John Holton is president and CEO of SCI Solutions.
It’s been a year since we’ve talked. What’s new with you and the company?
We’re doing well, especially given the economic challenges that the country’s gone through. Our revenues were up about 15% last year and we added about 62 new customers, so we’re over 400 now.
We’re seeing hospital clients starting to do a second generation of buying. They understand that access management is more than just scheduling and pre-registration, that it really focuses on taking a look at customer service for the physicians and the patients and starting the revenue cycle as early as possible, ideally in the physician’s office or better yet, in the patient’s home.
They’ve really been receptive to our ideas. We’ve been focusing a lot on self-service ideas over the years, looking at other industries and how they use self-service tools, either over the Web or things like kiosks, to offer a much better customer experience to their clients. We’ve been trying to apply a lot of these to the healthcare or the hospital environment.
What about patient scheduling? That’s your forte.
Some of the first things we’ve done are self-scheduling. By self-scheduling, I don’t mean requests, I mean actually like an airline reservation, typing in the information, your appointment preferences and automatically, within seconds, getting back appointment choices so you can decide when to have the service. We’ve got hospitals where the physician’s offices do self-scheduling, as well as the patients in their homes self-scheduling various procedures.
At one SCI client, more than 40% of their outpatient volume is self-scheduled. We’re starting to see some real progress made in those areas. A lot of the hospitals are in competitive situations and understand that it’s so important to tie physicians and patients through the service end; but the good part about it is it also starts a revenue cycle out in the physician’s office as well, or in the patient’s home. We’re starting to see those two ideas really catch on in the industry.
The new stuff that we’re really excited about is kiosks for the patient encounter and for check-in. We think, just like in the airline industry where they’ve been a huge success, or in the banking industry where they’ve been a huge success for the ATM machines, that there are a lot of possibilities and benefits that can be applied to hospitals in really improving their patient flow and the check-in and making a better patient experience.
The other thing that I’m really excited about is our ordering product now connects directly to the physician’s EMRs, and the EMR integration that seamlessly initiates the scheduling and revenue cycle activities right from the physician’s exam room. You know there’s a lot of effort underway with the stimulus money to get physicians and hospitals to use EMRs and then to integrate those and pass information. This is really a first step.
What are the advantages?
Our ordering product, Order Facilitator, automates the orders from the community physicians to the hospitals and then coordinates referrals among the primary MDs to specialists. The purpose of the programs is really to track every order and make sure that they’re not lost and that they’re legible. We provide that information and eliminate lost orders.
The doctor’s office doesn’t get interrupted, patients don’t have to wait around when they come in because the order’s been lost and they have to call the physician. The revenue cycle for medical necessity and for authorizations gets started in the physician’s office, while they’re still fresh in his or her mind.
I think one big benefit is that patient care is actually improved now because we can track every order the physician makes, and every appointment that’s made by the patient, and give the physician feedback as to which patients are following through on their orders.
I was pretty surprised at an article that appeared in The Journal of American Medical Association that said that up to 40% of orders written by physicians don’t get followed through by patients. That really doesn’t help much for their physical well-being. We’re excited that even a product that’s as administratively focused as getting orders into the hospital is able to also affect patient care positively.
Order Facilitator, the original version enabled, you to enter the orders — usually by the staff or the physician — through a portal or you could fax them over and they would be automatically entered into the system and then passed on to the correct departments and worked through a revenue cycle tool to make sure that they were preregistered successfully.
But now, with our new version, we are connecting directly to the physicians’ EMRs. Rather than receive a fax out of the EMR, we’re actually getting a structured record which eliminates the need for entering the order by the medical staff or trying to index a fax. We’re really excited about this. This may seem kind of ho-hum, that everyone has order entry systems, but in fact, when you look into it, it’s a very challenging problem.
As the Meaningful Use criteria get put into play, we’re going to have to, as an industry, deal with a lot of the challenges and quirks that we uncover and find solutions to them. It’s a Meaningful Use criterion to get the physicians to enter in the orders into the EMR. I think in Stage 2, sending it to the receiving provider will be required as well.
The challenge lies in the fact that the hospital systems that are in place today require an order message to have a medical record number, and often an account number. The physician’s EMR doesn’t know either one of these numbers and the hospital account number hasn’t been generated yet. If you have employed physicians and you’re all on a single system, you might be able to solve this challenge because you can generate an account number; but you probably don’t want to because you’d be generating a lot of accounts that may not get acted on.
With community physicians on all different types of EMR solutions, you have a real problem on your hands. SCI designed our orders product, now in the new release, to make sure that it’s architected in a way that it doesn’t require either a hospital medical record number or an account number. Through the process of ordering directly out of the EMR, it leads a scheduler and the registration folks through a process that gets the right medical record number on the patient as well as the physician’s EMR number. We’ve been able to cross-reference these electronically, and pretty easily. Then we pass those on to the various systems within the various hospitals.
Really, what we’re trying to do here is much like the way the integration engines standardized interfaces between proprietary systems back in the ‘90s, maybe even a little earlier. We are now integrating the orders between physicians’ EMRs and various hospital systems that need those orders without having to require the legacy vendors to go back and make a lot of programming changes to their system. These are not trivial changes.
You mentioned your business is up. Do you think having this inordinate focus on electronic medical records will take away from your business or will it help it?
No, I don’t think it will take away from our business. Our business is up because we solve real problems with real benefits to hospitals. We can make a huge difference to their bottom line very, very quickly; and we have a business model which is subscription-based.
For a very small amount of money on a monthly basis, you can get our software and our systems with our technical model of the Software as a Service. It deploys very fast relative to other large enterprise systems. Your return on investment, which is just a monthly fee — say it takes you four or five months to get this in. You’ve got five months of a subscription fee versus millions of dollars you may have paid under the license model.
Hospitals reap more benefits. The ratio of benefits to cost is so extreme that it’s a no-brainer in terms of doing this. What we found over the last year and a half or so is that when hospitals had capital equipment fees is where license vendors and others were having difficult hard time. The hospitals wanted to continue doing something and wanted to continue making improvements. They looked to vendors with these models that were easy to get started with and didn’t cost a lot to get in, but you could still make real gain.
I think that’s why we’ve been successful. I think the only gotcha, maybe, is that IT staffs have only so much bandwidth, so they may be focused on EMRs rather than other aspects. We’ve tried to address that by requiring almost no involvement by the IT staff, given that we host everything and do the interfacing and the stuff to run efficiently.
Do you think the HITECH Act will encourage innovation or will it discourage it?
I don’t know if it will encourage innovation. I think it will encourage better practices by some of the larger vendors. I think there may be a move towards more certification. The vendors will be more responsible for putting out better software and getting that software installed. We’re continuing to see some very bad software being offered to the industry.
One vendor that I won’t name recently introduced a product in our area of expertise. Instead of putting the time and effort into developing a rules engine and being able to implement fairly complex rules, they did nothing more than stick Visio flowcharts in their product. You could click on it if you needed to know the rules and a Visio flowchart would pop up in front of the telephone staff who were answering the phone. They had to go through and figure the scheduling process themselves.
Last time we talked, you were pretty pessimistic about uninsured patients, credit markets, bad debt, and self-pay. In the meantime, we’ve had healthcare reform. How do you think that will change the situation?
Healthcare reform, despite all the naysayers, is going to be a benefit to hospitals. We have 18% more Americans of the total population who will have insurance, so there should be more money in the system. Obviously there’s going to be more scrutiny through Medicare and cost-shifting.
The thing that worries me the most was not the government-supplied insurance, but it was the new high-deductible plans that are sweeping the nation now; the high-deductible plans where a person may pay the first $1,500 or the first $5,000 for the family. What happens is because there’s little price transparency — and we’re trained from our old system not to even ask about these things — a patient will come in and get a procedure not knowing the cost. It could be something as simple as an MRI after they’ve twisted their knee playing softball over the weekend and its $2-3,000. That’s significant money to lots of folks. If the insurance company isn’t paying that, then you have a real problem on your hands.
The research that I’ve read says that if you don’t collect self-pay money before the procedure’s done, you have less than a 40% chance of collecting it afterwards. It doesn’t matter what socioeconomic class the person belongs to — people just pay their healthcare bills last. What I’m concerned about, and what I’m seeing more and more with our clients, is bad debt being incurred in the self-pay portion of these patients’ bills. I still think that it’s a big problem that’s sitting on the horizon that our hospitals are going to have to deal with.
I always like to finish with your predictions since you’ve been pretty well on the money there. Tell me what you foresee for healthcare IT for the next three to five years.
I think the next three to five years is going to be a heads-down focus on these clinical products; getting those in and getting them going. I think we’re going to see a bit of a shakeout in the industry. This is really going to tell, among the big vendors, who are going to be successful.
I think companies like ours, which are focused on niches — but really big niches if you could call the revenue cycle a niche — are going to be very successful. I think you’re going to see the emergence of companies that are not today thought of as major financial players in the industry. Financial system providers in the industry will come to the forefront and you’ll see some new companies.
If we’re talking in five years, I think you’re going to see some new companies that are leading those areas. I think there’ll be a much clearer delineation between companies that provide financial systems for the hospitals versus those that provide clinical systems.
The third thing is that I’ve always been a big believer that large, outsourced business offices are going to have to be the way of the future. There are huge economies of scale that are available starting from orders, scheduling, and pre-registration functions, all the way through to denial claims management and collection agencies. That whole process can be done on a very large scale much more effectively and save a lot of money for the hospitals.
I would liken most hospitals to mom-and-pop shops in terms of their expertise and ability to do these things. I think that what we’re going to see is even more. The for-profit chains have been at the forefront of developing these large regional business office systems, but I think you’re going to see private companies coming in offering those services and more and more hospitals taking those up.