I like to do a high-level business update about the healthcare IT industry once or twice a year. My go-to guy is always Jon Phillips of Healthcare Growth Partners, LLC. Jon is careful with what he can and can’t say (unlike me, he won’t just gleefully blurt out sensitive information to the whole world) and if you check his track record from previous interviews here, he’s done very well in his analysis and prognostications. I always enjoy chatting with Jon and appreciate his taking time to share his thoughts with HIStalk.

Characterize the M&A market so far this year.

This year, we’re looking at well ahead of recent years in number of transactions even than the markets of recent years, which have been pretty active. What we’re seeing is activity in the sub-200 million dollar range. You haven’t seen much in huge deals going on, but seeing a lot in the middle market and sub-middle market. That bodes well for continued strong M&A activity in the space over months and years to come.

The big difference this year, and there are probably three that I would consider somewhat bellwether transactions or maybe four, is where you have financial sponsors making significant plays into the healthcare IT space. One of those, obviously, is Francisco Partners acquiring Dairyland. Two is Battery Ventures acquiring Quovadx. Three is Vista acquiring Sunquest, Four is potentially Insight and the Bessemer guys acquiring Netsmart, and five could be Primus acquiring HMS.

You’ve had a lot of financial sponsor activity in the healthcare IT space this year. That means a couple of things going forward. I think that these companies under new ownership are going to see some shifts in strategy. Not all of them, but some of them are certainly going to see shifts in strategy.

Take Sunquest, for example. Now that the CPR piece has been decoupled and Sunquest has been pulled out of Misys, all of a sudden you have a business that looks very different than it did six months ago. The growth opportunities are different. You have an organization that most likely will look to acquire new assets to augment their existing position and to grow in new ways.

For each of these financial sponsor deals, you’re going to see aspects of that. They may seem like small changes at first, but over time, you’ll see more and more. Quovadx bought Healthvision. My bet is that they’ll look to buy other things as they go forward. I think you’ll see acquisition activity and interest from these new kids on the block.

The pressure that will put on the other strategic players in the market, the traditional acquirers of choice like McKesson and Cerner and GE, they’ll start seeing more competition in situations where they’re looking to buy things. If you’re a small company, it’s great for you, because instead of having one or two people to talk to, now you have a lot of people to talk to. A small company can be more bullish about exit opportunities than you’ve been able to for quite a long time.

What’s hot and not in healthcare IT?

If we went back three months before the dislocation of the credit markets, I would have said that the hot opportunities are companies that are meaningful size with strong EBIDTA performance and a conservative investment platform for investment sponsors. Dairyland, Sunquest, HMS – organizations like that four months ago were on fire. You’ve seen a little bit of a slowdown because sponsors can’t put as much debt on them as they’ve been able to earlier in the year. There still will be a market for them because when a company gets to the 30 to 50 million dollar size with strong EBIDTA performance, but you’ll see some compression in the value that people can put forward on them.

In terms of what I see as hot, if you look at where the venture investment is going into, I’d drop it in three categories and there’s not a lot of change. There’s still a lot of interest in revenue cycle. Part of the challenge is defining what revenue cycle is. There’s a lot of interest in solutions that address revenue cycle challenges. More financings will be announced of companies in technology business and services businesses that are focused on fixing bits and pieces of the revenue cycle. The large majority of them fix bits and pieces. You don’t have anybody who’s going soup to nuts. Still, those point solutions can still deliver a lot of value to customers and that’s what’s driving investment VCs.

The other areas with a little more froth in the market come back to some things that are geared toward consumer-facing solutions, things that help manage information or care in consumer-directed or higher deductible type health plan environments. There’s some strong interest there.

Others get back to clinical content and clinician collaboration tools. Figuring out different ways for clinicians to work together and to exchange thoughts and ideas and being able to capture and then present back out the resident knowledge. That’s another area that’s pretty hot.

One that I’ve heard more about, and it will be interesting in how it plays out, is the whole remote care, telemedicine, home monitoring, and different ways of to deliver care into non-institutional environments. I’d stay that’s still a little bit earlier on in terms of the froth, but you’re starting to see people get more excited about that.

What do you think about Health 2.0?

I always tend to be a little bit skeptical of buzzwords. Some of the solutions that are out there, like the clinical content solutions that I was talking about, there are some really cool things that people are working on, When you think about the applicability of these technologies, or not even technologies but business models and care models, to the existing healthcare environment – you start getting pretty excited about that. Just different ways to give people a platform to work together and access knowledge that they wouldn’t otherwise be able to access.

We’re all in this to try to improve healthcare overall. You gotta think that by bringing more of that knowledge to bear, you’re going to be able to improve healthcare overall. I still think there’s a lot of noise around it and I’m not sure how all the business models will play out, but it’s definitely exciting.

We are seeing a lot activity on the interoperability and portal side. I’ve been a big fan for a long time. I’ve never run a hospital IT department, but solutions that let me manage my application migration myself on my schedule, not being forced to make changes because of interoperability requirements, those types of solutions strike me as being able to bring a lot of value. I characterize those as different aspects of Health 2.0 solutions that are clearly provider-facing, not consumer-facing, but you recognize that there’s a lot of data and information that’s already out there and tools that help you access that. They’re going to drive improved outcomes. It’s not necessarily a direct causation relationship, but the more information you have … think about clinicians. They are very smart people. Give them more information and tools to work with and they’ll use that and you’ll see that in healthier patients and better outcomes.

Private equity has gone crazy since we talked last in January. Explain how it works and how it has affected the industry.

Different private equity funds are going to have different approaches to how they like to build businesses. Some like to buy things cheap and fix them. Some buy pretty good companies and make them a little bit better. Some buy really good companies and help them be really good on a larger scale. So, you have these different approaches to the private equity marketplace.

Funds have acquired businesses in the healthcare IT space. Their focus is to generate a return in a reasonable timeframe. They may be willing to have a longer-term hold, longer than two or three years. Francisco Partners turned around their Lynx investment very quickly on a relative basis, but the investment was performing so well that it was the right time to do it and they got an incredible outcome from Picis on that exit.

These guys have made investments and the way they will make money is by really two ways. One is organic growth, the other is inorganic growth. They can augment those returns because they put debt on the company to start off and get leverage on their investment. But, the reality is that these guys need to figure out how to grow these businesses to get the kinds of returns they want to get. Companies that may have been a little more passive historically will probably get more aggressive in management and personality.

The direction for these companies is to be more aggressive toward growth. You also will see ongoing acquisition activity, especially in companies that are under $50 million in revenue, as these businesses look to add on pieces and capability so that they can take their organic growth rate, say 10 or 12%, and augment that with acquisitions and move that up to 20 or 25%. That really helps them get the returns they want to get.

At the end of the day, to get the returns they need, have to have some kind of exit. It can be an IPO, like athena. They can sell to strategic, like Francisco Partners selling Lynx to Picis for a strategic exit. Or, they can sell to another private equity firm. They have different approaches and sizes, so a smaller fund can always grow a business up and then sell it to a bigger fund. What you’ll see is a good amount of activity as these businesses position themselves for growth. Then will see those folks making the call to find a bigger home and see them making those decisions as well.

What’s the track record of private equity owners with respect to making R&D investments, keeping customers happy, and not flipping the company at the first opportunity?

I think some of the private equity folks will actually be better owners than the historical ownership, not to knock the historical ownership. The private equity owners are going to be very focused on how to grow the business. You can go buy stuff, but you also have to be able to sell more to new and existing customers. These guys are smart enough to realize that you can’t sell stuff to customers who don’t aren’t happy with what you’re giving them.

I’ve had conversations with a number of folks involved in both investors and management of these companies, and what you’re hearing about is a renewed level of focus on customers. Customers can actually be better off. When you think about it, when a strategic acquirer buys a business that’s in the same line of business of something they already have, one of those customer sets will have a migration path. They won’t want to support both customers on different platforms indefinitely. A strategic acquirer will have to manage a customer transition.

The financial acquirer wants that customer to be happy and to buy more things from me so that I can both grow in terms of selling new stuff, and on the maintenance side, I don’t have people who say they don’t want to fool with me any more and I’ll find another vendor because your product is behind and you’re not giving me decent service and a reason to stick. My argument would actually that these private equity owners can result in good things for customers.

The folks that will have the toughest time are organizations that have gotten used to operating in a certain way. You have folks coming from outside of healthcare IT, and some ways that’s good and in some ways that’s bad. Healthcare IT as a market has a lot of very unique characteristics. If you don’t understand those characteristics, you can really fall flat on your face.

There are some evolutions have occurred in other IT markets that haven’t hit healthcare yet. Some will never hit healthcare, some of them will hit healthcare and some of these folks bringing some outside perspective can bring value by saying, “This is how it played out in Market X.”  If you think about your business in different ways as a vendor, you might find ways to make customers happier and grow your business.

So I think that for customers overall in the near- and mid-term, it’s a good thing. The downside is the next round of exits, because you know they’re going to sell at some point. You hope they become strong enough when they do get sold, they’re not getting sold into a situation where somebody’s just buying them for the footprint and moving you off that system and onto something else.

Give me a grade for each of these publicly traded companies in terms of market share, image, management, and return on shareholder equity:

McKesson

In terms of market share, they’re absolutely getting an A because of their footprint. In terms of customer retention, I’m not sure what grade I’d assign, but what I’m hearing more of is that they’re having some customer losses. Historically, McKesson has been unbelievable in being able to hang on to customers. Traditional wisdom is that they didn’t try to find that many new customers. They weren’t trying to fight the ground war in getting new business hospital by hospital. I hear they’re starting to do more of that with some of their new capabilities that they have on board.

The Awarix deal that the did this summer … that they’re getting pretty aggressive in using that as an entry point. Awarix is a workflow tool for patient management hospital-wide, so it pulls information from disparate systems and presents it on flat screens that you have around the house. At a glance, you can understand things about census, room availability, where the bottlenecks are. It’s a patient throughput tool, very cool. McKesson is using that to push into new hospitals. They haven’t done a lot of that, so I’d give them an A in terms of what I’ve heard on that front. I’d probably give them a B in terms of customer retention because they’re losing more than they have in the past.

Eclipsys

At this point, I’d give them a B overall. They would agree that it’s taken them a little longer than they expected to right the ship. But, I also think that they still occupy a pretty interesting position in the market. They have strong capabilities. Organizationally, they’ve made the changes they needed to make to push things forward. I’d almost give them an incomplete. The judgment is still out.

Cerner

I still rate Cerner as being an A overall. Everybody you talk to, you ask them who frightens them in the marketplace, and everybody’s going to say Cerner. People can throw stones at different parts of their products and capabilities, but the reality is that Cerner, for better or worse, has defined the hospital information system landscape in a way that’s favorable to them.

Cerner’s question going forward comes back to where do you find growth going forward? When you’ve built up to be as big as they are, where do you go? I would expect that they wrestle with that internally. I’d give Cerner an A. Everybody knows about them, even outside of healthcare IT. They’re still the company to beat.

GE Healthcare

I’m going to stick with GE at a B-. I think they’re getting their arms around the assets they have, but every time they get their arms around the assets they have, they go out and buy something else, like Dynamic. When you look at where they fit, I’ve certainly heard good things about product development, but broadly I don’t feel like they’ve taken advantage of the footprint as well as they could have.

They have this incredibly strong brand, they’ve bought a lot of companies, but I would argue that, of the companies they bought, I don’t know how many you’d say were better off for having been bought by them. You can’t go through the list and say, wow, they bought that company and they really turned it into a massive business. You saw that on occasion, but they haven’t done a great job at taking advantage of the pieces they’ve put together.

Perot

I know less about them, but I would say that I’ve been surprised at some of the things they’ve done. I’d probably put them, honestly, closer to a B- or C. They’ve bought some things, but then lost one of the big contracts recently. I understand why people are in the outsourcing business because there’s huge opportunity there, but I haven’t heard that many, if any real success stories, in outsourcing. It’s an interesting thought, but then in practice, it just doesn’t seem to work that wall. It comes down to how different than other industries healthcare is, with a more complex mix of stakeholders. Aside of a few case studies, I don’t that they have a lot of folks saying, “Wow, I’m ecstatic about my outsourcing vendor.”

Quality Systems

They continue to stick to their knitting and I think they’re doing really well. I’d give them an A for focus. Anecdotally, I would give them somewhere between a B and C for delivery. I don’t know that that’s their fault, but they have so much opportunity out there that it’s tough to deliver.

The biggest risk Quality Systems and Allscripts and eClincalWorks and folks like that, that the more successful you are on the sales side, the more risk you’re taking on because you’re signing people up and it will take time to implement them. The longer that delays, you start digging a hole for yourself. It’s hard to argue that they’re doing the wrong thing based on the business they’re doing. From customer perspective, I get a little nervous about how long I’ll have to wait to get my system.

Sage Healthcare

I follow them a little bit. I think they’re probably a C to a D. Not through all the fault of their own. They stepped into a tough situation. They’re an example of an organization that stepped into healthcare most likely thinking it had some real similarities to other small and medium business, and they’re finding that the physician business is a challenging market.

Medical Manager had a great footprint, but those customers didn’t get a lot of care and feeding. When customers aren’t expressly unhappy but at least not happy and there’s a technological inflection point like the EMR hitting your sector, you’re in trouble. Your customers are going to go and you’ll lose more than you keep. That’s what they’re running into.

Misys

I think their new focus is good. I’d give them a B with little bit of an upward trend. They have this great asset in terms of the physician installed base. They just need to make sure they don’t run into the same issue that Sage is running into. If they can keep their customers happy enough so they don’t see them walking away. As customers go through technology replacement cycle, I want to make sure I’m on the winning end of a disproportionate share of my customers as they make those choices. They’ve got a fair amount of risk in front of them, but the focusing will help them out.

Mediware

I thought it was good to seem them start to focus more. The real question is, can they really figure out how to get some growth back? They have some interesting assets, but have to put them on a C on growth side until the most recent quarter. It’s good to see that most recent deal they did was focusing back on blood bank. It’s a good thing to reinforce what you’re good at and they’re good at that. They have an upward trend in front of them, but the jury is out.

Allscripts

Boy, up until the most recent quarter, I probably would have tagged them with an A based on what I was hearing in the marketplace. They were going a great job in getting big wins and were a really tough competitor. That doesn’t change with one quarter’s results, but you get a little concerned when a company operating in this great sector of healthcare stumbles. You wonder, is it due to growing pains, and if so, then look at them getting whacked 20% on stock price, then buying that’s a great buying opportunity. Otherwise, if it’s something fundamental, you get a little nervous. I’d probably give them a B, but I’d keep an eye on them because it could be opportunity to get in at the right price, but you have to see if the quarter was an aberration and not a trend.

Siemens

I’d give them a C. You get the sense that they’re buzzing around a lot, but you don’t get the sense that much is happening. They’ll have to continue to wrestle with whether this is a market they’re committed to long term. The answer has consistently been yes, but you keep asking the question because you’re not seeing them just rip it in the marketplace.

What do you think about big acquirers like InfoLogix, Nuance, and MedAssets?

I don’t know much about InfoLogix.

Nuance is really focused on strategically to be willing to be aggressive to build out a strong position. As a banker, you love to see that, but being a strategist as well, you wonder how all the pieces fit together at the end of the day.

MedAssets is especially interesting to me because they’re really a non-traditional player. Given the fact that they’re going public and they’re going to have lots of money and lots of margin and footprint, they could be a really big competitor for folks. I think it’s just a question of what they want to do. Do they want to focus on revenue cycle, or get into broader information systems in hospitals?

Given that they can touch so many hospitals, if I’m sitting in the competitive intelligence department of McKesson or Cerner or one of those places, I’d keep a very close eye on MedAssets. I’d want to know what those guys are doing. They’ve been pretty creative and can they certainly could continue to be creative.

In terms of other players, you’re going to see more and more offshore organizations looking to buy entry into the US market. Indian companies and other Asian organizations looking to take advantage of the labor force that they have and looking at the US market and trying to find targets that have a labor component that they could offshore.

When you think about situations with labor requirements, where you have systems that you can deploy that have labor associated with them. Revenue cycle is a good example of this. You can put the technology in place, but if you don’t have people to run after the claims or other aspects of it, you’re leaving money on the table. I think what you will see is a continued push by offshore organizations to find US targets where they can get some of that offshore arbitrage.

Are Microsoft and Google serious about healthcare or posers?

They’re serious about it, but I also think that they consistently underestimate the complexity of the market. A lot of people do. Microsoft has certainly done some interesting things with the businesses they’ve bought in the space, but they have to figure out where they’re going to fit and who they want to be. Are they going to be an enabler or in the application space? You look at them and they’ve got brand and reach, so they should be able to do things in healthcare.

I tend not to get too excited about some of the big healthcare initiatives these guys put out there. On the PHR side, I spend a lot of time around PHR businesses. It would be great if everybody had a personal health record and they all do it with Microsoft HealthVault, but you think through the challenges of how you get information in there. You don’t want to type it in, but because of privacy issues, you don’t want to have someone do it for you because who knows where the information will end up. You have challenges on the personal side of healthcare that won’t be resolved for awhile. For Microsoft and Google, I think they absolutely have huge opportunities and they recognize there’s a lot of money to be made in the space, but they will have to go through a bunch of iterations to get there.

There were rumors going around that Google was going to buy WebMD. Let’s say they did. What does that really do? How many people do you know who are using WebMD for more than a basic reference tool? The consumer market is tough. You haven’t had people have a lot of success there for a reason. As fragmented and challenging as the provider market is, it’s far simpler than consumer side.

If someone wanted to invest in early-stage companies but doesn’t have the $1 million it takes to be an accredited investor, what are their options?

It tends to be pretty tough. To get into a private equity fund, you must be accredited, and even then it can be pretty tough to get into private equity funds. The other part, in terms of direct investing, you still have the issue of being accredited.

I spend a lot of time thinking about that. One of the great opportunities in this space is that there’s such grassroots knowledge out there that it would be great to capture that and to let people invest and to be able to get return for the fact that they know what’s going on. Mechanically, it’s tough.

One of the challenges is that, in the early stage of healthcare IT investing, it’s a pretty small universe of funds that will do that. You and I know some of the characteristics that will make these small companies successful, but from an investor perspective, you have a whole raft of risks. If you’re not living and breathing healthcare technology, you’re not comfortable with a lot of those risks. You don’t see a lot of funds that have made plays in early stage healthcare technology because a lot of them made bad investments and lost money. It’s hard to find funds that are interested in doing that, much less putting your own money to work.

If I can figure that out, I’ll let you know, because I think there’s a great opportunity there in working with early stage companies. It’s not formulaic, but there’s a lot of common problems companies have. We see it in our client base. The challenges aren’t that different between companies. So there’s some benefit you can add just having that knowledge, saying let’s figure out how to apply it and help those companies grow and the best way to do that is as an investor.

How about the practice management market? Any projected winners?

I still think on the practice management side that you’ll continue to see a divergence, guys who will be software-focused and those will be services-focused. So not just services in terms of the subscription model for software, but bringing a broader set of services to the physician practice.

Take athena vs. Quality Systems. Athena uses a lot of technology and maybe they’re a technology company, but they’re really providing services, whereas Quality Systems is a technology company. In terms of who will win, I come back to that scale is incredibly important in the physician market. There are a lot of companies that have 200 or 500 docs, but you have over 200,000 practices. It can be a high cost of sales to go after those practices and try to convert them. Scale will be a big differentiator. Product will continue to differentiate, but a bigger company with a weaker product will still probably have a leg up over a smaller company with the best product out there.

Do you still like Teletracking, DR Systems, and the handheld vendors?

I do. When I come across a company that is bringing a fresh perspective and making money while they’re doing it, I love to see early stage companies that don’t have a lot of revenue that have cool technology because some of those guys are going to make it. The difference between making and not making it is picking the right strategy.

When I look around, I’m still a fan of the privately held businesses that keep plugging along and doing their thing, focusing on being the absolute best at what they do and not necessarily saying they have to do everything for everybody. Lots of companies that fall into that category. Those are businesses that you like to be around. You go through the KLAS rankings and see how many companies are out there and how many of decent size with really happy customers. That’s pretty cool. If you look at the top-ranked vendors, you get pretty excited when you see them serving customers well and growing their business and making money.

Instead of saying I like specific kinds of companies, I like companies that have strong technology and really happy customers who are really using the product. There are a lot of technologies out there where they get a couple of customers who aren’t really using the product. All the stuff we’re trying to change broadly – if people won’t use the technology, it’s still worthless.

What is athenahealth’s IPO telling the market?

To people who are either owners or employees of healthcare businesses, the capital markets are pretty interested in stories that help them. Jim Cramer said he’s a fan of any company that addresses the cost problem of healthcare. That’s a pretty blanket statement and a lot of people believe that. The stock came out at 18 and is over 40 today. Athena is trading with the expectation that it’s an option on improving efficiency in healthcare.

It’s nearly impossible to justify that price based on the fundamental performance of the business today. But, if you look forward, athena is a leader in a market that has a massive amount of opportunity, and as such, people are saying they’d rather in invest in Quality Systems in 2001 than in 2007. If you can communicate your business model and deliver numbers, there’s money to be had to fund it.

What’s the best M&A deal of the year so far from the buyer’s perspective?

I would probably say that the best one for the buyer is the McKesson Awarix deal. Awarix certainly wasn’t a $100 million business when they bought it, revenue-wise. McKesson was willing to make a strategic change in terms of what they were looking to do. They’re effectively rapidly going to market with that. It could be the most transformative and impactful of the deals.

What other industry segments are going downhill and likely to take some companies with them?

I think you’ll see a shakeout on the physician software side. I don’t think the segment is going downhill, but will see a shakeout there with all those CCHIT-certified vendors. You haven’t seen much consolidation there in a long time.

You’ll see that in the RIS-PACS marketplace. The aggregate enterprise value of Merge, AMICAS, and Emageon is less than $200 million. Each of them were valued at multiples of that not that long ago. Some of it’s the impact of the DRA, others because of company-specific things. A lot of people are still buying in that sector, but those guys have had a rough road. AMICAS is turning the corner, Emageon had a rough quarter. Merge is caught in challenges. The sector has been challenging, but it can’t be that challenging since GE bought Dynamic.

What changes would you predict for the upcoming year?

I think you will see sharper competition for new customers and for holding on to existing customers. It’s always been competitive and a highly fragmented market with a lot of small and large companies that run around. You can have a hospital systems vendor that can really make a go of it with three or four hospitals that they sign up from the start and bootstrap from there.

I think you’ll see a paradigm battle between best of breed and enterprise continue and probably heat up. Since so many hospitals have made large scale systems decisions and picked their big player, you will see a lot of fighting to capture the IT dollars around that big investment. The private equity investment … some companies that might have been a little more laid back will have pressure ramped up to deliver growth and profit. From a customer perspective, you might find that this next couple of years is a good time to be a customer, not that you didn’t have people fighting for your business before, but they’ll fight even harder.

I think you will see more of a focus on getting value from IT investments already in place. You hear a lot about healthcare technology investments, “We bought the system, but it’s not delivering even the soft ROI that we justified the investment with.”

This is part of why you’re seeing consolidation on the consulting side. People are realizing that consulting organizations are they’re bringing value in getting systems in place and some specialty firms actually help out with the adoption. That will be a bigger and bigger thing. If I’ve spent seen or eight figures on IT investment and it’s not being used, I have to figure out how to get people to use it. I can’t just throw it away and start over.

Given the issue with bond insurance companies, I think you will see capital constraints because of capital markets and operating pressure because of reimbursement trends from third-party payers and self-pay. You must be more efficient with the resources that you have.

The Huffington Post is a blog that raised $10 million in VC money. Is this a sign that exuberance is irrational enough for me to take HIStalk public?

I think if you took HIStalk public, you could expect a valuation that would be at a significant premium to the athena valuation. I would argue that you could go ahead and start interviewing bankers for this. I would say you’re worth somewhere around two billion dollars. [laughs] I’ll get a call from Jon Bush after this, asking, “Hey, are you saying I’m overvalued?”

People focus on return. In terms of what you’re building, you’re not just grabbing eyeballs and clicks. If people are looking at the information and the content that you’re bringing together … and this is in all seriousness … and you’re capturing decision-makers as they’re looking it and shaping their decisions, there’s a lot of value in that. Seriously.

You’re jumping off the $2 billion thing, but there’s a lot of value in the fact that you’ve got an audience who are really influential in the healthcare space. The challenge that you have … you’ve done a great job of monetizing it, because you’ve done a great job balancing it between making money without compromising the integrity of the commentary. The challenge in putting venture money in … I’m not saying that you’d ever compromise the integrity … is that the pressure goes up to find more revenue and be able to continue to grow that revenue line.

I think you’re doing the right thing the way you’re doing it, but I tell you what, if somebody comes along and offers you $10 million for it, you probably should think pretty hard about it. [laughs]

 View/Print Text Only

Photo and site: Jay Parkinson, MD, MPH

I didn’t have much trouble tracking down Jay Parkinson. He’s ubiquitous for a guy whose medical practice is just a few weeks old. He’s been interviewed many times, has a blog, and apparently is coming soon to a TV near you, all because of his Medicine 2.0 – which is actually Medicine 1920s – making house calls, charging reasonable cash prices, and being available whenever his patients need him, all in the hip Williamsburg neighborhood of Brooklyn.

He insists that it’s not about the technology, which in his case is the PC tools everybody else uses (Google apps, e-mail, IM, etc.) He doesn’t even use an EMR system any more, having given it up because it didn’t meet his needs. So, the lessons to learn from Jay aren’t about use of cool technology, but more about practicing medicine the way he wants, addressing some of the challenges of the healthcare system along the way.

Tell me about your background and your practice.

I’m a 31-year old male. [laughs] I practice in New York City, mostly in Williamsburg and Brooklyn. I started the practice September 24 after two residencies, the first one in pediatrics at St. Vincent’s Hospital here in the West Village and the second one in preventive medicine at Johns Hopkins in Baltimore. Seems like it’s going pretty well for me.

Most people associate house calls with country doctors carrying little black bags, but you’re in New York City.

I still have my black bag that I carry. Just getting around the city is next to nothing. You take the subway, walk, or take the bus. In the near future, I’ll be buying a scooter so I can scoot around. Hopefully I can keep every house that I visit within a 15-minute travel time.

Describe a typical patient encounter.

It’s great because they submit all their information ahead of time, so I pretty much know what’s going on prior to the meeting. I know what to talk about, what points to hit, what things I can skip over that other physicians would concentrate on and waste time on. They spend 10-15 minutes giving me all their health information via an online form. It’s very streamlined, but I still spend about an hour and a half per visit, talking to them, having them show me their art work. It’s very laid back.

I’m not a very formal person. Everybody that I’ve seen has really enjoyed seeing their doctor rather than being in some sterile, foreign environment that everybody knows and loves as a doctor’s office.

What’s it like making house calls and what do you learn that an office-based doctor wouldn’t?

Somebody has asthma, maybe lives in a dirty warehouse loft, I can pick up the fact that it’s pretty friggin’ dusty or has mice. It just gives you a feeling for who somebody is. You can tell a lot by how they live, more from a mental health perspective. The United States is a pretty clean place so we don’t have a lot of sanitation issues or something, but it gives you a more full picture about the person.

What technology do you use to run your practice?

It’s very basic, freely available technology. I have a Macbook and an iPhone. IM programs, like ATM and iChat for the Mac. I just use regular e-mail, Gmail in fact, because it’s very powerful.

I use a website called Formspring for my online forms. It’s very simply drag and drop forms creation. Any form can be made in three minutes or so. It uses skip branch logic, so questions can appear or disappear based on responses to previous questions. I use that to get another diagnosis through a careful history, because an early question is a branch in the algorithm for proper history taking. I think it’s safer because doctors aren’t perfect and sometimes they forget to ask very important questions about something rare. If I can spend time asking these questions beforehand, I don’t have to be worried about always thinking about every little thing during my interview session with the patient.

I saw on the Web that you use the Life Record medical record system. Tell me how you chose it and how it works for you.

Actually, I have abandoned that, simply because it’s not very customizable and I thought it was going to be. So, I’ve abandoned that. But, I was fascinated by it because it has a lot of features that I think would be very valuable for a traditional office-based practice with multiple practitioners. Having access to records by iPhone on a Friday night at dinner is vital in some circumstances.

Now I use Apple’s version of Excel called Apple Numbers and have created templates for nearly every condition that I have. I can use them for a physical exam or generating an invoice. It’s really just using Apple’s iCal for scheduling synced to Gmail’s calendar. iCal and Gmail and iPhone are all updated at the same time in real time. It’s pretty basic stuff.

You’re an iPhone fan, I hear.

I love the iPhone. I think that’s amazing. Hopefully I will be able to put Apple’s Number files on my iPhone. I think they’re coming out in with developer’s kit for iPhone in February and I’ll be able to use my iPhone a little more intensely. I could only get to my records by iPhone with Life Record. He’s a great guy, the guy that developed it, and I’m sorry it isn’t specific for what I need.

When it comes to technology, you seem to be a geek, but you deal with artists and are one heck of a photographer. Where do you fall on the geek-doctor-artist continuum?

I’m definitely fairly geeky, I guess. I really like technology and gadgets. Right after the iPhone came out, I wasn’t going to wait in line forever down in Baltimore. I’m all things Apple. I did the iPod first day it was announced years ago. I designed my own website and can do programming. I don’t know CSS or anything like that. I’m not trained in any technology, I just kind of figured it out on my own.

You charge $200 a house call. Do patients find that competitive and can you make a decent living at that price?

Sure. Look, I have no overhead whatsoever. If I charge $200 a visit, $195 of that is straight profit. I think that’s a pretty good living. If I see eight patients a day, that’s $1600. Without having staff, an office, billers … it becomes a very easily doable practice. I definitely designed the business model looking at that. The concept of doing the housecall was a way to open a practice without putting $300,000 upfront. I started this whole thing for less than $1,500.

Would your med school classmates think this is weird, or are they looking for more satisfying practice models too?

Everybody that I’ve trained with has been extremely supportive. I just got done with an interview for the London Times. Obviously there’s something interesting about what I’m doing since now I’m making international news.

What I’ve created, not to toot my own horn, is pretty ingenious. It’s a Band-Aid to a gaping wound in a lot of ways, the fiasco that is the American healthcare system. 50 million people without health insurance – there are a lot of voices behind what I’m trying to do. I’m doing a good job, I guess, getting the word out about the plight of the uninsured and also seeing patients at the same time.

A few people have mentioned security and privacy issues because of the technology I use, but because I don’t deal with insurance companies and don’t submit any patient health information online to insurance companies or Medicare or Medicaid, I don’t have to follow HIPAA regulations. I’m considered a country doctor, which is kind of interesting.

On your website, you talk about how you search the market to find the lowest fees for specialists and other medical services you can’t provide directly. How do you do that and what interesting stuff have you found as a result?

It will blow your mind what I found out. I graduated residency June 30th. Since then, between June 30 and September 24, there’s a good three months where that was what I was doing, finding accurate contact info for physicians in New York City and calling them up and asking what they charge, putting the information into a database. A mammogram ranges from $175 to $750, both of them amazing facilities, but nobody’s regulating healthcare prices.

Also, there’s widespread belief in the healthcare industry that they shouldn’t be competing for cash-paying patients because there’s so few of them. 50 million isn’t that few at all, but there’s no free market in the healthcare industry. The vast number of people have health insurance and doctors aren’t competing for their business at all. Its so funny, when I tell radiologists or pharmacists or anyone who stands to benefit from me referring my cash-paying customers to, it’s laughable how they kiss my ass to try to get my business.

The ultimate goal here is to create more transparency in the healthcare pricing scheme. I’m trying to create that transparency on my own because the healthcare industry won’t do it because they profit from that.

How would you compare what you do with the retail clinics that are springing up everywhere?

Most of the time, it’s simply a profit-driven marketing scheme. I’m personalized service. You call me up, I go to your home, physically examine you, follow up by IM or e-mail or text messaging. I get to know you as a person. I’m not remotely competing with retail clinics at all. People who go there want something different than I provide.

From your viewpoint, what’s the most wrong and most right about the US healthcare system?

It depends on who we’re talking about. Older people and very poor people, there’s absolutely nothing wrong with it whatsoever. For people who have insurance, there’s not much wrong. People who don’t have insurance because they’re young and healthy and priced out of paying an average $10,000 here in New York for an HMO, there’s a lot wrong. It really just depends on who you’re talking about. It’s hard to generalize that way.

My patients are people who are concerned about having or not having health insurance. New York State has policies that ensures that everyone pays the same for health insurance. That’s great for sick and old people, but young people can’t justify spending $9,500 when they only make $45,000. That to me is a significant problem for the uninsured in New York State. It’s a great solution if you’re old and sick.

You just started this practice and here you are, four or five weeks later, you’re in newspapers and on TV. You mentioned in an interview that you’re getting unbelievable offers to do TV and books. What’s coming your way?

You name it, I’ve gotten it. It’s pretty insane. Keep your eye out, probably next fall, for a TV series from a producer of movies that the whole world has seen, She’s getting back into an original series. I’m starting to write with her in a week and we’re going to start developing a TV series together, not a reality series. The major networks are interested in this concept. We’re developing it so it appeals to everybody, but it deals with the healthcare issues that are afflicting America. That’s in the works.

I got a book offer on Monday, so I’ll be writing a book about the healthcare industry using examples from my life and practice. The London Times was today. I’ll be doing a big talk show soon and Steven Colbert on November 12. It’s kind of insane. They’re all coming to me. I don’t have a PR person. I’m doing everything myself. I haven’t put out a single press release.

Is is scary that people want you to comment on an industry that you’re brand new to?

No, not at all. Sure, I don’t have experience in private practice dealing with insurance companies, but I’ve worked and talked about the healthcare system for years, getting my master’s in public health. I worked with Sidney Wolfe in Public Citizen’s Health Research, Ralph Nader’s consumer watchdog group in DC. I’ve worked at the Maryland state department of health level. I worked with National Association of Firefighters as their medical consultant. I’ve done a lot.

I’m not like a normal doctor who finished a residency and sees patients. I intensely studied the healthcare system and figured out its strengths and deficiencies. I spent the last three months at Hopkins on quality of patient care, studying quality in the American healthcare system. Doing Six Sigma and Lean Kaizen in various departments in Johns Hopkins, trying to figure out where the patient problems lie, problems with reimbursement and unsafe practices that lead to poor outcomes. I’m not worried about being a spokesperson.

Do you think you’ll keep practicing with all these offers?

I wouldn’t mind doing part-time for both. One thing I don’t want to be is part of the industry. I’ve got plenty of offers to join companies and form alliances, but then you become part of the problem, like most doctors. The practice of medicine is very conservative and appeals to a conservative type of person. They don’t really teach you to think outside the box. They try to prohibit you from thinking outside the box.

A lot of people are getting hung up on the “doctor who makes house calls.” Really, there’s no difference in seeing a patient in their homes instead of in the office. I don’t have a laboratory, so I can’t do rapid strep tests. It’s a little difficult to do male urethral swabs, stuff like that. Female exams, I just don’t do, but I refer to someone.

There’s really no difference between a house call environment and an office environment. I draw blood as I need it and a car comes up and picks it up outside my apartment door each night. To me, it was just a business model to start a practice on the cheap. People are also hung up on the technology, but it’s the stuff that everybody uses in every other industry in America. It’s just not being used to communicate with doctors.

Most doctors don’t even want to get patient e-mails.

Congress just passed a 10% Medicare reduction on to physicians yesterday. The only way doctors are making money these days is volume. If you see 30 patients a day, at 6:00 you go to your computer and there’s 30 e-mails, God, I can’t charge for these just yet. Why would I entertain the possibility of receiving e-mails from my patients? I understand why doctors are averse to that.

The way I treat patients, I can see six to eight patients a day, and as I’m traveling, I can answer e-mails. I’ll receive forms in my e-mail from patients who want to see me in the next hour if I’m not busy. With an iPhone and a Macbook, its ridiculously easy to keep track of everything.

You obviously love New York.

I’m a big fan. It’s the center of human culture. Everything is right here. If you want to go see this really obscure movie, it’s playing down the street. If you want to see this amazing photography by the best photographer in world of all time, it’s coming to town next week.

A woman was visiting me from Ireland and said something that describes New York as a summary. She said, “The one thing I love about New York is that the answer to every question is yes. It might cost some money, but the answer is yes.” She asked if I’d been to Ireland and I said no. She said the answer to every question in Ireland is either no or maybe.

The architecture and infrastructure here is just awesome. You don’t have to have a car.

Will you stay there or go Hollywood? You could leave your practice after one month and be in the public eye constantly if you wanted, doing stuff that people only dream of.

I’m not to going to go Hollywood, at least not yet. It seems that way, doesn’t it? We’ll see what happens. If I can start some sort of system … I have ideas and I have people backing me to create something along these lines that can benefit more than the 1,000 patients I can see here.

You could easily be rich and famous.

You should see my apartment right now. [laughs] It doesn’t look like I’m rich and famous just yet. But It’s New York, where the answer to every question is yes. The opportunities for me are endless, I think.

 View/Print Text Only

Photo: Health Management Technology

Security and privacy in healthcare are obviously hot topics. So, when Sentillion decided to sponsor HIStalk a few weeks ago, I pressed my luck and asked for an interview with CEO and co-founder Rob Seliger. I knew the company was refocusing a bit and also introducing a new single sign-on application called expreSSO, so I offered as bait the chance to talk about that. When I got on the phone with Rob, he said he’d be happy to talk about anything and that we didn’t have to pitch product. Good answer.

When I hear either “single sign-on” or “CCOW”, I think of Sentillion first because they’ve been doing it for a long time. They’ve introduced some new products I wasn’t fully aware of, including the vThere virtualized client for remote access.

Thanks to Rob for the chat.

Tell me about Sentillion and how you came to create it.

Sentillion was founded in 1998, spun it out of the former HP medical products group. I have the simplest resume on the planet – paper route, HP for 18½ years, then Sentillion. [laughs] I was working on technology that integrated applications not on the back end, like databases and integration engines, but on the front end of care, looking at the user experience of the caregiver, whether using applications from the same or different vendors.

We determined that our technology would serve better as a glue, run as a neutral company. We built a business case, they agreed. We spun the IP out with myself and my co-founder in 1998. We did three rounds of venture capital, the last one in 2001, and have been growing the company every since.

We moved from general integration to specific applications used in identity and access management. What we’ve been able to do is create a whole suite of products that address identity and access management needs for healthcare and, specifically, hospitals.

We sell to provider healthcare organizations. We’re unique in that way. Our competitors sell to finance and banking and retail customers. We said that healthcare has special needs, workflows, idiosyncrasies, and constraints. We wanted to create technology that was purpose-built for healthcare. Fast forward and we have hundreds of thousands of caregivers in hundreds of hospitals in the US, Canada, UK.

Healthcare security, like IT in general, seems to fall well behind that of most other industries, with lack of consistent authentication rules across applications, applications that don’t support LDAP or other centrally managed security, and heavy help desk use for password resets. Is it getting better?

It is getting better, but slowly. There are reasons why stronger security technologies have not been broadly adopted in healthcare. The main reason is that they get in the way of delivering healthcare. I’m not a physician or nurse, but I have a tremendous respect of what those people do for a living, taking care of people as their number one job. Navigating security isn’t what they’re paid to do. Our customer base is some of the smartest, most highly trained people on the planet and they’re adept at finding workarounds to impediments to delivering care, including security.

Part of our process is leveraging the years of experience we have in the care business. How many other security companies can you name that have a chief medical officer? We hired Dr. Jonathan Leviss as our Chief Medical Officer because he had a passion to eliminate the obstacles between caregivers and the productive use of computers.

You’ve heard of the last mile problem, like with DSL, where you can’t get connected if you’re too far from the telephone switch. I refer to our situation as the last inch problem, that inch that’s between the caregivers’ fingertips and the keyboard they don’t use. We provide security solutions that make them more productive instead of less, while instilling better security practices across the organization.

People often say that healthcare is slow to adopt technology, yet you can look at the amazing equipment from imaging systems to robotic surgery that is used. I don’t see a fear of technology in healthcare, just an avoidance of technology that’s an impediment to healthcare delivery. Vendors often miss that. We work really hard to get that right.

What security priorities would you recommend to a hospital CIO?

My favorite thing to do if I’m allowed is to take a walk, particularly in care areas, and watch what people are doing, who they are, where the computers are, what they’re showing, and whether they’re attended or unattended.

UPMC implemented our solution years ago. They started deployment in the ICU. I was with an entourage of UPMC executives and I drifted back from the tour group because they were headed to a workstation that someone was using with single sign-on and single patient selection. I stood back and marveled at all the workstations that were not in use, but were locked. I asked UPMC when the last time was that all those workstations with no one around were actually locked. [laughs]

It’s kind of like the broken window theory of why neighborhoods go downhill. Good security isn’t just the things you do on your network with firewalls and antivirus software. It also has to do with what people can see. Show them that their information is being safeguarded and protected. How would someone feel being wheeled down the hall and seeing other people’s information on display? It could be their information as well. You must show personnel and patients that they’re doing the right thing.

You testified before Congress after the VA’s security breach. How would you grade their progress since?

The hearings were for the right intentions but for the wrong reasons. The breach that occurred with the theft of that laptop was benign. The information was not clinical and the thief who stole it didn’t know it was there. At the end of the day, it was a non-event. They didn’t get Congress to the point of understanding how to practice good security.

The VA has the same challenges as non-VA – security vs. usability, however people who work for the VA can be told what to do, which isn’t always true of community physicians in hospitals. The VA has its act together as well as anyone else. They’re continuing to make investments in practical security practices. They’re extending a pilot we did for deployment of single sign-on, which is the first step in a powerful direction for them.

The participation in that hearing was fascinating for me. It was literally like being in a TV show. Members of Congress were in seats elevated maybe 10 or 12 feet in the air, looking down at myself and my VA colleagues at a table. Each member of Congress took the opportunity to express a passionate opinion, not all of which were germane to the conversation at hand. Despite the hyperbole, they actually listened to what I said and what the VA said. They asked good questions. It was a remarkable discourse.

The hearings were well after 9/11, yet the halls of Congress, with minimal screening, are still very open to the public. It was a wonderfully reassuring about our way of life. It was wide open to people who wanted to come and listen and participate and not be overly encumbered with security.

I’ve done so much public speaking that I’m rarely nervous, but I was nervous. I would not want to be there for a serious transgression or offense.

If I looked at your laptop right now, what security measures would I find?

You’d find our product, Vergence, which is single sign-on and a bunch of other things. Virtually everybody here uses it. What do I like about it the best? I don’t have to remember my passwords for the system that approves expense reports, Webex, salesforce.com … the list goes on and on. What I like best is the sheer convenience factor. The screensaver periodically locks my workstation after about 15 minutes of unattended use. That happens whether I’m using it at home or in the office. We all use high quality passwords, mnemonics based on pass phrases, based on an elaborate sentence I can remember and choose some letters from it to make my password.

Unless you’re sitting in front of it, you wouldn’t see the display because of a 3M privacy protection screen. I was working on board financials on an airplane flight several years ago when the woman next to me leaned over, almost into my seat, and said, “You know how to use a spreadsheet.” I thought, “How long has she been watching me work on board financials?” Anybody who’s a road warrior in the company can have a privacy shield.

Security and privacy get confused. The woman looking over my shoulder wasn’t trying to hack our systems, but she was breaching our privacy as a company by looking at sensitive information. Both security and privacy need proper protection. The recent George Clooney story suggests that the concern is well founded that the biggest data access concern that healthcare organizations should have is what happens within their four walls. Too bad Palisades Medical Center isn’t a Sentillion customer, as this is not a good way to get one’s hospital in the news.

Are you happy with the progress that healthcare software vendors have made in making their products CCOW compliant for improving the user experience?

Interesting question. The general answer is no. We’ve put our heart and soul into the CCOW standard going back to the HP days. Standards in healthcare still have a fickle existence when it comes to vendors adopting standards and applying them thoughtfully and properly to their products and with the same interest as something that is purely proprietary.

Much of the venture capital we raised in the early days was spent giving market visibility to the CCOW standard. That helped to a point, but there are vendors to this day who have not implemented the standard or have done so in an incomplete way just to check off that they’ve done it, or done it in an elitist way, interpreting it in a way that’s good for their business interests but not as useful to the customer as a full implementation.

Often a customer will say to us, “You’re Sentillion, can’t you get Vendor X to do it correctly?” I keep looking for that sheriff’s shield or subpoena power to tell vendors what to do. [laughs] We’re just another vendor.

Our answer was that so much of what was conceived by us and others in the standard is extremely powerful, but if vendors won’t implement it timely or correctly, we need another way. We developed a technology called bridging that allows achieving the standard in a way that’s not invasive to the application.

The A-Ha was that the part of the application we can see and rely on is the user interface, as opposed to trying to inspect the application at a code level and hoping for an undocumented API or secret hook that we could latch on to. The user interface is tangible. Because that translates into a series of calls to the underlying OS, we created programs to watch for those calls. We can watch an application as the user is using it and see that they selected a patient. We can get that and send it to other parts of the application to automate patient selection, but without having the CCOW standards.

I read something where someone said that CCOW is a great standard, but that Sentillion controls it. Boy, did that rile me. I’ve been doing this for over 15 years, originally for non-CCOW work. There are very specific rules of engagement for a standards open development process, from NIST, a standard for being a standard, how you vote, how you achieve a quorum, etc. For an open standard, when you have a final ballot, people can vote Yes, No, or Abstain. You throw out the Abstain votes and 90% of what’s left has to be Yes for the standard to be valid. Imagine trying to get that level of agreement in your own family. [laughs] It’s a tough hurdle with lots of opinions, lot of eyeballs before a ballot passes. There’s no way any one organization can control a standard. They can be a blocker if they have enough votes, but they can’t force something to happen.

If there’s a secret to what we’ve done, it’s two things: show up to the meetings and document them. [laughs] I like to write and most people don’t, so often it is myself or others who volunteer to document the meetings, but that doesn’t mean we’ve done anything more than spending evenings and weekends to pull documents together for the greater good. The idea that an individual or organization can control a standard is unfounded.

When I Google Sentillion, I get ads for ComputerProx and Encentuate. What is the Sentillion value proposition over these and other competitors like Carefx?

The companies we’re most likely to compete with head to head are more often companies like Novell or Computer Associates, We’ll also see Imprivata. We don’t see a lot of some of the other companies that come up with the ad hits, even though they’ve latched onto the keywords. Across the board, for all our competitors, there are really three salient points.

First is the healthcare focus. A CA or Novell, while they have sales and marketing teams that cater to healthcare, have products that are generic that are supposed to work in 9 to 5 office environments and not necessarily healthcare.

Second, we believe strongly that we provide a fabric or glue. The last thing we want our customers to have to do is glue our glue. If we show up and say, “We have one piece of the puzzle and you’ll have to work with these other vendors”, that’s not particularly satisfying. That’s why we’ve invested heavily in developing our own products. All our products were developed by Sentillion so our customers would have a single vendor, a single number to call. Every one of our competitors requires multiple partners to do what we do as a single vendor.

Third is the incredible track record we have in getting customers live and keeping them live. We have hundreds of hospitals and hundreds of thousands of users. We monitor uptime across all customers and report to our board like it was financial information. Five nines. Who’s doing that for a security apparatus like we provide?

I hope you don’t think it’s bravado, it’s just pride. There are still hospitals using monitors that I wrote firmware for, like the HP Clover. I still feel pride when I walk by them in a hospital and know that patients are being cared for with something I wrote.

Why is desktop virtualization important?

Going back to this sense of responsibility to solve problems, for years our customers were asking us to help with people who are not physically in their facility, like community docs or docs working at home. We told them we could help to a point, but they’d have to build a portal or provide remote emulation like Terminal Server or Citrix, which requires an investment in servers and expertise. That’s an OK answer, but not satisfying for customers.

We were developing improvements to our internal testing apparatus. We do massive scalability tests to test response time and failure factors and failover. We were experimenting with the virtualizing of clients, not servers. 99% of what people are doing is on servers, putting multiple virtual servers on one physical server. We thought, “With a bit more work, we could provide a virtualized client to our customers.” That was the birth of our vThere product.

Take the clinical workstation with whatever applications, OS, service packs, etc. for people who are physically in your enterprise. You can make exactly that same environment available to people outside your organization. It’s transparent, no particular software package or OS, or even preventatives or antivirus. You need a host PC of a reasonably contemporary vintage running a reasonably contemporary version of Windows. That’s it.

Fire up Windows and you get a completely virtualized version of the clinical workstation running on the host using the host’s memory and CPU, but no other aspect of the host software, If you use a VPN, we use that. The user clicks on an icon, it runs in a window and looks exactly like the application in a hospital. They provide their logon credentials and everything is identical. Radiologists can manipulate their images exactly like in the office without the remote delays. There’s no training involved, no new portal, and no additional expenses for standing up servers to host WTS or Citrix. It’s all running on native client hardware.

We introduced vThere in the middle of 2006. Use ranges from physician access to their full cadre of clinical applications to medical coders who work at home, who have increasing clout because they stand between the hospital and reimbursement. Hospitals are increasingly willing to accommodate a work-life balance for coders. Customers are doing that with IT, too, allowing them to work from home two or three days a week. How can you provide with them their usual applications? Our vThere product is a practical, elegant, and cost-effective solution.

Proximity-based security and biometrics always seemed ideal for healthcare. Are they, and how well are they selling?

We have extensive implementations of proximity and biometrics, primarily in the US. Less so in Canada and in the UK, which has a different model where NHS has mandated the use of smart cards. The combination of active proximity and biometrics is very powerful. You can achieve touchless logon. You walk up to a workstation, your identity is provided to an active proximity device, and you are then authenticated by fingerprint. With Vergence, our flagship product, we can not only log you on, but automatically launch your applications based on your role, and then single sign you onto those applications. The first thing you need to do is select a patient – we can’t read minds yet. [laughs] It’s very powerful. Customers are using the technologies separately as well.

We introduced in the latest version of Vergence a variation on the strong authentication theme using passive proximity devices and an Enterprise Grace Period. Most healthcare environments are reasonably physically secure. You can have flexibility in how you apply authentication to users during the day. The user, at the beginning of their grace period, swipes a proximity card, authenticates by password, and does their business. The next time they need to log on, during the grace period defined by the organization, they only need to swipe their smart card. Possession of the smart card within the grace period tells us it’s that user. Those seven or eight character strokes done 50 to 100 per day times add up. It allows organizations to find the right balance between strong authentication and caregiver convenience.

How does expreSSO change the single sign-on equation for healthcare customers and for Sentillion?

The biggest challenge that customers have with anybody’s single sign-on always centers around connecting with the application. Often, a vendor walks into a sales situation, tries to impress on the customer how easy their tools make it, and shows a live demo. They’ve thought through the applications to impress how easy it is. For more complicated applications, or those developed in-house with less optimal programming, what seems so easy in the sales call is much harder.

We’ve taken everything we’ve learned to make it easier to deploy. The next generation of tooling accompanies expreSSO. A wizard allows organizations to create incredibly sophisticated connectors without having to write code. If you think about a process of creating a connector for signing on and off and dealing with other sign-on related events, you’re navigating through a series of screens and either inputting information on behalf of the users or accepting information like a password expiration message. The trick is to satisfy the application by putting in the right information at the right time while responding to the information needed.

We looked at metaphors that would be easy for people to understand. We decided to use editing a movie. Movies have frames, they flow in a sequence, and you can insert special affects. We take a movie metaphor and apply it to the process of having a user generate a connector to a target application. We show screens in the order they want them to appear and define inputs based on visual controls that they point and click through — for a logon, logoff, or password expiration message, each representing the application as it appears at a certain point in time.

Anybody that’s used iMovie or Microsoft’s movie maker would instantly get how the expreSSO wizard makes connectors for applications. My wife recently edited videos of my son, who’s a competitive fencer. Colleges wanted 15 minutes of video. My wife went through hours of movies, having a great time with iMovie creating effects. She’s not a movie director, and had never used iMovie before, but she was still able to use a tool to do very powerful things.r That’s what expreSSO is all about.

The press release mentions cost savings.

Vergence does an awfully lot more than single sign-on – patient selection, auditing, and role-based access. Vergence is really a platform for creating a complete clinical workstation. It’s always been that, but in the early days, it was too broad for people to understand that, so we positioned it as a single sign-on solution. It’s like saying a car is an air conditioner when it’s more than that, like an entertainment system and transportation.

expreSSO does one thing really well and cost effectively – signing on and signing off. Customers increasingly want to focus on that to start and that’s what expreSSO is meant to solve really, really, well. When they’re ready for a more comprehensive solution, they can upgrade to Vergence.

You’ve had some recent organizational changes, I’ve heard. What’s going on at Sentillion?

We made some changes back in June that were mainly centered around refocusing the company on healthcare. We had started a process with vThere in broadening our footprint beyond healthcare in a thoughtful way. We created a business unit inside of Sentillion to look at opportunities outside of healthcare so the bulk of the company could stick with healthcare.

It’s difficult for a $30 million company to do as many things as we were trying to do. We were diversifying into the UK, bringing vThere and expreSSO to market, and trying to establish a foothold for vThere outside of healthcare. It was one vector too many. I decided we needed to reconsider expanding outside of healthcare, or at least let it be opportunistic and let companies find us. We had hired people without the healthcare background because we didn’t need that.

We’ve just come off a terrific Q3, the first full quarter since the change. We signed six new customers and sold a bunch of products to existing customers. It was a good thing to do and we did it thoughtfully for our customers and employees.

What do you like most and least about being a CEO?

I thought I would miss writing code. My expertise is in distributed, object-oriented programming. How’s that for a mouthful? [laughs] I really don’t miss it. I find what I really enjoy is the challenge of doing things that others haven’t done before.

People often ask me about what I do other than work. I have a car that I’ve been building for years. I drag race it. It’s a combination of parts that have never been put together, which means I make a lot of mistakes. I fine tune my problem solving skills and persistence. The thing I love most is to see what others here are able to accomplish that I have nothing to do with. It’s intensely satisfying. It happens following ethical principles that we care about and a corporate style that I care about, but I had nothing to do with it.

What I like least is the set of arcane accounting rules that govern software revenue recognition. It’s a set of principles defined by accounting boards that software companies need to follow to book revenue on an annual or quarterly basis. The rules are complex, but accounting rules don’t have that foundation of reason. It’s kind of like laws that evolved over the years. You can spend an inordinate amount of time interpreting the rules so you do the right thing. I’m not always sure that time is effective for the business or customers, other than you want to do the right thing.

Who do you admire in the industry?

The people that I admire most are in the new generation of CIOs, probably in their late 30s or early 40s, who grew up with information technology instead of having it happen around them. They have business savvy as well. The combination of a comfort with IT and business savvy are impressive.

Mark Hopkins at UPMC is one such person. Steve Hess of Christiana Care, Praveen Chophra at Childrens Healthcare of Atlanta, Allana Cummings of Children’s Omaha, and Marianne James of Children’s Cincinnati. All of these are examples of healthcare CIOs who have a comfort with technology and business acumen. They are putting it to formidable use in their organizations.

I gave a lecture at HIMSS about the healthcare tipping point, referencing Malcolm Gladwell’s book. One of the required ingredients is people like this to make it happen. If healthcare IT becomes truly pervasive in the next five years, it will be because of people like this.

Thanks for sponsoring HIStalk, by the way.

What was most fun about sponsoring your blog is that we all reading it already. It was a Homer Simpson Doh! moment. The best endorsement is that we didn’t just hear about it and decided to sponsor. Just like we use our product, we were already reading your blog.

 View/Print Text Only

The Cerner Health Conference kicked off Sunday at the Kansas City Convention Center. Don Trigg, Cerner’s chief marketing officer, offered to connect me with some attendees for a report. (I should note that, despite my occasional criticisms of Cerner, Don has always been a straight shooter, has invited me to Cerner events, and offered to connect me with sources there, all in a casual, non-official way, which I appreciate).

My guests for this live update were Helen Thompson, CIO of Heartland Health of St. Joseph, MO; Reid Conant, MD, CMIO of Tri-City Emergency Medical Group of Oceanside, CA; and Stephanie Mills, MD, CMIO and CIO of Franciscan Missionaries of Our Lady Health System of Baton Rouge, LA. I’m sure they were ready to relax after a long day of conference education, so I appreciate their voluntarily taking time to speak with me.

What’s your impression of the conference so far?

Reid: It’s been very productive sessions so far. I gave two talks today and will be on a panel on Wednesday. I sat in on a few sessions and shared ideas with my colleagues. The setup of the CHC is kind of neat – it’s primarily client-driven educational sessions. The overwhelming majority of sessions are either entirely client-presented or have a panel with Cerner people and other clients. It’s sharing of ideas. It was in Orlando for a few years, now it’s back in Kansas City. It’s a very productive way of sharing ideas among clients. We’re using many of the same applications. You can always learn something from someone else who’s using what you are in a different way.

Helen: The networking that we get from this event, as well as the strategic look at what’s next on the agenda, makes this an extremely valuable conference.

Stephanie: It’s been very interesting to watch healthcare IT over the past several years. I’ve seen us as clinicians become more engaged, more involved, and more committed to developing solutions for quality and patient safety challenges. It’s a group of colleagues with the same experiences, tools and challenges. It’s important to get together in a safe environment and collaborate. It’s amazing what comes out. It breaks down a lot of the barriers.

How would you compare the value you get from attending Cerner’s conference to other conferences like HIMSS?

Helen: We’re just 45 minutes north of Kansas City, so the location factors in. We have an opportunity to do much more focused sharing and learning from one another. HIMSS has such a broad range that it makes it difficult to do this level of collaboration.

Stephanie: It’s practical, with stories from other organizations. Very practically oriented. HIMSS tends to be more theoretical, which is also good. You need both sides of the coin. In the trenches, to know what is or isn’t working.

Reid: Being in Kansas City, there’s been an even larger presence of Cerner associates. That’s done a few things. It’s gotten them more involved and given them a view of what clinical medicine is. I heard from a few of them that that is encouraging to them as they’re working on code. For us, it allows us to give them direct feedback. That’s very important and they seem to listen. I’ve been on an ED solution advisory group for years and they take direct feedback on specific issues. Today in one of my talks, I spoke about using scribes with PowerNote. Cerner has electronic, template-based charting. To augment productivity, we use undergraduate students to assist the physician in creating that document. That electronic record gives them the tool. After this talk, an engineer came up and said, “We liked what you did with that column. It fits with our code.” They want to put it in the product. These guys will listen and the next service pack will often have those kinds of suggestions in them. That reception of ideas is valuable.

Stephanie: Team members were here and some of the Cerner documentation team were dealing with some challenges that’s been difficult to diagnose, working over phone and conference calls and sending log files back and forth. We got in the room, got on the system, and had both teams together. To be able to share those experiences is really valuable, to have direct access to a vendor and share that knowledge and experience and frustration – it really gets folks bought in to finding the solution. We build relations with people, not just a voice over the phone.

Reid: It makes them accountable on a personal level.

Helen: It makes us accountable, too, because we share feedback with them. The success of our organization is tied to the success of this application. It’s very much a two-way learning street. They learn so much from us while we’re down here presenting and we learn from them as the dialog is opened.

Have there been any big announcements or revelations so far?

Reid: This morning, Neal Patterson said something that I felt was impressive. Cerner has taken a stand as an organization and said, “We are going to focus on the current code level.” In this day and age of rushing to get the next release out, they said they’ll focus on 2007 code and put all of the innovation into that code level. They’re going to, for the rest of this decade, ride that code level and make it the best they can, as solid as they can, before moving to a major change to the architecture of the code, incorporating Java and so forth. Thankfully, they recognized that ahead of time. I appreciate that.

Stephanie: We’ve had keynote addresses, discussion about health policy, the future of healthcare, how technology can come to the table in a number of ways. Then, lots of sessions in different areas that focus on a combination of presentations from clients in the trenches and living this, and also some sessions from the Cerner team about what’s going on today in problem solving and development.

Helen: The conference is broken down into a series of tracks to select from. Some are application-specific, some are role-specific. There’s quite a broad range.

You mentioned code levels. Millennium’s Achilles heel for years seemed to be response time, with a rumor that the entire application would have to be scrapped and sent off to India for a rewrite. Was that mentioned and are you seeing performance issues?

Reid: When went live 3 1/2 years ago, we felt some of that. We’ve been remote-hosted since go-live. Some places that tried to do it on their own felt that impact. They had more delays then than now. ED is one of the fastest paced environments. Anything short of sub-second response time won’t cut it and I won’t hesitate to call them for a four-second delay. That’s just not an issue any more. We’re using CPOE with meds and every order I enter is through the system. I can enter 20 to 30 orders on a complex patient in 15 seconds, using order sets and other tools. There are lots of clicks. If response time is not immediate, I feel it and they hear about it. What Cerner highlighted today is the Lights On Network, a Web-based application that allows you to drill down to an institutional and user level on response times. They track some huge number of the most common and most important actions. They track each and every one, so you can literally drill down to Dr. Mitchell if he’s complaining and say, “We saw at 2:55 pm you had one delayed action, but other than that, it’s been sub-second.” You can also pull out by department, not just response times, but how they’re using it, like ignoring alerts.

Helen: We’re a client-hosted solution and Lights On Network user for over a year. We’re very pleased with system performance improvements that Cerner continues to develop from data they get from Lights On.

Stephanie: I agree. We’ve been quick to look for a quick fix for our healthcare woes and sometimes fall prey to technology seduction. We want the magic Band-Aid. At the same time, we’re quick to blame when the magic fix doesn’t solve the problem. You can’t do that in a vacuum. When you look at performance, we have a lot of challenges that can be pointed at a particular vendor or application. We’re maturing as an industry in applying best practices like ITIL. For leaders in healthcare IT, it’s important to have a comprehensive perspective and make sure our organization is optimized to provide quality of care and to apply technology. It’s about people and processes and workflow and not just automating a process.

Helen: We need to think back. When we had a paper record and a very ill patient and the chart got larger, it took longer to filter through that information. The more data we collect, it will be a more constant process to keep sub-second response.

Reid: One real strength of Millennium is integration, like accessing old records. If the patient rolls into the ED by ambulance, with a couple of identifiers I can pull up the record from visits three days or three years ago. The ED course is immediately accessible to the nurse in the ICU. For hospitalists, it’s worth it to get out of bed and get online. They can look at orders and tests.

Stephanie: It really does change the way we pratice completely.

Are you glad the conference moved to Kansas City?

Stephanie: It’s helpful for the reasons we mentioned, access to team members and architects and engineers and folks here behind the scenes that we don’t get to build a face-to-face relationship with. Orlando is a very big conference town and its nice to bring it to Kansas City.

Reid: It’s a busy week, too busy to bring the family to Disney World, so we get much more out of having it here.

Are you planning to check out any particular Cerner products?

Stephanie: We’re an integrated Cerner site using a lot of the solutions. We’re going through a reorganization of Information Services. The next step is to optimize what we have, dialing things back, looking at current state, looking at workflow. The next piece that we already own but haven’t implemented is Power Insight, which has clinical and operational dashboarding.

Helen: We’re optimizing the solutions, also looking at the Care Aware product, leveraging the application to move to a digital environment.

Reid: Care Aware is on the horizon. It was demonstrated this morning at the kickoff. In the ICU setting, where they’ve had antiquated paper flowsheets with graphs four by six feet double sided [laughs] someone goes in there with a pencil and traces the latest vitals on that graph. How antiquated is that? But it was one of the most useful tools. If I go to a code, that’s one the first things I look at. Care Aware is a centralized reporting tool and repository for acute care patients. Many of us were salivating at the demonstration. It uses a larger screen, maybe a 20-inch monitor, with an image of the latest chest X-ray, vitals, etc. It’s highly customizable at the user level. It asists you in decision-making, changes in plan. It appears that it will be an invaluable tool.

Stephanie: It will be great. It’s been fun to see this in development. In Louisiana, we have problems with access to care. We can leverage what we have outside of our walls to create a virtual critical care environment that’s more automated. We’ve been saying, “You have to be able to tell the story and have that snapshot in a comprehensive view.” Our Lady of the Lake has created our version using Cerner tools, but it’s pieces and parts and not quite as seamless. To be able to see that pulled together and configurable is certainly where the future is.

Reid: It takes something like the tracking board in the ED, the FirstNet application. The tracking board is highly customizable, data-rich, and drives processs improvement. It’s a very powerful tool. At a glance, you can see exactly what’s happening with each patient, what’s pending and what’s back. It’s a matter of getting as much data in an organized fashion right there in front of the provider.

What would you say has changed most dramatically about Cerner in the last couple of years?

Stephanie: I’ve seen consistent dedication to partnership, to collaboration from Neal Patterson down, a true interest in what’s going on and how Cerner can impact that. I think it’s authentic, it’s genuine. When the Cerner brass comes to visit your hospital, they’re out there and want to know what’s going on. They’re continuing to march the ball forward in that arena. We need all the help we can get in healthcare, to have companies that are truly committed. We’re all in this together. To feel that we’re able to collaborate with our colleagues and vendor partners in a meaningful fashion and with the patient as our primary responsibility – what more can you ask for? We’re continuing to see clinician involvement on the Cerner side. That’s promising. They’re taking a smart approach to technology, applying it where it makes sense, and not just trying to get the latest whiz-bang out.

Reid: An example of that is the organizational decision to take a step back and not advance to the next code immediately. That’s organizational maturity. There’s always the risk of misperception of what that means. I don’t think it’s a negative indicator. It just shows that, when they roll out the next code, that they want it to be a dramatic step up. Where we already are is phenomenal. Look at the curves on the Lights On Network and graph performance over the last year or two. You can see a very steady and fairly steep drop in response times, now to the point where it’s not an issue.

 View/Print Text Only