Pediatric Informatics: Computer Applications in Child Health (Health ...

15 Pediatric Care Coordination: The Business Case for a Medical Home 211
The level of transcription required decreases by half, since the structured notes
can be entered by practitioners at the time of visit, which reduces the amount of
dictation substantially.
Providers will suffer a 25% decline in productivity, measured by the number of
patients seen, during the first 6 months after implementation of the new system.
That decline is reflected in the gross revenues generated by each provider.
The practice will see an immediate 10% credit on malpractice premiums.
Conversion of the paper records to the electronic system (Conversion costs) will
total $25,000. This amount includes scanning required information for current
patients into the electronic system.
The projections for the first 6 months post-implementation reveal a significant loss,
primarily due to lowered productivity in the outpatient department (Table 15.2).
Adjustments to income relate to the improved laboratory revenues, but some
costs can be improved, as well, through savings on malpractice insurance and
Table 15.2 Pro forma statement – first 6 months post-implementation
Item Cost
System cost $175,000.00
Amount financed $140,000.00
Interest rate 5.5%
Finance period 48 months
Monthly payment $8,338.20
Increased lab volume 10%
Transcription decrease 50%
Productivity decrease 25%
Medical malpractice credit 10%
Income Expenses
Provider services – outpatient $412,500.00
Provider services – inpatient $192,500.00
Office laboratory services $264,000.00
Total revenues $869,000.00
Salaries – providers $275,000.00
Salaries – nurses $52,500.00
Salaries – medical assistants $18,000.00
Salaries – receptionists $15,000.00
Salaries – transcriptionists $18,750.00
Salaries (subtotal) $121,360.00
Benefits $242,720.00
Overhead charges $304,150.00
Medical Malpractice $33,150.00
Loan payments $50,029.18
Conversion costs $25,000.00
Total expenses $912,939.18
Net income $(43,939.18)