Readers Write 10/5/09

Submit your article of up to 500 words in length, subject to editing for clarity and brevity (please note: I run only original articles that have not appeared on any Web site or in any publication and I can’t use anything that looks like a commercial pitch). I’ll use a phony name for you unless you tell me otherwise. Thanks for sharing!

Web Services are Changing the Industry, Slowly
By Mark Moffitt

It’s an age-old argument in healthcare IT. Which is better, the single vendor or best-of-breed approach to software?

The single vendor approach has had the advantage, namely less risk from integrating systems, for a number of years.

The best-of-breed approach offers systems with better functionality and/or ease of use, but integrating systems from different vendors is a challenge. Small and innovative vendors are often the leaders in best-of-breed systems.

HL7 has not evolved past “piping” data from one system to another. Interoperability? Not using HL7. But web services offer a way to provide interoperability between systems.

This is the same technology that brought us the World Wide Web or Internet, online banking, Google, Amazon, eBay, the dotcom bubble and bust, and online communities. It is diminishing the primary benefit of the single vendor approach — ease of integration.

I predict Web services will bring more competition into the healthcare IT space and lower costs where vendors compete on functionality, innovation, and flexibility. It will open the door to smaller, more innovative vendors.

Web services have been around since the late 1990s, yet the single vendor approach still dominates the industry. Change has been slow as the sunk costs of single vendor software present a significant barrier to change. In addition, vendors of single vendor systems do not promote Web services for interoperability for obvious reasons.

But those barriers are about to be swept away by much more powerful forces.

Change is coming to healthcare regardless of the outcome of current healthcare reform efforts, in the form of 1) higher volume as baby boomers march through old age (Chart 1); and 2) lower reimbursement as healthcare cost as a percent of GDP falls. This change will be forced on the USA as a consequence of competing in a fiercely competitive global market.

The Obama administration is increasingly signaling that the United States will not continue to be the world’s consumer and importer of last resort. The clearest statements came last month from Larry Summers, White House economics director, in a speech at the Peterson Institute for International Economics and in an interview with the Financial Times. The United States, he said, must become an export-oriented rather than a consumption-based economy and must rely on real engineering rather than financial wizardry. Tim Geithner, the US Treasury secretary, and other top officials have spoken similarly of rebalancing US growth.

Healthcare costs are like a “tax” on the economy. That tax is much higher in the US than in other countries (Chart 2). Healthcare cost as a percent of GDP cannot continue at current levels if the USA is to compete against other global economic powerhouses in the 21st century. Unrelated to this discussion is the likelihood that the dollar will continue to devalue to level the playing field for USA exporters (Chart 3).

Web services are beginning to make inroads at the grass root level as healthcare IT shops are forced to find ways to provide more and more functionality in the face of stagnant or shrinking budgets. This trend will only accelerate as healthcare confronts a new reality.

It will take time to dislodge Epic, Siemens, GE, Cerner, et al, from their perch atop the healthcare IT food chain. I predict that these vendors will fight the inevitable reordering of the industry like others before them in other industries (read the book: “The Innovator’s Dilemma”). And like those before, them these vendors will not change because they are stuck in the business model that got them to the top.

But change is coming and it is unstoppable. It will bring about a leap forward in ease of use and flexibility at a much, much lower cost. The trend for the cost of healthcare IT systems is down, not up.

The primary beneficiary of these changes will be physicians and other care providers in the form of real and tangible productivity-enhancing features and functionality. They are going to need it.

It will be fun and exciting for some in the industry. For others, it will bring job losses and stress.

Fasten your seatbelts. It is going to be a thrilling ride over the next ten years.

Chart 1

Chart 2

Chart 3

Source for chart. OECD publishing. Rights and permissions. Allows websites and blogs to use excerpts of their publications with attribution and URL.

Mark Moffitt has worked in healthcare IT for 25+ years and has a BSEE, minor in computer engineering from University of Texas at Austin and an MBA from Vanderbilt. He is currently (de facto) CIO at Good Shepherd Medical Center in Longview, Texas.

Fee-Based Clearinghouses Defy 80/20 Rule
By Jim Denny

Mr. Revak raises an interesting premise about the costs associated with use of clearinghouses, based on the 80/20 principle. However, I’d like to offer some additional perspective on the value of using a Web-based clearinghouse.

I would agree that it is hard to justify paying for transactions if all you are getting is a dumb pipe to the payers. To justify the fees that clearinghouses would charge, they must deliver meaningful value beyond transaction processing. You should expect to receive some form of SLAs (Service Level Agreements) around performance, reliability, service levels and response times, first pass rates, etc.

It is also importation to remember that not all clearinghouses make money on a “per transaction” basis. Some, Navicure included, charge a flat monthly fee unrelated to claim volume — much like Internet service providers and cable television companies do. Indeed, any of these would prove to be prohibitively expensive if users were charged each and every time they used the service.

And, as noted above, Web-based clearinghouses can provide added value that goes well beyond simple claims processing. These services deliver business intelligence that can greatly enhance a practice’s business operations, such as real-time claim tracking; analysis of paid vs. contracted fees; coding and data entry error patterns; rejection and denial trends; and staff productivity reporting.

In addition, users benefit from the ever-widening scope of information available from Web-based clearinghouses. The claims engine employed by these firms get bigger and smarter with each claim processed because the “claim brain” benefits from the broader community of practices. In effect, thousands of practices could be making the same mistakes with given payers, resulting in repeated rejected claims. With online functionality, the error can be corrected automatically without each practice needing to fix its own system. And when new payer edits are applied, practices can rely upon their clearinghouse to integrate the policy change, so they don’t have to invest staff resources in keeping up with countless payers making endless modifications.

Certainly, in these difficult economic times, it makes sense for practices to take a critical look at how they invest their resources. But they must ensure they are looking not only at the price tag for any given solution, but that they also consider the overarching value they may receive.

Jim Denny is president, CEO, and director of Navicure of Duluth, GA.

Let Us Rise to the Occasion: It’s Not About the Technology We Offer; Our Value is in Changing the Way a Medical Practice Works
By Lindy Benton

Since February’s announcement of the federal stimulus package including electronic medical record incentives, the healthcare industry’s attention has focused mostly on the money: how physicians can get paid to implement an electronic medical record (EMR) — and how much vendors can make in the process.

I fear that we are neglecting one of our most unique — and critical — duties as vendors of healthcare technology, which is to align ourselves to the needs of physicians.

Let’s not forget why the federal government decided to pay for our industry to embrace automation. It wasn’t to install our technology; it was to change the way medical practices operate. Our nation needs — truly deserves — more value for what it spends on healthcare. As President Obama so bluntly put it, we’re even missing the basics:

Healthcare is the only area where you still have to fill out five different forms – when you go into a bank you don’t have to do that. You’ve got an ATM. …Sometimes you see their [healthcare] files and it’s all stuffed with papers, and nurses can’t read the doctor’s handwriting. AARP tele-town hall Tuesday July 28, 2009

The real issue at hand is changing the way a medical practice functions from the moment the patient walks into the door. Today, patients groan when they see a sign-in list teetering on a shallow window sill below a hand-written sign that declares, “Tap if you need help”. In the future, we need patients to be comforted by the precision and security of the technology and corresponding workflow that supports their physician.

There’s good evidence that the time is right for change. In these turbulent economic times, patients are anxious because money is tight, preventive care has been neglected, and long wait times for appointments just add to the frustration. Physicians are just as apprehensive. Reimbursement is down, expenses are up, and for many, the work is less and less professionally satisfying. Yet, faced with these challenges, most physicians don’t see technology as a savior. In fact, many see the stimulus package as just adding to the frustrations of the current economic environment.

It’s no surprise that physicians are fearful: EMRs haven’t had a stellar track record. In 2005, then-Arizona Governor Janet Napolitano issued an executive order for all healthcare providers to install EMRs by 2010. A May 2009 report found that as many as 20 percent of medical practices in Phoenix have or are canceling their EMR contracts as a result of training, functionality or affordability issues. Cancellations were especially prevalent among smaller medical practices, according to the HealthLeaders-InterStudy report.

As vendors, our challenge is to stop focusing exclusively on the EMR — getting physicians implemented as quickly as possible and then moving on to the next client. An EMR is a wonderful tool, but the national healthcare reform debate isn’t about tools. It’s not even about technology.

In order for physicians to not only implement an EMR, but to automate their workflow, they need us. Instead of worrying about how they are going to afford the staff training, maintenance, and continual upgrades of an EMR, physicians should be assured that the vendor they choose has the intellectual resources to be consultative to their needs so they can deliver efficient, affordable and high quality care to patients. They need vendors who can be partners — who can be experts, trainers and consultants on how to integrate technology into day-to-day operations. Physicians want a partner who can guarantee qualified information technology and be the professionals who help them navigate the complexities of an EMR.

As healthcare technology experts and as fellow Americans, it’s our calling — our responsibility — to make sure physicians get a positive return on their investment. In turn, patients will experience the value of the technology we offer.

The healthcare information technology industry should be proud of delivering on its past promises to produce cost savings, efficiencies, and even better patient outcomes. If we stay focused on truly creating value for medical practices, we’ll ensure that the stimulus package’s HITECH Act doesn’t become another Cash for Clunkers — a short-term stimulus that doesn’t get to the core problems. Instead, let it become our legacy.

Lindy Benton is chief operating officer of Sage Software Healthcare Division of Tampa, FL.