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HIStalk Interviews Kipp Lassetter and Robert Connely

February 19, 2010 Interviews 3 Comments

James K. Lassetter, MD is chairman and CEO and Robert Connely is senior vice president of Medicity of Salt Lake City, UT.


What caused the dissolution of CalRHIO and what are the prospects are for the new group?

(KL) It’s really pretty straightforward. A lot has been made of it, but the reality is that CalRHIO was formed at a time when there wasn’t any federal funding. The mission that CalRHIO was working on was how to create a fully connected California. A big part of that was how they could build a sustainability model.

They woke up one morning in the spring to the announcement that the states were going to get funding to do HIE activities. CalRHIO’s business model was such that it would have had to be the SDE, State Designated Entity. They competed in that process. You can imagine that there was a lot of politics involved.

The state decided that they were going to form a new entity. At that point, it was a simple decision that CalRHIO would fold itself into that new entity. That’s the reality of what happened.

Technically, there was no purpose in keeping a staff on for an HIE model that wasn’t going to be deployed. The board remains intact and continues to meet. In fact, CalRHIO recently won the second largest Social Security Administration grant and has retained consultants to roll that out. We’re the participating vendor in that grant.

The whole concept that CalRHIO folded and went away makes for good blog content — not referring to your blog, of course. It really doesn’t reflect reality at all.

What’s Medicity’s role going forward with the new group?

(KL) The new group is moving forward. It’s essentially in the formation phase. We expect some announcements out of the state fairly soon. We anticipate that they will go to vendor selection. We hope to have a very good shot at that relationship.

It must be frustrating to have to win the business all over again.

(KL) When the funding came out for the state, we knew it was going to be good news/bad news. You go to bed playing football and you wake up and realize it’s now baseball and you look a little funny out on the field in your football uniform. [laughs]

Because there was no funding out there, if you wanted to be a sustainable HIE, you had to build a business model. CalRHIO had developed what I thought was a very innovative and substantive business model that was endorsed by CalPERS. Many of the largest health plans in California had looked at it and validated it. They were the ones being asked to fund the HIE because it was speculated that they would derive the biggest benefit from reduced utilization, thereby lowering medical cost.

We had RAND involved, Mercer, Watson Wyatt, and CalPERS as one of the largest purchasers of healthcare services in the country, many of the largest payers that have a national footprint. All were engaged and supportive of the model. However, when the federal government came out with the funding, then the game changed.

The business model as laid out by CalRHIO had a focus on bringing information as a starting point to the emergency room, where you have the highest acuity meeting the lowest amount of information. If you were to look at the one point in the healthcare ecosystem where information will have the biggest impact on both cost and quality of care, I think everyone would agree that the ED is ground zero. That was picked as the first point because the information could have the highest impact in lowering the cost of care. That was certainly something the health plans were very interested in as being a starting point.

With the funding, it was much more about pushing HIE for broad physician meaningful use adoption. There’s a significant shift in the first phase. The big problem right now is the states are going to go out and pick a vendor and deploy. Unless they’ve thought through a sustainability model, these are going to be a lot of bridges to nowhere.

Are business models still important or are people forgetting that fact?

(KL) Business models are absolutely still important because the federal government has given no indication that there is going to be a continuity of funding. What’s happened is that it’s taking a back seat. Before the funding became available, all the entities had to focus on how they would get started. Now they know how they can get started, but what many of them have not yet figured out is how they can remain functional.

Is it easy to get the money but then have to figure it out later?

(KL) Everyone is in different phases. There are people in the planning phase, people that are in an operational phase. The ones we work with emphasize building a sustainability model. I can’t speak to the ones we haven’t seen, but I know that some are very focused on that.

If you look at the big picture of where the federal government is spending money on interoperability and the Nationwide Health Information Network, how would you describe where the money is going and what means to the industry and your business?

(KL) There’s a broad picture. If you look at the first phase of meaningful use, there’s a real emphasis on getting the physicians prepared to exchange data. Simultaneous to that, they’re trying to get the infrastructure in place so they can exchange data.

While the meaningful use requirements for information exchange are coming later in the process, the government knows that these infrastructures can’t be built overnight. They need to begin in earnest right now to be building the infrastructure capable of exchanging that data.

There’s a lot of innovation going on, and I think we’re in the middle of a lot of it, that should have an impact on changing that paradigm. The money specifically is being distributed to the states for both planning and operation of all different flavors of HIE. When you talk to the states, it’s lot like the fable of six blind men and an elephant — depending on whether they felt the trunk or the tail or the side, it was a tree, a rope, or a wall. There’s still a lack of consolidation around the concept of what an HIE really is. A lot of that came through in the recent KLAS report.

How would you characterize the difference between an HIE and a RHIO in contemporary terms?

(KL) There’s a verb HIE, which is the act of exchanging clinical information. There’s a noun HIE where you are an entity that is trying to create the functionality or the action of exchanging information. A lot of people do health information exchange without an HIE or RHIO.

It really is the difference between talking about the noun, an entity that’s called a health information exchange, or the actual action of health information exchange where you move clinical data between one provider and another.

Obviously, you don’t necessarily need a third party. Many of our clients are hospitals doing health information exchange with their affiliated physicians. Many of these are rural areas, where there are not competing hospitals. De facto, it becomes a full community exchange without the need for a third party body to mediate that.

Where does Epic’s private exchange among its users fit in?

(KL) It is a special class or consideration. If two entities are sharing the same technology platform, then it would seem fairly straightforward to exchange that data. Unless those facilities are juxtaposed to each other in a geographical sense, I don’t see the real value in it, but if two facilities are across the street from each other and full Epic shops, then clearly it seems to make sense for them to exchange data.

(RC) One of our bigger efforts across the country is to integrate HIEs and sub-HIEs, small HIEs, and it’s amazing how many of them we are connecting to. Epic’s going to be another life form that is out there. I think we’ll be interconnecting them.

It will kind of resemble the Internet in the end — networks are not nice and pure and harmonious, but they do move data back and forth. I think you can only go so far. Once they reach the edge, even they are getting involved in standards-based exchange. So, they’re part of it. It’s not a model that scales.

Are you seeing new market entrants with all this money flowing in?

(KL) We have a joke — the HIE costumes are flying off the Halloween store shelves. Before there was federal funding, there were few true HIE vendors out there. Now, anyone who’s ever moved a lab result electronically is an HIE vendor. Or for that matter, anyone who has exposed eligibility or done claims processing is now an HIE vendor.

Tell me about the patent for the Medicity Novo Grid.

(RC) It was a patent to move data in a different way, in a distributed fashion, how we create these linked objects that can move data from Point A to Point B and keep the level of synchronicity. It’s actually the core technology around a new platform that we’re introducing at HIMSS called iNexx.

It gave us that architectural underpinning that we can build a massive amount of business on without having to worry about patent trolls coming along and taking it away. We have that core architecture that we’re building the next generation product set on, how we can share information and built systems on top of that open platform.

Where does iNexx fit?

(KL) We believe we have the largest HIE platform deployed in the US and I think the KLAS report substantiates that. We decided to open it up to third-party development. We think this is a really bold move because it allows many different applications to share the same connectivity into a physician’s office, whether it’s demographics or connectivity to the practice management system or clinical CCD connectivity to the EMR system, and it’s bi-directional.

Typically those connections serve one application. Typically they’ve served our infrastructure, but by opening it up, it becomes plug-and-play. We’re taking a page out of the iPhone playbook and exposing an application store, but these applications are certified to safely and securely run on the platform, can be downloaded … there may be three or four e-prescribing solutions. There may be many different components that are together.

One of the big victories we felt we won was when the meaningful use criteria came out and allowed for a modular approach as opposed to a monolithic application. Different vendors can participate and create the modules that in totality allow the eligible provider to qualify for meaningful use, which we believe is a big paradigm shift. We’re calling it, for a lot of reasons, the first Health 4.0 platform.

(RC) Health 1.0 is about content, Health 2.0 about community, Health 3.0 about commerce, and then Health 4.0 about coherence. This is where we tie it back around the patent we got.

What that patent allows us to do is to create a different type of record, a linked object, that we can distribute across the community and tie it together. Everybody has a copy of it and can see what others do. The patient can even be involved in this exchange. In fact, we’re about to undergo some projects in California that bring patients into this shared record that the care team can maintain and conduct business across. It’s a private social network, if you will.

That new thing where we’re tying everything together as Kipp described earlier, bringing in data from the PM systems and the EMRs, from the hospital distribution of things from reference labs … all this data coming together and then shared in a coherent fashion between the various care team members and the patient at the center of this universe. Because this whole platform is structured that way, it’s not a relational database. It’s really designed for distributed object community.

It’s a new approach. The whole concept behind the platform is the way it manages information exchange, making that a natural part of the data structure, not an add-on interface. It’s built at the core. We believe we can bring it to market at a very low price that is a disruptive innovation.

(KL) The iNexx platform creates a virtual, Kaiser-type infrastructure. Historically, to do that full bricks and mortar IDN, everyone needs to be under the same ownership and practices are owned and insurance companies, hospitals, etc. This model allows organizations and affiliated physicians that are not part of the same entity but work together in related health plans to collaborate on a platform and in effect, create a high level of collaborative and coordinated care, much like what happens in the top IDNs across America.

We think the technology has gotten to the point where you don’t necessarily require single equity ownership across an entire IDN. Unrelated entities can collaborate around a single patient and achieve similar results.

From a physician’s perspective, one of the very powerful things about the iNexx platform is that when I bring a patient in view, I have a lot of different applications that could be exposed by many different vendors that I can use to perform actions, such as e-prescribing. Running in real time and next to that view of the patient in focus is a real-time view of activities going on by the care team of that patient that are all on the grid. Whatever lab results, whatever pending actions are on that patient by other practitioners and other specialists, I have that view. That is, from a physician who used to practice, some of the most useful and helpful information you could put in front of a doctor.

We’re in the middle of healthcare reform and a real pressure to lower the cost of care. The average cost of care per capita in the US right now is around $8,000. As the US looks outside the country for models to emulate, when you look inside the US, there’s a massive disparity in spending and quality indicators between the different regions within the United States. If you were to look at California, most people would intuitively say that California’s cost per capita is higher than the national average. The reality is that it’s much lower.

One of the contributing factors is what some people call the Kaiser Effect, which is that highly coordinated, collaborative care IDN. In order to compete against Kaiser, you have a unique delivery model mostly unique to California where you have IPAs that are doing risk contracting, functioning at a higher level of coordination of care, contributing to the net effect of a much lower cost of healthcare per capita than the national average.

If you look at the states that have the lowest per capita cost and the highest quality indicators, it’s the state of Utah. Besides the fact that there are other contributing social factors, that’s also the effect of the IHC network and the dominance of that network in Utah. We believe this infrastructure can create virtual IDN infrastructures that allow that same collaboration and coordination of care. That’s a high-level macroeconomic look at what we’re trying to achieve within the company.

What was your reaction to the KLAS HIE report?

(KL) I think it’s a reasonable start. I don’t think any one vendor is probably completely satisfied with how they got presented.

Obviously we feel we came out of the KLAS report very well. We’re very happy with how we came out. We obviously don’t feel the full scope of what we’re doing or how we’re doing it was represented in that report, but I don’t think that’s unique to us.

The market is moving so quickly that they probably ought to generate one of those reports every other month. With all the federal funding coming in, there’s so much changing. From the time that report got printed, in our opinion, it was way outdated.

What will interoperability look like in five years?

(RC) I personally think it will change significantly, that the technologies that we and others I’m sure are working on will negate some of the higher cost elements of putting together HIEs. EMRs will evolve from the state of recording everything a physician does to get more inserted into the collaborative areas.

I think HIEs will evolve to a Google-like search engine. I think with the technology and the focus on nursing and staffing being more coordinated is going to have a big impact. It’s not really coming from the government as I think the private sector that’s putting the pieces together. The money’s going to just chum up the water for a while.

I believe we’re going to evolve to another state and it’s going to be much simpler, much more distributed, and much more organized. I think the future will be much more Internet-like than the large, monolithic architecture they’re trying to assemble today.

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Currently there are "3 comments" on this Article:

  1. Seriously? –> your really “think HIEs will evolve to a Google-like search engine. I think with the technology and the focus on nursing and staffing being more coordinated is going to have a big impact. ”

    If that’s the case, then they’ll be totally useless to doctors and serve primarily to compromise our privacy.

    Let’s hope we never get that “evolved”.

    Don’t even really understand that next sentence either.

  2. The HIStalk interview with Medicity, substantially shading the details for favorable effect, strikes me as a huge misdirection of effort. The bulk of the content in the interview is marketing spin seeking to justify novel institutionalization of tasks that are better left decentralized and in the hands of current independent health business operators. It’s particularly revealing that an animated advertisement for Medicity as a founding corporate sponsor of the Blog accompanies a Medicity executive using the Blog to present his case for Medicity (or any sole contractor from the private sector) seizing and controlling health data that is not currently centralized. To be blunt, I see the interview as self-promotional self-dealing of the first order. Let me attempt to reduce the spin in the HIStalk content.

    “The Mission that CalRHIO was working on was how to create a centralized monopoly on all of the decentralized patient transition and clinical handoff health data of California, so that the clinical data could be acquired, centralized, controlled and monetized by CalRHIO on behalf of its corporate partners. By seizing control of the data, these brave business partners would be able to invent a new healthcare profit center, claiming that their shared savings breakthrough would magically impose no new costs on the healthcare system, and would generate new revenue to sustain a service no one was asking for.”

    (Aside — when one hears the CalRHIO narrative on “shared savings” and “State HIE sustainability” one should think of Enron inventing a dramatic new “market” for “energy futures” or Goldman Sachs inventing new financial “products” such as “interest only mortgages” or “mortgage backed securities” or “financial derivatives” or other creative and speculative investments, because they are all woven from the same crafty cloth. In short, put your hand on your wallet, keep your eyes on the predator, and back slowly and carefully away to a safe distance so you can return to the day to day business operations of patient care in a very harsh market with razor thin profit margins.)

    “The mission that CalRHIO was working on was how to pretend that they could fully connect California by declaring that pushing old claims data covering a small fraction of the patients who might present at an emergency room into a dumb claims data portal not in the workflow of any clinician or medical records department, and declaring that this wholly inadequate and clinically trivial patient data was actually relevant to the information gathering needs of patient care facilities when in fact it was a discredited health data processing shortcut that had failed in peer reviewed literature five years earlier (e.g., the MedsInfo project funded by BCBS of Massachusetts in 2003, and shut down as impractical in 2005 after a disastrous field trial).

    “So poor CalRHIO woke up one morning after having spent $7 million on five years of self-promotional marketing and zero dollars on building any practical health data exchange examples, and found that none of their prior funders would give them any more free cash to continue their policy charade, and that all around the country, including in a dozen neighborhoods in California, local HIE efforts were scrupulously building demonstration health information exchange projects, functional pilots for lab result delivery, or e-prescribing services, or an NHIN-enabled “wounded warrior” demonstration, or fully operational health data exchanges provisioning robust clinical data services to thousands of physicians. And most galling of all, CalRHIO found that unfortunately a new clinical informatics compentency had managed to define a topology for data exchange (NHIN) and a business model for operations (minimally invasive value based health data interoperability services — see HealthBridge, Inland Northwest, NEHIN, UHIN, etc.). In short, poor CalRHIO was still on the platform when the ONC + NHIN + ARRA train had left the station. One can only assume that CalRHIO failed to notice the rise of HITSP, CCHIT, CDA, NHIN, CONNECT and the hundreds of hard working clinical informatics professionals serving on all those mind-numbing committees and actual clinical informatics projects, because at a very basic level CalRHIO’s business model was based on policy entitlement rather than the nuts and bolts of clinical workflow and health data operations.”

    Perhaps the most adroit (and shameful) moment in the Medicity HIStalk interview is the conceit that the CalRHIO business model was “innovative and substantial” and yet now that federal incentive funds are on the table somehow the “substantial” CalRHIO sustainability model will “never be deployed.” If the CalRHIO model was so substantial, why did it not find funders? If t was so “validated” then why was it not built and operated? The problem with this picture is that the federal funds on the table represent a minor injection of capital in a major retooling of health data infrastructure services. The numbers published last summer by CAeHC (and circulated as content recently in the HIE Finance committee deliberations) suggest that California’s $38 million federal subsidy for HIE represents at most 5% of the private sector capital investment necessary over the next decade to fully operationalize a wholly new digital health data services sector in California to replace the current “scribble and fax” paper system of health data exchange. In other words, it is just as dangerous to think that the $38 million federal HIE subsidy to California can be squandered on a large centralized SDE as a new broker to cost shift mythical shared savings payments from Payers to HIEs as it is to lament the “substantial CAlRHIO business model” that somehow “technically” had no reason to be deployed. In my calculus of investment opportunities, “substantial business models” are likely to be built and tested, and business models that “technically” are never deployed are in fact vapor that are not substantial opportunities at all.

    I can see a very thin SDE as a neutral convenor to negotiate standard rates for health plans/insurance companies to compensate HIE service bureaus directly, if at all, but not as a tax gatherer/disburser. The latter model (a new bureaucracy to gather and disburse alleged funds that have not been proven to exist) is the same source of inefficiency and friction already excessively present in the current defective health care reimbursement system. If we are not working to streamline towards a leaner and more efficient future system to replace the current unsustainable health care finance system, then we are wasting our time and our children’s time.

    In an age of skyrocketing college costs, slashed State and County social services, anemic employment opportunities, collapsing pools of health insurance purchasers, and self-dealing health IT leaders who seek to patent the future of health data technology, I suggest treating the marketing spin of technology vendors with a clear understanding of who is speaking and what’s in it for them.

    In the words of Deep Throat in All The President’s Men, “Follow the money.”

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