US health systems invested more than $10 billion in electronic health record (EHR) systems between 2008 and 2013, and were projected to spend another $10 billion to $15 billion by 2016.1 For most health systems, these investments constitute their largest capital expenditures, but few if any systems have maximized the return on those investments. To capture the full impact of their investments, health systems must look beyond traditional arguments for EHR implementation, such as efficiency gains and meaningful use incentives. (To understand why, see the sidebar on p. 2 of the PDF). Instead, they should emphasize both clinically and operationally oriented sources of value, including better supply utilization, improved clinical out-comes, and new labor practices that optimize both care quality and service efficiency. When done right, these approaches can generate 10% to 20% of additional contribution impact—which, on a per-bed basis, can amount to an additional $10,000 to $20,000 in annual margin.2
In this paper, we will describe the opportunity health systems have to maximize the value derived—directly or indirectly—from EHR systems. First, we will discuss 11 ways in which EHRs, together with linked IT systems and applications, can transform hospital operations through cost reductions, revenue enhancements, and quality improvements. Next, we will introduce an EHR maturity curve that lays out the phases of implementation and value capture. Finally, we will discuss the steps health systems need to take to achieve more value.