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Monday Morning Update 7/11/11

July 10, 2011 News 19 Comments

From 4merMCK: “Re: McKesson. USA Today reported that MCK’s Hammergren made $150m in 2010, a sizable increase. The gap in salary alone for MCK-IT employees is approximately 375x, and merit increases in the former HBO were 2.5%, or around $2,000. Under Hammergren’s leadership, MCK shares have risen around 20%. At the end of the day, it is shareholder value that drives CEO compensation. Whether that’s worth his increase, only shareholders can answer. Rumor in Alpharetta is that the HIT business was shopped around, but based on the asking price and a declining base, there were no offers. Now they are trying to determine what a ‘growth’ strategy would look like.” Unverified.  

From The PACS Designer: “Re: Internet2 and healthcare. Rural healthcare facilitated through the use of telemedicine solutions is a trend that is gaining more attention. One new area that can accelerate the adoption of telemedicine applications is Internet2, which offers higher speed communications tools. The FCC’s Rural Health Care Pilot Programs (RHCPPs) have been in the past a funding source for employment a rural EHR and telemedicine experiments. State-by-state license requirements for physicians has been one of the roadblocks to further expansion of the concept.”

From Mr. HIStalk: “Re: holiday woes. Funny that I’m reading this on a plane to vacation.” The referenced article includes suggestions for prepping the office in advance of taking R & R to avoid “vacation interruptus.”  Coincidentally, Mr. H just skipped town for some well-deserved time off, leaving me (Inga) as the designated second-in-command. The same article notes that 30% of workers are like Mr. H and intend to contact work while on vacation. Mr. H barely opened his first beer before checking in (and contributing to this post), but Mrs. H and I are hoping he’ll get into the chillin’ mode soon.

7-10-2011 9-13-00 AM

Technology vendors and the healthcare system are most responsible for disconnected patient information, readers say. New poll to your right, just to change it up a little: is your company’s CEO honest and honorable?

7-10-2011 12-41-30 PM

The Tennessee Comptroller of the Treasury releases an audit reporting finding that Community Health Network (CHN) lost or misused $1.26 million between 2007 and 2009. CHN is a non-profit organization that provides medical technology to rural communities, often through grants. Auditors claim the company’s former CEO, Keith Williams, improperly received more than $80,000 by paying himself unapproved bonuses, making personal purchases with CHN’s credit card, and claiming reimbursement for meal purchases that were paid for with CHN’s credit card. Former CFO Paul Monroe was found to paid over $10,000 in unauthorized pay. Auditors also say that Williams and Monroe falsified grant invoices and grant reports and misused proceeds from a state grant to purchase almost $600,000 in unauthorized software. The software vendor later hired Williams as a consultant while he was still employed at CHN.

7-10-2011 11-17-18 AM

Georgia Governor Nathan Deal will speak Monday morning from the Alpharetta headquarters of McKesson Provider Technologies, pitching the state’s campaign to lure technology jobs. It will be streamed live at 8:30 a.m Eastern.

More from Vince on minicomputers, this time focusing on the companies that wrote software for them, one of the biggest of which was started in the proverbial garage.

The VA reveals plans to allow clinicians to use  Android devices, iPhones, and iPads, in addition to the currently supported BlackBerries.

This week’s Time Capsule editorial from 2006: USB Drives Would Help Consumers Quickly Access McClinics. Its conclusion: “This system of having patients walking around with their own information ready to plug into a provider’s system seems like the best solution for now.”

7-10-2011 7-36-44 AM

Morris Hospital & Healthcare Centers (IL) names Cassie Brown manager of health information management. I like that Brown worked at Morris Hospital as a medical records file clerk while in high school school and college and before learning the ropes at a couple of other medical facilities.

Healthcare jobs grew by 13,500 in June, though the hospital sector declined 0.1%. Ambulatory healthcare added 16,500 jobs, including 5,000 in physician offices.

7-10-2011 11-51-07 AM

HIStalk Practice’s own Dr. Gregg gets a shout out in the Columbus (OH) business journal for being the state’s first doctor to get an EHR stimulus check from Ohio Medicaid.

7-10-2011 11-59-42 AM

Broadlawns Medical Center (IA) becomes the first medical center in the state to use PatientSecure’s biometric patient ID system.

7-10-2011 12-10-22 PM

British Columbia’s former deputy minister of health Ron Danderfer pleads guilty of fraud in relation to benefits he received between 2004 and 2007. Danderfer, who oversaw the creation of the province’s $222 million EHR system, admits he accepted the use of a vacation condominium and a job for his wife.

7-10-2011 1-55-38 PM

Surescripts and the authors of JAMIA-published article, “Errors associated with outpatient computerized prescribing systems,” issue a joint statement to clarify the study’s use of the term “e-prescribing.” The authors point out that their use of the term “e-prescribing” does not reflect the way the term is used today, nor does it match the federal government’s definition. The study examined what was considered e-prescribing back in in the old days (2008); that is, prescriptions generated by a computer, faxed to a pharmacy, and then printed. You’ve got to admit that “E-Prescribing Doesn’t Make The Grade” is a far more compelling headline than one that says, “The Way Things Were Done Three Years Ago Wasn’t All That Great.”

Contacts

Mr. H, Inga, Dr. Jayne, Dr. Gregg.

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Currently there are "19 comments" on this Article:

  1. Thank you Inga for posting this: “The Tennessee Comptroller of the Treasury releases an audit reporting finding that Community Health Network (CHN) lost or misused $1.26 million between 2007 and 2009.”

    This is the tip of the iceberg of the fraud and corruption in the HIT industry, at all levels. It will only worsen as the Congress is handing out cash without accountability for HIT products that have no aftermarket surveillance.

  2. Before you splash a salacious rumor about one of your own sponsors, read the source of the rumor.

    http://www.usatoday.com/money/companies/management/2011-07-07-executive-compensation-stock-options-payouts-CEOs-gains_n.htm

    Clearly says in the article that $112 million came from exercising stock options, and Hammergren’s compensation package didn’t otherwise change. Also note that he started the job right after a scandal that nearly destroyed the company – recall your graph from a few days ago – and since he’s been on the job he’s doubled the share price and made the company an industry leader in multiple aspects of health care. Be jealous of his pay package, but this is one CEO who actually earned his check.

    Your readers also shouldn’t confuse one product line with a whole business. Cerner, Epic, and Allscripts all make only one product at the end of the day – an enterprise EMR – while McK has the broadest, deepest, and largest HIT portfolio of any company out there. To say that they tried to sell their whole IT business is absurb, because there aren’t really any companies who could afford to buy it. Not to mention that even if one product line performs poorly for a while, the company has cushion from other product lines to protect it until it gets revamped. That’s what happened with your newest sponsor – Paragon. That’s also how Siemens managed to transition into Soarian as their primary EMR.

    You really should be careful not to bash your own sponsors, especially with rumors from former employees with an axe to grind. After all, they are former employees for a reason.

  3. Fast Check – Even with the exercising of the stock options, I find Hammergren’s take home wildly out of whack (as I do many CEOs). Quite frankly, it’s offensive. His compensation, whether it come in stock options, fringe benefits, salary, etc., is still wildly out whack even for a company the size of McK.

    And as a customer of McK products, we have all heard from McK CURRENT employees that the whole MTP division has been shopped. You’re right, unlike Cerner et. al., McKesson does have a wider and more varied product lineup by virtue of their buying sprees. The issue I think we’re all wondering about in the HIT space (that’s what this forum is about) is the kind of deals McK is signing right now.

    Think about it. There’s all this HITECH money and McK can’t sell an integrated EHR solution with clinical and revenue cycle integration because they don’t have one. They almost aren’t players in this space by lack of their products not being able to talk to one another.

  4. Fact Check-I would agree that Mr. Hammergren has done more than a nice job at McKesson, but to say he earned the check is ridiculous. No one and I repeat-NO ONE is worth $150M in a year. Hammergren has made an enormous amount of money while at McKesson and if you are realistic, you know their IT business is in a world of hurt right now. There are two key areas in healthcare IT right now-enterprise EMR’s(You know Meaningful Use, ARRA) and ICD10 (Revenue Cycle) and MCK is still messing with their 10.xxx upgrade, which they have been talking about for 5 years and of course HERM never got off the ground after spending well over $100M. Yes, they have a broad portfolio, but it really doesn’t matter right now because their customers are focused on the two areas mentioned above.

    I don’t see any bashing, simply commentary about the ludicrous amount of money being heaped on John Hammergren. It isn;t a problem confined to healthcare, but US businesses in general. And realistically, the IT business for McKesson is only a sliver of their overall revenue, certainly an important profit producer but their core business has been and always will be distribution.

  5. Not to slight the individual, but a post about being named manager of health information management is relevant to this blog why? I can see manger of HIS or HIT but not HIM.

  6. @FactCheck – if Mr. H felt any kind of loyalty toward a company, or at all censored himself, just because they were his sponsor then he would have effectively sold out and it would be obvious and his readership would justifiably decline….I think that the fact that someone is a sponsor is irrelevant to the type of coverage they receive on Histalk, as it should be.

  7. I think it is interesting that pro Big Corporate Conglomerate people, use the size of the parent company to sell the strength of the company against smaller, niche players or the Epic, Cerner and Allscripts of the industry.

    How about this, HIT is a rounding error to McKesson and Siemens, so be careful of the stick you are carrying…you just may get beaten with it.

  8. Agree with Jeff – Mr HIStalk remains independent of sponsorship buyout. How wonderfully refreshing.
    Also – a note to FactCheck, please check your emotions and assumptions at the door before posting.
    You make an unfair assumption – “rumors from former employees with an axe to grind. After all, they are former employees for a reason”
    Not sure how long you have been in the world of the employed, especially in HIT world, however there are plenty of people in this business that move around and also boomerang.

  9. Have to say, it’s easy to feel CEOs are overpaid when you don’t have the skill set to be one. The CEO is paid by boards and shareholders in a publicly traded company, and nobody forces the company to pay that money. In Hammergren’s case, he brought the company back from a devastating scandal to double the stock price on the heels of a poor economy. In my opinion, he has earned his money. Vikram Pandit, Jeff Immelt, and others would be a different story.

    If anyone wants to crusade against bloated executive salaries, start with the non-profit health system CIOs who read this blog. I routinely see CIOs making more than the neurosurgeons at the hospitals where they work. Does that make sense?

  10. It’s interesting how much misinformation there is about McKesson and also about HIT. MPT isn’t even all of McKesson’s HIT offerings. It’s interesting that McKesson has 2 enterprise EMRs – the simple, relatively inexpensive, integrated Paragon, designed for use by small hospitals with limited IT resources, and the complex, function-rich, configurable/customizable Horizon for larger health systems with access to better resources. Paragon has done very well recently, while Horizon has struggled. It’s fascinating to examine why.

    Horizon was built for the days when a hospital’s maverick IT staff wanted to go out and combine self-development with best of breed products. Wasn’t unusual to see a Siemens financial system underlying a homegrown clinical database with Sunquest in the lab, Picis in the OR, T-Systems in the ER, and McKesson’s physician portal tying the whole thing together as a SSO GUI. Somehow, hospital IT staffs decided that being innovative was hard, and decided that it was more important to have an integrated system – easier to build, fewer interfaces to manage, happier end users. Incompetent IT staffs basically gave up on trying to be good at technology and just decided to focus on being good network admins for their hospitals. When did hospital IT staffs become so embarrassingly mediocre?

    I have to snicker a little every time people talk about integration in HIT. Health care is such a complicated industry that it is literally impossible for a single software system to send and receive all information needed to run a hospital. Epic and Cerner have both clearly demonstrated that the farther they get away from their core competencies, the poorer quality their systems become. They’ll continue to have large gaps at their fringes and guess what – hospitals will still have to integrate and interface non-native systems, hardware and software, to continue to grow their technology offerings. Some of Epic’s biggest customers are just waiting for the day when something better comes along that will allow them to break out of the constraints Epic provides. Some of Cerner’s big customers already reached that point and moved to Epic, only to realize it wasn’t really any better. It’s amazing to me how narrow-minded and naive so many people are in HIT, thinking their integrated clinical/financial system is all they need to rocket their patient care into the 21st century.

    The comment from MountainMan is the most insightful of all. Just as IDX is a rounding error for GE, HIT is a rounding error for health care as a whole. That’s why I’m astonished that non-profit hospitals can spend 9 figures on something like Epic which impacts such a tiny fraction of the actual care they provide. Companies like Epic, Cerner, and Allscripts offer so little as to be irrelevant in the grander scheme of health care. Remember that HIS was invented by conglomerates like Lockheed Martin, and nurtured by conglomerates like GE and Siemens. If you sit at the feet of Epic, Cerner, and Allscripts waiting for them to tell you a story about how they’re going to transform health care, you’ll be sorely disappointed with the outcome.

  11. Re: your recent survey on Who is the most responsible for allowing the continued existence of silos of disconnected patient information? My original hunch was that each played a role in the disconnect, but saw this article come across my desk today:
    (Docs averse to sharing patient data, even for public health
    July 07, 2011 | Health IT News) and truly thought it was probably on point.

  12. @Fact Check- Your defense of McKesson is marginally impressive. I am guessing you are a Paragon employee since you spout the marketing slick pretty well. Watch yourself though. While your loyal soapboxing sounds nice, rest assured that the “former employees with an axe to grind” are on to your nonsense (and most are grateful to be out of that crazed box). You sound like you write the McK fact sheets. LOL We too were programmed to drink the orange and blue kool-aid until many of us saw the error of our ways. If you don’t tire of it at some point yourself, well you can always look forward to hunting season McKesson style every April or so. Careful there, who knows how loyal you will be then??
    P.S. What was the number of CEs/sales in MPT let go this spring? 250? 300? I am sure that John slept better at night with his singles to keep him warm. And I was not one of those affected. But are you really going to sit there and foolishly believe every one of those people deserved to be riffed? I am revolted by the lack of integrity from McK-leadership that preaches “ICARE” That’s MY axe to grind.

  13. @FactCheck-I think you have drank too much of the MCK kool-aid and are an aspiring marketing individual. I think your last comment insulted the majority of people who read HISTalk-healthcare IT personnel who in your words-are embarassingly mediocre and overpaid CIO’s. McKesson had its opportunity several years ago, when a lot of hospitals were buying Horizon and things were going well. They derailed when the 10.xx upgrade, that had been talked about for several years started missing, then the much anticipated HERM came out, but also started missing.

    McKesson has a nasty habit of culling the heard every year in April and typically are not good at finding qualified mid-level managers. They had a lot of weak people in development and because of the rampant good ole boys network, didn;t have the insight or know-how to get the right people on the bus. Consequently, they have been damaged and allowed others like Cerner and Epic to step in.
    Yes, Paragon is doing well, but don’t forget Meditech has been in that market and committed to that market for many years. McKesson is pushing Paragon because it’s the product that works right now.

    If you thought HISTalk dissed Paragon, you have more than made up for that.

  14. Wow FactCheck sure has the Big Corporate Arrogance thing down well.

    The fact is McKesson had a pretty good strategy to counter Epic – a modular approach to building an integrated solution (though it wildly misapplied “SOA” as a catch-all bandaid for integration). And due to the acquisition mode that is in thier DNA, they had compiled an impressive portfolio and had some solid deliverable first components.

    However, execution and integration have never been the McK trademarks in HIT, and they have lost most of the credibility they had on integrated systems.

    They still have done a great job with Paragon and have a lot of best-of-breed solutions. But FactCheck sounds like a lot of Siemens people I talk to – still bleeding customers left and right, but arrogantly predicting that the market will leave Epic any day now. They have been saying that for 6 or more years.

    FactCheck should read Vince Ciotti’s history of HIS section (love it) – Lockheed Martin helped start HIS but bailed. McK, GE and Siemens didn’t even come to the party until almost Y2K – and can someone name the top HIS contribution each has made since then? Siemens has spent 10 years creating Soarian, McK resuscitated Paragon and GE…..well lets just leave them alone.

    The HIS market was “nutured” by SMS, HBOC, Meditech et al. The very same type of companies that FactCheck now derides.

  15. FactCheck quote: “if you sit at the feet of Epic, Cerner, and Allscripts waiting for them to tell you a story about how they’re going to transform health care, you’ll be sorely disappointed with the outcome.”

     

    You can add any vendor to the list.  Vendors do not have an incentive to improve outcomes, they have incentives to improve the bottom line.

     

    Technology alone will NOT improve outcomes.  It requires an alignment of business process, people, and the technology.

     

    To argue the virtues of one company over another company is simply useless.

     

    It is what the organizations that purchase, implement and use the technology do with that technology that ultimately improves care, lowers cost, or whatever the desired outcome should be.

     

    Software and Software vendors are a commodity, it does not matter what logo is in the corner of the screen.  It matters in the implementation and how one organization aligns the software with the goals of providing care and driving outcomes.

     

    Every vendor has a showcase site, every vendor has the nightmare implementation.  If you evaluate what the delta in those sites are, you will find it to be the leadership within the provider organization that ultimately makes the largest difference.

     

    Those of us that are “embarrassingly mediocre and overpaid CIO’s”, are too often let down by the vendor that is only interested in a technical achievement of ‘go live’.  No vendor is off the hook on this, McKesson, GE, Siemens, Epic, Meditech, and the list goes on.

  16. MedPro – Geez I’m old. I landed my first job in the industry in 1981 working for Four-Phase as a “field engineer”. We were the guys who showed up in three-piece suits (trying to look like IBM) to fix anything from entire systems, disk drives, line printers, etc. all the way down to repairing keyboards. I was immediately assigned every hospital account in town for the simple reason that the break/fix guys hated hospitals. They were generally the only accounts with 7x24x365 maintence coverage and since we actually repaired things in those days you got calls at all hours of the day and night for the most mundane things.

    If the phone rang at 12:30 AM you knew it was a tape drive problem at a hospital because they all took their systems down and midnight to run “batch”. The first step in running batch was a tape backup. If the backup failed you couldn’t proceed.

    The story we were always told at Four-Phase about HBO’s beginnings was that HBO started in a trailer house in Peoria with 13 people. HBO used Four-Phase for the simple reason that it was the only company that would even talk to them since HBO had no money. Four-Phase agreed to provide HBO with 10 systems for 10 hospitals for 90 days gratis. HBO installed the systems in the hospitals with the agreement that if the hospitals liked what they saw they would buy the systems and pay at the 90 day mark and HBO would then pay Four-Phase. I have no idea if this story is true or was just a good story, but Four-Phase and HBO were long time partners until HBO started it’s own hardware maintenance company (SSI, then MSSI, then CSMG) before selling that company to Data General in about 1990-91. Four-Phase was purchased by Motorola in the late 1980’s and went downhill from there.

    Good times

  17. A CEO who has 10 years of stock options saved up and taken a large company and doubled its share price should be able to make that kind of money.

    It works out to roughly 12-13M/year in stock gains (which is a lot) but it is only worth that due to how the stock performed.

    McKesson is a huge company by revenue standards. Looking at other large companies in the US, I am sure you will find other executives who make much more on a year in year out basis.

    This was John’s year to cash is some saved up options… and why not, the stock is near an all time high.

  18. Big Money-he made over $50M last year as well. This isn’t a case of Hammergren holding options for 10 years, it’s a case of him getting payed too much. I would be quick to agree that it’s not just Hammergren but a lot of other US CEO’s.

    I will guarantee you that McKesson can find someone equally talented for a lot less money.

    My point-imagine if McKesson, instead of paying Hammergren $150M, payed him $50M and used the other $100M to develop a clinical system that was integrated to compete with Epic and Cerner!







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