A patient’s records throughout different healthcare settings. Other

A capital expenditures are purchases of land, buildings, or equipment used for operations; not for resale; have a useful life of more than one year; costs $500 or more; and are subject for depreciation (exception is land) (Nowicki, 2015). An electronic medical record (EMR) system is a capital expenditure because it would improve productivity, improve quality, improve safety conditions for patients, reduce operating expenses, and improve patient care.
An EMR system is “an electronic record of health-related information on an individual that can be created, gathered, managed, and consulted by authorized clinicians and staff” (U.S. Department of Health and Human Services, 2018). It is a digital version of the traditional paper-based medical record for an individual. There are many significant benefits that this system has for physicians, practices, and organizations especially the benefit of communicating and sharing the patient’s records throughout different healthcare settings. Other benefits that will help the small and understaffed community health center that just purchased the EMR system are less paperwork and fewer storage issues. Within the healthcare industry there is a lot of time and cost associated with administrative duties due to paperwork. Since EMR is paperless, the large amount of papers to fill out and keep will decrease especially with storage. Digital access to the patient’s record is instant. Healthcare facilities will see less clutter and more efficiency therefore, reducing costs (USF Health, 2018).
EMRs can increase quality of care by providing complete healthcare information about a patient in real time. Precise and up-to-date information provides a higher quality of patient care, from better diagnoses to decreased errors and eliminating medical malpractice lawsuits. The EMR system can send out reminders for preventative care visits and screenings that can help patients manage their healthcare better. Electronic prescribing through the EMR lets the physicians electronically communicate the prescriptions directly with the pharmacy, lessening the chance for errors and eliminating any lost paper prescriptions. Patient safety improves because electronic prescribing automatically checks for possible dangers with other medications the patient is taking (USF Health, 2018).
There are financial incentives from buying the EMR system. Yes, the system is costly for the community health center but, happily the center can “recoup their investment through the Medicare Electronic Health Records Incentive Program and the Medicaid Electronic Health Records Incentive Program” (USF Health, 2018). The center can earn financial incentives for the implementation and meaningful use of EMR technology therefore, the EMR system will not cost as much.
Increased efficiency and productivity is another benefit. EMRs can be more effective than paper records by allowing a more consolidated management patient record which is quickly accessed anywhere. Contacts and communications with doctors, insurance providers, pharmacies and diagnostic centers are quick and trackable. This then frees up time with lost messages and follow-up calls helping with office management leading to greater productivity (USF Health, 2018).
Lastly, the EMR system provides better patient care. All the previous benefits are good for the center is also good for the patient. Modernized digital access to a patient’s complete record means that patients do not have to fill out the same paperwork at each doctor’s office which could be bothersome for some people. Each office can see what diagnostic tests, treatments, and other tests a patient has had and the results. There is better coordination among providers that leads to “more accurate diagnoses, improved management of chronic conditions and better overall patient care,” (USF Health, 2018) which in the end, leads to a very happy patient.
The community health center should have done a cost-benefit analysis as a means of evaluating all the potential costs and revenues that would be generated from the purchase of the electronic medical record (EMR) system. The typical analyses for capital expenditures are payback period, net present value (npv0, and internal rate of return (IRR). The payback period is the number of years for cash flow to recover the investment. Whereas, the NPV analysis relies on discounted cash flow in dollars. If the NPV is positive there is excess cash flow if the NPV is negative, the cash flow is not enough to repay the original investment. However, the IRR analysis gives an answer in a percentage which is difficult to calculate. The result of the analysis would have determined whether it was financially practical and would project possible cash flow (Nowicki, 2015). The center gathered a comprehensive list of all the costs and benefits associated with the EMR system from outside services and resources. Costs would include “direct and indirect costs, intangible costs, opportunity costs and the cost of potential risks” (Investopedia- Cost-benefit analysis, 2018). Benefits would include all “direct and indirect revenues and intangible benefits,” (Investopedia- Cost-benefit analysis, 2018) such as increased services. A conservative monetary estimate is given to all items for both costs and benefits for the purpose of a cost-benefit analysis. Then a final step to quantitatively compare the results is done. Since the benefits outweighed the costs the EMR system was purchased.
A benefit cost ratio (BCR) is often “used to detail the relationship between possible benefits and costs, both quantitative and qualitative, of undertaking new projects or replacing old ones” (Investopedia- Benefit cost ratio, 2018). Since sometimes the benefits and costs cannot be measured in financial terms, the ratio is used to measure and understand both factors. The BCR is calculated by “dividing the total discounted value of the benefits by the total discounted value of the costs” (Investopedia- Benefit cost ratio, 2018). Another words, to calculate the discounted values for the benefits and costs, “use the net present value (NPV) formula, in which the values are divided by the sum of 1 and the discount rate raised to the number of periods” (Investopedia- Benefit cost ratio, 2018).
If a project has a BCR that is greater than 1, it shows that the NPV of the project benefits are greater and outweigh the NPV of the costs. As a result, the project should then be considered. And, if the BCR is equal to 1, the ratio reveals that the NPV of likely profits are equal to or the same as the costs. But, if a project’s BCR is less than 1, the project’s costs are more than the benefits and it should not be considered (Investopedia- Benefit cost ratio, 2018).


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