Microsoft will announce later today that it will acquire Sentillion, Inc. of Andover, MA. Terms of the acquisition were not announced. The transaction is expected to close in early 2010.

Privately held Sentillion, founded in 1998, sells patented solutions for single sign-on, context management, and identity management. It has over 1,000 hospital customers and over 500,000 users. It was named by KLAS as the #1 healthcare SSO vendor in its December 2008 report.

I interviewed Peter Neupert, corporate vice president of Microsoft’s Health Solutions Group, and Robert Seliger, CEO and co-founder of Sentillion, about the acquisition on Wednesday.

Neupert says clinician users of Microsoft’s Amalga Unified Intelligence System, live in 115 hospitals, will benefit from Sentillion’s SSO and context management technologies. “Our goal is not to be an EMR,” Neupert said. “When we provide data and they want to take action on it, we want to make it easy for them.”

The companies signed an agreement this past June to incorporate Sentillion’s SSO and context management in Amalga UIS. The announcement quoted a Microsoft spokesperson as saying, “… for clinicians and others to readily adopt and get the maximum value out of a new platform like Amalga UIS, it needs to become an inherent part of the clinical workflows that drive the patient care delivery process. Our collaboration with Sentillion is designed to achieve that level of integration.”

I asked Neupert why Microsoft wants to acquire Sentillion rather than just continue the licensing arrangement. He said Microsoft can use Sentillion’s domain expertise in context sharing to create more solutions, particularly those that allow customers to continue with their best-of-breed strategies. “We want people to understand that best-of-breed is a reasonable path for them to pursue,” Neupert said.

“Our goal is not to just sell Microsoft products,” he said. “Our goal is to help create new innovation in the health ecosystem. What we are trying to enable is workflows that cross organizational boundaries.”

I asked him if there are important aspects of the announcement that might go unnoticed. “This shows that Microsoft is continuing to invest, the Health Solutions Group in particular, to make health an important vertical inside the company, making a series of thoughtful steps in acquiring domain knowledge and technology and people to make that investment practical,” Neupert replied.

I asked Seliger why he’s selling Sentillion now. “We are a healthy company, profitable, and growing … the next step is a perfect outcome. You take our business legacy and commitments to customers and preserve that, but also take it to new levels, new countries, new venues that we wouldn’t get to as quickly on our own … To build an entire organization with P&L behind it that says Microsoft is unprecedented. It’s a fabulous home for Sentillion.”

Seliger says the Sentillion management team will stay on. The company will be operated as a wholly owned Microsoft subsidiary from its Andover office, with Seliger reporting to Neupert.

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Submit your article of up to 500 words in length, subject to editing for clarity and brevity (please note: I run only original articles that have not appeared on any Web site or in any publication and I can’t use anything that looks like a commercial pitch). I’ll use a phony name for you unless you tell me otherwise. Thanks for sharing!

Catastrophic Insurance Coverage to Reduce Healthcare Costs
By Carl Witonsky 

Expanding on Dr. Dan Fields’ point number nine in his excellent 16-point program on how to reduce healthcare costs and improve outcomes, I think there is a potential to save $100 billion a year by employers buying catastrophic insurance for their employees and giving them an HSA account funded with $5,000.

The employee would then pay for all doctor, pharmacy, and outpatient visits with their HSA credit card. NO CLAIM FORMS would be created. The doctor would update the patient’s EMR with the patient complaint, clinical findings, treatments, etc. The catastrophic insurance would kick in when the employee’s out-of-pocket hits $2,500 (above the company-funded $5,000) so insurance claims would be confined almost exclusively to inpatient stays. 

The last time I checked, there were five billion claims processed a year in these United States. I estimate that four billion are not related to an inpatient stay. If the total cost for a typical physician claim is $25 between the provider and payor to process (current studies report that a two-doctor family practice costs $70,000 per year per physician for claims-related work), that is a $100 billion cost reduction per year.

I am continuing to research this subject and would be very receptive to critical comments and suggestions.

Clearly all the payors would be up in arms against losing their lucrative administration fees and doctors might  attempt to raise the price for office visits, so we will still need insurers / government to negotiate fair fee schedules. The key is to make health care insurance like home insurance — catastrophic-only — and reduce the enormous administration cost of the paper chase to the absolute minimum.

Carl Witonsky is managing director of Falcon Capital Partners of Radnor, PA.

Any Sufficiently Advanced Technology is Indistinguishable from Magic – Remember, Clarke’s Third Law?
By Shabbir Khan

I have been reading HIStalk for couple of years. In addition to saying that your HIStalk posts have always been timely and informative, I wanted to express my kudos to you and Inga for always staying objective.

I have also been reading Dr. Gregg Alexander’s posts on HIStalk Practice with great interest. I am in total agreement with him on the need for giving the physicians and their nursing / office staff a basic tool to help them build their own apps and user interfaces for documenting and sharing patient data with each other using lightweight portable devices.

Physicians have always proven themselves pragmatically wise in adopting and using a new technology if it works for them and if they see a real value in using it. They are not averse to adopting a new technology if it helps them in treating their patients while increasing their productivity. They have enthusiastically adopted a great variety of new technologies in the past. Some examples of the technologies adopted include the use of IV drip line, medical ventilators, and medical imaging equipment. We have also witnessed rapid adoption of many other technologies by the medical community including the use of fax machines, pagers, cell phones, transcription technologies, Internet, and more recently, smart phones (with computer brains) running on 3G networks.

These technologies have made physicians and nurses more productive, improved their workflow, and enabled them to spend more time with their patients. Importantly, these technologies have given the control back to the physicians, nursing staff, and ordinary technicians to use these technologies without needing any outside or specialized help. For example, today nurses routinely use an IV drip line to administer medicine to a patient intravenously without needing any assistant from an IV drip line specialist or from an IV drip equipment vendor. A lab technician can easily fax a lab report to a physician’s office without worrying about HL-7 compatibility on the other end.

Electronic health record systems of today put physicians at the mercy of EHR vendors. Therefore, Dr. Alexander’s post regarding the need for achieving more simplicity and giving more control back to the physicians reflects a more practical approach.

Today, each EHR vendor offers you a unique, “one shoe fits all” solution. Each vendor claims that customizing their system is easy and inexpensive. However, your intuition tells you that the reality is totally different. Using existing technologies and current processes to re-configure, re-program, re-build, and re-deploy poorly designed software is an extremely arduous, expensive, and a painfully slow process as it requires an army of non-clinicians to do it correctly, e.g., programmers who speak such a wide diversity of languages it’s as if they are still living in a Migdal Bavel today.

No wonder the adoption rates for EHR systems have stayed in single digits for so many years. This has been the case despite all of the brilliant marketing tactics used by the EHR vendors. The insurance industry has also been lobbying hard for faster adoption as it eliminates its own data entry costs and gives it a very powerful tool to reduce its medical loss ratios by getting its hands on all patient charts in the entire nation for free. Then, they’ll use the data, that was provided by the physicians to begin with, against the physicians after data mining it extensively.

In addition to the massive lobbying efforts of the insurance industry, other efforts for increasing EHR adoption are also failing, including the relaxation of the Stark Law and a variety of financial incentives being offered by the Federal and state governments.

Physicians are sticking to their paper charts for now.

Building a simple, but a separate smart phone application for each little thing is also not a good solution. Juggling through multiple apps during a very short session (15-20 minutes with a patient) will prove to be too cumbersome for the physician and their nursing staff. It will slow them down. The small size of an iPhone or similar smart phone (e.g., a palm prē) is another limiting factor that will force clinicians to stare at a computer screen for too long while flipping through a myriad of small screens just to get to the right page to enter or display the required information.

An ideal solution requires two important things to happen:

a) Availability of better hardware with larger screen size for quicker access to the data in a patient’s chart and faster means of data entry.

b) Development of a brand new class of software.

I live in Silicon Valley. Better hardware is coming soon (as early as the summer of 2010). However, development of the necessary software will continue to prove to be a more daunting task as it requires a totally new kind of thinking. It requires the development of a brand new and a revolutionary software technology that will be highly disruptive to the status quo.

Both Dr. Alexander and I have been looking for a sufficiently advanced technology that is indistinguishable from magic. Although I’ve developed pretty good intellectual property to make this magic happen (e.g., making it easier for the clinicians to define and build their own apps), it is very difficult to get funded in today’s environment to build such a disruptive technology.

Who wants to fund a Robert Gaskins or Dan Bricklin in today’s economic climate?

Shabbir Khan is a Silicon Valley entrepreneur who is proud of being a nerd.

Physician-Friendly Documentation
By Chris Joyce

Thank you for posting the interview with Dr. Hau of Shareable Ink. Dr. Hau’s comments really resonate with those of us that have been evangelizing for more intuitive documentation solutions and a different approach to healthcare IT for years. Every week we get calls from frustrated docs and CIOs that have purchased a big-box EMR, yet are struggling to adapt their workflow and make the jump. 

Fortunately, the industry is finally catching onto the source of the poor adoption rates — the user experience! Many HIS/EMR vendors have adopted a web and/or SaaS architecture which solves the IT deployment, cost, and support challenges, but doesn’t address the practical usability for the providers. We’ve seen the same issues with the adoption of EDC in clinical trials. These users are often mobile and offline in spotty wireless environments such as the OR, making a Web application that’s expecting primarily keyboard input unacceptable. Not to mention the horrible bedside manner of being behind a laptop during the encounter. 

The solution must be integrated so they have real-time validation, access to previous notes, and don’t have to re-enter patient demographics/history. At the same time, the interface needs to be natural and flexible so the provider can enter structured discrete data as well and notes / annotations to encourage more complete documentation. As Dr. Hau states, if the providers aren’t using it, it is worthless and you won’t be able to address meaningful use or safeguard against RAC audits.

For these reasons, we embraced the tablet in our Logical Ink solution where can truly eliminate paper without giving up the speed/intuitiveness of a pen interface that is so patient/physician-friendly. The user can combine the power of pen, voice and keyboard input instead of choosing just one approach. It is baked into the user experience instead of the “bolt-on” approach many take. We take advantage of the powerful computing device to make the form(s) interactive: interfacing with devices, validating the data in real time, and performing calculations. And the large screen maintains the familiar paper metaphor. Finally, we can work disconnected for periods of time and sync the documentation with the HIS/EMR via industry standards like HL7, for seamless integration into the hospital workflow.

I’m hopeful the industry is moving towards us and that more vendors will renew their focus on physician-friendly documentation.

Chris Joyce is founder and president of Logical Progression of Cary, NC.

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From The PACS Designer: “Re: Google Chromium OS. Courtesy of InformationWeek, we can get an idea of what Google’s Chromium OS is all about, even though it won’t be released for another year.”

From Joe Bologna Sandwich: “Re: [health system name omitted]. I heard second hand that they will cancel their contract with [vendor name omitted] in January.” I’ve e-mailed the CIO. Sorry for the redacting, but this is a publicly traded vendor and a humongous contract, so I’d like to confirm the rumor if possible.

From Nancy: “Re: Bobbie Byrne. The pediatrician, Eclipsys alum, and former clinical director of CCHIT is leaving CCHIT to become CIO of a hospital.” According to her LinkedIn page, she is now VP of informatics at Edward Hospital (IL), having left CCHIT sometime this month after only seven months or so.

From Cracker: “Re: Spheris. Warburg Pincus is looking to unload its albatross Spheris stake to CBay Systems, the largest medical transcription company in the US since their purchase of MedQuist in 2008. Spheris, second largest, recently ended a three-year run as a quasi-public company — public debt, not public stock. Uncompetitive technology and a heavy debt load handicap Spheris as medical transcription prices fall.” Unverified. Spheris doesn’t file SEC reports any more, but management had said margins and revenue were down. I also noticed that Spheris is no longer listed on the portfolio page of Warburg Pincus even though it’s still showing in the Google cache of the page, so I’d say something is up.

From Anonymous Coward: “Re: NHS cutting back on IT project. Enjoy your writings a lot. I work for one of the Big Vendors that I wish you talked about more — we are doing some good stuff (finally….).” Budget deficits take their toll in Britain, with a proposed large scale-back or maybe outright scrapping of the $20 billion and overdue NPfIT project. The arguments are the same as here: do those big systems really pay their way in terms of outcomes or cost reductions? The Conservative Party has proposed moratorium on all government computer projects, claiming the Labour government has spent $162 billion on IT in the past 12 years and another $115 billion will come due in the next two years. Lots of interesting comments on NPfIT are here.

Thanks to our HIMSS contact for chasing down our inquiry (on behalf of a reader’s question) about how government employees are compensated for speaking at the annual conference.She says HIMSS works within federal guidelines and does not offer honoraria or expense reimbursement to government employees (as I assumed). David Blumenthal asked for nothing and was offered nothing.

I like the move by Francisco Partners to buy QuadraMed. QuadraMed has had more than its share of struggles, all of them conducted in the spotlight since it was a publicly traded company (albeit with little benefit since market cap was low and share price stagnant). It had some old preferred shares that were so favorable that those shareholders were getting much of the cash. It has good products (HIM, Affinity, and QCPR) that ought to be selling well, especially if the QCPR migration to Cache’ is indeed complete. Francisco Partners has been a good steward of the companies it has bought, getting their houses in order, distancing them from previous baggage, and clarifying their identities and strategies. I think it’s the best possible outcome for customers and employees. A reader tipped me off with perfect accuracy last night, so I watched the news ticker this morning to jump on the announcement as soon as it went out.

The Chicago inspector general will review the 13 bids the health department received for a mental health system, determining whether anything suspicious was involved in choosing Cerner over 13 other bidders. The system had disastrous financial repercussions, it’s claimed, when billing problems prevented collection of money from the state for services rendered.

I was a bit loosey-goosey in my description of the products of new sponsor BridgeHead Software, so their VP contact provided clarification. Just so I don’t do it again, here’s the verbatim quote, better than I could have done anyway:

BridgeHead provides healthcare data management solutions that combine backup and archive into a single platform that it easy for IT to manage.  While you mentioned it’s cool that we can “do business intelligence on a backup”, it’s actually the archive that provides that value. Our archive is able to capture data from a variety of sources (including DICOM data from various PACS), transform that data (dedupe, compress, encrypt, containerize), index the content and make it all searchable. This truly enables the EHR by providing a foundation for managing all the data sources that comprise the electronic health record, regardless of whether that data is actually “owned” by your primary EHR application. Backup complements the solution by providing point-in-time recoverability, and this is just one aspect of our larger disaster recovery/business continuance functionality.

The HIT Policy Committee’s NHIN Workgroup will meet next Wednesday. On the agenda: a review of objectives and NHIN Meaningful Use. The Webcast runs from 10 a.m. to 1 p.m. Eastern.

Wirral University Teaching Hospitals is the first UK client to go live on Cerner PowerTrials, which connects physicians and researchers to support clinical trial participation by patients.

Lancaster General Hospital (PA) releases data about its use of auto-programmed smart IV pumps, linking them to the Cerner Bridge Medical eMAR/bedside barcode checking system. Their results: nurse IV pump programming time was reduced by 25%, infusion pump programming steps were cut from 17 to seven, and reprogramming was cut by 90%.

In New Zealand, Auckland Hospital’s clinical systems go down hard for four hours when a UPS circuit board fries. Related: the health board spends $1 million for software to track requests for follow-up X-rays after doctors missed a request; 10 patients were overdosed on meds because the automated dispensing cabinets don’t check doses; patient systems at another hospital failed when a roof leak dripped water into a computer; and information entered on the wrong patient caused another patient to be given an unnecessary colonoscopy. For IT noobs, I know this is a splash of cold reality, like that first time you saw your objet d’amour in the dawn’s early without benefit of makeup.

Steve Stanic, formerly the National Director of the McKesson solution center for Perot Systems and CIO of Memorial Savannah, is named CIO of Mississippi Baptist Health System.

Charlie McCall’s lawyers want a new trial after finding out that the jury foreperson, a Stanford Law graduate, gave fellow jury members a definition of “reckless disregard”.

Dennis Quaid, livin’ large on the healthcare conference circuit, announces at his keynote at the ASHP Midyear the National Alert Network for Serious Medication Errors. What caught my eye, however, was the picture below Dennis’s of three hot blondes with violins, apparently holding as much pharmaceutical expertise as Dennis, pre-keynoting fresh from America’s Got Talent … ladies and gentlemen, blond Polish triplets with graduate degrees in fiddlin’!

Someone wanted to hear ideas that would save healthcare $1 billion a year, so here’s mine: stop paying healthcare people to screw around at conferences. If the knowledge is all that important, someone will cover it in a Webinar or journal article (or let everybody pay their own way to go to conferences like I do). I’m pretty sure the salaries, travel costs, and registrations add up to way more than a billion since it seems like half the hospital is junketing somewhere at any given moment and nothing useful ever seems to come of it except the attendees brag to everyone let behind at how enriched their professional lives are since having dinner at Bouchon or cutting up after too many flirtinis at the Donnie & Marie show. Patients, check your drug doses extra carefully this week.

Australia’s industry groups agree on certification criteria for medical software. The National E-Health Transition Authority also announced that the SNOMED CT-AU terminology database is available to Australian license holders (note to vigilant seekers of SNOMED misspelling sightings – Computerworld spelled it SNOWED).

CareFusion announces new Pyxis products at ASHP: drug-lab alerts on MedStation, a PDA-based pre-selection tool for nurses, a maintenance console for all MedStation and SupplyStation systems, and a new version of CII Safe.

E-mail me.

HERtalk by Inga

From Sandy Claws: “Re: Pam Pure. Do you know where she is and what she is doing? I would look and see if she is doing any work with Francisco Partners or Blueline Partners. My guess she is at least consulting with one of them.” Interesting question, especially in light of the QuadraMed/Francisco deal and the recent hire of two former McKesson bigwigs. Blueline owned, at least at one time, a large number of shares of QuadraMed.

Medicity announces the opening of its platform to third-party application development. Partners developing to Medicity’s iNexx API can leverage Medicity’s customer base of 700 hospitals, 25,000 physician practices, and 250,000 providers.

At its Executive Summit in Las Vegas, Allcripts announces its Professional EHR 9.0 release, as well as Allscripts Remote for BlackBerrys. The 9.0 release includes an enhanced user-interface and expanded disease management capabilities.

CliniComp names Phillip LaJoie, the former CIO of the Naval Medical Center and CTO of the Military Health System’s infrastructure arm, as VP of deployment.

On my Christmas list: smart slippers, like these designed by AT&T scientists that include electronic insoles with four pressure sensors and an accelerometer to measure how well you are walking. I’m not sure exactly what I’d do with them. Perhaps make my departing party guests try them in order to evaluate if they are walking well enough to drive home. AT&T is making major investments in telehealth products. Seems they want to establish a “foothold” in the growing telehealth industry.

Moses Cone Health System (NC) selects Streamline Health Solutions’ enterprise document workflow solution.

Gannett Health Services at Cornell University is now live on Point and Click EHR, which is designed for college health. A staff member calls the transition “incredibly challenging, but invigorating.”

St. Vincent’s Hospital Manhattan lays off 180 of its 3,800 employees to cut costs. The hospital cites “severe financial shortfalls” as a result of the recession and funding cuts. Those affected include managerial and patient care positions. Condolences. There’s never a great time to be laid off, but I’m sure this doesn’t make for a merry holiday season.

Duke University approves a new one-year Masters of Management in Clinical Informatics degree program to be offered by the Fuqua School of Business and the Duke Center for Health Informatics.

The personalized medical care segment of the personalized health and wellness market market could grow to $100 billion by 2015, assuming telehealth takes off. This segment includes telemedicine, HIT, and disease management services offered by traditional health and wellness companies.

No sooner than Charles McCall gets his due then another story of greed in healthcare emerges. The latest scandal comes courtesy of Canopy Financial and co-founder Jeremy Blackburn. Canopy filed for bankruptcy protection after the FBI began looking into alleged fraudulent financial statements that were created as part of a $75 million investment scheme. Blackburn has since resigned as president and his assets have been frozen. KPMG discovered the potential fraud after learning that Canopy was presenting financial reports to prospective investors that were supposedly audited by KPMG. In fact, KPMG had never been retained by Canopy to audit its financials.

If you work in the patient safety, quality of care, or regulatory compliance fields, check out a new social Web site just for you and your peers. Quantros launched the new site called Clinical Cafe.

Two health systems are among five recipients of the 2009 Malcolm Baldrige National Quality Award. AtlantiCare (NJ) and Healthland Health (MO) were both winners in the healthcare category.

The California Nurses Association, the MA Nurses Association, and some members of the United American Nurses combine to form National Nurses United. The new entity represents over 100,000 nurses.

Actuaries calculate that West Virginia could save over $1.1 billion by going digital and centralizing patient care. Savings would be seen by the government as well as private insurers and policy holders. The low-hanging fruit includes e-prescribing (estimated savings of $164 million), EMR ($317 million savings), and the creation of medical homes.

Thanks for the very sweet reader who sent Mr. H and me our own personalized Christmas ornament. I’m glad Mrs. H never reads HIStalk, just in case she happens to be the jealous type.

First, Congress considered taxing cosmetic surgeries. Now they are looking at tanning services. Seriously, what do those folks in Washington have against a little beauty enhancement? Will makeup be next? Or, heaven forbid(!), pumps?

E-mail Inga.

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QuadraMed announced this morning that it has agreed to be acquired by Francisco Partners, a private equity firm, in an all-cash deal valued at $126 million. Shareholder approval is expected in the first quarter of 2010.

”Francisco Partners brings to QuadraMed extensive resources, expertise and a proven track record of helping healthcare technology companies sharpen their strategy and operational execution. Operating as a private company will also allow us to place more emphasis on generating long-term value for our clients with less distraction on short-term results for the public markets,” said Duncan James, QuadraMed president and CEO.

Francisco Partners partner Ezra Perlman was quoted as saying, “We are excited to become part of QuadraMed’s future success with this acquisition. We understand the critical role technology plays to drive quality care and to make healthcare more efficient. QuadraMed has a quality set of products, an extensive customer base, and a solid market position. We look forward to supporting Duncan and the Company’s management team as we go forward together to create long-term value for the Company’s customers, employees, and stakeholders.”

Other healthcare IT investments of Francisco Partners include API Healthcare, AdvancedMD, and Healthland.

The $8.50 acquisition price represents a 32% premium to yesterday’s $6.41 market close price of common shares.

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George Huntzinger is CEO and partner of The Huntzinger Management Group.

You’ve been in the business a long time. Tell me what lessons you’ve learned that newcomers would benefit from hearing.

The consulting business is really an interesting business. I’ve been in it since … I’m going to say 1984. Actually, it was probably before that because we did consulting at one of the software companies I ran prior to that. But it’s not an easy thing to do. A lot of people go out and try and start consulting companies from scratch. They do it with minimal experience and they find out right away that there’s a real science to doing this.

I think it takes people with some good experience who have had the opportunity to work for large organizations and have been successful at what they’ve been doing before. Who have had a good track record and mentors and people that have coached them along through the whole process. Who have experienced all the various things that you can conceivably experience in virtually growing and building a consulting business that is servicing whatever market or markets they choose to serve.

I guess the key thing is experience. It’s having been there, done that, and having enough experience to know that when you’re going at something, you know when to stop investing when you hit something that isn’t worth investing in, and knowing where to accelerate investing when it makes sense to crank up the burner a little bit from a financial perspective. To go at something hard and go at it hard in the right markets, and usually come out on top of that — if you read it right.

People start up their own small consulting outfits because they need a job or just wanted to work for themselves. How many of those succeed? What does it take to make a real firm out of it and not just a few people selling time?

What I think is really interesting is the world’s kind of a funny place and there’s space in it for everyone, so to speak. We have employees today that only want to be employees and never want to do anything. They’re very good consultants. They enjoy doing what they do and they never want to aspire beyond being the best consultant that they can be and they always want to be employees.

Then there’s other folks that we bring into solutions that we’re providing to our clients and they come in as subcontractors, so they single-shingle it. There’s some people that single-shingle it, but don’t want to be anything more than just that. I guess they want the freedom of being an independent. They want to be able to move around, and they want to be able to operate solely as a business as a sole-proprietor. 

You’ll find a tremendous amount of consultants out there that fall into that category. They’re not really interested in doing much beyond that other than taking on an engagement or two that might require one or two of their buddies to come into it that they know, to help them to fulfill something they can’t fulfill by themselves. I can name twenty people in that category today that just, are satisfied doing that.

What would be the advantages or disadvantages of a really small, maybe even a one-person shop, versus a real ongoing concern?

I think a lot of it has to do with freedom. As an employee, you’re wrapped up in all the controls that are put on you as an employee. So you’ve got your vacation limitation, you have your personal day limitation, you’ve got whatever benefits that people are putting in front of you — they’re the benefits you get. It’s the package that you’re buying.

You’re also buying security when you’re part of that, so that’s a really nice plan for people who also need people to be around them to prosper and grow. They’re not as independent in their thinking, whereas when you walk on the — I’ll call it the subcontractor or independent consultant — side of the fence, where they’re a small business unto themselves, they have basically ultimate freedom. They can buy whatever benefit package they want to buy. They can spend as much or little on it as they want. They can take as much vacation as they want to take. They can work on a project, then take a month off if they want to.

There are freedoms there that you have, but yet still get to work on projects with people and do things and interact and interplay with various resources. You know, fulfill that side of the needs in your life.

Should a customer care about if somebody makes a pitch and says, “Hey, it’s just me and I’m hands-on and you get me and not somebody else. I’m cheaper by the hour”?

It all depends on what the customer is buying. It’s a good question. Our business, we’re not a staff augmentation company, so that’s not where our head is today. I’ll just speak by way of example. We’re an advisory and management services company, where we assume full accountability and responsibility for either running a given function or running a given project or function. We’re taking on that role. Whenever you take on that role, they want somebody who’s really committed and there, and has a little depth behind the organization.

Because when you put that transaction together, there’s usually a little bit of risk that you’ll take and put some deliverables at stake. Some risk for meeting certain deadlines or making certain deliverables happen, or achieving certain goals that you lay out in your contract. They’re going to want some meat around that when they contract with you. That’s usually not a good environment for an independent, sole practitioner to flow into.

They’ll usually contract with the Huntzinger Management Group for a project that takes on and maybe requires six or seven resources to be deployed because you’re assuming full responsibility for accomplishing whatever it is they want you to accomplish. In that, you may bring in four employees and two subcontractors, but the Huntzinger Management Group is 100% at risk for doing that. The client is more willing to sign up with an organization who does that for a living, whereas an individual usually fills a staff aug spot.

Or, if they’re a project manager, they’ll usually not take on a key leadership role as a project manager. They’ll be a project manager as part of a team. There might be seven or eight project managers onboard along with a project director that oversees everything. It’s very hard for an individual to take on full accountability and responsibility for a given thing because they don’t have total control of it.

Do you think the cycle will ever end where consulting firms sell out to bigger companies, then bring back most of the people to form another consulting company?

You know, everything has a life cycle, doesn’t it? What we’ve experienced in the 20-25 years that I’ve been running consulting or running businesses … I spent a good portion of my career at Computer Sciences Corporation and I ran their healthcare business for 14 years. When we started there it was $10 million, when we left there was close to $400 million, so it was a nice run.

You saw Superior grow and prosper. You saw First Consulting and Healthlink or IMT Healthlink kind of grow and prosper, and then all get absorbed into these larger corporations. It’s interesting because a lot of the larger corporations create an environment that … they’re great companies, they’re great organizations, but for whatever the reason, it’s hard for certain consultants to grow and prosper in that environment.

It is not the same $100 million or $150-$250 million company that they were working in before, where it’s a little bit more family-oriented, less bureaucratic. There’s not this big umbrella of policies, procedures, and regimentation that lays over the top of it. They’re accustomed to having a little bit more of a free-form environment.

So these big organizations bottom and the next thing you know, it doesn’t work for a few very talented people. They spin off and go and start it over, as you see in the market today.

I don’t know how many new starts are out there today. We’re one of them. There’s a lot of people that go at it from different angles, but there are a lot of companies under $30 million today that are forming again. They’ll go through their cycle where next year, a few of them will consolidate. The year after, a few more consolidate, and then maybe they’ll get bought by the bigger guys again, whoever is there at that time.

You do business consulting for healthcare IT vendors. What kinds of trends are you seeing there?

We do business consulting on two fronts. We serve the supply side of the market and for the most part, it’s 99% healthcare. And when I say the supply side, I’m talking about those organizations that sell solutions or services to healthcare providers or payers. They come in the form of software companies, IT outsourcing companies, business process outsourcing companies, and even various forms of consulting companies.

There’s all different types of consulting companies. They all have a different set of needs than the provider side, so our strategy is a two-legged strategy. The first leg is selling to the supply side of the equation. I’ll talk about what we do there. The second leg is selling primarily to the provider side, the hospitals and health systems, and I’ll cover that in just a second.

But on the supply side, what their needs are: they are businesses that are trying to grow in their own discipline. They’re attempting to serve a client base. They have all the needs that a business has, in that they have to have a good business strategy, good marketing strategy, a good positioning strategy. They need an operating model that is efficient and effective. What we do for those organizations is help them improve their shareholder value or the overall value that they bring to, if it’s a not-for-profit, whoever the organization is that they’re serving.

We do business strategy, marketing strategy, operations analysis, and improvement work. We usually start out with various forms of assessments, whether it’s a business assessment or a functional assessment. We’ve done a number of those over the last couple of years for this. In fact, probably 50% of my client base today are suppliers to healthcare provider or payer sector. Our job is to help them become more effective and efficient in how they go at their particular market or niche.

On the provider side, for the most part, we concentrate on IT. As I said, we’re an advisory and management services company;  we’re not a staff augmentation business. We’re pretty high level in the IT organization. We do not have any barriers around size of organization, so we serve, I’ll say, not-for-profit organizations, $100 million not-for-profit hospitals to $2.5-billion large academic medical centers. We do everything from IT assessments, IT strategy, IT operations improvement work. We will take on the responsibility for running various functions within IT. We will also do, when I say take on the responsibility, also for projects. Everything from doing full selections or contract negotiation to overseeing the implementation of the solution we selected.

I have readers who run small startups. What needs do those small companies have and what mistakes do they make?

It’s rather interesting. There are a lot of software companies servicing the healthcare market today that are less than $10 million in revenue. They usually come out in the market with a solution. They’ve got a technology-based solution. They’ve got a couple of engineers that figured out how to build something that they’re taking to the market. There’s usually a need for it and they line up several customers. They start getting some traction, but they’re doing it in such a way that it’s kind of a shoestring approach to starting a business. They’re not necessarily capitalized very well.

So they got going, they’ve got traction, and they did it not necessarily in the most optimum manner. Now it’s how do I take the solution set that I have today and really blow it out? If it has national market opportunity and maybe they’ve got a couple million dollars worth of business, they have five clients, and you take a look at that. You do an assessment of their business and you find out that wow, these folks have built a great solution. But what they lack is how to take that solution in a grand way and really get exponential growth, how to take them from $2 million to $15 million in an 18-month period.

What we help them do is think through their business strategy, their marketing strategy. The marketing strategy includes how they effectively position themselves in the market, how they go after competition effectively, what’s the proper pricing strategy for their solution set. What’s the best way to increase the awareness and consideration of the buying population out there so that they get a fair hit rate and get that accelerated growth curve going?

That’s what we do and that’s one of the biggest problems that I think are confronting these smaller companies. We help them think through that and we will actually develop the tactical plans necessary to take them from their current state to that future state. They want us to oversee it in either a mentoring role or take on the responsibility as a senior executive of their organization to see it through. We’ve done that numerous times and we’ll do it again.

You’ve seen a lot of people and a lot of companies in the industry. What companies and people in healthcare IT do you admire?

I have been in this industry a long time, since 1969. I worked for and spent a good number of years at Geisinger Medical Center and spent 14 years of my formative years at Geisinger. I have a tremendous amount of respect for that organization. I like their model. They’re modeled after Mayo, but they’ve kind of went beyond that and they have their own model today. There are some people there, I’m not going to name them all, but there’s some people I’ve learned an awful lot from and a few of them are still there. I really have a great deal of respect for that organization.

When I did a long span, a 14-year span at CSC, Van Honeycutt, who was my boss for quite a few years , ended up being the CEO and chairman of the board there. I just learned a tremendous amount about how to run a business there and run it through thick and thin and have always been successful at running businesses in good and bad times. I attribute that an awful lot to not just Van, but a number of other executives that I had the opportunity to work with at Computer Sciences Corporation.

Rich Helppie and myself worked real closely together at Superior. I think we learned a lot from each other and we learned how to basically take that business and get it turned around and repositioned and take it forward. Whether it’s Rich or a couple of the partners that I work with today, I have a tremendous amount of respect for, and that’s why they’re my partners today. They are what made Superior successful as we came out of the turn there and began building not only a consulting business, but a really nice IT outsourcing and recurring revenue stream that we later sold to ACS. I can go on and name a hundred people, but I always learn from the people around me and hopefully they learn a little bit from me.

Any final thoughts?

My goodness, I just want to say thanks for the opportunity to have this interview today. I greatly, greatly appreciate that.

I just really and truly enjoy serving the healthcare sector. I’ve been in it all my life and I just thought it would be a lot of fun cranking an organization up on our own. We have four very good partners. I should probably take myself out of that category. I have three terrific partners, and we all have been there, done that kind of people. We’ve all run various businesses or parts of businesses and we’re very good at what we do and we’re all just having a ball doing this.

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