located in an area that has a large elderly population. Due to this currently, over 60% of the patients have medicare and of these 40% have combined medicare/medi-cal. Patients with private insurance comprise approximately 30% and 10% have no insurance. The issue: Currently, Silver Lake Memorial utilizes paper charts for its medical records, and has an understaffed medical records department. This has caused issues with coordinating care, medical records requests from patients or insurance companies, and communications between departments. For instance, if lab tests are ordered, the test is accomplished in a timely fashion, yet the lab department must request the records of the patient from the medical records department. Due to the overload, it may take several days for the lab to get the patients record. Once the lab results are entered into the patient’s record, the record is then returned to the medical records department. A CQI task force analyzed the issue and determined that upgrading to an EMR system would solve many of these issues. The task force than commissioned a technology committee to study the possible solutions. The analysis: According to a SWOT analysis and CQI methodology (See figure A) (Darr and Longest, 2008), it was found that an upgrade to an EMR system is warranted. According to the American Recovery and Reinvestment Act (ARRA) of 2009, the eventual use of an EMR system will become mandatory for continuing to receive medicare/medi-cal disbursements. Included in ARRA is funding available for hospitals who are “meaningful users” of EMR technology (Latham and Watkins, 2009). At no better time in our history has the move to electronic medical records technology been indicated. Besides the funding available, the move to an EMR system would be a wise strategic choice. As the CQI task force indicated, the area that our organization is most substandard and could use the most improvement in is the flow of patient information interdepartmentally. The upgrade would allow our care to be more coordinated, timely and efficient, and fewer errors, thus leading to higher patient care and satisfaction. Also, though it takes longer for a physician to input notes into the EMR, time savings would still be realized in the system as a whole. These upgrades would lead to better strategic positioning by giving our organization the image of being the hospital best able to serve the needs of the population in a superior fashion.

Prospective EMR systems: Funding for EMR systems is stipulated under section 4102(a)(1) of ARRA which states that a base amount of $2 million is available to acute care hospitals that adopt a meaningful EMR system, as determined by the secretary, which provides for the electronic exchange of information that improves coordination (Latham and Watkins, 2009). There are three basic types of EMR systems which qualify under this stipulation (Congdon, 2009): 1. Server based EMR system: This system is the most expensive, both in terms of set up fees and licensing fees, yet gives the most control over information and patient charts and maintains the most confidentiality. It’s also the most reliable, since the whole system is within the hospital itself. The main EMR system would be located somewhere in the building and maintained by internal IT members. This would allow little down time in the event that a server error occurred. However, the system would require an upgrade of the existing computer system and the creation of an organization wide intranet connected specifically to each department. Also, the system would require frequent updates from the vendor. Cost; $10 million initial cost, $50,000/year for licensing fees. With four (4) full time IT techs, $160,000/year (Congdon, 2009).
2. Application Service Provider (ASP) EMR systems: This is the least expensive system,

both in terms of set up fees and licensing fees, however has the least control over information and patient charts since the server is controlled at the providers location. Also, confidentiality issues are a major concern because the charts are “pulled” via the internet. Also, if the internet goes down, then the charts are inaccessible, and there is no way to determine how long before charts are accessible again. Besides the lower cost, IT personal would not be necessary and department managers could easily be trained on system maintenance. Cost; $2 million initially, and approximately $25,000/year (maximum) licensing fees. No IT tech costs associated (Congdon, 2009). Open source EMR systems: This is an in-between system, where each department has it’s “own” server (it can be a regular computer that is just used to store files, and need not be anything fancy), and all the departments are connected through an intranet system. Again, this would require an upgrade of the hospitals system to include an intranet system, though could be made more “loose” than the server based EMR system. (Blobel et al., 2009) All that would be necessary is the running of lines through routers. However, the network would have to be made secure from outside internet access through firewalls and data encryption. This system give control to the hospital, however, a large team of IT personal would be required, since the maintenance of the servers is beyond the scope of most managers. Though this system is not as secure as server based, it is much more secure than ASP systems. Cost: 4 million initially, with approximately $30,000/year in licensing fees. Associated IT personal costs would be approximately $200,000/year, with five (5) IT employees (Congdon, 2009):. In choosing an appropriate EMR system, several factors must be taken into consideration. Of these, the one we will discuss in more detail, since it is not obvious, is the financial costs. After financial cost are weighed, the appropriate decision matrix (See figure B) (Darr and Longest, 2008) criteria can be applied. Neither the open source, nor the server based system will have a breakeven point with the ASP system (meaning that the ASP system will always be cheaper). However, there would a break even point between the service based system and the open source system. Total per year cost of the server system is $210,000/year, whereas the open source system would cost approximately $230,000/year; with the difference being $20,000/year. The

difference in initial start-up costs is $6 million (server minus open). Thus, it would take 300 years to make up the difference. For all inclusive purposes, difference in pricing should not be taken into consideration. It is our decision then, based on the decision criteria that a open source EMR system be adopted. By the numbers: The EMR system would incur a cost of approximately $300,000/year and after the 10 year depreciation period, an annual cost of approximately $100,000/year. However, when the system is analyzed in non-tangible ways, including increased customer care, more efficient systems (allowing more patients to be seen), and better outcomes make the system worth the associated costs and provides positioning for a good return on investment. Looking at it in a different perspective, when medicare/medi-cal turns the carrot into the stick, the losses from not having a EMR system in place would be substantial. See financial chart for more detailed breakdown (See figure C). Implementation: In accordance with standard management practice, the implementation of the EMR system would occur using a CII method (See figure D) within each department. Each department has its own unique needs and the decision on how to implement the EMR should be tailored. Also, the implementation of the system itself will occur in a step-wise manner after each department comes up with an implementation plan. The stages are as follows: Stage 1: Each department would create a proposed implementation Plan of Action (POA) and submit it to the designated manager. Stage 2: The coordination manager would then look at the proposed POA’s and decide in which manner the roll-out will occur. Stage 3: The intranet structure will be put in place, with both hard-ware and software requirements. Concurrently, the department managers will be trained in use of the software. Stage 4: The managers will then take what they learned, and train their staff members on use of the EMR and the policies/expectations of use. Employee commitment to the idea is to be gained through a discussion of why the EMR is important. Stage 5: The roll-out. First, the lab will utilize the EMR by placing results in the system. Physicians will learn to pull the results from the EMR. Second, the nurses and techs will learn to input basic patient information into the system. Third, the physicians will learn to input exam noted into the system. Fourth, and last, a coordination with the billing department will occur, with all physicians billing through the EMR (or billing department could take over if physicians have a hard time with the billing). Problems and barriers with implementation: Below are some of the major problems with implementing the system (Health Care Tracker, 2009). 1. Problems with adding in old charts: This process would be labor intensive, and would cause the largest grief in the initial implementation stage. Over-coming this issue smoothly is essential to the continued success of the EMR. For all return patients, the records are to be pulled several days in advance, and the most recent chart is to be placed

in the EMR. This will allow the transition to occur smoothly and in a coordinated and orderly fashion. 2. Long-term preservation of records: What if the company supporting the EMR system goes out of business? What if the server eventually crashes. Luckily this is avoided by two reasons; first, in order for an EMR program to be ARRA certifiable, databases must be compatible with other ARRA certified programs, thus preventing this problem from happening. Thus, if the EMR company goes out of business, another EMR company can be retained the databases easily transferred. Second, weekly back-ups will be mandatory for each department. 3. Legal/privacy issues: Some patients may be worried about the privacy of their information when being stored electronically. With the enhanced security features found in the firewall, as well as encrypted transmission of information, the likelihood of unauthorized access of information is so small as not to be considered an issue. Also, ARRA certified programs and systems are HIPPA compliant. Conclusion: With proper planning and implementation, the use of an EMR system could become reality at Silver Lake memorial. It is essential to our future survival that we adapt the above plan, and fully commit what resources we can to make sure the program is a success. The successful implementation of the EMR system will in the long run enhance the quality of care given to our patients, allow for a more coordinated approach to treatment, and make the system more efficient. It makes sense in the context of our mission; to provide the highest quality of care to the members of our surrounding community.

Resources: Blobel, B. Pharow, P. and Stassinopoulos, G. (2003). Model-Based Design and Implementation of Secure, Interoperable EHR Systems. Pubmed. Retrived from Congdon, Ken (2009). How much will an EMR system cost you? Journal of Health Care Technology Online. Retrived from Darr, Kurt and Longest, Beauford (2008). Managing Health Organizations and Systems. Baltimore, MD. Health Professions Press. Health Care Tracker (2009). Barriers to implementing an Electronic Health Record System. Retrieved from Latham and Watkins (2009). The American Recovery and Reinvestment Act of 2009. A guide for state and local governments. Retrived from

Figure A: The CQI model

Figure B: Decision Matrix
Criteria Initial Cost Confidentiality Easy of implentation Effectivness Efficency increase Maintnence cost Compatibility Key: 1=Bad 3= Good 5=Best Server Based 1 5 3 5 5 1 5 ASP system 5 1 3 5 5 5 5 Open source 3 3 3 5 5 3 5

Figure C: Budget and long term financial plan.
Start up cost federal aid Total start-up cost Depreciation: 10 years (cost/yr) IT tech labor cost Licensing fees parts/equipment Total costs Depreciated cost + annual cost minus savings from time minus savings from no rec. dept. Total annual cost of system 4,000,000 -2,000,000 2,000,000 200,000 200,000 30,000 10,000 240,000

440,000 -40,000 -100,000 300,000

Figure D: CII
CII Methodology Manager Shares the problem with subordinates as a group (how to implement the EMR), obtains their ideas and suggestions, and then makes the decision that may or may not reflect the subordinates contributions.

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