EHRs are expensive systems - they are expensive to implement, and even more expensive to maintain and upgrade. I often hear the argument that even though EHRs cost money to put in, they save money in the long term. The primary assumption in this contention is usually that EHRs reduce the cost of delivering healthcare delivery.
Of course this line of reasoning hinges on our ability to actually measure the return on investment of an EHR with a significant degree of accuracy. As those of you familiar with EHR implementations probably know, this is more challenging than expected, and it is often a difficult task to make a true estimate on ROI on health IT.
Studies that have attempted this exercise usually don't have a clear conclusion - a representative statement concludes that "...additional research utilizing broader perspectives and multidisciplinary techniques will be needed before a better understanding of ROI from health IT is achieved..." . There are many reasons why it’s hard to calculate an ROI on EHRs, but one significant issue is that we often don’t know exactly how much it costs to get EHRs up and running.
So how much do EHRs cost to implement? One would think that given the number of implementations nationwide, that information should be reasonably easy to figure out, but surprisingly that’s not the case; the numbers in the clinical informatics literature are scattered and are often somewhat vague.
We do have some idea of costs: for example David Bates once estimated that CPOE at Brigham & Women’s Hospital in Boston cost $1.9 million dollars to implement in 1998 . But the Brigham is not a typical hospital; it's a teaching institution with a home-grown EHR that has been developed over decades. The level of internal informatics expertise within Brigham far exceeds that of other organizations, and perhaps even some EHR vendors.
One well-quoted study on inpatient EHR costs was commissioned by the American Hospital Association and the Federation of American Hospitals and looked at more representative hospitals. The study was conducted by the First Consulting Group , who found it would cost a 500-bed hospital $7.9 million in initial costs and $1.35 million in annual operating costs to implement and maintain an EHR. But even though this study looked only at six organizations, and it's a stretch to extrapolate these figures to the multitude of US hospitals, we could use the results as a ballpark figure to do the math to figure out the projected expenditure associated with universal EHR use in the US.
The cost is depressingly high, and then there is also the associated cost of setting up and maintaing a robust health information exchange network so that these EHRs can talk to each other. Rainu Kaushal calculated that a national healthcare health information network would cost $156 billion in capital investment over 5 years and $48 billion in annual operating costs .
But the costs of implementation will be mitigated or even countermanded by the cost savings associated with EHR use, right?
Many studies that show cost savings of EHRs don't take into account the cost of implementation. And if they do, some choose to focus on the direct costs and don't factor in the indirect costs associated with implementation and maintenance. For example, part of the process of implementing EHRs includes monitoring for HIPAA violations, and HIPAA compliance costs money. One report documented that HIPAA compliance with a coronary artery disease registry led to more than $8,700 and $4,500 in incremental and follow-up yearly study costs, respectively . I have yet to see a credible study that demonstrates that the cost of HIPAA compliance was factored into cost-savings calculations.
So why spend the money if we can’t show an ROI? I’ve previously noted that the march of progress is unrelenting, and while that’s a viable argument, I can offer a better line of reasoning than attributing the domination of EHRs to the inexorable advance of evolution.
We currently focus much of our attention on the actual implementation of EHRs, which is a reasonable attitude since we want to get things right and avoid calamitous catastrophes such as adverse post-implementation patient outcomes or a wholesale clinician revolt against the EHR.
But as we become more comfortable with EHR implementations we will surely shift our focus to the extraordinary ability of EHRs to collect vast quantities of data. We can then try to figure out how to mine and analyze the data accumulated by these interconnected systems in an efficient and innovative manner to improve patient care and outcomes. And that’s the real ROI, the proverbial treasure-trove at the end of the rainbow.
 Menachemi N, Brooks RG. Reviewing the benefits and costs of electronic health records and associated patient safety technologies.J Med Syst. 2006 Jun;30(3):159-68.
 Bates DW, Leape LL, Cullen DJ, Laird N, Petersen LA, Teich JM, Burdick E, Hickley M, Kleefield S, Shea B, Vander Vliet M, Seger DL. Effect of computerized physician order entry and a team intervention on prevention of serious medication errors. J Am Med Assoc 1998;280(15):1311-1316.
 First Consulting Group. Computerized Physician Order Entry: Costs, Benefits and Challenges. 2003.
 Kaushal R et al. The Costs of A National Health Information Network. Ann Intern Med August 2, 2005 143:165-173
 Armstrong D et al., "Potential Impact of the HIPAA Privacy Rule on Data Collection in a Registry of Patients with Acute Coronary Syndrome," Archives of Internal Medicine 165, no. 10 (2005): 1125–1129