Watching the stock market’s gyrations over the past few months has made me reconsider investment strategies. I thought about the thousands of people who have won the million dollar lottery. These people have made a lot of money and swear by the lottery because it has changed their lives, and they would recommend lottery tickets as a great investment. Yet, I know for myself and for most people, we would not spend a significant portion of our assets on lottery tickets because we assess the risk and conclude that the likelihood of success makes betting the nest egg on the lottery an unsound investment.
So, little surprise, my thoughts turned to EMR and, specifically, the realization that in evaluating EMRs, the issue of risk is too often overlooked. EMRs are purchased after speaking to a few of the vendor’s success stories (i.e., lottery winners), which blinds the buyer from assessing the true, underlying risk.
When calculating expected return on any investment, one needs to account for the likelihood of achieving that return. Everyone who purchases an EMR enters into the process with the expectation that they will be successful. Unfortunately, history has shown that this is not the reality; the chances of failure with a traditional, point-and-click EMR are relatively high. Depending on the physician’s specialty, traditional EMRs carry a 50%-90% failure rate which explains why, according to a New England Journal of Medicine study, only 4% of physicians are using a fully functional EMR.
My business school Finance professor would insist that the expected financial returns resulting from any investment must be decreased by the chance of failure. So, for example, if you are a physician who expects $44,000 in EMR incentives from the government, you must decrease that expected windfall by at least 50%, to $22,000. Furthermore, you may be successful in implementing an EMR, but not in convincing CMS that you are using the EMR in a meaningful way, so you must adjust the $22,000 further downward to reflect this additional reality.
Unfortunately, when purchasing an EMR, payments to the vendor are not tied to the success of the product, so physicians must pay full freight and then hope that the ROI materializes—a lot like buying a lottery ticket. Don’t buy a dream! Consider all of the potential returns, realistically assess the likelihood that your physicians will actually use the EMR successfully, and adjust your expected ROI accordingly. You can make a sound business decision only by including “risk” in your analysis.