Running head: BUSINESS PROPOSAL

Business Proposal

Maab Khalil

University Of San Diego

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Executive Summary

The Health Information Technology (HIT) has been advancing for the past two decades

replacing the manual and outdated paper medical records and financial billing system. This

progressive approval of health information technology (IT) is in the form of eClinicalWorks

electronic health record (EHR) system. eClinicalWorks automated solution can be the can be

beneficial at Heartland Health's primary practices. These benefits can advance Heartlands medical

record system by illustrating flowsheets to capture information and activities, capturing medical

billing transactions and recording them in the appropriate subsidiary journal, and communicating

financial information effortlessly. These features can improve Heartland Health management

efficiency and provide quality healthcare standard.

eClinicalWorks EHR systems competitive analysis exhibits a high rate in price

attractiveness, interoperability, and functionality compared to other top EHR systems in the

healthcare market. Its price tag includes an electronic medical record (EMR), Practice Managment,

eClinicalMobile, Patient Portal, and eClinalMessenger with no start-up costs. eClinicalWorks will

deliver the satisfaction and value that will help Heartland Health ensure an excellent quality of

care in practice and holding health care providers centered on patient care with lower costs.

For this to be successful heartland health must have a well-functioning organizational chart,

which will be beneficial to the core output of the team. The organizational chart of Heartland

Health consists of a Medical Director, Medical Doctor, two Nurses, a biller, two receptionists, and

five medical assistants. The Medical Director will oversee the clinical services and front office.

The clinical services delegate the medical assistants and the registered nurses, while the front

office, will take command of reception scheduling and billing. Heartland Health organizational

chart must depicts the model of how administrators are required to make decisions in the primary
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care practice. Technology specialist will be assigned to take charge of installing the software,

hardware, and maintenance of the system. EHR trainers will train staff to input medical records,

health records, physician notes, billing information, and drug prescription. An active leadership

role in the primary practice is significant to the success of the organization. Respect, motivation,

positive reinforcements, and the delegation of responsibilities to the staff are essential qualities for

the advancement of Heartland Health.

Installation of eCLinicalWorks EHR in the offices of Heartland Health will cost $44,200

in the first year and after implementation RVU's will increase by 1200 with additional revenues of

$54,000. The operating margin is 18.15% and the cost per unit for Year 1 is $36.83. The end

period cash flow after three years will be $71,200.

The economic advantage of healthcare information technology has seen tremendous

advances in healthcare organization’s (HCO). It holds commitments of diminishing adverse drug

events (ADEs), enhancing the efficiency of care delivery, promoting quality of care, lessening

costs, and conserving money over the longer term. For a successful implementation of this new

culture, an essential marketing plan should focus on five principals to be successful. Position the

product, tapping into the mind of the customers and healthcare providers, listening to customers

feedback, creating a simple slogan that will represent the product's identity, and tracking results

will support the foundation of a successful EHR system in the HCO. Healthcare leader should also

encourage patient awareness through enrollment patient portals to increase communication

between health care providers regarding the patient wellness and health. Cementing

eClinicalWorks EHR system with a large-scale survey to see the trends produced by the EHR

system will increase awareness and influence early adopters to spread this new product to the

laggards.
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The Economic Climate in Healthcare Organization

The United States (U.S) healthcare organization (HCO) is the result of decades of reform

due to the influence of health policy researchers and decision makers to provide a suitable

payment plan and quality of care to the public. One of the essential economic disparities between

HCO and other business is the way in which customers or patients pay for the service they

receive (Cleverly, 2018).

Most businesses use billed charged payment system, which presents customers with

quality healthcare services charged at a suitable price. Other HCO uses fixed price per unit

service, primary payment system, designed by the business and not the consumer. Until the early

1980's, cost reimbursement by Medicare was the most dominant form of payment for most

hospitals and other institutional providers. Also, state Medicaid plans paid hospitals through the

Historical Cost Reimbursement. Historical Cost Reimbursement has two essential components,

reasonable and apportionment cost. Reasonable cost is limiting payment by excluding specific

categories of cost in which the payers deems reasonable, and apportionment cost is a method in

which costs are assigned to a specific payer, like Medicare. Today, HCO are now using specific

service and fee schedule payment systems for consumers. Specific service system charge payers

through a defined unit of services, while, fee schedule system see payers and providers agree on

a fixed payment for specific services.

During the 2007-2010 recession period, hospital service expenditure dropped to a

historically low rate (Gloria J. Bazzoli, 2014). The recession influenced hospital to cut their cost

of producing services. The impact of the recession caused a tremendous divide between the

financially weak hospital and financially strong hospitals. The loss of employment and health

coverage from customers caused a financial strain to HCO. There are also many factors that
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caused a strain in hospital performance, like, poor management leading to constant financial

strains, reduction of financial resources to support the improvement of health information

through technology, and the support to manage financial risk. U.S Hospitals are now using the

Centers for Medicare and Medicaid Services Healthcare Cost Report Information System (CMS

Form 2552) data to improve the efficiency of care (Jason Turner, 2015). The CMS data also give

hospitals the framework to evaluate the quality of earnings by using the DuPont analysis.

Increasing the return on equity (ROE) through profit margin, total asset turnover (TATO), and

capital structure. The analysis stimulates overall profitability to an HCO.

With the recent improvement of healthcare efficiency and profitability, many consumers

have seen a surge in drug costs. According to a study (Ana D. Vega, 2016), the rise of drug cost

is due to manufacturer competition, industry consolidation, and capitalization of generic "me-

too" drugs. This change led pharmacy benefit managers (PBM), health plans sponsor, and retail

pharmacies to find other avenues to increase profit at the expense of the consumers.

U.S healthcare has seen a lack of physicians, specifically, in Hawai'i due to concerns of

low payment that has become crucial. A report from FAIR Health, a company that tracks private

insurance reimbursement rates that Hawaii has the lowest reimbursement rates and that

physicians are reimbursed significantly lower than cities with the similar cost of living by both

Medicare and private insurance. Meanwhile, Nebraska has the highest physician reimbursement

rates in the U.S. To fix this variation in payment; the U.S health care have revised payment

methodologies that increase pay for services, Geographic Prices Cost Indices to adjust payment,

and applying the 10% Medicare Bonus Program for physicians working in areas of need.
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Product and Services

The Health Information Technology (HIT) has been advancing for the past two decades

replacing the manual records system embedded in the healthcare sector. According to Wheatley

(2013), this sluggish but progressive approval of health information technology (IT) nationwide

warrants a new era in the healthcare industry. Heartland Health primary practice can benefit from

these HIT advance in it medical record system, illustrating flowsheets to capture information and

activities, capturing medical billing transactions and recording them in the appropriate subsidiary

journal, and communicating financial information effortlessly. The product and service that can

perform all these criteria's and improve Heartland Health management efficiency is

eClinicalWorks's electronic health record (EHR). It is the latest development of EHR's,

remodeling healthcare through comprehensive documentation, in-depth knowledge, and is the

industry leader in excellence and satisfaction. eCLinicalWorks cloud-based EHR was designed

to meet the challenges of value-based care. Health care providers will enjoy the ease in the

documentation, interoperability, access to patient data anytime and anywhere; using the web

browsers, smartphones, and tablet devices. It also offers pioneering solutions for Patient

Engagement and Population Health, generating cycles of care that help providers adequately

recognize patient needs, assess risk, and encourage more efficient processing and results. Baker

et al., (2018) stated that technology and patient engagement work together and it will make the

patient be an active participant in his or her healthcare. Streamlining workflows and offering

flexible and customizable resolutions for documentation fulfill a perception of connected

Heartland Health. With a no-cost on-demand activation, providers can exchange knowledge with

Epic and Cerner hospitals through the CommonWell Health Alliance and Carequalit leading to

sound clinical decisions. eClinicalWorks integrated telemedicine solutions offer patients the
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choice of an in-office visit in the comfort of the patient’s home. It also expands on the regular

visit by allowing other healthcare providers and medical experts around the globe. The following

table shows a competitive analysis between eClinicalWorks and its competitors.

Table 1

Competitive Analysis

Buying Criteria Cerner Epic eClinicalWork

Price Attractiveness M L M

Functionality H M H

Interoperability L M H
Note. L = Low, M = Medium, H = High.

The above table shows a descriptive analysis of the buying criteria for an EHR system.

The criteria include Price Attractiveness, Functionality, and Interoperability. The analysis rates

eClinicalWorks and its competitors from High (H), Medium (M), and Low (L). The analysis

presents eClinicalWorks and Cerner price more attractable than Epic due to its high costs. The

eClincalWorks price tag includes an electronic medical record (EMR), Practice Managment,

eClinicalMobile, Patient Portal, and eClinalMessenger with no start-up costs. The second

analysis in functionality or easy usability indicates that both Cerner and eClinicalWorks are rated

high. Lastly, eClincalWorks is rated a high in the interoperability criteria compared to both

Cerner and Epic. eClinicalWorks will deliver the satisfaction and value that will help Heartland

Health ensure an excellent quality of care in practice and keeping healthcare providers centered

on patient care with lower costs.

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Organization, Productivity, and Labor

Heartland Health is a primary care practice in the Southwestern United States. It consists

of a medical director, medical doctor, and two nurse practitioners, their objective is to provide

outpatient medical care for residents. This report will give an overview of the annual cost

assumption, the relative value scale (RVU) cost, the one-month expense budget, and the one-

month productivity report at Heartland Health. This overview will bring an understanding of

Heartland Health costs of doing business and their productivity.

The annual cost assumption in provider time, which includes annual salary payment of a

medical director, a medical doctor, and two nurse practitioners will cost $690,000 in provider

time. Technology cost is $30,000, which contributes to the acquisition of two electrocardiograms

(EKG), eight computers, two copiers, two ultrasound machines, and two electronic scales.

Supply costs of $25,000 which comprise of paper, tongue depressors, bathroom, and exam

supplies. Heartland Health also has an indirect cost in financing five information technologist, a

biller, two receptionists, and four medical assistants. Leasing two office suites with utilities per

suite will result in a total of $358,000 in indirect cost. Hence, the total annual expense will be

$1,106,000.

The RVU is a method of budgeting used to calculate the resource consumption, the basic

unit of service in Heartland Health's RVU is 15-minutes office visit. A provider works 40 hours

per week and a 1 hour for lunch breaks; this will give 35 hours of work time per week. Each

health provider has two weeks of vacation time per year, and the remaining 50 weeks will be

multiplied by 35 hours producing a work time of 1,750 hours annually. For monthly, 1750 hours

will be divided by 12 months delivering 145.83 hours per month per provider. With four

providers it will be 583.32 hours per month. Multiplying the four provider RVU's with 583.32
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hours per month will give a product of 2333.3 of RVU's per month. To obtain a monthly

expense, $690,000 divided by 12 will equal $57,500, 2333.3 RVU then divides this. The average

expense for provider time per RVU is $24.64 per month. Technology, supplies, and indirect cost

RVU per month are $1.18, $0.89, and $12.79, respectively. The Costs and RVU Development

table in the right column show that the costliest component for a visit is the provider time while

the least costly component is the supplies.

When examining the Heartland Health one-month report, the provider time actual cost

was found to be $56,000. The provider time budget was $57,508.50, and this gives a variance of

$1,508.50 which is favorable. The actual technology cost was $3000 compared to its budget of

$2752.94. This symbolizes an unfavorable variance of $247.06. Actual supply cost in the

expense budget was $2,588, and the budget was $2,076.50. The supply cost went over the budget

by $511.50, an unfavorable variance. The actual indirect cost was $28,965 with a budget of

$29,839. The indirect cost indicated a favorable variance of $874. The unfavorable variance

could be due to maintenance fees in the technology costs and an ordering more supplies than

needed. The total actual one-month expense was $90,553 with a budget of $92,270. This

financial show a favorable variance. The $1,717 difference can be used in purchasing new

services to improve the primary care.

Dissecting Heartland Health's one-month productivity report in both Heartland South and

North offices, the finance shows that the actual total RVU was 2277 compared to the RVU

budget of 2333. This unfavorable report could be due to a hurricanes or natural events that

caused patients not to come to be seen by providers.

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Leadership

In a successful organization, whether small or significant, top management leader will

always highlight its achievements of having a well-functioning organization control system. This

control system is essential to understanding the complex blueprint of the entire organization. In

the perspective of Heartland Health, a well-functioning organizational chart can be beneficial to

the core output of the team. It is an important factor in the supervision of the organization and

hence the structure of the organization will affect the financial management of Heartland Health.

The organizational chart of Heartland Health consists of a Medical Director, Medical Doctor,

two Nurses, a biller, two receptionists, and five medical assistants. The Medical Director will

oversee the clinical services and front office. The clinical services delegate the medical assistants

and the registered nurses, while the front office, will take command of reception scheduling and

billing. Heartland Health organizational chart depicts the model of how administrators are

required to make decisions in the primary care practice.

For the electronic health records (EHR) system to be a success at the primary practice,

potential hiring is essential to the success of eClinicalWorks' EHR. Technology specialist will be

assigned to take charge of installing the software, hardware, and maintenance of the system.

EHR trainers will train staff to input medical records, health records, physician notes, billing

information, and drug prescription.

An active leadership role in the primary practice is significant to the success of the

organization. Respect, motivation, positive reinforcements, and the delegation of responsibilities

to the staff are essential qualities for the advancement of Heartland Health. The medical director

will delegate clinical response to the health care providers; each one will be responsible for there

workflow process. It will improve the working relationship between doctors, nurses, and medical
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assistant, resulting in the success of the clinical department. The medical director along with the

medical staff and the front office will review the eCLinicalWorks EHR proposal, providing

views on the benefits of the system and how it will improve the efficiency of the practice. The

front office billing department will look into the financial budget to implement, install, and

maintain the EHR system. Once a financial budget becomes sound, the Medical Director will

approve the budget for the new EHR system at Heartland Health.

With the implementations, Heartland Health will become a striving primary practice in

the community. Providing quality, efficient, and cost-effective care that will be a vital role model

to all small healthcare practices in the United States. Heartland Health strategic vision plan is to

provide the best healthcare service in the country and its mission is to be the number one

healthcare primary practice in the Southwest United States.

Several factors will influence Heartland Health goals by the strength, opportunity, and

threat (SWOT) analysis. Heartland Health strengths are its Healthcare providers presence in the

community, each with over 15 years of experience in healthcare, and its geographic location in

the community. Its weakness is the lack of an EHR system that will significantly improve the

billing, record storage, and reducing cost in practice. Another weakness is the location of offices

being 14 miles apart and leased in strip malls with other five businesses. Heartland's

opportunities come in the announcement of Yamaha Industries, bringing in 3,000 full-time jobs

in the community. This will result in the increase in work and billable at the primary practice;

Heartland Health will then be the sole health care provider in the community. Heartland's threat

is the emergence of a successful and popular HMO located in a town nearby; another threat is the

downward adjustment of Medicare reimbursement because they cannot demonstrate meaningful

use of certified EHR technology.

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Electronic Medical Record 3-Year Financial Prospectus

Revenue and Expense Assumptions

1. Sales/Revenue—First year’s annual volume increase is 100 RVUs per month x 12 months =

1200 RVU/yr. Revenue is RVU= $45. 1200 x $45 = $54,000. Second and third year annual

increases in patient visits of 80 visits a month= 960 RVU/yr. x $45 = $43,200. Similar electronic

medical record implementations experienced an increase in the volume of patient office

visits/revenue due to ability to send automatic text messages reminders of visits and seasonal

reminders of flu shot.

A study (Howley et al., 2014) conducted to see the long-term financial impact of

electronic health records implementation show that reimbursements significantly increased after

EHR implementation even though the number of patient visits decreased over the 2-year

observation period. The application was also associated with an increase in ancillary office

procedures, for example, drawing blood, immunizations, wound care, and ultrasounds.

2. Expense—sum of lines 5-9

3. Operating income—sales/revenue minus cost/expense

4. Operating margin—divide operating income by revenue x 100 to obtain percent

Expense Assumptions

5. Salaries and wages--Training and productivity loss; 4 providers 40 hours training each x

$200/hr. = $32000. 6 receptionists/medical assistants 40 hours training x $15 = $3600. 1 biller 40

hours training x $15 = $600. $32000+$3600 +$600=$36,200 Informatics technician training

required—No additional.

6. Materials and supplies required—no additional

7. Technology—contract services annually--support for computerized technology is $8000

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8. Depreciation and Amortization—none {use when recording the depreciation of an asset [e.g.

land, building or equipment (computer)] reducing their historical cost by accumulated

depreciation (refer to page 264 in textbook for more details) Amortization schedule records the

principal and interest contained in each payment.}

9. Interest—none (use when loan is involved and cost of interest must be considered)

10. Total expense— sum of lines 5-9

Net Income Assumptions

11. Net Income—sales/revenue minus the total expense

Cash Flow Report Assumptions

12. Net income—repeat net income from line 11

13. Depreciation—repeat line 8

14. Borrowing—repeat line 9

15. Total sources—add lines 12-14

16. Capital purchasing—software $9,000 for cash purchase; no building; no equipment

17. Working capital—none

18. Total Uses—add lines 16 and 17

19. Cash at Beginning of Period—none

20. Net Cash activities—total sources minus total uses

21. Cash at Ending of Period—add line 19 and line 20

Volume/Productivity Report Assumptions

22. Volume statistic—RVU = 15 minutes of office time with provider; the volume indicator

relates to the sales/revenue: Year 1: 1200, Year 2: 960, and Year 3: 960

23. Cost per unit—total expense divided by RVU

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Table 1 Heartland Health: Electronic Medical Record 3-Year Financial Prospectus
Year 1 Year 2 Year 3
1.Sales/Revenue 54,000 43,200 43,200
2. Expense 44,200 8,000 8,000
3. Operating Income 9,800 35,200 35,200

4. Operating Margin 18.15% 81.5% 81.5%

Expenses
5.Salaries and Wages 36,200 -- --
6. Material and Supplies -- -- --
7. Contract Services and Fees 8,000 8,000 8,000
(technology)
8. Depreciation and Amortization -- -- --
9. Interest -- -- --
10. Total Expense 44,200 8,000 8,000

11. Net Income 9,800 35,200 35,200

Cash Flow
Year 1 Year 2 Year 3
Sources
12.Net Income 9,800 35,200 35,200
13.Depreciation -- -- --
14.Borrowing -- -- --
15.Total sources 9,800 35,200 35,200
Uses
16.Capital purchasing 9,000 -- --
17.Working capital --
18.Total uses 9,000 -- --

19.Cash at Beginning of Period -- 800 36,000

20.Net Cash Activities 800 35,200 35,200
21.Cash at Ending of Period 800 36,000 71,200

Volume
Year 1 Year 2 Year 3
22. RVU (Volume statistic) 1200 960 960
23. Cost per unit 36.83 36.7 36.7
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Financial Summary

The health information technology project proposal is for the implementation of an

electronic medical record (EMR) in the offices of Heartland Health (Table 1). In the first year,

RVUs are forecast to increase by 1200 with an additional revenue of $54,000. The first year’s

operating expense of for the EMR installation is $44200. The operating margin is 18.15%. The

cost per unit for Year 1 is $36.83. A capital cash purchase of 9000 is required. Cash at ending of

a 3-year period is 71,200.

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Marketing

The evolution of the health care system in the adoption of electronic health records (EHR)

trends have sprung trends in the healthcare organizations (HCO). With the implementation of EHR

HCO have seen an increase in capabilities in the workplace. It allows recording and retrieval of

the essential elements of medical records, like, patient demographics, encounter notes, patient

medication, patient complaints, system review, past medical history, problem lists, procedure

notes, and lab notes. This feature allows management of results of laboratory and imaging tests,

prescribing drug, tracking immunizations, and using clinical guidelines and protocols (Gans et al.,

2005). These features will ultimately lead to benefits to the practice. These benefits are the

reduction of medical records staff expenses, medical records storage costs, transcription costs,

medical records transportation costs, and physician recruitment. EHR system will improve the

access of medical record information, improve workflow, increase patient communications,

increase accuracy for coding evaluation and management procedure.

The economic advantage of healthcare information technology has seen tremendous

advances in HCO. It holds commitments of diminishing adverse drug events (ADEs), enhancing

the efficiency of care delivery, promoting quality of care, lessening costs, and conserving money

over the longer term. With these advantages, there is a disadvantage concerning the cost of

purchasing the EHR systems, installation, and maintenance. The average EHR system ranges from

$18,000 to $35000 with maintenance and installation of $8,000. It is essential to assess the cost

versus effectiveness in order to determine the value the EHR system will give to any healthcare

practice. Several studies reviewed (O'reilly et al., 2011), found HIT interventions offer cost

advantages despite their acquisition costs.

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Electronic health record (EHR) practices have the potential to modify the healthcare system

from the paper-based industry to one that employs clinical and information to assist providers in

performing a higher quality of care to their patients (Menachemi & Collum, 2011). The use of

reducing the unnecessary use of tests or the need to mail hard copies of test results to different

providers. By presenting patient information more promptly available, EHRs lessen costs related

to chart pulls as well as supplies needed to maintain paper charts. Recent studies (Menachemi &

Collum, 2011) have shown that having an EHR as opposed to a paper file can result in decreased

transcription costs through point-of-care documentation and other structured documentation

systems. In order for this to be successful HCO should encourage health information technology

(HIT) champions to influence their organization and healthcare practices, to bring about a change

in the workplace and inspire the lagers to adopt the new HIT culture.

For a successful implementation of this new culture, an essential marketing plan should

focus on five principals to be successful (D'Andrea, 2017). Position the product, tapping into the

mind of the customers and healthcare providers, listening to customers feedback, creating a simple

that will represent the product's identity, and tracking results will support the foundation of a

successful EHR system in the HCO. The Market campaign must include a local television

advertisement that promotes the product and services, and a 2-minute facebook advert add that

increase the awareness of Heartland's Health new EHR systems, and a letter sent to the community

inviting them to a question on the product and services. Reliable email messaging is part of a

national transformation initiative in the United States to encourage new standards of care that

further enhances patient-provider communication (Haun et al., 2015). These steps will increase the

market awareness of our product and would increase the peer pressure on the laggards by the early

adopter.
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Reference

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