Howard Messing is president and CEO of Meditech.

How’s business?

I think we’re doing very well. The stimulus bill has certainly stimulated.

I noticed on the financials that operating income dropped last year for the first time. Was that just an accounting irregularity, or what happened there?

Operating income dropped last year… Well, we had a drop in sales last year because of the first half of last year. Nobody was buying anything because everybody was figuring out what was going on. That’s probably why you see a small drop in there.

I take it that’s totally reversed and then some.

Right, the problem being that between the time we make a sale and the time the income shows up is the better part of a year. Even though we were making a lot of sales, the second half of last year wasn’t reflected until this year.

Tell me about the challenges and the successes with 6.0. That’s a pretty big step for the company.

6.0 is, yes, a very big step for us. We’ve rewritten a bunch of our software from scratch, which we tend to do every certain number of years, certainly every 7-10 years, as we get new ideas and better ideas. It’s gone pretty well. It’s gotten a great reaction from people.

The biggest challenge for us is that we have so many customers running our older version of software that we have to not only maintain the older version, but actually continue to development in it. We’ll have to continue that for some number of years to come until the vast bulk of our customers upgrade to our newer software.

In addition, we still have the rest of our apps. We’ve only done a core set of applications so far. We’re going to have to do the rest of those over the next 2-3 years.

I take it those would co-exist? If someone wanted 6.0, they could still run everything, it’s just they would be 6.0 on some things?

Right. That’s the way we do it.

I would assume there’s quite a number out there running Magic?

Yes, there’s quite a lot.

Do you have a feel for how many that is?

Something over 1,000-1,200 sites, I believe, are still running Magic.

And your total count — I don’t know what it is now. It used to be around 2,100.

2,100 or 2,200.

So half are still on Magic. Is that the next logical step, that they would go all the way from Magic to 6.0?

Yes, we do have a plan where people go straight from Magic to 6.0. There’s no reason to go to the intermediate.

There were some good things said by the folks at the HIMSS conference — by Dave Garets, if I remember right — about the CPOE adoption with 6.0, which seems to be dramatically improved. Was that part of the reason for rewriting it in a way that was more Windows familiar?

Yes. I think the big difference there is functionally. The old stuff and the new stuff currently is pretty much the same, but the look and feel is certainly different.

People, particularly doctors and nurses, are much more desirous of a modern look and feel and they’re willing to accept things a lot easier if it’s a modern look and feel. I think, yes, that’s why you’re seeing a much greater acceptance. I don’t know about much greater, but a greater acceptance, certainly, with 6.0.

At the same time, the new interface also has allowed us, I think, to reduce things like number of clicks and all those good things. That’s also helped.

Some of the attention that’s out there now is going to companies like Eclipsys and Cerner for opening up their system to third-party customization or hooks into the application. Meditech’s always been pretty close to the vest on not letting clients screw around with the underlying stuff. Is that something that’s in the works or do you even believe in that concept?

I’m not really even sure what the competitors are doing in that area. We’ve always had some ability for our customers to define some things on their own, but overall I would say no, we don’t believe in customization as a desirous thing. It certainly is a necessary thing, on occasion, to do.

I think, moving forward with certification and the patient safety and all that, it’s probably going to be a less attractive feature for people to use than it is in the present time. We don’t have any great plans on that.

What do you think about the whole certification argument? Do you like the way it’s changing? What are your thoughts, as a vendor, on what certification means to you?

What certification means to me? I guess in many ways, I would have been the last one to say that certification was a good thing, but I have surprised myself by coming around quite a bit in thinking that it, perhaps, is a good thing for our industry. Certainly, we’ll quibble over the details of how it’s done, and quibble about the particular way of the government’s getting involved.

I’d like to say I’m a short-term pessimist and a long-term optimist, but in the long run since I worry a lot about patient safety, I think certification may very well be in everybody’s best interest. I would rather that it was cast in terms of results rather than specific ways to get there, but over time, I assume that we will get modification into the way it’s written and be able to do it in a meaningful way — not to use the word too much. We’ll see …we’ll see.

In the short-term, yes, it’s a pain in the ass because you’ve got to get it certified. We don’t know all the rules and we may have to get it certified multiple times, but so long as it’s a level playing field for everyone, and so long as the eventual outcome is to have better systems and interoperable systems, I don’t think it’s necessarily a bad thing.

How do you think the whole CCHIT will change now that Meaningful Use is off on a different direction? What do you think certification’s going to look like in a year or two?

I really don’t know. We’re certainly will have some people who continue to look at it and put their ideas in and we’ll see how it goes.

Do you think, under the CCHIT requirements, that you had to invest R&D to do stuff that customers probably didn’t really care about that was still on the checklist?

A very small amount of that, but most of what’s on there is stuff that people do care about. I’d actually have to think long and hard about something that nobody cared about.

Meditech’s one of the few systems out there that’s really appropriate for those many small hospitals that maybe aren’t very far along on their IT journey. Are you doing anything new to go after that business?

Not really. First of all, we think we’re suitable for all hospitals regardless of size, but I will agree that the small hospitals find our cost of ownership to be particularly good for them, and tend to work with us. No, we’re not doing anything specific to do that, other than we continue to watch our pricing to make sure that we remain appropriate for various sizes of hospitals.

What competitors do you face across the table most often?

I think McKesson is certainly in the medium-sized hospitals as the competitor, and I think we face them most often. In the small hospitals, probably CPSI. In the large hospitals, it’s mostly Cerner. Occasionally in the largest hospitals, Epic.

I’m assuming you displace some in-house vendors occasionally. Who are the ones that usually get displaced in favor of Meditech?

It’s a mixture of all of them.

Yes?

Yes. I’m not going to single out any particular vendor.

Have the demographics of your customer base shifted as far as size, location, or type of hospital?

Yes, I think the size is slightly larger than it used to be. If you would have asked me five years ago, I would have said our sweet spot was 200-225 beds. I would say it’s closer to 275-300 beds today.

If you took that as a percentile, that’s probably a fairly huge chunk of the hospitals that are out there. I’m sure you probably know that number by heart, but that’s, I would guess, most of them by far.

Well, we think we’re in about 25-28% of the hospitals in the country, if that’s what you’re asking me.

I was just saying, if somebody drew a line and said, “Well, your sweet spot’s 300 beds,” or whatever it is, you would still not be ruling out very many potential prospects.

That’s true, that’s right. We don’t want to rule anybody out.

What about hosting? What’s the latest buzz on people wanting hosted solutions or turnkey solutions?

Actually, that’s kind of interesting because I used to not be at all a fan of hosting. I didn’t think that made economic sense for Meditech customers again because I thought our cost of ownership was pretty low.

Having said that, I’ve seen more interest over the last year or two than I expected, and not necessarily from the places that are most cost-pressed, which is what you would expect. I think a lot of people are taking the attitude that even if they don’t save money, it reduces management time and frees them up to deal with more long-term issues.

We’re seeing more of it. We ourselves have no intentions of providing that service directly, but there are various people out there who are interested in providing that service with Meditech software and we continue to say that’s fine with us.

When I talked to you years ago, it was the ‘stick to the knitting’ philosophy; that you didn’t want to be in something that was distracting. Is that the reason that you don’t want …

Absolutely. We sell software and the services around that software. We don’t do anything else.

The proposed acquisition of Eclipsys by Allscripts moved the idea of integration between hospitals and physician practices to the forefront. What do you think about the acquisition and that trend of people suddenly short-listing only those vendors who have strong integration with outpatient?

I don’t pay too much attention to what the competitors are doing, so I don’t know that I have any particular impression on Eclipsys and Allscripts. But in general, I agree with the philosophy and something we’ve promoted –  that there has to be tighter integration with all avenues of care, both ambulatory and acute care and eventually, nursing homes and independent care and whatever.

Obviously the biggest connection is between ambulatory and acute care, and one way or another, there needs to be a seamless integration with that, both in terms of getting the doctors to appreciate better what’s going on and in terms of taking better care of the patient. So I think you’ll see, whether it’s by acquisition or strong partnerships between companies, a tighter and tighter integration between all horizontal attributes of care. We’ve done that for a long time ourselves with our partner LSS, but even with us, I think you’ll see a tightening of that integration.

At the same time, still recognizing that for a long time to come, there are going to be doctors out there who have their own systems that are not necessarily the one that the inpatient or the acute care facility might choose for them.

Are you finding that that question comes up more often when you have prospects; and are they comfortable with the answer that you can give them on your strategy for either one system for doctors, or foreign systems that you can integrate?

It does come up more often. I’m very happy with that answer. It seems to be something that most people respond well to.

What do you think about the trend of smaller hospitals that are struggling with everything from technology to financing being acquired? How do you think that will change your business?

I don’t think it will change the business that much. There may be less customers, but they will be bigger customers overall if that trend continues.

I think we’re actually a few years away from the real cost pressures hitting our hospitals. Many of my hospitals would disagree with me on that. They’d say they’re under that pressure today, but as the baby boomers age in the next four or five years, there’ll be a lot of cost pressure and there’ll probably be a lot of consolidation in the hospital industry at that time.

When we have customers of ours that are acquired by another hospital, often our system is the one that stays in place. Often they do a search to decide what they want to do and it’s just another competitive situation. I don’t think it changes the business that much.

It might hurt a vendor that specializes only in the smallest hospitals if they tend to disappear, but I actually don’t think the smallest hospitals will all disappear. There’s a need for those small hospitals out in rural areas, and many of them are fiercely independent.

It seems like nobody even blinks an eye these days when you see a deal signed for $30 or $50 or even $100 million. Does your phone ring more often when hospitals that can’t afford that suddenly think the Meditech picture looks attractive?

Well, I blink at somebody spending $100 million. I don’t really understand some of the economics behind these decisions that are being made at a time when the hospitals are claiming they’re under so much cost pressure. Then you see them making these gigantic deals for huge amounts of money for a system that I consider to be basically equivalent to what I offer for 20% of the cost. It’s very, very strange, and I think that will catch up with people in the long run.

So, I’m not sure how to answer your question, but we continue to say that we’re good value. We’re not looking to take advantage of anyone by raising our prices tremendously. We think that, in the long run and with the cost pressures now, people will more and more realize that we were a good alternative.

Assuming that it would be difficult to look at the marginal benefit compared to the marginal cost of $10 million versus $100 million, why do you think people are making those decisions?

I think there’s some element of people thinking if you’re spending that much, you must be getting a better system. I think there’s some element of … how do I want to put it? There’s some element of people wanting to … I have to be careful how I say this.

Many hospital managements are afraid of losing their doctors, and so they turn the decision over to their doctors. The doctors are not necessarily concerned with the overall finances of the acute care institution, so the cost does not become a factor in the choice. I think we see a lot of that happening. I don’t think there’s any way it can be cost justified.

As I understand it, the HITECH reimbursement isn’t based on what you spend, it’s based on volume. Bottom line, it would stand to reason that the less you spend, the more you get to keep of the difference. Are people asking you to run those numbers?

They do ask us to run those numbers. That’s the way I understand it. Like I said, I think it will come back to haunt some people who are spending gobs and gobs of money on some of these systems.

And it’s not, of course, just the capital upfront. The maintenance is going to be just excruciating on some of that.

Right, right. Total cost of ownership is huge on some of these systems.

Are you pricing 6.0 differently, or is that basically just a replacement at the same price?

It’s a replacement. We don’t charge different amounts for different systems. It’s too complicated.

Your maintenance fees are, I assume, still low?

Our maintenance fees are basically the same as they’ve always been. We charge basically, 1% a month of what people buy for maintenance and we intend to keep that. Not that there aren’t modest raises over time, but we try to keep it low. We don’t think that our systems are difficult to maintain.

With other vendors, not only do the price goes up, but so do the maintenance percentage. It seems like it shames the other vendors who get 18 or 20% on five times the cost.

They don’t seem to be shamed by it. If they were truly shamed by it, they would do something about it.

Or the customers would stop buying.

Right, right.

How do you educate someone who somehow sees that as an equivalent alternative? Are they just not price sensitive?

To be honest, we don’t actually lose many sales to the real expensive systems that are out there. Many of our customers do toy with it. Many of them do understand it’s too expensive and then back off on it.

We just do what we’ve always done, which is we want people to want our system. We don’t want them to buy from us because they don’t want somebody else’s system, so we continue to demonstrate what we do.

If they bring up specific features that they think they’re getting with somebody else’s system that we don’t have, we try to point out to them that it’s actually there in our software. Hopefully, we make our case and it’s a strong one, that it’s better to go with Meditech.

Three or four years from now is when I believe the real crisis will happen in healthcare. Again, I know people say it’s happening now, but I really believe it’ll be three or four years from now. As the baby boomers enter Medicare, hospitals are not going to be able to spend as much on healthcare information systems as they do today. I think Meditech is very well positioned for when that happens, and the companies that are charging a lot will have built cost structures that they won’t be able to maintain.

Do you think there’s a certain snob value that a hospital says, “Oh, I can’t run Meditech. I’ve got to have Epic or Cerner because that’s what all the cool hospitals like mine are running.” Do you think that there are people who never even pick up the phone to call you?

Yes, I believe that exists. I think it’s less than it used to be. I think we’ve made a lot of progress, particularly in the multi-hospital chains. Particularly among the Catholic hospitals we’ve done very well, so I think it’s less than it used to be, but yes, there is certainly the snob appeal or whatever you want to call it — the CIO of the large teaching institution who can’t do Meditech because we’re also in community hospitals.

I would assume your win percentage is a lot higher when the CFO is involved more actively.

I’ve never really looked at that, to tell you the truth. I’d imagine it’s true, but I’ve never actually thought about it.

What’s your overall thought on the proposed Meaningful Use criteria and the whole healthcare reform issue and how it’s going to affect your business?

I wish the Meaningful Use was caged in terms of results than it was caged in terms of features of software. Then, I would think you would have a much better impact on patients than it, perhaps, will caging it the way that they’ve done it. It’s certainly is driving a huge amount of sales for us today in time, as people decide they have to make a decision now.

If they are going to change systems, they won’t be able to afford to change their system 18 months from now when they’re in the thick of trying to get that money from the government. So, it’s driven a huge amount of business today, which I expect to be a blip.

I expect that 18 months to two years from now, there’ll actually be a lull in people buying systems; much as it was after Y2K, wherein 1999 was a huge year and then 2000-2001, business really fell off. I see the same thing here.

I do wish the government had spread this out over a longer timeframe. I think that our customers would be able to be better focused on the real results they can get from it if we had done that rather than chasing after the money and doing the minimum they can to get the money because it’s under such a tight time frame. But again, as I said before, I’m a long-term optimist. I think in the long run this will all be good.

How do you plan for your business knowing that that hump is going to go away after the people have locked in with whoever their partner is?

The main thing we’ve done is limit the implementations that we’re doing currently, which has been a struggle. We have done that in term of we are growing, but we’re not growing so fast that we’ll have people who won’t have what to do 18 months or two years from now.

We’ve really spaced out the implementation. As people coming to us for the first time today are getting dates for delivery that are well over a year, to sometimes, depending on what they’re buying, as much as 18 months from now, which many of them don’t like. But that’s the way we control the business and make sure that our long record of no layoffs and controlled growth remains intact.

How do you think your job will change as CEO?

I don’t think it’ll change very much at all. Neil Pappalardo, who has been our CEO for 40 years or so, has just decided that it’s time for him to give up that title, but in effect, I’ve been running the day-to-day business for quite a while now. He’s still around; he just has been gradually spending more and more time on other pursuits, and so thought it was time to pass the baton. So, I don’t really think it’s going to change much on a day-to-day basis.

Is there a movement to prepare to transfer to the next generation of leadership?

I think we’ve always done that. It’s the case that we have appointed new officers several times over the past three years. I think you’re going to see us doing that again before too long.

We have a great set of people who are what we call directors, the round of people who report to our officers. It’s a lot of good people who have been here a long time who see this as their life’s work, and they will gradually take over. Our succession planning is thought out very carefully. We try very hard to get people promoted before the person who they are going to be, so to say, replacing, is ready to retire.

For example, we had a VP of development, a fellow named Bob Gale, who about 2-3 years ago we promoted him to senior VP and brought in a woman by the name of Michelle O’Connor, and she has been gradually taking over responsibility from him. You’ll see that in all of our areas.

This is one of those boom cycles where suddenly everybody and their brother want to be in healthcare IT. Is the company going to stick to its guns about not selling, not going public, not changing?

As long as I’m around it will. Yes — the answer to that is yes. We have too much fun the way it is. Again, we think the prospects for the future are very, very good. We see no reason to change the structure of the company. It’s worked well for us and we don’t see any benefit.

If you looked out 5-10 years, what are the strengths, weaknesses, opportunities and threats for Meditech?

I think the biggest threat is if the healthcare system changes in such a way that we can’t adapt correctly, and nobody really knows where the healthcare system is going. There are certainly many competing thoughts. That’s one of the reasons that I have been pursuing international business is to give us some stability that doesn’t depend on, let’s say, one healthcare system in the world. I think that’s the biggest, biggest risk we have.

I also think in some ways that that’s our biggest strength, in that we’ve shown flexibility. We reinvented ourselves many times and shown that we can have multiple generations of software running that address the different needs of the healthcare system. Hopefully, whatever does happen, we’ll be able to deal with.

Anything else you wanted to talk about or any concluding thoughts?

You know, there’s one thing you didn’t ask me about that I think is going to become more and more important as IT systems become more and more central to the clinical care process, which is patient safety. That’s something that’s a very big personal concern to me. We’re making every effort we can to produce a safe as possible software as we can. To some extent, I wish that the ARRA requirements actually included some patient safety issues as well in them.

I’m sure that the FDA, if they ever get funding, will start to regulate our software. In Canada, our kind of software becomes a medical device in about a year. We’re going to have to be regulated if we were a medical device which has patient safety implications. I think that’s the biggest issue for the industry that we should all be cognizant of and we should all care a lot about.

The only thing that keeps me up at night is the fear that we’re doing something that’s going to hurt someone. I hope that all the other CEOs have the same kind of feeling, because if one hurts somebody, it casts a light on the entire industry.

Generally when that happens, either it wasn’t designed to be very usable or the QA wasn’t very good. What steps do you take to build that safety into the product?

We certainly have a fairly thorough QA process that we do to make sure that the software is as absolutely safe as it can possibly be. Then we also have a fairly detailed process when a customer reports a possible patient safety issue. That problem is immediately elevated in status. We make a quick determination whether it’s even possible that there’s a patient safety issue so that we can notify all customers of the possible issue. Then we throw a lot of development resources and QA resources on it to figure out what the problem is and fix it.

I agree with you that sometimes patient safety issues are bugs, but sometimes they’re just a misunderstanding of how the software needs to be used; or a question of terminology. Those are actually a lot tougher to find, so you have to be that much more careful in your design, and that much more careful in your quality review of things.

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From The PACS Designer: “Re: Yoono. Yoono allows you to connect to all your social networks and instant messaging services in one place.” Guess all the good domain names were taken if Yoono was all that was left. I gave up on Twitter about five minutes after I tried it. Recruiters have run everyone off from LinkedIn. Facebook is pretty cool, but trending up on self-conscious constant users trying to impress their phony online friends with minimally clever observations. Still, Inga and I like it when someone Likes or Friends us on FB because we’re just as vain as everyone else when it comes to public displays of fake affection, the electronic version of the Hollywood air kiss.

From ExER: “Re: Betsy Hersher. It seems she’s back in the recruiting business. Her picture and references are gone from CES Partners and she’s working with former employee Bonnie Siegel on a search.”

From GladToBeLongGone: “Re: you won’t run this, but word is that Mr. Big Yahoo whose name sounds like his initials at a company being acquired is already looking for a new gig. This should be good news for all the sales people at Newco since the guy who should get the top job doesn’t have that incredible ego.” I expected that — the coattails he rode in on are long gone.

From Medsync: “Re: baby pool. Join the pool on the arrival of the Blumenthal twins, Meaningful use and Certification.” Someone set up an online “when will the baby be born” contest. Funny. The MU draft went out right before New Year’s, as I well know since I worked frantic hours summarizing it here, so maybe the final version will come out this holiday weekend and mess up another holiday for me.

I’m in solo mode again as Inga takes a bit of me-time. Here are a few quotes from her e-mails to me today to tide you over (feel free to guess the context): (a) “Seems to be a lot of interest in porn stars these days”; (b) citing readership increases since she came on board, “just saying … I’m sure your work contributed to that growth as well”; (c) with a forwarded press release of dubious value, “Hmmm …”; (d) when testing a change I had made in the HIStalk display on smart phones, “We have been re-mobilized.” She’s a bit terse from her iPhone, but always entertaining.

Listening: new from The New Pornographers, indie pop from Canada.

Back in March, I dug out a juicy nugget from an internal VA report: it was scrapping a $150 million patient scheduling system without ever bringing it live. The GAO weighs in with its official report (warning: PDF), pegging the cost at $127 million and saying “VA has not implemented any of the planned system’s capabilities and is essentially starting over.” The contractor that developed the system with “a large number of defects” walks away with $65 million. GAO finds much to criticize about the VA’s involvement: lack of competitive bidding, sloppy specs, unreliable status reports, and lack of action by project oversight groups when the project started tanking. They made the same massive mistake they made with BearingPoint in the also-failed, $472 million CoreFLS — they just gave the incumbent contractor more work orders against an existing maintenance contract instead of bidding it out. All of this started coming out a couple of years ago in various reports, which got a few VA bigwigs fired and some politicians fired up to hold VA accountable. The contractor is not conspicuously named in any of these documents, but it appears to have been Southwest Research Institute of San Antonio, a non-profit bringing in $564 million per year. It was founded, oddly enough, by an Texas oilman named whose last name was Slick.

A Compuware survey attempts to make a point about clinical system response time, but I’m not going to bother with the results because their methodology was terrible. They scrounged up 99 respondents to take their survey, all from social networking sites and with no apparent attempt to qualify the respondents by the system they use, their roles, etc. Given that the company is in the infrastructure business, you will not be shocked to learn that they conclude that clinicians taking Twitter surveys aren’t happy with response time. (note to self: develop a Twitter-based CPOE system and go public fast).

A Dr. HITECH contribution for Independence Day (please, can we avoid calling it the Fourth of July?) Ross Martin, MD, MHA re-imagines a National Anthem that’s easier to sing and allows variations (hopefully better than those godawful hack jobs done to the Star Spangled Banner by “Nashville recording artists” and diva-lites before NASCAR races). You can vote for Ross’s version.

A new KLAS report covers cardiovascular information systems. Its conclusion: they suck. Every vendor except Philips and Digisonics gets a lower client satisfaction score than last year, making the CVIS segment one of the worst. Those vendors: Agfa, Fujifilm, GE, HeartIT, Lumedx, McKesson, Merge, ScImage, Siemens, and Thinking Systems. KLAS says 30% of respondents are hoping to dump their vendors, concluding that they “fail to deliver on integration, functionality, and service expectations.”

I installed a new smartphone display format for HIStalk, HIStalk Mobile, and HIStalk Practice. If you’re a mobile user, it should be fast, sleek, and easy to read.

I liked HIT better before the politicians got involved and vice versa. Dr. Ron Kirkland, a self-styled conservative Republican running for Congress and former chair of the American Medical Group Association, bragged on AMGA’s political involvement in getting HITECH passed. Now that he’s running for office, he hates HITECH, saying the country is going bankrupt because of “the bailouts, the ridiculous stimulus plans, the outrageous farm subsidies to big corporations, and yes, even the small incentives for electronic medical records. We must end them now!” In the mean time, his 120-doctor clinic will lap up $4 million from the HITECH feed trough. A bang-up reporting job by Andis Robeznieks from Modern Healthcare. You can tell the real journalists like Andis from the posers: Google their subject and see how often (95% of the time, in my experience) they obviously just saw a press release, e-mailed a couple of people for vanilla quotes, and wrote it up cleverly like they sleuthed out real news.

Ed Marx always updates his CIO Unplugged posts with responses to reader comments, which he’s just done for his CPOE adoption one.

I’ve mentioned business analytics vendor Qlik Technologies a couple of times going back to February 2006. It’s doing an IPO valued at around $700 million.

Mass General’s Emergency Medical Network develops an ER locator app that covers the entire US.

Misys PLC CEO Mike Lawrie says that even though the company will cash in most of its Allscripts shares, it remains committed to Misys Open Source Solutions. It’s an odd press release: he made the quoted announcement at a company sales conference, not generally perceived as the best venue to deliver objective news.

IASIS Healthcare extends its plans for McKesson Horizon Clinicals, committing to physician documentation and CPOE in its 16 hospitals.

University of Tennessee Medical Center chooses GE Centricity Perioperative.

Industry longtimer Bettina Dold joins transcription vendor Acusis as director of product development. 

Australians won’t be able to review their medical records online for at least two years, the health minister says.

Sponsor news:

• IntraNexus has a shiny new Web site, which I notice includes a handy features and benefits list for each application in their SAPPHIRE lineup.
• Bayonne Medical Center (NJ) goes live with Picis ED PulseCheck two months ahead of schedule, integrated with Meditech.
• Hoag Memorial Presbyterian Hospital (CA) chooses Medicity as its HIE partner, signing up for ProAccess Community, MediTrust Cloud Services, and the Novo Grid.
• St. Cloud Medical group (MN) signs up for Greenway PrimeSuite for its 55 providers, including its patient portal and mobile version for hospital rounding.

Samsung launches its Android-powered, 4G-capable Epic smart phone on Sprint, which I’m mentioning only because I’m sick of hearing about iPhones.

Conmed (seriously) gets a $9 million, five-year contract to provide services to the City of Roanoke, VA, including implementing an EMR for its jail.

The FBI is brought in to investigate a hacker’s demands for data ransom after claiming to have penetrated the Texas Cancer Registry. Seems suspicious: the firewalls are intact, only one message was sent, and no proof was provided. It sounds like it could be an employee trying to coax more budget money from the state with a false alarm, but I’m sure the Fibbies will figure it out.

Former McKesson VP Mikael Ohman is named COO of T-System.

Odd lawsuit: two former porn stars are suing a clinic that provides medical clearance for the adult film industry, saying its release forms allow disclosure of their health information to almost anyone. I never thought of porn stars as being particularly protective of their anatomy and physiology, but I guess they’re like the rest of us.

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An HIT Moment with ... is a quick interview with someone we find interesting. Sharona Hoffman is professor of law and bioethics and co-director of the Law-Medicine Center at Case Western Reserve University School of Law in Cleveland, OH. She recently published an article, E-Health Hazards: Provider Liability and Electronic Health Record Systems in Berkeley Technology Law Journal with co-author Andy Podgurski, a CWRU professor of computer science who also contributed to the information below.

The article suggests that a hospital may expose itself to liability for physician acts, from which it is currently protected, by forcing doctors to follow its EHR-enforced practice guidelines. Should this be a significant concern?

This is a complicated legal question and I don’t think it should be of primary concern for hospitals. Whether a hospital is vicariously liable for the acts of physicians will depend upon the degree of control it has over them. Often, a hospital can prove that the physician is an independent contractor. In some circumstances, however, doctors are found to be employees and not independent contractors. The issuance of an EHR practice guideline alone, however, probably will not undercut the independent contractor defense.

Provider errors due to software usability issues have made headlines recently. The article suggests an option of requiring all EHRs to use a standard user interface. Given the competitive and proprietary nature of the EHR industry, is that likely or even advisable? Is there a precedent in other industries?

Major software platforms like Microsoft Windows and the Mac have user interface standards or guidelines that application vendors follow. An EHR interface standard should define an essential level of consistency between the UIs of different system. It shouldn’t require them to be identical.

How much liability do software vendors and hospitals have for programming errors and setup mistakes, respectively? Do you think those cases are coming up but being settled out of court such that the problem is understated?

Vendors would have primary responsibility in such cases. Vendors both design the software and help hospitals implement the systems and train employees. Hospitals would have liability if they tried to customize the system inappropriately on their own or did not engage experts to provide responsible training. They could also be held liable for mistakes that employees, rather than independent contractors, made with the system that caused patient harm.

The vast majority of cases that are filed in court do not produce a reported decision and many of these are settled, so you are right that it is difficult to know how many EHR cases have arisen.

In fact, regardless of litigation, a major problem is that there is no adverse event reporting requirement. If an EHR system has a problem, the vendor or user doesn’t have to report it to any regulatory agency. Nobody is keeping track of what kinds of problems are arising and how frequently. Therefore, EHR system purchasers can’t obtain information they need to make educated decisions.

The article concludes that the federal government should oversee and monitor EHRs in some way that goes beyond simple certification. Explain why that’s the case and who in the industry should advocate for government involvement.

EHR systems are much more than just record-keeping systems. They manage patient care in a lot of ways, and therefore, they are safety-critical. They provide doctors with prompts and alerts concerning patient allergies, other drugs patients are taking, and the patient’s medical history. They provide a mechanism by which doctors order diagnostic tests, medications, and other treatments. They will create the patient record and could be the way by which a physician communicates with other departments or with the patient herself. 

If anything goes wrong with any of these functions because of software bugs, computer shutdowns, or user errors due to poor system design, this could be catastrophic for medical outcomes.

The FDA regulates drugs and devices. A responsible doctor would never think of implanting a pacemaker that is not FDA-approved, because a flawed device could kill the patient. We believe that EHR systems will be just as critical for patient welfare and therefore, they require an equal degree of government oversight.

Anyone who really cares about patients and medical outcomes should be advocating for government involvement.

As you looked at the EHR industry and EHR adoption by providers, what aspects concern you the most, both as an attorney and a patient? 

EHR systems have the potential to improve patient care significantly. They can increase efficiency, provide doctors with essential information about the patient, and help doctors make optimal medical decisions. Most other industries are computerized, so it is certainly time for the medical profession to catch up. However, in implementing EHR systems, we must proceed cautiously and responsibly.

It is extremely important that the government establish appropriate approval and monitoring processes for EHR systems. These must include an adverse event reporting requirement.

We have heard from a lot of health care providers that the systems they have are difficult to navigate, reduce efficiency because they require too much time and data, and disrupt the relationship with the patient. Some doctors feel that they are overwhelmed by irrelevant or trivial electronic alerts and that they don’t have time to listen to and examine patients because they are too busy attending to the demands of the computer.

Therefore, we need regulatory standards and criteria that ensure that vendors minimize these problems. Once a practice purchases a system for millions of dollars and trains its staff, it will not be able switch to a different system that is better. It is only with appropriate oversight and quality-control that we can maximize the potential of this technology.

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From MaxPayneUK: “Re: iSoft. Shares hit 17c AUS – penny stock range. Directors and CEO reportedly selling off shares and rumors of massive layoffs in the UK and India have come up. ANZ MD sacked – will the UK MD be next? Too right!” Shares dropped to as low as 13.5 cents Friday when CEO Gary Cohen sold some of his, saying he had no choice due to margin calls. Denis Tebbutt, managing director in Australia and New Zealand, has been replaced. Wanna buy a train wreck cheap? Someone could pick iSoft up for a song, disengage from its money-losing UK business, and still become the non-US world’s biggest healthcare IT player.

I appreciate the support of CapSite, new to HIStalk as a Platinum Sponsor. CapSite is a healthcare technology research and advisory firm that offers an easy-to-use online database of evidence-based information to support healthcare technology capital expenditures. It provides the always-elusive pricing transparency (i.e., “Am I getting a good deal compared to hospitals like mine?”) by offering line-item details from contracts and proposals, broken out into software, hardware, and services. Its scope includes healthcare IT, imaging equipment, and medical devices. CapSite offers services to vendors as well, helping them understand pricing, competitive positioning, and industry trends. They’ll give you a live demo if you ask nicely. Thanks to the folks at CapSite for supporting HIStalk and its readers.

Orlando Health (FL) signs a deal with Health Care DataWorks for an enterprise data warehouse.

Finally, a meme (and a background buzz) even more annoying than Meaningful Use: vuvuzela.

The MyMedicalRecords people seem to be desperate to make something happen with the PHRs that nobody wants (including free ones, and theirs runs $100 per year), so their latest attempt is to run a commercial during the Daytime Emmy Awards (honoring the best of Unemployment TV). Last time I checked, the money-losing company had a dozen or so employees with microscopic revenue going down instead of up and with an odd D-list celebrity board of advisors that includes former astronaut Buzz Aldrin, former politician Dick Gephardt, and former boxer Sugar Ray Leonard. I was going to include their commercial video here, but it doesn’t work unless you manually switch to HD mode, so I’ll just link.

John Glaser e-mailed to confirm that he’s moving from Partners HealthCare to Siemens, where he’ll be CEO of its healthcare IT business, reported here first thanks to a non-John tipster (if you haven’t signed up for updates, do it now to avoid future in-your-face gloating by those who have). John will have held three big jobs in one calendar year: Partners CIO, ONC advisor, and now vendor CEO. Some are speculating that his move was due to announced Partners cost cutbacks, but he tells me he was just getting restless after 22 years at Partners and his ONC stint stimulated his desire to try something new. Congratulations to him. I always say the best times to take risks are in your 20s (no money, no kids, no clue) and your 50s (money, kids grown, ready for deferred excitement). If he wanted a tough job, I think he found it.

Singapore’s national EHR project chooses its vendors: Accenture, Oracle, and Orion Health get the $144 million USD deal to tie together Singapore’s EMRs to meet its “one patient, one record” vision.

We’re firing on all cylinders on HIStalk Mobile, double-teaming mobile health news with Travis (MD, MBA, software developer reporting news and opinion) and the enigmatic M (who’s contributing app spotlights and iPhone news). Sign up for the e-mail list over there and jump in with comments or guest articles if you are so inclined.

This is encouraging: nearly 2/3 of readers say their doctor used an EMR in the exam room during their most recent visit (mine did too, by the way). New poll to your right: which factor most directly affects a hospital’s adoption of CPOE?

MIT researchers develop a $2 cell phone add-on called PerfectSight that will let patients, particularly those in developing countries, check their own eyesight. Also using consumer technology to create diagnostic tools: Rice University, whose biomedical engineers worked with MD Anderson to rig a $400 Olympus digital camera and special dyes that can detect cancerous cells in the cheek, which could make it possible for non-pathologists to perform portable cancer screening.

The FDA and FCC will meet in July to “identify regulatory challenges” with mobile health devices and ensuring their safety and effectiveness. A UK article says the FCC is interested in reports that wireless broadband could interfere with medical equipment, saying that GE Healthcare has asked for increased regulation to avoid interference to its hospital equipment.

Raj Toleti, who founded kiosk maker Galvanon and content management company Cytura in the Orlando area, joins another Orlando kiosk company, PatientPoint, as CEO.

The West Virginia Health Information Network outsources its entire six-person payroll, including its CIO, in a no-bid contract with a research institute. They say it’s cheaper because the employees don’t receive state benefits and that its structure could change anyway.

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Terry Edwards is president and CEO of PerfectServe. 

Tell me what PerfectServe does.

At a high level, it’s all about making it easy for clinicians in a hospital environment — nurses and doctors — to connect with the right doctor at the right time and in the right way. It’s about enabling communication processes that are accurate and simple.

Then from the perspective of the doctor, it’s about enabling processes that gives physicians the ability to really selectively filter and control the communications that they receive throughout their work day. When I use those terms, ‘the ability to selectively filter and control,’ it’s really about enabling them to mold the flow of communication that a hospital directs at them around their own personal unique workflows.

Give me an example of two or three problems that this would solve.

Let’s say that we are three physicians, and maybe we’re cardiologists. Our workflow rules might be that we each take our own calls during the week beginning at 6:30 a.m. until 4:30 p.m. except for the days that we’re off.

John is off on Tuesdays, Bill is off on Wednesdays, and I’m off on Thursdays. On those days that we’re off, one of the other two covers for the person who’s off. Then we have our consults during that same weekday time period, handled by our PA. Our PA will route those to one of us based on the things that are unique to those consults. In the evening hours and on the weekend hours, everything is handled by one doctor on call and we change that schedule daily. One guy would cover the whole weekend, like Friday night through Monday morning.

In addition to that, maybe John likes to have everything just route to his cell phone in real time. He doesn’t mind being interrupted; he like being really accessible. Maybe Bill likes only the urgent things routed to his cell phone, and for everything else, he wants a text message to show up on his phone. Me, maybe I’m just a numeric pager kind of guy — I just want a call-back number and that’s it, but beginning at 9:00 p.m., I want you to call me at home.

Instead of all those instructions living in pieces of paper, Rolodexes, and call schedules in three-ring binders and things in and around the hospital that nurses and other doctors need to refer to and interpret every time they need to call one of us, we build all of those rules into the PerfectServe system. We give the hospital one number to dial.

This is where the ease comes in. If I’m trying to reach Bill, I just call on the system and I say, “Bill Smith.” The system will confirm that, it will interpret the rules, and then route the call either to Bill or maybe the PA or one of us according to the workflow rules, and then our individual instructions for that specific moment in time. It does it automatically.

That sounds something a little bit similar to what Vocera offers. Who would you consider to be your competitors?

Our competitor is the status quo, just in terms of all the manual processes that are in place in health systems today. Vocera is not really a competitor. They’re really a complementary technology in that Vocera is more like a device or a node on PerfectServe’s network or PerfectServe’s platform.

We can answer calls and messages that would originate on Vocera devices and we can send calls and messages to clinicians on Vocera devices. But Vocera, for the most part, is an ‘in the four walls of the hospital’ solution; whereas PerfectServe includes the communication to physicians regardless of whether they’re in the hospital or out in their practices, or mobile — wherever they are. We’re device agnostic.

Someone comes to you and they decide what end-user devices they need, whether it’s voice-over-IP or plain old telephones, or whatever. Then you’re what rides in the middle to decide, when those calls come in, how to route them?

Exactly. It’s about really intelligent workflow-based, rules-based routing according to the rules of the recipient. Physicians are the biggest users in terms of receivers of calls and messages, and then those who might be around them as part of their workflow — like a nurse practitioner, physician assistant, or some other sender.

Like in the example that I gave, the consults during the weekdays would route to a PA. If, for example, I was the nurse on the floor, I might not know that those are the rules, but when I called in and said, “Bill Smith,” I might hear prompt, “Are you calling about a consult?” Yes. Then, that would route that call to the PA, and maybe the outcome would be a voice message where I can leave all the detail, and the PA picks those up throughout the day and then determines where to forward it to.

So if I’m calling a doctor and their preferred method at that moment is to roll to a pager, do I then get prompted for their pager number or does it just say, “Your message will be delivered,” and then it logs you off and it just does what it does in the background?

Yes, it does what it does. When we configure the system in a hospital, we configure it so that we’re pulling all the appropriate Caller ID information. We map that back to departments so that we greatly reduce the need for nurses to key in numbers and make mistakes and things like that, as well as speed up the system.

Everything that happens on the platform is documented automatically. We’ve developed an analytical tool that then allows, say, a chief medical officer at a hospital to look and see how many calls and messages we are initiating to which doctors and from which departments, and drill down into that by specialty and contact method. When you have that data, then you can begin to use it as a tool to enhance process improvement for those clinical processes in which communication are really a fast, and/or efficient communication is central.

What about patients? Would physicians’ practices use this as the front-end for patient calls?

Yes. There is another module of the service that is designed to replace the conventional answering service. That provides a portal, or an access point for patient calls coming into the practice. The caller experience is different than the hospital portal, which is optimized for communication that originates from clinicians at a given hospital site.

What would be the compelling reason that they would do that? I know a lot of them are really tied to their answering services.

It’s the elimination of human error. In the current communication processes, whether they’re those that originate at the practice, or those that are being done manually in the hospital environment, the complexity of the physician workflows coupled to the manual processes — you’re basically dealing with a high volume of highly variable processes handled in manual ways, so you have a high degree of communication breakdown.

When you have a breakdown, you have situations where the wrong doctor, for example, is paged or called when he should be off. Or maybe a doctor, when he is on call in the middle of the night, his rule is that he wants his pager to go off and not his home phone to ring. The reason why is if the home phone rings, it wakes up everybody in the house. Whereas another person, when they’re on call and they’re at home, they might sleep in a different room from their spouse and they want their home phone to ring.

With doctors, those breakdowns really result in a high degree of frustration; and then the overall process inefficiencies cost them time. Time is the only thing that the doctors have, really. That’s their key asset.

Looking at it from the hospital perspective, tell me about what the advantages would be to hospitals and to patients for physicians being able to directly access physicians and nurses to make their communications with physicians.

Those benefits, at the highest level, really accrue up into the coordination of care, the reduction of risk, and tighter physician alignment. When I talk about tighter physician alignment, I mean really being able to integrate the care delivery processes of the hospital with the communication workflow of the physicians. These things are important because of the high volume of communication that takes place just in the coordination of care.

For example, a typical 300-bed hospital will probably initiate some 15,000 voice-related calls to doctors every single month, or 180,000 a year. These are interactions where it’s about: there’s been a change of status on this patient; or we’ve got these results and I need to act, but I need to know what order you’re going to write.

Those events are all related to patient care. When you improve the accuracy of those processes, then nurses aren’t wasting time making phone calls to the wrong people. You reduce the delays in communication and decisions can be made faster. That has an impact on not only reduction of risk and quality, but faster throughput; and it can make a contribution to reducing length of stay and everything related to improved efficiency.

You mentioned the measurement of length of stay. Have any users done any quality measures or satisfaction measures?

We had started a study with one of our small hospital accounts and we didn’t complete it because of some changes in their operation, but that was a study that suggested that we had been able to impact length of stay when physicians used the tool in the right way; but some of that data was inconclusive.

I was in a meeting actually yesterday with one of our clients at the St. John Health System where we were talking about value. It was a value analysis discussion with some of the executives. They had indicated that their length of stay had gone down with PerfectServe. There were many things that they had done to drive that, but they felt that PerfectServe was a major contributor.

Has anybody ever asked you to do anything with emergency communication to an entire group, where one call blasts information out in different ways to more than one person?

We have what we call a ‘team alert’ function, and it’s really designed for smaller clinical teams; although I think we have some applications of maybe 50-100 people. We’re not designed for mass emergency notification. There are other companies that do that.

Where our team alert applications work is when we have processes — such as a process around mobilizing an open-heart team or maybe a cath lab team where there are multiple people who might serve in one of the handful of roles — we need to know who’s covering which role at what time. Then we need to have fail-safe or measurable processes, where we can get a message out and know and receive confirmation that it has been retrieved or acknowledged within a certain time period, and if not, it escalates.

We have a lot of those applications that are out there and running in hospitals for not only what I mentioned in terms of cath teams and open-heart teams, but rapid response teams and other code teams as well.

I had read the case study on your site of Fairfield Medical Center and the cardiac cath lab, which I thought was pretty cool. Can you describe that and think about other ways hospitals might do something like they did?

In that particular application, they had … it was again, manual processes, and they literally had one person who would go down and manually call through a list. It just took time. They were able to basically replace multiple calls, and the time and the acknowledgements back and forth, with a single phone call.

There’s another case study on there around Henry Ford Macomb Hospital, and that’s an interesting story. They had an environment where there was a lot of dependence on paging. The call-backs and the repeat calls were creating satisfaction and quality problems between the ED physicians and a lot of the primary care doctors.

The ED physicians got together with the primary care doctors and they said, “Look, we’ve got in PerfectServe the ability to filter communications that go to you from the ED. Here’s the deal. If you guys will enable rules to route calls from the ED to your cell phones, we’ll make sure we’re on the other end of the line when we call you.”

They put that process in place and saw significant increase in real-time calls to physicians, which had a major impact on helping them improve flow, as well as physician satisfaction with both the ED and the primary care doctors.

What are the time and the requirements and the cost of implementing?

The costs depend on the size of the hospital and the medical staff, but the time requirements are … I mean, there are certain things that can change this a little bit, but typically, in about a three- to four-month time period from the project kickoff.

In fact, we just went live at Monroe Regional Medical Center just about two or three weeks ago. I guess it was about three weeks ago because it was in May. That project kicked off the end of February, and in addition to the planning, the big job of implementation is gathering the workflow rules of all the members of the medical staff and educating them on what the platform can do. That starts with some high-level awareness, workshops, one-on-one meetings with heavy admitters and other key doctors and practices; then gathering and collecting all this information and configuring it, and then we have the go-live.

In Monroe’s case, we went live on one day with the entire medical staff, 552 doctors, and they were immediately, out of the gate, processing at a rate that was equivalent to probably about 20,000 interactions a month. It will just go up from there.

On that particular thought, one of the things that has really amazed me about their organization, even to this day, is that it’s the kind of project that a hospital can do and actually succeed. I mean, it has a major impact on nursing and a major impact on physicians. They can actually drive a process change in a very short amount of time and realize and see those benefits just immediately.

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