Electronic Medical Records Cost Employers $50 Per Employee Per Month

This video provides an in-depth exploration of the hidden financial burden imposed by Electronic Medical Records (EMRs) or Electronic Health Records (EHRs) on employers, estimating this cost at $50 Per Employee Per Month (PEPM). Dr. Eric Bricker, the speaker, explains that this significant expense is not transparently visible to employers but is instead deeply embedded within health insurance claims. A core issue highlighted is that many EMR companies charge a substantial percentage of physician practice revenue, with an example given of 7%. This business model inherently incentivizes EMR vendors to promote a fee-for-service approach, which maximizes billing and revenue, rather than encouraging value-based care or capitation models that focus on outcomes and cost efficiency.

Dr. Bricker meticulously quantifies this administrative cost, demonstrating how a 7% EMR charge on the claims portion of an average employee's $10,000 annual health plan expense translates to approximately $595 per year per employee, or roughly $50 PEPM. Even after accounting for prescription drug spending, this cost remains around $40 PEPM. From a physician's perspective, the financial impact is equally stark: an EMR charging 7% of revenue means a primary care physician (averaging $1.4 million in annual revenue) or a specialist (averaging $1.6 million) could be paying an astounding $105,000 per year to their EMR vendor. This calculation suggests that a doctor might dedicate nearly one month of their annual work solely to cover EMR expenses, illustrating the profound administrative and financial exploitation within the existing healthcare system.

The speaker then introduces an alternative model, Direct Primary Care (DPC), as a "better way" to mitigate these costs and inefficiencies. Using Atlas MD in Wichita, Kansas, as a prime example, Dr. Bricker explains how DPC practices operate by allowing physicians to opt out of traditional insurance billing. Instead, patients or their employers pay a direct, recurring subscription fee, typically $50 per month. This model significantly reduces administrative overhead, enabling DPC physicians to earn substantially more (e.g., 35% higher take-home pay, reaching $308,000 annually compared to $228,000 for fee-for-service doctors). Furthermore, DPC physicians can see fewer patients (e.g., 8 per day versus 25) and dedicate more time to each visit (e.g., an hour instead of seven minutes), leading to improved patient care and satisfaction.

Dr. Bricker concludes by underscoring that administrative waste in healthcare is not merely a financial drain but also a detriment to patient access and quality of care. He posits that the substantial funds currently diverted to EMRs and other administrative processes could instead be utilized by physicians to provide free care to those in need, thereby fulfilling a crucial professional responsibility. The video serves as a compelling critique of the misaligned incentives and pervasive inefficiencies that characterize the current healthcare finance system, particularly those exacerbated by the revenue-sharing models of EMR vendors.

Key Takeaways:

• Hidden EMR Costs for Employers: Electronic Medical Records (EMRs) impose a substantial, often unrecognized, financial burden on employers, estimated at $40-50 Per Employee Per Month (PEPM). This cost is not a direct bill but is embedded within health insurance claims, making it largely invisible to employers.
• EMR Vendor Business Model: Many EMR companies operate on a percentage-of-revenue model, charging physician practices a significant portion (e.g., 7%) of their collected revenue. This incentivizes EMR vendors to encourage maximum fee-for-service billing, thereby discouraging value-based care or capitation models.
• Staggering Physician Costs: For individual physicians, EMR costs can be exorbitant, potentially reaching $105,000 per doctor per year based on average revenue figures. This implies that a physician might spend nearly one month of their annual work solely to cover their EMR expenses.
• Administrative Waste and Exploitation: The current healthcare system is plagued by significant administrative waste, where a large portion of physician-generated revenue (e.g., $1.25 million out of $1.5 million) is siphoned off by various administrative layers, including EMR vendors and billing services, before reaching the physician.
• Impact on Physician Income: While a primary care physician might generate $1.5 million in revenue, their take-home pay in a fee-for-service model could be as low as $228,000, illustrating the vast disparity caused by administrative overhead.
• Direct Primary Care (DPC) as an Alternative: DPC offers a viable alternative by allowing physicians to opt out of insurance billing and directly charge patients or employers a subscription fee. This model significantly reduces administrative overhead and aligns incentives.
• Benefits of DPC for Physicians: DPC physicians can achieve higher take-home pay (e.g., 35% more, reaching $308,000 annually) while seeing fewer patients (e.g., 8 per day vs. 25) and providing longer, more comprehensive visits (e.g., an hour vs. seven minutes).
• Reduced Overall Healthcare Costs in DPC: The DPC model can drastically lower the overall cost to the healthcare system for patient care. A DPC practice might bill $480,000 for the same patient panel that would generate $1.5 million in a traditional fee-for-service setup.
• Patient Access and Professional Responsibility: The pervasive administrative waste not only inflates costs but also negatively impacts patient access to care. Eliminating these inefficiencies could free up physician time and resources to provide pro bono care, addressing a historical professional responsibility.
• Misaligned Incentives: The percentage-of-revenue model for EMRs exemplifies misaligned incentives in healthcare, where the financial success of administrative vendors is tied to maximizing billing rather than optimizing patient outcomes or cost efficiency.
• The "Creaming Off" Effect: A substantial portion of the money spent by employers on healthcare claims is "creamed off" by various intermediaries and administrative services, including EMRs, before it directly benefits patient care or physician compensation.

Key Concepts:

• EMR/EHR (Electronic Medical Record/Electronic Health Record): Digital versions of a patient's paper chart, used by healthcare providers for clinical documentation, billing, and other administrative tasks.
• PEPM (Per Employee Per Month): A common metric in employee benefits and healthcare finance to express costs on a monthly, per-employee basis.
• Fee-for-Service: A payment model where services are unbundled and paid for separately. In healthcare, it gives an incentive for physicians to provide more services because payment is dependent on the quantity of care, not quality.
• Value-Based Care: A healthcare delivery model where providers are paid based on patient health outcomes, rather than the volume of services provided.
• Capitation: A payment arrangement where a healthcare provider is paid a fixed amount per patient per unit of time, regardless of how many services the patient uses.
• Direct Primary Care (DPC): A healthcare model where patients pay a monthly or annual fee directly to their primary care provider for a defined set of services, bypassing insurance companies for routine care.
• MLR (Medical Loss Ratio): The percentage of insurance premiums that an insurance company spends on claims and expenses that improve health care quality. The remaining percentage is for administrative costs, marketing, and profit.

Examples/Case Studies:

• Atlas MD (Wichita, Kansas): This practice is highlighted as an original Direct Primary Care model. It demonstrates how physicians can achieve 35% higher take-home pay ($308,000/year) compared to fee-for-service PCPs ($228,000/year) by charging patients a $50/month subscription fee and focusing on patient-centered care with fewer daily patient encounters.