Most Wired: IT's return on investment is tricky to pin down

Typical measures aren't enough to capture the real value. Quality care is good business, hospital leaders insist.

As the rush intensifies to meet mandates for more health care information technology, hospitals must ensure they are getting solid returns on IT investments. Calculating accurate ROI, however, can be difficult.

The problem is, hospitals typically measure ROI from a business perspective—cost, revenues or operating efficiencies—but many benefits of clinical applications fall into quality and safety realms that do not easily translate into dollars.

"If the project is strategic in nature or a government mandate, ROI calculations are limited," says Denver Health Chief Information Officer Gregg Veltri.

To reach a keener understanding of IT value, investment rationale should center on clinical benefits, says John Frownfelter, M.D., chief medical information officer, inpatient services, Henry Ford Health System in Detroit. But even then, measurement tools are lacking.

"We know electronic health records are the right thing to do, but we don't have the data to predict how this will improve clinical processes or outcomes," he says, adding that hospitals generally don't prove either the business or clinical case well for clinical applications, though both are inextricably linked.

"We should measure clinical ROI in terms of measurable impact on patient care," Frownfelter says. For instance, his institution implemented a communication tool to increase the percentage of hospital calls to physicians that are answered in real time; completed emergency department calls to on-call physicians are now up 38 percent, a four-fold increase.

When ROI Is Obvious

A recent investment in a clinical surveillance tool at the University of Kansas Hospital is another example. Bob Page, president and CEO, says the system generates alerts by monitoring information entered into the EHR. Algorithms for early detection of sepsis is one of the first conditions implemented.

Page says the hospital's IT investment decisions are embedded in a philosophy that quality care is good business. "Correct treatment the first time and avoidance of errors is blended equally into bedside care and IT," he says.

The University of Chicago Medical Center also tends not to use financial ROI as a metric when evaluating IT. "Our emphasis is on how well the technology will support organizational goals and strategic initiatives," says David Miller, executive director, application systems at the medical center.

IT ROI is sometimes obvious. Computerized provider order entry, for instance, reduced by 20 percent the turnaround from pharmacy order to drug administration, Miller says. The medical center also eliminated 15 radiology department FTEs within 30 days of implementation of voice recognition software.

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"IT has become the enabler for the business of health care here," (Denver Health Chief Information Officer Gregg) Veltri says.

Regardless of ROI, hospitals feel pressure to adopt innovative technologies.

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One way to save money on IT is with free or low-cost open-source applications, a strategy attractive to county hospitals.

"Open source was our only alternative, since we can't afford commercial systems," says Paul Hensler, CEO of Kern Medical Center, Bakersfield, Calif. Hensler believes more hospitals should go open source.

"There seems to be a perception that since open-source EHRs are free, they're ineffective," he says. They not only are effective, Hensler adds, they may also help Kern Medical Center turn a profit.

[EDITOR'S NOTE: Kern Medical Center is currently implementing Medsphere's OpenVista, an open-source EHR solution based on the VA's VistA system.]