The hidden costs of building digital engagement tools

As health systems shop for digital engagement tools, they frequently ask: would it be cheaper to build instead of buy? In this two-part series, Notable Head of Research Carle Falk breaks down how to weigh the decision. This first article outlines the potential costs associated with building a digital engagement solution. The second article will establish a framework to evaluate vendors when buying.

Weighing the costs of an EHR-first approach

The margin pressure on health systems today is nearly unprecedented. Fitch, the ratings agency that evaluates the financial risk worthiness of not-for-profit hospitals, recently reported that H2 financial performance expectations are bleak, driven in large part by rising labor expenses. Worse, some are seeing that pandemic-related discretionary demand is weakening in the face of inflation and the squeeze on patient out-of-pocket funds. It has never been more urgent to eliminate barriers to patient access. But these microeconomic challenges also raise the stakes for every spending decision. In this landscape, many health systems are investing in digital engagement strategies to alleviate the staff burden of registration and scheduling. 

The EHR remains an invaluable digital record of clinical activities. However, it comes with significant hosting, support, staffing, and training spend, amounting to more than seventy dollars per ambulatory visit in continuous operating costs (according to Notable’s analysis of publicly available spending data). No surprise, therefore, that executives look to maximize EHR ROI and leverage every capability. However, it's important not to fall into the 'sunk cost' fallacy — executives should still undertake a 'build vs buy' analysis when considering digital engagement tools that could extend their EHR's capabilities. Here we will review key considerations of choosing to “build” digital engagement using the existing EHR versus buying a best-in-breed solution.

Calculate all costs, including indirect and ongoing costs

In any build analysis, it is essential to weigh both the upfront as well maintenance, direct and indirect costs associated with an investment. When expanding EHR digital engagement capabilities, consider these elements:

Direct costs

• Hardware (if required) — e.g., on average, kiosks cost $3,000 per
• Licensing (if not included) — fully new modules will likely come with SaaS hosting fees; adding capabilities to existing modules may not
• EHR certified configuration consultant(s) and EHR certified analysts (2+) — most new capabilities require at least 10 months of configuration work
• EHR certified FTEs — to support the launch and ensure adoption and use of the capabilities over time
• Investments in web design or printing — to ensure patients can find and use portals

Indirect costs

• Productivity implications for non-IT back-office staff — if the capability is not fully automated and added data entry, reviews, or submissions are required
• Productivity implications for non-IT front-desk staff — as the patients transition to using new systems and the organization adapts to new workflows

Avoid underestimating the ongoing staff required to support EHR functionality

While executives expect build and configuration costs to spike during initial rollout, many underestimate the ongoing staff investment required to support systems over the long-term. 

Case in point — pre-visit registration is critical to digital engagement because it enables the organization to capture and confirm key administrative, financial, and even clinical data before the patient arrives. Every department will have its own approach to digital registration that includes custom forms that are continually adapted. 

Consequently, it is common for health systems to have dozens of digital questionnaires in their development queue. In fact, the greater the organizational complexity (number of specialties) and the higher the digital engagement goal, the faster and deeper the queue grows. At one health system, already a top quartile performer on EHR digital engagement, a team of a dozen FTEs (at a $75,000 starting salary each) could not adequately meet scheduling, electronic check-in, questionnaire requests, communication, and regulatory needs day to day. That is one FTE per 200K visits. The digital forms queue alone included nearly 40 new requests with a 6- month wait before a new project could even start. 

This stands in contrast to “buying” a solution, wherein the technology partner will often provide deployment, maintenance, and ongoing upkeep all as one fee. This allows for a much more predictable total cost of ownership and unburdens you from the cost of servicing each additional questionnaire, module, and outage with an internal team.

Turnover and high labor costs make relying on staff fraught

Worse, even entry-level EHR certified talent is in extraordinarily high demand. Once certified many of these staff find they can earn significantly more as consultants or working in health tech. Consequently, turnover is high. The cost of replacing individual talent can range from ½ to 2 times salary, not counting lost institutional knowledge, added travel expenses to support new staff training and certification, and the impact on team morale. 

At a time when labor costs grow faster than revenues, any strategy reliant on recruitment and retention of skilled talent should give pause. Every day health system executives share concerns about growing vacancies across the enterprise, both clinical and administrative. Search any local market and you will see dozens to hundreds of open positions for talent to support administrative or technological needs. Digital patient engagement investments that require human support are, in essence, not digital engagement. 

Don’t lose sight of outcomes and ROI when evaluating costs

Digital patient engagement should solve multiple pain points. 

First, it should simplify and streamline how patients access information and care. Patient portals have the potential to make the medical record easier to access. Patients can visit your website, sign into your portal, and view clinical results and physician notes.  But it is a passive system — the patient must first create a password-protected account to use the digital record, which may lead to low utilization rates.

Second, any digital patient engagement solution should be able to demonstrate it can, in fact, engage patients. That is the measurable return on investment. We speak with many systems that struggle to get past 10% digital registration through their patient portals. 

Third, set a standard or target for digital engagement and continuously measure to see if your chosen strategy is delivering the desired results. Healthcare should be looking to out-of-industry consumer check-in rates as a guide. In air travel, in 2020 it was predicted that more than half of air travelers globally would move to online check in. In hospitality, hotel registration vendors boast rates of online check-in before arrival over 75%. In 2020, over 90% of millennials expressed interest in mobile phone check-in at hotels. Outside of healthcare, it is routine that these check-ins include identity verification and financial transactions and even public health screens (e.g., COVID vaccination status). Healthcare needs to achieve similar standards.

What are the pain points for patients and your system that you want digital engagement to alleviate? What is the universe of patients you need to engage — not just those with portal accounts? Are you defining engagement in a useful way, counting only actions that accomplish a specific task — rather than counting a single portal log-in as engagement? 

Why should healthcare systems expect a lesser result than any other industry? Last, why are health systems spending millions to “build” EHR-embedded solutions that don’t engage patients as they have come to expect?  

When building digital engagement tools, use this framework as a checklist to avoid compromising on outcomes. The answer to all the following questions should be yes. 

• Will the solution engage patients across multiple channels — email, mobile phone, portal without a username and password?
• Is the solution fully configurable — quickly accommodating differences between care settings and specialities? 
• Will the solution be easily incorporated into staff workflows, without cost-prohibitive trainings and extensive change management?
• Will the solution deliver digital engagement rates that match consumer engagement rates?

In our next post, we will provide a framework for making a “buy” decision to serve digital engagement needs.