Electronic Medical Record Systems: Know the Total Cost of Ownership

So, you have decided to join many other organizations and begin the search for an electronic medical record (EMR) system. Now what? Before purchasing an EMR system, you must first determine what the total cost of ownership will be specific to individual software systems. This not only includes the first year’s software, implementation, and infrastructure costs, but should also include the costs for ongoing support and licensing, as well as for ongoing basic IT support not integrated with software support. The total cost of ownership will vary depending on the type of EMR system purchased.

The first step toward implementing an EMR system is to establish your facility’s “technology baseline” by evaluating its current technology, including PCs, servers, network hardware, application licensing agreements, network wiring, electrical wiring, and current IT support operations. This technology must be documented, reviewed, and assessed to ensure that the current technology environment can support an EMR system. You will need to know which infrastructure components will require an upgrade—and the price of upgrading these—before purchasing an EMR system.

Often administrators start the EMR vendor selection process by inviting vendors into their facilities to demonstrate their software systems. Software demos should never be the first step of selecting any technology vendor, especially for EMR. Vendors will often tell you the total cost of the software only, and facilities may take this number to be the bottom-line cost of the project. The price of the software is not the bottom line; administrators must also determine the hardware, network, infrastructure, electrical, and other expenses specific to their facilities. On average, the software outlay for an EMR system represents less than 50% of the total cost of an EMR project’s first year of operation.

Determining Total Costs

Vendors often have different infrastructure requirements specific to their systems, and these are not included in an EMR system’s software cost. The variable cost related to the project is for the software and software training itself. Since systems vary in cost and functionality, buyer beware when it comes to software—you get what you pay for. Most expenditures listed below need to be included regardless of the EMR software vendor you select.

Basic Costs

Most EMR vendors only quote the costs associated with the following:

  • Software licensing costs charged to use the vendor’s software.

  • Software training costs charged by the vendor to train your users on its software system—not to train your staff on how to use a PC.

  • Implementation costs charged for hardware purchased from the EMR vendor. These charges do not include implementing hardware purchased from other vendors for EMR, e.g., new PCs, routers, switches, and wireless network equipment. The vendor will often assign a project manager to supervise the project tasks related to the software side only. Hire or appoint your own project manager/director to manage the complete project, represent your facility’s best interests, and deal with all vendors involved.

  • Ongoing support fees to support the vendor’s software for the life of the contract, which do not include the costs to support your facility’s other applications. The EMR vendor does not become your IT support vendor for daily break/fix support.

Detailed Costs

Most EMR vendors do not include the costs associated with the following with their quote:

Hardware. New “network drops” for staff (e.g., nursing stations) will require a PC for EMR and network infrastructure installation. Also, cables, switches, and routers will need to be installed for the wireless network. The server, PCs, and electronic handheld devices will include operating system licensing and installation fees. All hardware used for EMR must be connected to a backup generator through a battery or UPS (uninterruptible power supply) to ensure the system is available during a power outage.

Software. Facilities may prefer to have their current financial and pharmaceutical systems interface with the new EMR system. Some vendors offer this service at no charge, but this only means the vendor will not charge for its work on the interfaces. Financial and pharmaceutical software companies will charge you to build an interface. Before signing any contracts for an EMR system, receive a written confirmation from the EMR, financial, and pharmaceutical vendors that their software will interface with the new system and have each vendor provide an estimate. If the vendors will not interface, you can set the proper expectations with staff and create a new process flow related to billing. If possible, avoid customizing any EMR system to meet your facility’s vocabulary. The more you customize now, the more the system will cost to support later. Remember, EMR is only a tool, and customization kills financially!

Staffing. Basic PC training may be needed for some staff members, who otherwise will fail during EMR training and take months to catch up to others. If staff members are not properly trained on basic PC use, your facility may see a drop in reimbursement since less documentation will be entered into the EMR system. With more technology soon to be installed in your facility, the internal IT support team or IT vendor must support these devices, so ensure that you have the proper level of IT staffing to handle the increased demand in IT support. Staff are paid for their time spent attending two or more training sessions, which may include a combined four total hours per nurse aide and seven total hours per nurse. These wages are not included in training costs.

Backups. Always think “disaster avoidance” and purchase backup hardware. Current disaster recovery and evacuation plans should be updated and staff trained on the new procedures. With any major project, include a contingency budget. Unknown costs can arise that were completely unexpected, and even the best preparation can overlook these costs. The bottom line: You never know what issues may arise when updating your building’s infrastructure. For example, if your facility consists of two or more buildings, you probably have a fiberoptic cable underground that connects the buildings’ technology. Over time, the conduit can crack or become damaged, compromising the cable. Once EMR is implemented, you may find the cable will need to be repaired or replaced.

Project management. The project manager role is critical to the success of EMR implementation. This role can be filled internally or externally and is your facility’s “general contractor” for the duration of the project and beyond. Do not rely on the EMR software vendor’s project manager to guide all the different vendors involved with the project. Vendors or groups that will need to be managed include the EMR software company, local IT vendor or internal IT team, electrical vendor or maintenance team, network or wireless installation vendor, infrastructure hardware vendors, financial application vendor, and pharmaceutical application vendor. The project manager is responsible for ensuring that these and all other groups or vendors complete their tasks on time and under budget.

The project manager should not be the director of nursing or any healthcare staff member who has major daily responsibilities, nor should this person be your current IT support manager or IT break/fix support person. What makes a great break/fix mind often does not mix well with managing major initiatives and ensuring that disparate groups are following timelines. While the project manager does not need to be an expert on technology or an ex-healthcare staff member, this person should understand technology (engineering, application, support) and healthcare (state surveys, providing care, different staff roles and responsibilities), as well as the project’s different components and who is affected with every decision made.

Post-implementation. Now that you have implemented an EMR system, ongoing costs will continue to accrue. Your facility now has more PCs, servers, and network devices, so more IT support is needed. Over the next few years, hardware will need to be replaced and upgraded. As staff members leave your facility and new staff members are hired, your team will be responsible for continuous EMR system training.


The costs listed above should be estimated before you sign any contracts with an EMR vendor; take time to complete your homework before selecting a system. You are forever changing the tools used by staff to provide care, and EMR is only a tool, not magic. Most implementations fail because of improper planning or because facilities buy the cheapest system—all systems are not created equal—and then don’t train staff. For success, always stick to the fundamentals: training, communication, and support. Train your staff, communicate to your management team and vendors, and support all who are involved in the project. These fundamentals will lead to success.

Daniel J. Cavolo, MBA, is President and Owner of the The Loyola Group, LLC, an IT service and support company founded to assist healthcare organizations with new IT initiatives and serve these healthcare organizations as a virtual Chief Information Office, IT Director, and/or IT project manager.

For more information, phone (440) 823-0878 or visit https://www.theloyolagroup.com. To send your comments to the author and editors, please e-mail cavolo0707@nursinghomesmagazine.com.

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