Financial model for investment recovery period in electronic health records implementations

Technology usage for better healthcare delivery is being emphasised in the USA and other advanced nations. Electronic health records (EHR) are being widely seen as improving operational efficiency and reducing medication errors in clinic practices and hospitals. Further, hospitals and clinics stand to gain incentives from the federal government if they implement EHRs and demonstrate meaningful use of EHRs. While numerous other aspects of HER implementations is found in literature, financial models have not been well studied. Before implementing EHR, one must take into consideration investment recovery period considering the costs, savings and possible tax incentives. In this paper, we develop financial model for computing investment recovery period in EHR implementations assuming constant patient visits. We further develop required growth rate formula if investments need to be recovered in fixed number of years. The model is illustrated with numerical example.