Hospitals going paperless save big

February 7, 2001

Moving to a paperless system can be expensive for hospitals at the start, but huge benefits in cost savings and added productivity eventually result, a HIMSS education session was told Tuesday. You may have to spend $34 million to go paperless, which

Moving to a paperless system can be expensive for hospitals at the start, but huge benefits in cost savings and added productivity eventually result, a HIMSS education session was told Tuesday.

You may have to spend $34 million to go paperless, which is difficult on a $30 million budget, according to Jack A. Newman, executive vice president of Cerner.

"But if you can get past your hesitation, we can show you ways to reduce your costs by $80 million or more," he said.

Newman estimated that potential savings for a sample hospital could exceed $90 million over five years, including quick wins of $28 million in supply chain savings and lab consolidation. Other major benefits:
- $14 million in savings from length of stay/pathway compliance;
- $4.7 million from the reduction of redundant or inappropriate orders; and
- $9.4 million from reduction of adverse drug events.

"Nationwide, adverse drug events add an average of $4700 per case," Newman said.

Electronic medical records allowed the Mayo Clinic/St. Luke's Hospital in Jacksonville, FL, to eliminate 275 FTEs from an FTE base of 1200 (26%), generating an annual saving of $7.3 million and permitting them to pay back their paperless investment in less than three years, according to Newman.

Likewise, deployment of Cerner's CDR, orders management, and use of rules at Integris Health in Oklahoma City has yielded cost savings estimated to be $3.5 million annually, an amount estimated to represent 20% to 25% of total impact.

"Paperless medical records reduce paper handling steps from 35 to 14, essentially reducing 11 people to six, a 60% reduction in process steps and a 50% reduction in people involved," Newman said.

During the same session, Joy Keeler, chief information officer at the University of Illinois at Chicago (UIC), said her institution did two years ago what hardly anyone thought could be done. In 1998, researchers estimated an 80% probability that healthcare institutions would not have a fully functional electronic health record until this year. In 1999, however, UIC successfully moved 28 clinics to the Outpatient Care Center using an electronic health record in lieu of the paper records.

"We didn't take the paper with us," Keeler said.

Keeler cited benefits associated with her paperless hospital:
- easy access to medical information;
- no lost records;
- legibility and organization of all records; and
- storage of all medical information in one place.

Although Keeler estimates UIC saves $3.6 million annually, she said success is measured by clinician acceptance.

"Getting physician acceptance is related to confidence that the system will be there all the time. We try to deliver value," she said.