The True Cost of Traditional Lab-EHR Integrations

True Cost Series: Part 2

Automation and real-time data exchange are critical tools to advance quality care and reduce cost in healthcare. That said, more than 50% of diagnostic labs still operate using paper forms. The true cost of those paper forms is at least $30 per order.

So why isn’t every provider investing in automation?

The harsh reality is that traditional integration is too expensive for most providers.  While the direct cost ranges between $9.50-$12.00 per order, if you add in sunk costs on integrations with clinics no longer using the service, that number more than triples. It’s no wonder so many providers continue to use paper, at least until now.

Here is the cost breakdown for a “mid-sized”[1] diagnostic lab:

1. EHR fees – $2,500 per clinic/integration, $2.75-$3.00 per order received

Every EHR vendor has a different approach to charging for integrations[2]:

• Upfront integration fee per clinic -$1,500-$15,000 per clinic location.
• One-time initial integration fee plus a fee per clinic – Some vendors charge a one-time fee of up to $25,000, plus a variable pricing scheme for clinics once they start ordering through the service.
• Monthly or annual integration maintenance fees – Ranging from $35-$100 per month.
• Monthly per user fees – Ranging from $50.00-$100.00 per month – So a clinic with 10 users might cost the lab $1,000 or more each month in user fees.
• Fees per transaction – Ranging from $1.00-$4.00 per transaction.

The average EHR vendor fee comes to $2,500 per clinic.  This translates to $2.75-$3.00 per order.

2. Integration costs – $3,500-$6,500 per clinic/integration, $4.00-$7.75 per order received

Integration implementations are typically performed using one of three options:

• Implementation by LIMS vendor.
• Implementation by 3^rd party integration vendor.
• Implementation by internal Lab Interface Team.

Whereas internal IT costs average approximately $3,500 per clinic, external vendors range from $5,500-6,500 per location. Using the volume metrics above, this translates to a range of $4-7.75 per order received.

3. Lag time & lost orders – $20,000 per clinic/integration, $30.00 per order received

• EHR vendors are inundated with thousands of integration requests, often forcing their customers to wait in line for resources to become available.
• Wait time can sometimes be as little as a few weeks, but often stretches into months and occasionally even years.
• In the interim, your clinic might use paper orders or worse, decide to wait to order until the integration is complete.

On average, delays in receiving the first order cost about $20,000 per clinic/integration, or $30 per order received.

4.  Sunk costs on integrations when the provider loses a customer – $2,600 per clinic/integration, $3.00 per order received

• Customer churn is high, with some providers reporting 10% or more each year.
• Investment in traditional integration for customers that churn generates significant sunk costs for providers.

Using the low-end figures for the costs described in items 1-3 above and applying a 10% churn rate suggests an additional $2,600 cost per integration or $3.00 per order eventually received by the lab.

5.  Other costs – $100 per clinic/integration, $0.25-$0.50 per order received

• Every time a lab test menu changes, a new ask at order entry question is required, or other order form modification, an integration must be updated to accommodate.
• To execute these changes, IT staff must shift focus from new integrations or other priority projects to implement across the entire range of EHRs and 3^rd party systems.
• This cost will vary widely depending on how frequently the menu changes and how many existing integrations will need to be updated.

We estimate this cost at $100 per clinic/integration, or $0.25-$0.50 per order received.

So – all in what are we talking about here?  Wait for it…

Each traditional clinic integration costs an estimated $28,000-$30,000 or $40.00 per order received!

With Shadowbox’s breakthrough technology, most of these costs go away, making electronic ordering and resulting a reality for every clinic customer.  Here’s how we do it:

• (NEW) No initial set-up fee to connect your LIMS to Shadowbox.
• Low, flat monthly subscription fee that only increases when your lab’s enterprise-wide volume exceeds that tier’s threshold.
• No sequential EHR, 3^rd party integrator, or LIMS fee for each clinic. Install Shadowbox in as many clinics as you want with no additional cost.
• Free up your internal IT staff to focus on only those integrations that generate ROI with customer proven in volume and retention.
• The Shadowbox Dynamic Requisition is updated through the labs’ user management portal and is available to all clinics ordering through Shadowbox the next time they open the application.

Using the same metrics for clinic customers and volume, we estimate the cost of Shadowbox to be $300-$450 per clinic/integration, or $0.35-$0.40 per order received at the lab.

Contact Shadowbox now for a demo and to learn more about how our breakthrough integration technology is disrupting the integration industry and helping our customers make more revenue, reduce costs, and increase their customer’s satisfaction with their services.

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[1] We define a “mid-sized” diagnostic lab as having an approximate volume of 10,000 samples per day over a customer set of 3,000 clinics: essentially representing a mid-size diagnostic lab.  The numbers also assume that the lab prioritizes integrations for higher volume clinics and doesn’t invest in integrations with clinics with low volume.  Accordingly, labs with fewer daily samples and/or invest in lower volume clinics would see higher costs for traditional integrations, and labs with more samples and/or invest in fewer clinics with lower volume would see a lower cost per sample accordingly.

[2] Ranges based upon costs as reported by Shadowbox customers.