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Time Capsule: I’ll Have What He’s Having – Why Hospital Software Selection Is More Lemming than Deming

August 10, 2012 Time Capsule 5 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in October 2007.

I’ll Have What He’s Having – Why Hospital Software Selection Is More Lemming than Deming
By Mr. HIStalk

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It’s a wonder that any hospital IT systems are on the market today. Somebody had to actually start using those systems without the benefit of endless hand-wringing with peer hospitals. How do you like it? Would you buy it again? How’s it ranked? How is the response time, support time, and implementation time? Can we come see it at your place?

Hospitals gripe about lack of vendor innovation, but salespeople can’t wedge a foot in the CIO’s door unless at least 20 hospitals have been live on the system for five years. Half of those customers need to be within 20 percent of the prospect’s bed capacity and one of them should be in the prospect’s state or an adjacent one (geographic disparity must be ruled out). It’s like the collective migration of lemmings – everybody just blindly follows someone else who seems to have a clue.

Hospitals can be like indecisive restaurant patrons who point at someone else’s plate and tell the waiter, “I’ll have what he’s having”. If you develop a cure for cancer, you still may not be able to find a brave first hospital customer. I’m told that this rampant me-tooism is stronger in healthcare than in any other industry and I don’t doubt it a bit. That’s why healthcare IT is both wonderful and aggravating.

Here are some thoughts on why we play follow the leader:

  • Hospital executives always (and sometimes rightfully) feel less competent than their private business counterparts. Therefore, they’re not about to lose one of few local jobs they’re qualified for just because some vendor has a risky product that could provide big benefits. If you can’t get promoted, at least don’t get fired.
  • CIOs are too busy or indifferent to figure out for themselves whether a product is appropriate for their setting. The easiest course of action is to let someone else do the legwork, i.e. buy only those things that someone else bought or that a hopelessly broadly composed committee voted for. There’s mediocrity in numbers.
  • Hospitals are not good at writing contracts that align incentives and hold vendors accountable, so they spend the effort instead buying the lowest risk products, which are usually those with the least potential to pay off big.
  • Nobody wants to build software, even though many (most?) applications on the market started out as a custom development project for one or more hospitals. It’s easier to buy stuff that probably won’t work than it is to get exactly what you want, especially if you don’t really know what you want anyway.
  • The urge to buy something often outweighs urge to do something. Grinding out years of hard process redesign is much less satisfying than throwing a software Hail Mary, one of few chances the IT department has to be decisive.

So, to clarify: hospitals want and expect massive improvement driven by sophisticated software, as long as it doesn’t require messy organizational change, risk, unproven technologies, or executive engagement. If you follow quality guru W. Edwards Deming, you’ll identify one way or another with his statement: “The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.”

While a conservative position is understandable given how busy everyone is, it does assure that averages aren’t skewed upward by risk-takers who improbably succeed wildly after a gamble on brilliant but unproven information systems.

Einstein defined insanity as “the belief that one can get different results by doing the same thing.” Add “… as every other unsuccessful hospital” to the end of his statement and you will have described hospitals seeking the software silver bullet – more lemming than Deming.

Time Capsule: Lay Your Hands on the TV to Be Healed: The Emergence of the Superstar Remote Physician

August 4, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in September 2007.

Lay Your Hands on the TV to Be Healed: The Emergence of the Superstar Remote Physician
By Mr. HIStalk

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What do these micro-trends have in common?

  • Big-name US hospitals open branches overseas
  • Recognized organizations and practitioners offer remote second opinions
  • Centralized intensivists monitor ICU patients
  • The military uses telemedicine to improve battlefield care and services to remote locations

It’s a two-part answer: (a) all were made possible by technology, and (b) all point to a growing de- emphasis on the traditional patient-physician relationships. (There’s actually a third part: providers following an evidence-based practice framework can deliver better outcomes than free spirits making it up as they go, valuing conformity as much as brilliance).

Blame HMOs and hospitals if you don’t like this inevitable future of care delivery. Both organizations deal swiftly and decisively with episodic symptoms, but aren’t so hot when it comes to mind-body-spirit care or, in fact, anything that requires more than a set of labs, rads, and physical measurements to conclude that a surgery, treatment, or prescription is in order. It’s like Whack-A-Mole-Medicine — diagnosis and treatment for a generation raised on video games.

We patients have been dutifully conditioned to expect nothing more from our sometimes faceless providers or interchangeable institutions. No one cares that you’d rather see a doctor instead of a physician assistant. You can do well in a hospital stay attended to by non-physicians 23.75 hours a day. Doctors cover for each other without advance notice. Apparently it doesn’t matter who’s manning the stethoscope.

Patients are accustomed to being told which movie, car, or college is "best". It’s not much of a leap, then, to expect them to flock to notable experts for serious diagnoses, even if that person won’t every lay eyes or hands on them. Can the local, faceless doctor with a state school education and an unimpressive residency do as well as an Ivy League super- specialist working remotely, just because you’re sitting naked in front of them? There’s an obvious precedent: pathologists and radiologists who rarely leave their darkened basements to render professional services.

This will happen: very good doctors, singled out as such by any of dozens of score card and pay-for- performance plans, will be busy offering remote services to those who grew up believing that medicine is about objective processing of health data, not being a family friend who’s know everything about you and your family. They’ll make a mint, of course.

Remote medical practice will drive – and be driven by – the interoperability of electronic medical records. Accurate decision-making and efficiency will demand extensive data review: notes, diagnostic images, prescription records, digital pictures, video, and sound files.

Remote, faceless medicine is inevitable except for those with the financial means to seek alternatives. It will require extensive electronic, portable records with a wide variety of sources and formats. Good doctors will have their reach extended by the reduced need to be tied to a physical location, broadening their customer base like a TV preacher or Suzanne Somers hawking jewelry on the Home Shopping Network.

Doctors will be a brand name. Information demands will be extensive. Interoperability will be a given. And if you want a (figurative) shoulder to cry on, you’ll have to join an online support group.

Time Capsule: Google Health: Does Anyone Still Care?

July 27, 2012 Time Capsule 1 Comment

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in September 2007.

Google Health: Does Anyone Still Care?
By Mr. HIStalk

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I like just about everything about Google. I like its products, its offbeat style, its innovative products, and it’s "we’re really just geeks like you" winking acknowledgment of its own cool technology.

Notice I said I like "just about" everything Google. What I’m sick of hearing about is Google Health, whatever it is (if it’s anything at all).

Everybody’s atwitter because the company’s health guy, Adam Bosworth, either quit or got fired last week. Google kept it mighty quiet, not admitting it until a blogger ran the story from a tip. The acknowledgment was terse, so you might well figure that he either got canned or went off to start a competitive business.

Google’s entire health output so far is, well, zero. The company hasn’t even announced anything. Googlers don’t show up at conferences, don’t write white papers, and don’t dazzle us with their usual brilliance. Maybe the company got embarrassed and cleaned house.

Of course, most Googlers are engineers. They are a great asset in solving purely technical problems, like writing search algorithms. Could it be that they’re ill equipped to understand the rat’s nest that is US healthcare, much less do anything to improve it, or even more importantly to shareholders, profit from it?

Everybody assumes Google’s healthcare people have been sequestered while creating a world-beater personal health record. I wasn’t so sure since it seemed like an odd business for them (and everybody else) to be in. Leaked screen shots of a cheesy (not sparsely elegant) prototype weren’t encouraging. This is the best that a $164 billion market cap company could come up with? It looked like one of those "$40 on a USB stick" spare bedroom programmer products that are giving the PHR genre a bad name.

It wouldn’t surprise me a bit to see the company get back to what it knows best: advertising. Google doesn’t know EMRs, PHRs, or HISs, but it knows how to jam context-sensitive ads in your face and get you to click on them. Why would Google want to get into the ugly Vietnam of clinical systems and low-rent PHRs when it could simply find new places to serve up more of those ads that effortlessly bring in billions? Like in front of doctors who have already amply proven to be influenced by obnoxious drug company advertising, for example.

You’ve seen the faltering first steps of ad-powered physician systems, healthcare social networks, and online references. The approaches have been amateurish, but I guarantee somebody will figure out that the real money will be made by giving drug and medical device companies access to prescribers at the point of decision-making. Pay-per-click gets much more valuable when presented in context to free EMR content and patient-specific information. Say, do you really want to order Drug A? Why not try Drug B instead, especially since this patient has renal problems and we’re offering a special price? Click here for our convincing medical references. In fact, we’ll buy your whole office lunch if you’ll just click OK instead of Cancel.

Many big company toes have been dipped into the healthcare waters over the years. Most got drawn back quickly, burned by an industry in which even deeply experienced organizations often fail. Fresh healthcare ideas are a dime a dozen, but the bigger the company, the more ludicrous the results have been.

At this point, I’m past whatever interest I had in Google’s healthcare efforts. They’ve had plenty of time to dazzle me. I don’t care any more. Just stick those AdSense ads in clinical software and let’s move on.

Time Capsule: Private Investors Will Create Competitive Newcomers

July 20, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in September 2007.

Private Investors Will Create Competitive Newcomers
By Mr. HIStalk

I’m anxious to see which companies will become bigger, meaner competitors once they get some private equity investment money underneath them.

Most small companies will never find the holy grail of being publicly traded. An IPO requires a showcase management team, several rounds of pre-IPO investment, and strong capabilities in accounting, marketing, and culture development. If you don’t have those resources, you’re stuck looking in from the outside while your glitzier competitors leverage their newfound capital infusion to drive the nail a little deeper into your coffin.

Private investors level the playing field. Companies can get funding and management assistance without being hampered by high administrative costs and mandatory shareholder disclosure. You still have to sell your soul by giving big investors board seats and hefty equity, but you get the cash for growth without having to survive the leering, probing stares of the Wall Street beauty contest.

David Brailer says his healthcare private investment fund will spend $700 million of the retirement fund of California’s public employees on problem-solving healthcare companies. He’s looking for niche players with limited competition and profitability (who isn’t?) in which to make investments in the $10 to $80 million range.

He’ll need several to spend that money, maybe up to 50 companies. That could change the face of the industry fairly quickly, at least before some of those dice rolls go bust.

So what kinds of companies will Brailer and other money managers seek out? I’d look for companies that offer:

  • Software products that are standalone for a single hospital function or department. That decouples the product from the long sales cycles that are common for broad application suites.
  • Solutions for expensive problems like capacity management, throughput, medical errors, case management, purchasing, and enhancement of the bottom line. High ROI means easier selling.
  • Products that coordinate care through communications or alerting.
  • PM/EMR products for small physician practices that can survive the ongoing shakeout in that market.
  • Home care systems, especially remote monitoring.
  • Outsourcing of high-dollar functions that can be performed remotely, like reading radiology images or configuring complex software applications.
  • Medication packaging and distribution to support bedside barcoding and drug supply integrity.
  • Licensed clinical decision support content that can be easily integrated into existing systems.
  • Consumer testing and retail healthcare delivery.
  • Applications for minimally penetrated high acuity areas such as anesthesia, labor and delivery, and the emergency department.

With all that investor money seeking a home, it will be a seller’s market. Private equity companies will try to outbid each other for the chance to latch onto an eventual winner. HIMSS didn’t stir up much interest with its program to connect needy companies with moneylenders, but times have changed. Private equity is hot and those investor dollars are burning a hole in its pocket.

If you’re a small company with growth, profits, clean books, and a solid story, you’ll be hearing knocking on your door. While the money most certainly doesn’t come free, it can push a company to the next level, assuming it’s smart enough to use the money wisely to support long-term growth.

For everyone else, we should see some exciting ups and downs in the competitive landscape. I predict you’ll see a lot of new names in those HIMSS booths in a few months. Brailer always joked about the number of companies littering the HIMSS exhibit hall, so now we know why he was there: he was scouting for future investment.

Time Capsule: The HIT "Trendulum" Starts its Swing

July 13, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in August 2007.

The HIT "Trendulum" Starts its Swing
By Mr. HIStalk

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Anyone who’s worked in healthcare IT for a long time knows about the often-mentioned pendulum (or "trendulum", as I call it). It swings one way, reaches its maximum travel, and then starts its swing back in the other direction. Some examples have been:

  • PC desktop vs. thin client
  • Midrange/mainframe vs. PC
  • Own vs. lease
  • Build vs. buy
  • Outsource vs. bring it back in-house

I’m not sure why there’s a pendulum. Probably because providers are limited in capital, project resources, and institutional focus, thereby making it impossible to get IT projects done until the need for them reaches a crisis level.

Four or five years ago, the pendulum finally swung back on clinical applications after a long absence. The formerly hot enterprise resource planning, budgeting, and financial systems cooled off in favor of patient care systems.

Magazines started fawning over CPOE and forming RHIOs for clinical data sharing. Maybe it really was a trend, or maybe reporters just got tired of writing about administrative systems. Toss in some eager consultants and feel-good politicians and suddenly the only systems that mattered were clinical.

It’s hard to accurately detect the pendulum’s slow reversal, but it looks to me like it’s almost ready to head back the other way. Maybe it wasn’t permanently lodged on the clinical side after all.

The reason is disillusionment. CPOE got sold, but not used. Clinical decision support systems haven’t yet yielded the expected results on clinical outcomes. Small-practice doctors have steered a wide berth around electronic medical records systems. RHIOs met the technical challenges, but not the business ones.

In the mean time, payments (or "reimbursements" for those too polite to say the word) have been stagnant or declining. Costs are up (including IT costs ratcheted up by all that clinical systems activity). No margin, no mission. Before you know it, customers will again be clamoring for those formerly unsexy systems that handle purchasing, collections, and contracting.

Wall Street and the private equity companies apparently see it coming. Indian firms are snapping up healthcare billing and collections companies. MedAssets and athenahealth are going public with an attractive value proposition: those who use their systems, unlike clinical systems, get to take home more money. Wal-Mart is putting its healthcare IT clout into RFID tracking, not patient care software.

That "equal but opposite" reaction was inevitable. Care redesign hasn’t paid off yet, so it’s time to go back to wringing inefficiencies out of the system. Everybody’s best hope for doing that will rest with IT systems, just like it did for outcomes improvement.

That’s not necessarily a bad thing. Once one fire has been brought under control, it’s time to turn the hoses on the other ones. Everyone gripes about healthcare costs even while providers swear they’re not making money, so something has to give.

The great thing about predicting a trend is that you can be vague on the timeline and you’ll eventually be right. So, here’s my prediction: it won’t be long before the industry will be buzzing about administrative systems again.

Time Capsule: Software: No, You May NOT Have It Your Way

July 6, 2012 Time Capsule 2 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in August 2007.

Software: No, You May NOT Have It Your Way
By Mr. HIStalk

mrhmedium

Healthcare IT is a lot more like McDonald’s than Burger King. When it comes to software, you may NOT have it your way.

Here’s a classic example. Well-intentioned clinical software sends alerts to doctors or pharmacists that a certain drug is eliminated by the kidney. Therefore, it nags incessantly, making sure you’re amply warned to reconsider the dose you’re ordering. Sometimes the warning is too stupid to even realize that the patient’s kidneys are normal – it just fires indiscriminately any time that drug is ordered.

That’s not terrible for inexperienced residents, but it’s darned annoying for specialists who spend their entire working lives dealing with patients and drugs like this. "I’m a nephrologist and this system thinks it knows more than me? Hah."

So, one might innocently ask, why must the computer treat all users as infuriatingly equal? Would it not make sense to allow those warnings to be selectively turned off for qualified users? Or, maybe clinical systems should work like some PC applications, where there’s a "basic" mode with limited available options and an "advanced" mode that opens up all kinds of cool but dangerous capabilities once you’ve proven your capability, kind of like a learner’s permit.

Much of the software in use today was built with the mainframe paradigm, i.e. users are stupid and programmers need to spank them if they dare make a mistake. Programmers usually have a deeply held contempt for non-geeky users. If the technology existed, they’d send 110 volts through the keyboards of imperfect users in some kind of Skinner-inspired operant conditioning experiment. I’ve been a programmer and we always dreamed longingly about this ("So he enters medical record number where it says visit number, and — ZAP! Read the screen next time, loser.")

PC and Web software has, in the mean time, progressed into this century. Amazon knows who you are, makes recommendations, lets you easily find your previous orders, and offers you deals on stuff it knows you’ll like. iGoogle lets you build your own home page and use your choice of hundreds of widgets that can do everything from showing your inbox to displaying the latest headlines from The Onion. When you want to do stuff in Windows, you can choose a friendly, step-by-step wizard instead of an imposing screen full of impending, cryptic warnings.

It’s no wonder that doctors and nurses are disappointed by the multi-million dollar systems we make them use. They’ve used the cool PC stuff. Using healthcare software is like waiting in the driver’s license line: everyone is treated contemptuously equal.

Here’s how it should work. The kidney expert gets a basic warning about a certain drug’s dosing in renal failure. A button should be right there that says, "Don’t show me these kinds of messages again." Just like Word’s spell checker, in other words. The doctor is a big boy or girl and can choose for themselves what’s useful and what’s not. Just because the computer has the capability to issue warnings doesn’t mean it should. You trust users to deliver care, so trust them to ignore unhelpful information.

Technically, this is not hard. Neither is personalization that allows users to customize menus, create their own subset of commonly used items, or create an inbox of the kinds of new information they’d like to see about their patients.

It’s no wonder that clinical users just can’t warm up to a computer system as a trusted ally when it often behaves like electronic idiot savant happy to fire off ignored and unwanted information to those who resent it.

Time Capsule: Untethered Caregivers = Great Clinical Systems Opportunity

June 30, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in August 2007.

Untethered Caregivers = Great Clinical Systems Opportunity
By Mr. HIStalk

mrhmedium

Networking hardware vendor Cisco made a surprising announcement last week. The company’s two-year-old hospital division has become its growth leader. Sales have doubled in those two years to a cool $1 billion annually. Much of that involves wireless networking. That’s an unqualified "great" for Cisco and a qualified "good" for hospitals.

Healthcare customers were already buying a lot of Cisco gear, so carving out a separate healthcare business may not have made much difference. Still, the company must see a lot of opportunity in hospital wireless, infrastructure upgrades, and new construction. They’re smart.

Cisco will learn from a hospital-focused division. The company supposedly ran afoul of FDA regulations after making meaningless claims about a "medical grade network." It backed off a little, but is now pushing the good concept of integrating medical devices via wireless connectivity.

Hopefully Cisco won’t misstep again when injecting its products between patients and caregivers. If the company backpedals on reliability guarantees or has a patient-harming episode and hides behind legalese, word will spread fast. Cisco has a couple of hot little competitors like Meru and Aruba who would be more than happy to snatch a few of its crumbs.

Anyway, what’s most interesting about the announcement is that, clearly, most hospitals now have some flavor of wireless network. They vary in coverage, reliability, speed, use, and user acceptance, but they’re out there in force. And because of that variation, Cisco and other vendors see a gold mine in replacement the early-generation 802.11b and 802.11g systems that are limping along unimpressively.

Expectations have changed. Wireless is mission critical. Entire clinical systems strategies have been crafted around mobile caregivers wandering seamlessly around buildings while using portable computing devices.

Software vendors haven’t quite caught up. Applications are sometimes mobile user-unfriendly, requiring carefully targeted mouse clicks and keyboard entry that doesn’t work well when cradling a tiny notebook PC in your arm. Less-than-youthful caregivers may have to squint painfully to read screens that were designed for 17-inch monitors. .

The writing is on the wall, however. Wired devices will soon be as antiquated as those early-generation VCRs that had a wire-attached remote control. Wire’s last advantage is about to be eliminated as 802.11n matches or exceeds its speed.

Hospitals will save a bundle by not hard-wiring buildings. It’s painful to sit through construction meetings trying to convince architects and construction project managers that network wiring requirements are just a bit more complex and expensive than running electrical power to wall outlets. That’s a concept you can tell your grandkids about some day, like when TVs had a picture tube or when music came from a store instead of a download.

The downside, as it always is, is cost. We’re re-buying all this gear from Cisco and other vendors, ripping out what we bought just a few years ago. That’s capital that could have been used elsewhere, like virtualizing servers or improving redundancy.

If all goes well, this second round of spending probably buys the performance you expected from the first round.

Still, wireless technology developments are exciting. Hospitals need to figure out how to improve patient care given untethered caregivers who carry an impressive arsenal of technology in lightweight devices. There is cool stuff yet to be done using VoIP communication devices, new bedside patient monitoring and diagnostics, and information systems designed to help deliver care, not just document it.

Clinical systems vendors, it’s a great time to rework or build applications without the assumption that users are sitting at a desk all day. Ubiquitous wireless connectivity changes the game. If you don’t believe it, think about what went on in coffee shops before Wi-Fi.

Time Capsule: "Best", "Most Wired", and Other Hospital Surveys: Good for Selling Stuff and Not Much Else

June 23, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in July 2007.

"Best", "Most Wired", and Other Hospital Surveys: Good for Selling Stuff and Not Much Else
By Mr. HIStalk

mrhmedium

 

US News and World Report released its Best Hospitals 2007 list last week. Indecisive or brain-dead folks who can’t choose a movie, restaurant, or college now have yet another life decision they can outsource to faceless reporters who will tell them what to do for just the cost of a magazine (anyone who’s worked around reporters would question whether that’s a good idea.)

Few readers will care how "Best" was determined. Answer: a few hundred doctors were surveyed, Medicare mortality was reviewed, and two-year-old AHA survey results were picked through to see who had cool technology and who was really busy. Some kind of unstated weighting was applied and, voila! the Best Hospitals were extruded out the other end.

Best Hospitals isn’t as blatantly biased toward a specific industry sector as the annual Most Wired Hospitals ("Buy more of our products so you can get on our list.") They’re just trying to sell magazines, not multi-million dollar IT gadgets. But what does "best" mean when it comes to hospitals? Is there such thing?

It doesn’t mean much to the average hospital patient, as far as I can tell from those three survey sources. Doctors don’t know anything about most hospitals first hand, so that’s just a popularity contest. Medicare mortality may be relevant (or not) if you’re a senior citizen, but not so much if you’re an expectant mother or trauma victim. Using old AHA survey results to create a brand new conclusion seems iffy.

Not surprisingly, the physician "reputation points" question ensures that only big academic medical centers make the list. It’s like the Best Colleges edition: the only drama is whether Harvard, Stanford, or Princeton will bag the #1 spot in a given year. In fact, the Best Colleges issue itself influences reputation, so maybe the only thing that will ever change is the order of finish.

Rankings aside, you don’t know if your kid will get a better education or a faster meningitis cure just because you picked the Best instead of the local places that only non-magazine reading rubes would patronize. Nobody knows. It’s not predictive. But one thing’s sure: it helps sell magazines.

The bottom line is that we don’t really know, for a given individual or condition, which hospital is best. We don’t even know if it matters which one you go to. Maybe it’s your doctor, your faith, your preventive care, or your genes that has the most effect on whether you walk out happy or not. Whose building you sleep in may or may not play as much of a major role as us hospital types would like to think (except avoiding those that are prone to killing patients with a hospital- acquired infections or medical mistakes). Big hospitals have their share (maybe disproportionately so) of medical errors and poor outcomes.

The best hospitals (or, more precisely, doctors who practice in them) do just one thing obviously better: diagnosis. After that, I’m not convinced there’s much difference. In fact, in the typical giant medical center run by a liberal academic parent, you’re apt to find hordes of geeky diagnosticians wearing bow ties and vast armies of lower-ranking types who are likely to miss your meds and take their time responding to your call button (I like to think it’s because they’re not scared of an employer that deals with incompetent professors by offering them lifetime employment through tenure).

Juxtaposed with this story was hardly shocking news: according to a study, electronic medical records don’t improve patient care. Well, actually, that’s what the headlines said. What the study found was that EMRs didn’t improve compliance with standard practices that ought to improve care. The biggest shock to me was that somebody apparently thought they should. You can buy the golf clubs Tiger Woods uses, but that doesn’t mean you’ll play better golf. When it comes to EMRs, the hopes of the naive apparently needed dashing.

When it comes to what’s most important – whether you, specifically, will walk out of a hospital alive and well – maybe some reporter’s Best Hospitals or Best EMR or Most Wired lists don’t really make much difference. It’s not that easy. That’s a tough message for a data-driven, standardization-obsessed, sometimes sheep-following industry to hear, but I think it’s true.

Time Capsule: Private vs. Public Vendors: I’ll Take the Former

June 15, 2012 Time Capsule 1 Comment

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in July 2007.

Private vs. Public Vendors: I’ll Take the Former
By Mr. HIStalk

mrhmedium

It used to be that every company’s goal was going public. Now, it seems like they all want to go private.

Private equity was all the rage back in the 1980s, when companies like KKR ruled the roost with their leveraged buyouts and hostile takeovers of stagnant companies, often using Michael Milliken’s junk bonds to finance the raid.

Their goal was simple: strip the target company’s assets clean and sell the parts for more than the cost of the whole. Long-term strategy was for suckers. Real money came from flipping.

Private equity is back. You’ve seen the headlines about buyout kings The Blackstone Group, whose proposed initial public offering has even attracted the investment interest of the Chinese government.

Several healthcare IT vendors have taken the private equity route (Kodak’s health group, Surgical Information Systems, Dairyland, and quite a few more come to mind.) Do customers fare better under private investors as opposed to being publicly traded? My tentative answer is yes.

Going public provides obvious benefits: a mammoth influx of capital, easy distribution of liquid equity to early investors and executives, and access to customers and investors who prefer doing business with companies that meet rigorous financial market requirements (see: Enron).

Stock money isn’t free, though. Outsiders get a big piece of the action in return. Administrative costs skyrocket. Business must be conducted transparently, sometimes reducing competitiveness. Worst of all, fear of irrational investor decisions brings the strategy horizon down to about two quarters.

Private equity managers can bring in their own capital from a long line of salivating institutional investors. Their holdings can operate as secretively as they like, free of SEC oversight and even Sarbanes-Oxley (at least until some Enron-type bloodletting sends investors screaming to their Congresspeople). They can overcompensate executives, rake off huge amounts of money as management fees, and secretly plot the day when they IPO the formerly low-flying company for a quick buck (which some would say was their primary motivation in the first place.)

It’s still greed, which as Gordon Gekko and I always say, is good.

From a customer’s perspective, I’d rather see my vendor go private than public. Only a few vendors went public during my customerhood. All of them went from pretty good to pretty awful once they’d sold their souls. Maybe they would have tanked anyway, but innovation and responsiveness took a back seat to snaring new business and bringing in dispassionate Wall Streeters to manage their particular HIT widget. As a customer, I was suddenly less important than big- money investors because they’d already taken my money.

Private investment at least gives the illusion that the company resisted the urge to cash in. Their companies don’t manage quarter by quarter. Sometimes the equity firm has a good track record of being a benign steward, happy with slow, steady growth instead of yearning for a quick flip. They bring in far better talent than would have ever worked for the previous owners.

Your mileage may vary, but as a customer, I’ve never seen a company improve by going public. And while I’m sure vendors sometimes get worse by turning over the keys to private money, I’d take my chances.

Time Capsule: Vendors: Develop an "Antivirus" Program to Warn of Your Software’s Bugs

June 9, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in June 2007.

Vendors: Develop an "Antivirus" Program to Warn of Your Software’s Bugs
By Mr. HIStalk

mrhmedium

CIOs and vendors spend lots of money and time addressing system redundancy. Thank goodness. When clinical systems go down, patient risk goes up (or so you hope, anyway, since that’s the ultimate validation of that system’s influence on patient outcomes.)

We can agree that downtime is bad. What vendors haven’t fully acknowledged, however, is that systems can be up and running, yet still endangering patients because of internal logic or data errors. Known bugs, in other words, that cause errors that are subtler and, for that reason, potentially more dangerous.

I’ve worked in vendor support, so I’ve seen hundreds of examples:

  • Medication doses, lab tests, or nursing actions are omitted from their respective printed or online schedules
  • Interface problems allow time-critical information to be delayed or ignored
  • Lack of sufficient storage space causes transactions to be lost
  • Patient merging or discharge cancellation does something undesirable to visit information
  • Technical issues cause background processing to fail, delaying reports or updates until a user finally notices.

I could go on, here’s my point. The vendor’s support people knew about these problems. They could get on a client’s system, query the database, and say, "Yep, we’ve seen this problem before." In most cases, a simple utility program could have detected the error condition proactively and warned someone immediately, allowing the problem to be resolved before patients were exposed to data-driven risk.

Vendors don’t like this idea. First, it admits that their software has bugs (which it always does.) Secondly, it also admits that even well-documented bugs can’t always be fixed immediately.

I don’t buy the idea that it’s the customer’s job to find and report problems. It’s never acceptable to endanger a patient with a known software defect, even if a fix is on the way. The obvious solution (temporary or otherwise) is to write a program to detect the problem, let the customer choose how often to automatically run it, and provide the appropriate alert when that problem is found.

Here’s a simple example. Suppose I have CPOE and pharmacy systems that should always be synchronized via complex interfacing or integration. That’s great, but what if something goes wrong? The unacceptable answer: let the clinician find the problem. Oops, the antibiotic order is active in CPOE, but expired in pharmacy. Customer support: "Thanks for telling us, but we already know about that problem, even though we can’t fix it. Continue to be vigilant. Can we close your case?"

This is not necessary. A program could easily have detected the problem. Programs are better than clinicians at comparing List A to List B. So, why are preoccupied clinicians expected to be the safety net for programmers?

None of the applications I’ve used provided these low- level diagnostics. Finding bugs was a user’s problem, even after those problems had been documented, acknowledged as bugs, and scheduled for an eventual fix.

This drives users through the roof. IT is proclaimed as unresponsive and the vendor is branded as incurably stupid.

My message to vendors: It’s your job to tell customers when your software has a problem, not vice versa. Ask your support reps for a list of known problem symptoms. Get your developers to write a diagnostic program that users can run on a predefined schedule, including their preference for alerts.

Think of it like your PC’s antivirus program. It has a core detection engine. Users determine how often it runs and what happens when it finds a problem. Automatic updates to its detection patterns let it find even newly discovered problems immediately.

Developing a problem detection engine isn’t an admission of failure. it’s a reflection of reality. Software always has bugs that leave detectable tracks in the customer’s database. Finding the occurrence of those clinical software bugs is good for everyone involved, most notably the patient.

Time Capsule: Services-Heavy Vendors: The High-Flying Offense Turned Boring Ground Game

June 1, 2012 Time Capsule 2 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in June 2007.

Services-Heavy Vendors: The High-Flying Offense Turned Boring Ground Game
By Mr. HIStalk

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Enterprise software vendors go through three lifecycle stages:

  • Stage 1 – We’re going to develop and sell the greatest software application in our market.
  • Stage 2 – The software market is fickle and cutthroat now that new entrants are in play. We’ll keep our product competitive but, in the meantime, we’ll ramp up a highly profitable services business like all those consulting companies that are pulling down easy money.
  • Stage 3 – Our legacy software applications are getting killed by Stage 1 competitors, so we’ll just milk the services side and maybe someday develop some new applications if that cash cow ever dries up and the market forces us into it.

If you’re a vendor, what stage is your company in? If you’re a provider, where are your vendors?

It’s important, because in all but Stage 1, there’s not much innovation going on. Once the services money starts rolling in, no one wants to risk it by investing in innovation. The big money is made in Stage 3, where the capital investment is paid off and the gravy train is rolling in.

It’s like the Super Bowl. A team often gets there by fearlessly airing the ball out and running reckless blitzes, beating all comers. Once they’re in the big game, they suddenly drag out a conservative ground game and prevent defense that causes spectators to nod off in their $1,000 seats. Often, they lose.

You see that a lot with publicly traded companies that are scared to death of one bad quarter. Instead of playing to win, they’re playing not to lose.

Conservative customers keep encouraging them. They give Stage 3 companies preference, using the same criteria that a grandmotherly investor looks for: solid financials, a long list of customers (even if they’re largely indifferent ones), and well-groomed executives who talk about vision but mostly worry about financial ratios and earnings reports.

In other words, customers claim to want innovation, but when it comes to their own IT capital, they invest in those companies least likely to innovate. Vendors say they want innovation, too, but they usually just take the easy way out and buy the Stage 1 upstart and smother them with their stifling culture.

A Stage 1 company might offer the best chance of creating a truly brilliant product, but getting a critical mass of customers is hard. The company could run out of capital, lose its visionaries, sell out to a big competitor, or otherwise stumble and never realize its potential. If there’s a 60 percent chance of that vs. a 100 percent chance of a boring but serviceable Stage 3 product, most hospitals will take Door Number 2.

According to KLAS surveys and watercooler discussions, few hospitals really like those multi- million dollar systems they keep buying. Certainly the results they obtain from implementing them are largely unimpressive.

That isn’t surprising if you buy the idea that vendors are all striving for Stage 3, having long outgrown their starry-eyed beginnings. Recurring revenue is the Holy Grail. Software only needs to be good enough to keep the service revenue coming. The one-shot capital bump from licensing is small potatoes in comparison.

The market won’t change unless threatening new companies enter at Stage 1. A constantly replenishing supply of them is needed because they, too, want to hit the Stage 3 Promised Land.

You’ll know if we ever get enough Stage 1 vendors nipping at Stage 3 heels. The Stage 3 powerhouses will suddenly get mad enough to start airing the ball out again. That ought to wake up the bored fans.

Time Capsule: Surprise! Below-Average Doctors Use EMRs, Too

May 25, 2012 Time Capsule 4 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in June 2007.

Surprise! Below-Average Doctors Use EMRs, Too
By Mr. HIStalk

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A just-published journal article seems to rip the use of electronic medical records in physician practices. Its conclusion: paper-based doctors hit diabetes quality standards more often than their EMR-wielding colleagues.

From that, you might logically conclude that EMRs don’t provide the outcomes benefits claimed by their vendors. And that, my friends, is why a little bit of information can do a lot of damage.

Observational studies often leave questions unanswered. A researcher observes that Factor A and Factor B co-exist. In a journalistic leap of faith, the conclusion (stated or not) is that one of those must cause the other.

I wish it worked that way. I’d find myself a young, intellectually impotent young lady as a companion. Why? Because you see those women on the arms of rich old guys. Ergo, eye candy makes poor men wealthy. See the fallacy?

Back to the EMR article. I assume the following:

  • Caring, competent physicians will find a way to practice good, evidence-based medicine no matter what gadgets they do or don’t have at their disposal.
  • Uncaring dolts won’t really get much better just because they have promising toys.
  • Those doctors who will get the biggest benefit from information technology are in neither group, that undecided 60 percent who can be pushed either way.

What the article doesn’t tell us is how individual physicians changed after implementing EMRs. Isn’t that what we really want to know? If EMRs improved individual physicians, the rest wouldn’t matter.

Which leads me to these conclusions:

  • EMRs can make it easier for physicians in the first category to do the right thing more conveniently. Compliance may go up a shade, as may efficiency.
  • EMRs may make less-competent physicians more or less efficient without necessarily improving their adherence to clinical standards.
  • Those docs in the middle might be steered and swayed by the path of least resistance to improve their practice, given both EMR technology and the motivation to change (that’s another whole discussion.)

The EMR payback comes from those doctors in the last category. Such systems won’t change the votes of party loyalists, but they can sway the masses of the undecideds.

It’s also not just what you have, but how you use it. Doctor A effectively uses a crappy EMR. Doctor B has the really hot, expensive application, but doesn’t use most of it. Doctor A’s bad EMR may greatly enhance good practice, while Doctor B’s great one may offer no improvement.

Personally, I don’t care whether my doctor uses electronic medical records, pen and paper, or a stone tablet and chisel. His tools are his business. I judge him on my personal outcomes. I expect him to invest in whatever it takes to deliver those outcomes, no different expectations than I would have for a mechanic, masseuse, or chef.

The article will likely cause interesting debate (if for no other reason, it’s a slow news time.) Still, it shouldn’t be a surprise that EMR-wielding doctors don’t necessarily deliver better care.

In fact, it’s actually surprising that anyone finds the study’s conclusions to be inflammatory. Apparently we’ve been sufficiently brainwashed to believe that brushes make the artist. We ought to know better by now.

Time Capsule: Incompetence by Committee: How Customers Dumb Down Vendor Software

May 18, 2012 Time Capsule 2 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in May 2007.

Incompetence by Committee: How Customers Dumb Down Vendor Software
By Mr. HIStalk

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We software customers often complain that our vendors lack vision. Maybe so, but what goes unsaid is that we ourselves are largely responsible.

Many or most vendors do their best work before their second customer comes on board. Their bright and dedicated employees, along with perhaps a development site’s subject matter experts, work from a blank slate and do some really innovative work.

Once customers sign up, however, the once-fresh product is dumbed down. Every new customer has their list of must-have enhancements, almost entirely (a) a smorgasbord of unrelated bells and whistles they saw in some other vendor’s demo; or (b) a feature of questionable necessity that exists only in the product they’re replacing. Consider the irony in either case.

That’s why software turns into a crazy quilt of unrelated and immature ideas. Too many customers come up with lame ideas that vendors are scared to ignore.

Customers, you see, are terrible visionaries. They always have a punch list of minor productivity tweaks and site-specific changes that move the product sideways at best. Vendors who ignore these suggestions, often with good reason, are considered unresponsive.

No wonder quality assurance, product documentation, and integration are so bad in healthcare software. Applications aren’t an integrated software platform with a clear focus – they’re a collection of unrelated product features and emergency tweaks held loosely together with the unreliable glue of a common user interface, customization switches, and a single database, all voted on by committees of self-interest.

Too many cooks in the kitchen indeed. We blame customers or poor training when only 20% of software capabilities are used. Maybe it’s because only 20% of a scattershot of functionality applies to a given site.

The enhancement process encourages this. A bunch of customers – heavily overweighted by those from big hospitals with travel money – sit in a room and vote on enhancement ideas. What’s wrong with that democratic approach?

  • The larger the committee, the less likely anything bold or innovative will result.
  • The voting process ensures that only safe, universally acceptable enhancements will be chosen. Products that were created through risk-taking and creativity get watered down by dull, uninspired changes that neither enrage nor delight anyone.
  • Small, obviously beneficial changes never get done. Why waste your user vote on something less than a sweeping change that no one else wants?
  • Customers have no idea what they want or need. They’re also unwilling to expend any more effort than to toss out off-the-wall suggestions.
  • Customers will provide crudely drawn screen mockups (users think only in terms of screens). They don’t employee critical thinking skills until the enhancement arrives on their doorsteps, at which time they suddenly get engaged and loudly proclaim its imperfection and refuse to use it.

Ample evidence exists that hospitals have few original thoughts and little ability to think strategically. Putting hospital staff in charge of product design and strategic direction is a bad idea.

Once a product has evolved into a Frankenstein-like set of unrelated product appendages, testing and integration get geometrically more difficult. A great niche product with a fanatically loyal customer base becomes an unwieldy fibrillation of disjointed ideas with an indifferent audience and mediocre KLAS scores (sound like anybody you know?)

Vendors don’t help. Is the intended product audience a 50-bed rural hospital, a 1000-bed academic medical center, or an IDN with a big ambulatory business? "Yes!! We want a product that is universally cherished and appreciated." Fat chance.

I see nothing to challenge the basic premise that innovation will come only from small, cheeky vendors willing to break the rules and provide leadership, not contract programming to customer specs. At the other end of the product life cycle is the elephant graveyard, those publicly traded vendors and multi-industry conglomerates where once-interesting products go to die slowly and painfully.

What happens in between is up to us customers.

Time Capsule: All Government Agencies Agree – You’re Free to Buy EMRs for Physicians, Even When it Doesn’t Make Sense

May 12, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in May 2007.

All Government Agencies Agree – You’re Free to Buy EMRs for Physicians, Even When it Doesn’t Make Sense
By Mr. HIStalk

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The Internal Revenue Service clarified its position this week on hospitals donating technology and related services to physicians. The bottom line is that non- profits can do so without fear of losing their non-profit status.

Lots of folks (most of them vendors) were excited about loosened up Stark laws, so this announcement removed what appears to be the last barrier before the EMR spending orgy gets officially underway.

Vendors love it. Docs weren’t buying their wares when their own money was involved, so creating a misaligned incentive is the best possible outcome. If someone else is paying for dinner, I’m having both the steak and the lobster, even if I’m not likely to finish them.

I’m not sure that getting the green light to give away expensive products is great news, but I’ll try not to rain on the parade of those who do.

I’ve worked for big IDNs that provided practice management systems to affiliated physician groups. Our doctors were fairly willing to use the software we chose on their behalf because it got them paid. Even then, we heard plenty of gripes about product design, reliability, and most of all, cost (this was a simple, character-based scheduling and billing system that only the office staff used anyway.)

As little of a picnic as that was, I don’t envy bright-eyed hospital IT types who think they want to be in the physician EMR business.

One problem we had was allocating ongoing costs. Being a bureaucratic IDN, we were known for high overhead and low performance, especially compared to the doctor’s A+ certified, college dropout nephew who was willing to design networks and develop software for $15 an hour after his grocery bagging shift was over. He was cheaper, so that made us thieves, our doctor customers assumed (doctors always assume that hospitals are getting rich, underestimating the profit-sapping effects of inefficiency and inertia.)

We thought we could cover our relatively fixed cost with the number of physicians who signed on. A few bailed out, though, because of cost (or maybe value.) That forced the pie slices of those remaining to get larger, which caused a few more to reconsider — well, you get the idea. Allocation is hard, especially when the user base is shrinking.

If you’ll be charging ongoing fees, you’ll be competing solely on cost and willingness to rush over to the office (or even the doctor’s house) any time something’s not working. It’s your fault, even when the doctor’s wife/office manager brings down the network by unplugging your router to make a space for her curling iron.

The worst scenario is if the stuff you’re paying for isn’t used. Remember, your doctors weren’t buying when it was their money. Try to structure a vendor deal where they get paid only if the system gets used, otherwise, it’s just you trying to strong-arm doctors and we know how well that works (cough*CPOE*cough.)

CCHIT has certified 81 ambulatory EMR products, so cast a wider net than that handful of old-line, CIO- friendly vendors with correspondingly high price tags and old technologies. That was the whole point of certification, after all. While you can’t trust a doctor who swears he or she will use a product, you can definitely trust one who swears they won’t.

Don’t whip out the checkbook until you’ve developed an integration strategy. If you just want to give away free software, that’s fine, but otherwise, what information do you want to send and receive from your new doctor buddies? Doctors don’t want a portal, they want your information dropped into their EMR – can you do that?

Lastly, don’t be swayed by what seems to be an unstoppable trend of hospitals paying for physician systems. Magazines, consultants, vendors, and member organizations love to encourage the bandwagon effect, detaching your wallet from your brain to their benefit. If return on investment is shaky, surely you have other IT projects you can fund instead.

Time Capsule: Perk-less IT Peons: It’s Good to Be King (Or At Least Prince)

May 4, 2012 Time Capsule 3 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in April 2007.

Perk-less IT Peons: It’s Good to Be King (Or At Least Prince)
By Mr. HIStalk

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If you’re a non-management hospital IT employee, I’ll let you in on a little secret: your bosses are benefiting greatly from your labors.

I’m qualified to say that because I’ve been on both sides of the fence: management and peon. I’m happiest not being in management, but there’s no question that it comes with secretive perks that mere software analysts, network engineers, and help desk analysts will never see.

Here are some management-only benefits I’ve seen nonprofit hospitals offer:

  • Higher salaries. Duh, right? But you have to love that 50% or 100% premium for sitting in meetings instead of doing real work. IT employees are usually self directed, so remembering their names and smiling benevolently when you pass them in the hall is most of what’s expected.
  • Bonuses. I’ve seen a roomful of people go deathly silent in a department meeting as my clueless boss went off-script in a moment of exuberant IT camaraderie and let fly with a chuckling, "We’ll do it because my bonus depends on it." Uh, boss, keep in mind that these folks get a magnanimous $200 or so of gain-sharing in those rare years where we make budget and move our ED satisfaction scores from "awful" to just "bad," so we don’t talk about management bonuses (the funny thing is that I’ve seen this happen at least five times, all with different people at the podium who should have known better.) Ordering employees to work harder so managers can pocket a $15,000 windfall isn’t much of a motivator.
  • Reserved parking. I always said I’d never work someplace where bigwigs are too good to find a parking place like everyone else. Unfortunately, that eliminates about 80% of potential employers. Hospitals whose lack of money, brains, or real estate forces caregivers to schlep in on an offsite parking bus still manage to find reserved, close-in spots for the suits.
  • On-call. Only employees whose roles are vital take it. Unless a Code Yellow signals an immediate need for a performance appraisal or offsite planning session, managers get a pass.
  • Offices. Managers get private offices because they’re supposedly constantly supporting and coaching their valued team members, all of whom sit in ugly, Soviet-looking windowless cubicles and gripe about cube mates listening to voice mail on speakerphone. Managers can shut the door and check their stocks, make personal calls, or run an eBay business, especially since no one really knows what they’re supposed to be doing in the first place.
  • Vendor goodies. Executives need never pay for their own lunches, fall short on sports tickets, or wonder if their Christmas stocking will be empty. Sure, it’s the position, not the person, that triggers the fawning and phony friendship, but it’s still fun.

There are many more: special retirement plans, memberships, unlimited travel and education budgets, sweetened medical insurance, car allowances, and many more. All pretty generous for an allegedly cash-strapped, nonprofit hospital that begrudgingly gives $10 an hour employees a 20% discount on bad, 40% overpriced cafeteria food.

The only thing I disliked about our benefits package is that it was a secret. Employees weren’t supposed to know (although the analysts running the payroll system certainly did.) Apparently our managerial excellence was so subtle that worker bees couldn’t be trusted to discern it. In other words, the people being managed would probably think their managers weren’t worth it.

Off the record, while sprawling back in my private office and musing about my peers and bosses, I’d usually agree.

Time Capsule: CEO Compensation 101: Why Neal Patterson’s Pay is Shocking

April 27, 2012 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in April 2007.

CEO Compensation 101: Why Neal Patterson’s Pay is Shocking
By Mr. HIStalk

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We learned last week that Cerner paid Neal Patterson $4.2 million in 2006, most of it in stock. That’s a shocking amount, one that deserves the immediate scrutiny of the company’s board, its shareholders, and its customers.

Why so little?

Corporations often wildly overpay CEOs. What does overpay mean? When the shareholders are losing their shirts and the fat cat running the show still gets a big payday.

Example: Ford continues its near-death experience at the hands of Asian manufacturers with better and cheaper products, losing a mind-boggling $12.7 billion last year, but they managed to scrape up $28 million for their new CEO. That’s for just four months on the job. He’d better have brought a magic wand that can make Toyota disappear to be worth that.

Or Home Depot. While the stock was dropping 10% over the past six years, their CEO took home $124 million, plus many dozen millions more in stock options. Are those orange aprons so hideous that no one with more wealth-building talent will wear one?

At least Exxon, whose retiring chairman got a $400 million parting gift as he tried to keep a straight face about oil supply and demand, made $36 billion in profit last year. Providing $3 a gallon gas for those Fords is much more lucrative than building the cars it goes in. I hate buying expensive gas, but as long as Exxon can keep me and everybody else doing it, they’re justifiably earning big bucks.

A year ago, CERN stock was at $39.65. It’s now at $55.09. That’s an eye-popping 39% increase. The Dow was up about 14% during that time.

Pay for performance works when it comes to running companies. You want the person in charge to have big-time skin in the game. Their job is to make shareholders money. If they do that, pay them well. If not, find someone who can.

It’s like being a coach. You can be an inspirational leader, a civic beacon, and a role model, but for the money you’re being paid and the number of qualified people who could take your job tomorrow, you’d better win. Americans like winners.

Everybody has their own opinion of Cerner and its products, but it doesn’t matter what you or I think. CEOs of publicly traded companies have one audience to please – investors. Rightly or wrongly, CEOs live and die by the quarterly numbers. The most important product Cerner sells isn’t Millennium, it’s shares of stock. That’s where the real money is made.

Cerner is selling $1.4 billion a year and has a market cap of $4.35 billion. That’s pretty good for a company with cutthroat competitors and customers who (theoretically) don’t have a lot to spend.

Patterson runs the company his way, just like he did from the beginning when they were a no-name little lab vendor. That was 28 years ago. Not many current CEOs started the company, built it up, went public, and stayed at the helm.

The best possible alignment between CEOs and shareholders is to compensate them in stock. Not by giving them a bunch of free shares for taking the CEO job, but to pay them in stock instead of cash. They make money when everyone else does, the ultimate "eating your own dog food."

That’s why you shouldn’t feel too sorry for Neal. He’s sitting on $317 million worth of stock. I don’t own CERN shares, but for those happy shareholders who do, I say: bravo to him.

Time Capsule: Is Healthcare IT Really "The Right Thing to Do?" Prove it.

April 20, 2012 Time Capsule 2 Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in April 2007.

Is Healthcare IT Really "The Right Thing to Do?" Prove it.
By Mr. HIStalk

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I like to shock people by telling them that a hospital is basically a clean hotel with lots more staff, lots worse service, and a nightly rate that no one in their right minds would voluntarily pay for an uncomfortable bed, incessant noise, and bad food.

Going with the hotel analogy, if you owned a mid-priced hotel in a highly competitive market, what would motivate you to make an IT investment?

  • It would perform some function that increases customer loyalty or occupancy rates, thereby increasing profits
  • It would reduce costs and allow more aggressive pricing, thereby increasing profits
  • It would improve quality in a perceptible way that would support higher room charges, thereby increasing profits

See the common theme?

None of these motivations work for hospitals. We’re already full, even those hospitals with poor performance and low satisfaction scores. Patients don’t really care if we automate or not, even though we keep trying to convince them how wonderful it is. IT rarely reduces costs for a given organization and hasn’t put the brakes on healthcare spending.

Worst of all, despite stacks of arguments trying to prove that technology investments improve patient outcomes, evidence is skimpy at best.

That leaves two reasons to invest the many millions today’s IT solutions often cost. Either (a) it’s a cost of being in business, or (b) it’s the right thing to do.

"Cost of being in business" is the lazy answer that IT vendors love. Walmart eats companies for lunch that hide behind what they think are fixed costs that Walmart can eliminate. A few good Rollback Specials and Mr. "Cost of Being in Business" isn’t for much longer. Luckily (for everyone but patients and payors, anyway), hospitals collectively have few original ideas, so the competitive threat is minimal.

Walmart invests legendarily in IT, but they’re not throwing money at the same off-the-rack systems that every other department store uses (like hospitals do.) Without the motivation of competitive advantage and eventual increased profits, why bother? Spend the money on nicer bathrooms or friendlier cashiers instead. The payback is more certain.

"It’s the right thing to do" is noble-sounding, but easily riddled with holes. You can’t prove it’s the right thing to do, can you? If even one hospital that didn’t spend $40 million on a clinical system has better outcomes than yours that did, then obviously it isn’t just about IT.

Most hospitals wouldn’t touch an expensive new drug without reams of studies proving its safety, efficacy, and cost-benefit ratio. Those same hospitals, however, continue to buy IT on faith alone, using either the "cost of being in business" or "right thing to do" rationale. If IT were a drug, we’d ban the chippy blonde sales rep from our hospital.

All of this would be irrelevant if patients found IT valuable. My doctor doesn’t use an EMR, but I’m not about to switch to a different one. My dentist doesn’t use computers except for scheduling and billing, but I’m sticking with him. When I need a new provider, I have zero interest in whether they use computers or not.

In other words, I’ll give lip service to laypeople about the wonderfulness of healthcare IT, but my feet vote differently. I’m the Chrysler sales guy who parks his Toyota around back and hopes the prospect doesn’t notice.

Maybe today’s IT systems really do improve outcomes or cost. If so, then I challenge vendors to prove it and customers to demand that proof before buying their wares. Otherwise, spend the money on staff, training, and equipment instead because we know those improve quality and efficiency.

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