Stanford Hospital and Clinics (A): Building the Business Case for an Electronic Medical Records System

In 2005, Stanford Hospital and Clinics (SHC) was internationally recognized as a leading medical institution in terms of its clinical capabilities and specialty expertise. However, the organization was lagging many of its competitors in terms of its operations and information technology (IT). While other major healthcare providers of a similar caliber had begun to transition to integrated electronic medical records (EMR) systems, SHC was using a patchwork of disjointed and outdated software programs to manage inpatient and outpatient care, as well as its back office functions. Dr. Kevin Tabb, who was the chief quality and medical information officer at the time, along with other executives within the organization, recognized the importance of adopting an EMR system. Yet the implementation of such a system would require a sizable investment over multiple years that would have to be approved by the SHC board of directors. Tabb and his colleagues had to think carefully about the cost/benefit equation associated with an EMR system, and the amount of time required to realize a payback on the capital expenditure. They also had to consider how to position the investment to the board in a realistic but persuasive manner. This case explains EMR systems, describes SHC’s vendor selection process, and explores how SHC developed a business case to support this significant investment. It should be used in conjunction with a spreadsheet of estimated costs and benefits entitled OIT-101A SHC EMR Model.