How much does an EHR system cost? (Budget template included)

Time is a private healthcare provider's most valuable resource, making an electronic health record (EHR) system critical to your business — streamlining administrative work, organizing patient records, and solving those bottlenecks that keep your practice from thriving.

An EHR is a digital system that stores, manages, and shares comprehensive patient information across multiple healthcare settings. Unlike an electronic medical record (EMR) system, which focuses on a single practice's patient records, an EHR provides broader functionality and interoperability, allowing for seamless data sharing and workflow optimization across various providers and care teams. The right EHR enhances your practice’s efficiency and improves patient care.

So, how much should you expect to pay for it? Budgeting for EHR costs is overwhelming at first, but we've created this guide to help you through the process. Let's dive into the costs of EHR software, including initial EHR pricing estimates, recurring and hidden costs to include in your budget, and how to cover all these costs.

The cost of an EHR typically involves many practice-specific factors. However, according to Software Path's 2022 EHR report, practices set the average cost for EHR software at $1,200 per user per yearr. Breaking that data down, a small medical practice with 3 users typically expects to pay $300 a month for an EHR system.

However, the real cost of implementing EHR is more complex than that. It includes EHR deployment and varying ongoing costs, such as those required for information technology (IT) needs. Remember: out-of-the-box software costs are only part of your budgeting equation. 

Your EHR budget should include startup costs, equipment costs, and other indirect costs like internet connection upgrades, training, and more. Providers may also have to temporarily decrease their patient numbers as they adjust to the new system.

These include line items like software licensing fees, implementation support, and initial data migration, but exclude costs like recurring subscription fees or ongoing maintenance expenses.

One big factor when considering your budget is the type of EHR system: on-premise, cloud-based, or hybrid. Each has their pros and cons. On-premise typically costs more upfront, while cloud-based offers more flexibility for scale. Hybrid systems combine elements of both.

Here's an EHR implementation cost breakdown for on-premise and cloud-based systems:

Both cloud-based and on-premise platforms come with an initial cost, with cloud-based systems often requiring a startup fee or upfront annual subscription and on-premise systems necessitating software and hardware purchases. 

While the costs of an EHR depend on your vendor and system choice, here are the typical direct costs you should expect:

Both options require careful planning and coordination with your vendor. Ask your vendor partner for detailed cost breakdowns specific to their platform to ensure you are prepared before installation.

When planning your EHR budget, don't forget to include the hidden implementation costs. Both cloud-based and on-premise models will have indirect fees, but they vary. 

Here are the costs they both incur:

For a cloud-based EHR solution, indirect costs include:

For an on-premise EHR, indirect costs include:

Understanding these indirect setup costs will ensure a smoother transition and help maximize the benefits of your new EHR system. By budgeting for these expenses ahead of time, you'll be ready to tackle them when they come up.

Be sure to plan for recurring costs for any EHR system. Besides monthly or annual subscription fees, cloud-based EHRs may require ongoing IT support for long-term troubleshooting, which can contribute to their overall cost. However, the costs of maintenance and updates are often included in the subscription fees.

Updating on-premise systems might require purchasing new software versions and manual installations by IT staff. Your team will have to handle maintenance, including regular backups and security patches, internally, which may add to their workload. Plus, managing and maintaining local infrastructure often requires ongoing IT support.

Moving beyond your implementation costs, let's explore the total cost of ownership of an EHR:

According to Tebra's 2024 study, 39% of private practices cite managing costs and financial concerns as the most significant EHR challenge. For many primary care practices and small practices, the upfront costs of EHR adoption, such as software licensing, hardware upgrades, and staff training, can feel overwhelming. 

Luckily, there are several ways to ease the financial burden and make the transition more manageable:

Small and primary care practices often start by exploring federal programs designed to support EHR adoption. For instance, the Medicare and Medicaid EHR Incentive Programs (now part of the Promoting Interoperability Program) provide financial assistance to eligible providers who adopt and meaningfully use certified EHR technology. 

Additionally, practices may consider vendor financing options, which allow them to spread out the costs over time through subscription-based pricing models.

State-level grants and local healthcare initiatives may also offer funding opportunities specifically aimed at supporting small practices. Practices can further reduce costs by seeking cloud-based EHR systems, which often have lower upfront costs than on-premise systems, as they eliminate the need for expensive hardware and server installations.

Private practices should work closely with their EHR vendors to identify cost-effective solutions tailored to their needs. Many vendors provide scalable systems that grow with the practice, ensuring affordability while meeting current operational demands. 

With the right resources and planning, EHR adoption can become a manageable and rewarding investment that drives long-term efficiency and patient care improvements.

Planning your EHR implementation can be overwhelming. That's why we created a budget planner, which allows you to easily navigate the total cost of ownership. From initial setup to recurring expenses, this planner covers all aspects to ensure you're fully prepared. 

Don't let unexpected costs catch you off guard — use this planner to budget confidently and set your practice up for long-term success.

For private practices investing in an EHR or electronic medical records (EMR) system, understanding the full scope of the costs involved is essential. With costs averaging $1,200 per user per year, budgeting ensures you can manage both upfront and ongoing expenses while maximizing your return on investment.

A thoughtful EHR implementation supports your practice's efficiency, improves patient care, and streamlines operations. By considering all the factors we’ve covered — software licensing, hardware requirements, training, workflow adjustments, and ongoing maintenance — you’ll position your private practice for a successful transition to better practice management.

Discover how Tebra's comprehensive, HIPAA-compliant EHR solutions can streamline your operations, boost inpatient and outpatient patient engagement, and help you achieve your goals. Get a free demo today.