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Implementation of Hospital Computerized Physician Order Entry Systems in a Rural State: Feasibility and Financial Impact

Affiliation of the authors: Department of Health Management and Policy, College of Public Health, University of Iowa, Iowa City, IA.

Correspondence and reprints: Robert L. Ohsfeldt, PhD, Department of Health Management and Policy, 200 Hawkins Drive, University of Iowa, Iowa City, IA 52246; e-mail: <robert-ohsfeldt{at}uiowa.edu>.

Received for publication: 02/08/04; accepted for publication: 09/02/04.

Objective The aim of this study was to estimate the costs of implementing computerized physician order entry (CPOE) systems in hospitals in a rural state and to evaluate the financial implications of statewide CPOE implementation.

Methods A simulation model was constructed using estimates of initial and ongoing CPOE costs mapped onto all general hospitals in Iowa by bed quantity and current clinical information system (CIS) status. CPOE cost estimates were obtained from a leading CPOE vendor. Current CIS status was determined through mail survey of Iowa hospitals. Patient care revenue and operating cost data published by the Iowa Hospital Association were used to simulate the financial impact of CPOE adoption on hospitals.

Results CPOE implementation would dramatically increase operating costs for rural and critical access hospitals in the absence of substantial costs savings associated with improved efficiency or improved patient safety. For urban and rural referral hospitals, the cost impact is less dramatic but still substantial. However, relatively modest benefits in the form of patient care cost savings or revenue enhancement would be sufficient to offset CPOE costs for these larger hospitals.

Conclusion Implementation of CPOE in rural or critical access hospitals may depend on net increase in operating costs. Adoption of CPOE may be financially infeasible for these small hospitals in the absence of increases in hospital payments or ongoing subsidies from third parties.

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