Report Supporting Purchase of an
Executive Summary
The present report provides the support and justification for the purchase of an electronic medication administration records (eMAR) system for the hospital. Medication errors are a serious concern within the business of healthcare and information technology is now available to address the issues causing many of the more egregious problems in this area. In particular, eMAR systems have proven to increase the chances of the right patient receiving the right medication in the right dose through the right route at the right time. These aspects of patient care are fundamental to high quality and are too important to remain compromised when the means of addressing the issues are known to management and available. This is why it is so important that decision-makers seriously consider this capital expenditure at this time.
The proposed system would comprise hardware, software, and networking components. The hardware would be primarily tablet computers and a scanning system present in the patient’s rooms. The system will preferably be wireless and networked. Patient intake and the pharmacy would also require printer systems for the barcodes. Two possible choices for the software required include the eMAR system as an off-the-shelf system or as a software as a service (SAAS) lease. Importantly, the software will provide warning and record-keeping functions that will provide data that management can use in retrospect to evaluate the return of the investment in the system. This report recommends hospital-wide implementation of the new system to capture the most return possible on the investment in the system and its installation.
Implementing an eMAR system within the hospital will address a number of goals of the organization. Specifically, as mentioned above, an eMAR system will improve quality of patient care that the hospital provides. Furthermore, from an organizational standpoint, the system also provides an employee oversight function that could be used to additionally route employee training and resources in a direction more beneficial to the organization that what might occur without the system. Having such a system also meets standard of care and reputational goals of the hospital. In addition, an eMAR system will also address many management goals such as quality assurance, employee development, and increased revenue. In particular, a primary benefit and the point of greatest result on the finances of the hospital is the avoidance of adverse medication events (ADE) that in turn accrue as significant monetary savings to the hospital.
Acceptability of the project is a positive aspect for acceptance. Although the scope of impact is large, the majority of the long-term acceptance factors are positive for all three stakeholders: physicians, hospital employees, and the patients/community. There will be initial issues with change and training, however, good planning and a step-wise implementation will help to address those concerns. As the hospital is a relatively late adopter of this technology, the one benefit to this delay is that the systems have had a number of years to mature so usability of the system right out of the box should be high. Companies providing this service also will have several years of experience supporting hospitals and their conversions, so the transition support should also be relatively skilled. These factors could increase the chance of a smooth transition between the paper and electronic systems.
There are several important risks with this project that management would need to address. First, because prescribing and administering drugs is a basic function within the hospital, there will need to be a back-up system in place during system downtimes or complete electrical failure. One option is to leave the paper system in place for such an event. Alternatively, management could consider investing in an off-site back up system. Second, particularly if decision-makers select a SAAS or cloud-based system, patient confidentiality concerns will be part of both the product review and system testing after implementation. This additional risk should be part of what management considers when making the software selection upon approval of the expenditure.
Based on past experiences by other hospital organizations implementing eMAR systems with similarities to the one recommended, this report provides a budget of approximately $600,000 for the five-year project. Upfront costs are estimated at $300,000 and recurring costs of about $60,000 per year for a total of $300,000 over the course of the lifetime of the system. However, as shown in detail in the financial feasibility section, current estimates predict a very robust return on investment for these expenditures. In particular, based on the experiences of other organizations using an eMAR system, the greatest positive influence on the hospital’s finances is the expectation of avoiding approximately 240 adverse drug events a year.
Given that a highly conservative estimate of cost per adverse event to the hospital is $4600 this factor alone provides an estimated $1,104,000, or for ease of reference, approximately $1 million of avoided costs per year, for a total savings of about $5 million during the entire project. As detailed in the financial feasibility section, when all costs are taken into account, the calculations yield a significant average positive return on investment of approximately $954,420 per year. Additionally, a similar project that was developed in-house and thus had significantly more upfront costs than the currently proposed system, broke even within one year of implementation.
The present report provides a case for the implementation of an eMAR system with bar-code capabilities in our hospital. Although there are current ongoing efforts to avoid medication administration errors, there is evidence that even the best of paper-based systems still have multiple points of weakness where problems can occur. Most, if not all, of these problem areas can be addressed using an e-MAR system such as the one proposed. Such a system will address over-arching organizational goals such as high quality patient care and employee oversight. It will also address many management goals such as quality assurance, employee development, and increased revenue as provided in the financial feasibility section. Admittedly, the purchase and implementation of an e-MAR system will be expensive in both money and time invested, but the ultimate goal of greatly improved patient safety, quality assurance, and avoided ADE costs provided by this information technology system justifies this expensive expenditure. Thus, this report recommends the purchase and implementation of an eMAR system as the right course of action from an organizational, management, and patient service viewpoint.
Three detailed sections supporting this recommendation follow this executive summary. These three sections are project overview including needs and goals, project acceptability and risks, and project economic feasibility.
Section I – Project Overview
Experts estimate that medication errors in the United States cause approximately 7000 deaths annually and cost approximately $2 billion in added health care spending (Paoletti et al., 2007). Improving the safety outcomes of medication-use processes is a means of addressing this issue. Careful and planned use of information technology is a proven approach to solve a majority of medication errors made with paper-based systems (Paoletti et al., 2007). Computer-based systems have been found to provide much better compliance with the “five rights” of medication administration: right patient, right dose, right route, right time, and right medication (Hook, 2008). Accordingly, the present paper summarizes research and justification for the purchase and implementation of an eMAR with a bar-code component in this organization. The current technology used is assumed to be a manual, paper-based, five-day MAR.
Relation of System to Needs of the Hospital
Decision-makers can understand the need for an eMAR system within the organization through evidence of the likely current error rate for medication administration. A pre-implementation study for an eMAR system within a similar hospital setting revealed a total of 188 errors over a five-day period (Paoletti et al., 2007). There is no basis for assuming that the error rate within our hospital is particularly better or worse than this evidence-based rate. In particular, Paoletti et al. classified the majority of the errors in their pre-implementation study in a first category of wrong time (15 of 188), or late administration. However, a second category of errors included problems such as omission (15), wrong technique (14), wrong dose (6), extra dose (5), wrong medication (3), wrong route (1) and wrong formulation (1) (2007). The proposed new eMAR system targets this second category of errors and would enhance the economic environment of the hospital most directly.
Description of the Proposed System
Figure 1 is a projected workflow for the system recommended for purchase. The new eMAR system would require both hardware and software purchases. Software needs would be the eMAR program itself and any supportive bar-code aspects not included in the eMAR system. Decision-makers should review programs available from commercial providers for conformity with the needs of the hospital for this project. Unless there are highly specialized needs within the hospital, an off-the-shelf software system would be the best choice, although customization could be available if needed. Another possibility would be software as a service (SAAS), therefore a cloud-based system. Whether a software or cloud-based system is selected, decision-makers should consider including technical support time from the software provider within the purchase contract. An estimated budget for this project would be approximately $500,000 and could be more with specialized software adaptions. If decision-makers select an SAAS solution there may be less initial up-front installation costs, but licensing fees will be an ongoing expense that decision-makers will need to budget.
Some of the hardware of the required system would include computer terminals or tablets that have attached scanners for the bar-coding aspects. The ideal situation is one computer/tablet for each patient room, as rolling terminals have proven an issue with workflow and storage space issues. The current research supports having a budget to cover this situation. Other hardware needs are for producing labels for both patient bracelets and drug containers located at patient intake and the pharmacy, respectively. Decision-makers should consider a wireless, networked implementation of the system, as this would help relieve the need for wires to connect this system, promote more efficient connections between the components of the system, make the system much more portable, and result in less space issues.
One key component of the eMAR system would be immediate real-time warnings that would alert medical personnel to discrepancies when the personnel enter the various actions into the system during medication administration. The real-time alert would function to stop activities that contradict what personnel had placed in the patient’s record as prescribed. A second key component of the eMAR system would be a historical reporting function of the number of errors caught, thus justifying the presence of the system. One possible historical report would be a prevented medication error report that would show times when the system displayed warning notices to the nurse or other provider administering the medication, but the nurse made changes to bring the administration into compliance with the order. A second would be a possible medication error report that would show where the personnel did not use the system correctly, that is, the system displays a warning error but medication administration continued (Paoletti, 2007). Both of these reports will provide valuable data concerning the benefits of the newly implemented system.
Ultimately, the hospital would implement the proposed eMAR application across all units within the hospital. By aiming for a hospital-wide application, the reduction in risk and improved patient outcomes discussed more extensively below would have the greatest likelihood of being achieved.
Management and Organizational Goals Met by System
This system increases quality insurance, a primary management goal. Studies have shown that utilizing an eMAR system reduces medication administration errors (Paoletti, 2007), particularly with the real-time conflict alert function, as discussed above. The system essentially provides an added layer of review of medication administration not subject to work-related stress, hectic environments, or distracted attention that can occur with human oversight. The use of such an eMAR system also provides employee development, a second management goal. Over time, medical care is becoming more dependent on information technology tools and employees within the medical system need the skills to use these tools. Implementation of this system within the hospital will provide its employees the training and experience with a tool that has become widespread within the medical industry.
This system also has economic impact through reduced malpractice risks to the hospital. These systems target the type of errors that commonly become the basis for malpractice lawsuits (Paoletti, 2007). Reduced malpractice costs will increase revenues for the hospital, a further management goal, through reduced malpractice insurance premiums and any other malpractice costs incurred. Malpractice also has impacts on hospital reputation that can be avoided if the errors do not happen. Finally, it is also likely that a perception that our hospital utilizes the latest technology to support patient safety and quality of care will increase referrals to the hospital, thereby also increasing revenues.
Figure 1. Workflow for eMAR (Ola-Weissman, 2013).
Section II – Project Acceptability and Risks
Acceptability of a particular capital expenditure in the hospital organization context focuses on three primary stakeholders: privileged physicians, hospital employees, and the community/patients (Cleverley and Cameron, 2007, pp. 405-408). This analysis examines the probably reactions with rejection or acceptance of the proposed electronic medications administration record system project (eMAR) for these three groups of stakeholders.
Physicians
Therefore, the next step in the acceptability analysis is an examination of the intensity of the possible effect on physician attitude of acceptance or nonacceptance. As eMAR systems are becoming the accepted norm for hospitals, it is likely that if the project is not accepted, physicians would be disgruntled at the very least and could discuss the lack of an eMAR at this organization with the community and other physicians. In any case, it is probable that physicians will interpret lack of support for the project that the hospital is not interested in maintaining a standard of care that is becoming expected. If the eMAR project is accepted it is possible that physicians could increase practice at the hospital, and may select this facility if the patient would be anticipated to have complex drug administration needs. Again, at the very least, a successful implementation of the eMAR would impress the doctors and they would likely discuss the project favorably in the community and with other physicians (Cleverley and Cameron, 2007, p. 406).
Hospital Employees
If the eMAR project is accepted, there is likely a mixed reaction within the employees. The same group that would’ve been disappointed with rejection of the project will be highly pleased, as their goals of additional training and perceived ability to increase quality care with the project will be met. In contrast, there will be a subset of employees unhappy with the project because of the certainty of change in their routine. However, all attempts will be made to have implementation be as smooth as possible, and the ultimate effect of similar projects in other hospitals has been significantly positive, as will be discussed in much more detail in the brief literature review below.
Patients/Community
A final stakeholder in this project is the hospital community and patients that use the facility. Their perception of the project if it is not accepted would likely be limited to those that have a different experience at another hospital that has the eMAR system, as without that knowledge the fact that the organization does not have this resource would not be a consideration. Furthermore, if the project is accepted, at least certain groups within the community would be highly pleased and with some public relations effort, the system could receive a widespread positive effect on the reputation and image of the hospital (Cleverley and Cameron, 2007, p. 406).
Use at Other Organizations
Decision-makers can reduce the uncertainty in this acceptability analysis by reviewing literature reporting the results of implementation of similar systems within hospital organizations. In particular, a selection of three peer-reviewed publications will be summarized. Moreland et al. found that an eMAR system significantly improved “overall nurse satisfaction and perceptions of improvement in workload, teamwork, east of documentation, drug information accuracy, and patient safety” (2012, p. 97). The only studied factor that did not improve with the system was communication between the nurse and the pharmacy. Reporting on an implementation of an internally developed eMAR system by Brigham Womens’ and Childrens’ Hopsital, Maviglia et al. disclosed a significant reduction in adverse drug events, estimated at 517 averted events annually, and a financial return on investment (ROI) with the breakeven point occurring within the first year of operation after a three year development period (2007). It should be noted that the off-the-shelf technology no longer requires such long-term development time before implementation.
Finally, a survey-based publication records a positive attitude toward eMAR systems by nurse users, but concerns about usability are also discussed (Marini, Hasman, Huijer, and Dimassi, 2010). As technology overall has improved greatly between June 2007, the time of the survey and the present, it is likely that these usability issues have been addressed in the currently available software and the general positive attitude even in the face of technological difficulties is encouraging.
Risk and Compliance
Projects of this type have very important risks that management needs to address. A first risk management must take into account is having back-up systems during system failure. As the administration of medication is a required function within the hospital, there will need to be a contingency plan for system failures that will occur. Possible plans include having a redundant system in place that can be accessed if needed, or the selection of software as a service (SAAS) that shifts the back-up plan burden to the service provider. Another option would be to utilize the current paper-system in case of a software system failure, although depending on the time lag between eMAR implementation and the first system failure, memory of the paper system may be very dim. Importantly, this system does have the advantage of not requiring electricity, thus if the failure involves a disaster including electrical failure requiring reliance on hospital generated electricity, the paper system would not be an added burden. Thus, management can address this concern by having a back-up plan in place, whatever approach they select.
A further consideration of risk is patient confidentiality. Certainly decision-makers must verify that any commercial system selected complies with governmental regulations, such as HIPAA, or the applicable equivalent. Further, if decision-makers select a SAAS for the eMAR, privacy issues they will have to examine privacy issues even more carefully, as cloud-based applications require by definition the movement of highly confidential information outside the control of the hospital. However, other advantages such as cost savings, less need for technology support, and ability to update without additional cost can over-ride the added confidentiality risk. Management can address this risk therefore by making measured considerations of the possible benefits and risks within the system choices.
Section III – Economic Feasibility
This final section is to provide financial analysis of the project. Table 1 provides an estimated budget for the project, with the cost breakout based on the proportional upfront and recurring costs reported by Maviglia et al. (2007) with adjustments made for the present proposed project. Table 2 provides estimated changes in annual operating costs associated with the eMAR project, which will not alter the productivity of the service line. See also the attached spreadsheet for a more detailed presentation of this data.
This budget assumes hardware and software purchase. It will need to be adjusted if decision-makers want to lease the hardware or select a cloud-based software system, as lease costs will move these expenses, at least partially, from an upfront to a recurring cost. If necessary, the finance department can perform an equivalent annual cost analysis at a later date to aid this decision. The percentage of the costs of the total budget, including the ratio of recurring cost to total project budget, reflect those experienced by Maviglia et al. in their implementation of an eMAR system (2007). The five-year plan is based on the estimated time of functional utility of a eMAR system purchased this year.
Average cost of adverse drug events (ADE) used in this calculation is based on the estimate of Bates, Spell and Cullen (1997) and is in 1995 dollars, thus is likely underestimated. Number of averted events is estimated based on the assumed fact that our hospital serves approximately half the patient number of Brigham Womens’ and Childrens’ hospital of Maviglia et al. (2007). As summarized in the return on investment (ROI) calculations within the Excel spreadsheet, the first year RO1 is estimated at $548,100, the year 2+ RO!s are estimated at $1,056,000 each, for an average annual ROI over the five year project of $954,420.
References
Bates, D. W., Leape, L. L., Cullen, D. J. Laird, N., Petersen, L., Small, S. D., . . . Edmonson, A. (1997). Incidence of adverse drug events and potential adverse drug events: implications for prevention. Journal of the American Medical Association. 27, 1, 307-11.
Cleverley, W. O. and Cameron, A. E. (2007). Esstentials of health care finance. Sudbury, MA: Jones and Bartlett Publishers.
Hook, J. M., Pearlstein, J., Samarth, A., & Cusack, C. (2008). Using Barcode Medication Administration to Improve quality and safety. Agency for Healthcare Research and Quality.U.S. Department of Health and Human Services. Retrieved from
http://healthit.ahrq.gov/sites/default/files/docs/page/09-0023-EF_bcma_0.pdf
Marini, S.D., Hasman, A., Hujer, H. A., and Dimassi, H. (2010). Nurses’ attitudes toward the use of the bar-coding medication administration system. Computers, Informatics, Nursing. 28, 2, 112-23.
Moreland, P. J., Gallagher, S., Bena, J. F., Morrison, S., and Albert, N. M. (2012). Nursing satisfaction with implementation of electronic medication administration record. Computers, Informatics, Nursing. 30, 2, 97-103.
Maviglia, S., Yoo, J. Y., Franz, C., Featherstone, E., Churchill, W., Bates, D., . . . Poon, E. (2007). Cost-benefit analysis of a hospital pharmacy bar code solution. Archives of Internal Medicine. 167, 788-94.
Ola-Weissman, T. (2013 April 8).Implementation of an electronic medication administration system.Slideshare. Retrieved from
http://www.slideshare.net/Spiderella/implementation-of-an-electronic-charting-system
Paoletti, R. D., Suess, T. M., Lesko, M. G., Feroli, A. A., Kennel, J. A., Mahler, J. M., and Saunders, T. (2007). Using Bar-code Technology and Medication Observation Methodology for Safer Medication Administration. American Journal of Health-System Pharmacy.65, 5, 536-43.
