HIStalk Interviews Michael Simpson, CEO, Caradigm

Michael Simpson is CEO of Caradigm of Redmond, WA.

Tell me about yourself and the company.

I’ve been with Caradigm for 90 days like everyone else, starting June 1. Prior to that, I was with GE Healthcare, where I spent a year and a half working on the Qualibria joint development project with Intermountain Healthcare.

Prior to that, I was based in London, England working for McKesson Corporation as the chief technology and strategy officer for the international operations team. Before that, I spent almost four years with McKesson U.S. and ran their clinical operations for the Horizon product line. Prior to that, I was in high tech — Unisys, Philips, and Novell. Half of my life was spent in high tech, the other half in healthcare.

Tell me how Caradigm is structured and how many employees it has.

From a structure point of view, Microsoft had their HSG group and the GE team had the eHealth and the Qualibria teams. Coming across from the Microsoft side were about 200 or 250 Microsoft employees from the Health Solutions Group that worked on Amalga and the identity and access management team. That’s the former Sentillion group that I’m sure you remember. From the GE side was a group of about 250 folks who came in from the Intermountain-Mayo Clinic relationship with Qualibria. The rest of the team came from eHealth, which is the HIE product line.

We’ve got about 525 FTEs at Caradigm today, roughly around 750 people strong.

The original announcement said that Qualibria would be part of Caradigm, but the only Web reference I can find still has it under the GE Healthcare banner. It is part of Caradigm, right?

Yes, the intellectual property for that has come across. Qualibria as a brand is being decommissioned. All of the intellectual property on how you attach knowledge to data is going to be rolled into the Caradigm Amalga platform.

If you think about Amalga, it was really good at pulling a bunch of data together, but it didn’t have a lot of components on how to attach knowledge to that data. One of the reasons we did this joint venture was to be able to take all the connectivity that Amalga brings, the storage of the data, and the analytics and be able to attach the knowledge that we have learned between Mayo Clinic-Intermountain Healthcare to it.

Amalga was  the hottest thing going, but I haven’t heard much about it since the announcement even though there’s a ton of interest in data analysis and visualization. What’s the status of Amalga and where is it going?

Amalga v2 is still a shipping and selling product. We’re getting ready to announce – I’ll give you the scoop — Amalga Cloud. One of the complaints that a lot of people had about Amalga was that it was very heavy and difficult to install. The first wave of customers who had Amalga learned a great deal, and we learned a great deal from those customers.

What we learned is we really need to simplify the Amalga approach and where it’s headed, so we’re doing that first. By this fall, we’ll announce the Amalga Cloud services. The next year, of course, we will have a new version of Amalga that comes out.

Amalga is still key to our product line. It is very strong in what we’re doing moving forward. So, no changes from a strategy point of view relative to Amalga.

What are the benefits people are seeing from it and how do you expect that to change as the healthcare system changes?

Amalga’s value proposition is absolutely phenomenal from a connectivity point of view. For the last five years, everybody has been spending a ton of money on doing digitization of data in a dozen different silos. Now we need something to bring all that data together so we can now learn from that data and act on it in real time.

What Amalga brings to the table for a healthcare system or payer is that they can now directly attach to their EMR — whether that’s Epic, Cerner, McKesson, etc. — as well as their HIE and many of these other departmentals, put all this information together, and then start doing true analytics and change the way patients are being cared for in real time.

Is it an odd pairing that the former Sentillion access management products are paired up with Amalga, or does that makes sense in a way that I haven’t quite figured out?

Actually, it’s critical to our strategy. If you think about a physician and nurse workflow, having to bring in additional workflows — whether they’re in Epic or they’re in Horizon or they’re in Cerner — you want to develop applications that look at trends of information and add that information either back to the EMR or through some other tool. What the Vergence product line allows us to do is guarantee context. We can now share information inside the workflow of the existing physician and nurse without having them change applications.

Today, there’s dozens of great applications out there in the market that bring additional information — whether that’s TheraDoc, Humedica, all those types of applications — but it’s difficult to integrate those into workflow. If we look at where we want to go with Amalga, which provides this open platform for folks to write additional applications on, you want to go and integrate that into workflow without having to be concerned about context and logging in and all those pieces. Vergence ties all that together.

When the JV was formed, the reaction was either that a lot of innovation would occur or that both companies had just put products they didn’t really want into the new entity. What can Caradigm do that Microsoft and GE couldn’t do on their own?

At the end of the day, the things that both GE and Microsoft have been working on … it’s hard when you try to bridge the IT silos within healthcare to create new ways for organizations to look at the insights and create new workflows. It’s a new muscle that all the healthcare organizations are trying to do.

Caradigm had the benefit of looking at what GE was doing, what Microsoft was doing, and bring all those learnings together and advance that in a way that both companies as individuals couldn’t necessarily do on their own.

One thing I think we’ve all learned in healthcare over the last 10-15 years is there’s not a single vendor who can do it themselves. You need to have that open platform and allow others into your system so that you can get the benefit and the knowledge from many different people, whether that’s IT professionals, whether that’s content delivery folks, etc. You need one place for them to do that. As a new entity, from a Caradigm point of view, we are that open platform to digest and move forward.

Your background is with McKesson and GE Healthcare, two companies that lost market position in key areas, either because they didn’t invest and innovate or because they’re limited as publicly traded companies. What new opportunities will Caradigm have in operating outside of the giant corporate umbrella?

A joint venture structure gives Caradigm the ability to innovate and be a lot more nimble than you could within the corporate structures of large companies. Microsoft and GE are phenomenal organizations and they are great shareholders of Caradigm. Their ability to drive and deliver cash flow, fund the venture, and then to help us utilize their channels where we need to helps us be more effective as we move forward.

What are expectations of the corporate parents?

The expectation at the end of the day is how Caradigm can be a catalyst to deliver ACO solutions to the market, and I’ll use ACO in a global sense. It really is about integrated healthcare moving forward. Our parents are looking for Caradigm to be able to deliver on the function of connectivity, to deliver the function of learning into the healthcare environment so it can drive more innovation in the market.

I assume another goal was profitability. Will you need to take specific actions to get the products where they need to be?

The good news about having two great shareholders is that you can sit down and put a realistic plan together. Within a large company, you are required to make money in a certain period of time. As we created the joint venture, we sat down with both Microsoft and GE and said, first year you’ve got to organize the company. You’ve got all the joint venture pain to get through. You’ve got marketing to do. Then you can innovate and drive solutions. Year Three is when you really start to see the uptake from a market point of view.

The bottom line here is the two shareholders look at this as a growth play for both Microsoft and GE. They’re investing in the company to make sure that it hits its profitability goals in Year Four.

Are new products being built or new R&D being undertaken?

Absolutely. First, we continue to invest extremely heavily in Amalga as a platform. As well as in the eHealth space — this is in our health information exchange assets — and the identity and access management solutions within Vergence.

We’re also now working on a series of applications with our partners. If you look at the readmissions module, the ability for any hospital to understand algorithmically which patients are going to get readmitted based on things that we can see within Amalga.

There’s a whole series of applications that we will be announcing around the HIMSS timeframe which we will drive in the areas of transition of care, readmission, and other components around the integrated accountable care network.

These products are all being built internally?

Some are being built internally and some are being built with partners. Part of the mantra within Caradigm is that we provide the platform and the ecosystem. It’s not that Caradigm has to create all applications. Our goal is to create the environment so that we can have many different partners. It’s about bringing choice back into the healthcare environment.

If you think about it, 15 years ago, any hospital could go to a best-of-breed and then you had to worry about connectivity. In the last decade, you had to have one integrated solution. When it came to buying the best departmental for perinatal or the best departmental for theater management, you didn’t really have a choice.

Our goal with Caradigm is to bring this open ecosystem and platform to bear. Then you can decide on any partner you want to bring in.

A few companies have taken that message to heart. How do you see the idea of partnerships and opening up systems to third-party components changing the market in the next five or ten years?

The good news of what the HITECH Act and CMS have been doing is they’ve been driving additional IHE profiles, etc. All the governments around the world see the need to have an open healthcare environment. Most organizations and countries are requiring more and more openness to the common platforms. It makes it a lot easier for folks like Caradigm and others to be able to reach in and aggregate that data to provide different learnings.

If you think about the core EMR, in order to really deliver on the ACO message that we’re all trying to do over the next several years, it’s not just about the EMR. You need the EMR, but you also need a business analytics engine. You also need a lot of content brought in. You also need connectivity with HIEs. It’s a lot of different solutions.

What Caradigm delivers to market is an integrated solution. We can connect to any type of HIE or EMR. It is that umbrella application that allows us to glue all those together. They can start to focus not on the technology, but what’s important, to improve the quality of healthcare and then to reduce the cost and delivery. How are you going to manage those cohorts of patients and start to drive cohort design and focus in on the care rather than the technology?

The hospital EMR market has consolidated down to a handful of dominant vendors. Do you see opportunity if the EMR turns out to be a commodity, with much of the value being added on the back end?

Absolutely. I’m going to be politically correct here with you. The market has consolidated. There really are two, maybe three choices for any hospital to make as far their core EMR.

If you look at some our best customers, like Providence Healthcare System … they are a phenomenal Epic shop. They turned on Epic last year. What they’re now delivering with Amalga are early warning systems and care enhancements that allow them to go above and beyond what they’ve digitized within the EMR.

The EMRs are phenomenal at digitizing of data, and we absolutely respect and want those to continue. What we’re really good at is taking all that digitized data and allowing it to flow through the entire continuum of care — data brought in from the ambulatory side, the inpatient side, etc. — and then providing these early warning systems that add value to the EMR. Our goal is, how can we add value to the EMR and how can we add value to the HIE so we can improve healthcare?

I assume you spend a lot of your time meeting with customers and prospects. What are they telling you that they need or want, and what are they telling you that they would appreciate Caradigm’s involvement with?

The good news — and I’d say this is probably the most exciting thing about being with Caradigm — is what they want is what we have, from a message point of view. They want connectivity. They want to be able to connect all their different systems together. They want to be able to have one central place for all that knowledge. They want to tie learnings to that knowledge, and they want to give that information back to their clinicians.

What we can offer from a health information exchange to our core data asset, etc. is really what they’re looking for. The piece that they’re looking for the most is, how can we do it simply? When you think about all of the work that is on the plate of the IT department of the hospital, they’re looking for simple solutions. This is why we’ve come out with Amalga Cloud. They need the ability to actually send their data to the cloud to do the analytics so they don’t have to worry about the day-to-day operation of the technology. They want the outputs.

What we’re definitely seeing from a trend point of view is that hospitals, payers, physicians, etc. are all looking for the output. Historically, the conversation was all about the technology. Now what they’re looking for is, how can you help me design cohorts of patients? How can you help me put advanced early warning systems in place? How can you help me manage my ICUs better? It’s about the outcome versus the technology, which is a great conversation.

Lots of innovative stuff is going on, but hospitals are risk averse and often ignore smaller companies and focus on core systems. They’re not interested in talking about something new. Will the Caradigm name and corporate connections give you an opportunity to get in front of people with innovative solutions, possibly ones that you would acquire, and make that purchase more palatable?

No question. And again, that’s one of the great things about being a joint venture. We are Caradigm, which is a Microsoft and GE Healthcare company. We have the full support of both parents. You can look at all the folks who signed up for Amalga, the folks who signed up for GE eHealth … they signed up with very large healthcare companies due to  the expertise they could bring to the table and what else they could bring to the portfolio.

At the end of the day, if we’re driving toward a solution and we need help with Microsoft SQL, they’re only three blocks away. If we need help pulling data out of GE EMRs or CT, we’ve got the entire backing of GE Healthcare to help us do that work. So the answer is yes, I think we definitely can be a lot more nimble, but at the same time, can we provide a steady hand or a known factor from the customer point of view.

You probably have a lot of upselling opportunities, but you have a fairly limited number of products to sell. Do you see acquisitions in the future?

You know, you never turn down the opportunity. There’s a lot of market consolidation that’s going to be coming over the future. Again, my job at Caradigm is to provide this open platform. Whether it’s via acquisition or whether we provide platform services to many of these other niche players, I think time will tell.

At the end of the day, if you think about all the great companies out there, many of them have had to spend tens of millions of dollars developing a platform to gather and aggregate data. Then they add their value on top of that with their niche, whether it’s phenomenal business analytics, clinical analytics, decision support, etc. But they’ve spent all that money on a platform, and maintaining that platform is very expensive.

As we talk to different partners in the market, it’s not necessarily about acquisition, but how we can provide this platform so we all don’t have to keep spending money on developing a platform, which means we can offer services to our customers — the providers and the payers — at a much faster rate.

What are your top goals for the company over the next five years?

Five years from now, do we want to be profitable? Of course. Our shareholders definitely would like us to be profitable. But at the end of the day, what our shareholders are expecting is that we as Caradigm are a catalyst that helps control cost by improving the quality of the healthcare systems around the world.

The world will learn a lot over the course of the next four or five years as we drive toward an integrated and accountable care environment. We want to provide the tools to help bring that accountable care world to fruition.

Do you have any concluding thoughts?

It’s back to your question of GE, a great company, and Microsoft, a great company, and why Caradigm is different. We’re different because we can truly provide a tool set and a series of solutions that can help organizations deliver on the accountable care message. Our goal is to ensure that hospitals have the solutions that will help them manage the risk that they’re all going to have to take as we move forward.

I think globally we know that healthcare cannot continue to spend the way it’s spending today. Solutions are absolutely required to help manage cohorts of patients, manage populations, and manage the environment a lot differently than they have before. No one company on this planet can do it all. Our goal as Caradigm is to help provide this platform and open up all of this data so that the hospitals and the payers can help advance the care of patients.

It is about healthcare at the end of the day. We do drive toward profitability like any company does, but it’s really about how we can be that catalyst to help define where healthcare is going over the course of the next four or five years.