Nationwide EHR implementation expected to cost $150B

California professor estimates about cost of U.S. EHR deployment. Source: New York Times

Full implementation of networked EHRs in U.S. doctors’ offices and hospitals could cost approximately $150 billion over eight years, a California professor told an Institute of Medicine workshop last week.

Robert Miller, a professor of health economics at the University of California, San Francisco, acknowledged that his $150 billion estimate sounded like a large sum but called it “manageable” because it amounts to less than a 1 percent increase per year in the nation’s total healthcare spending, according to Government HealthIT.

He said that hospitals are further along the path toward implementing clinical information systems, partly because they get some boosts in revenues when they install EHRs, Government HealthIT said. Miller also said that large hospital organizations and hospital investors increasingly view IT as an expected cost in annual budgets.

With hospital profit margins around 5 percent, he added that “most hospitals with most beds can afford it.” However, Government HealthIT reported that public and small hospitals and some highly leveraged for-profit hospitals are likely to lag behind.

Miller’s projections call for hospitals to spend $35 billion to acquire and expand EHR systems and $55 billion in new operating costs over eight years, Government HealthIT said. He said this level of spending would bring hospitals’ IT spending closer to that of other industries.