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This Week in HIT 8/16/13

August 16, 2013 This Week in HIT 1 Comment



Facts and Background
The 2012 Food and Drug Safety and Innovation Act (FDASIA) requires HHS to evaluate the patient safety risk of healthcare IT in the context of encouraging innovation and avoiding regulatory duplication. The FDASIA committee released its draft report this week, which concludes that FDA regulation of healthcare IT is not necessary, but better surveillance of live systems and post-implementation testing is needed.

The committee likes the status quo a lot. Vendors can breathe a sigh of relief that the draft suggests only better communication about product safety issues and potentially a move away from product certification. 


  • The committee found it frustrating that definitions of healthcare IT and specific functionality that would trigger FDA oversight are not clear.
  • The report calls for creating a surveillance mechanism to track patient harm and near misses for unregulated software. Surveillance is an easy first step, but somehow it never seems to get done successfully. Who would a practicing physician contact when faced with a patient-endangering software defect?
  • The report wasn’t a big fan of product certification, saying it pushes vendors to meet the same checklist, gives prospects no way to compare products since they all pass, and focuses on features rather than outcomes. It recommended marketplace transparency instead.
  • The committee agreed with an earlier IOM report in saying that the federal government should discourage vendors from interfering with the free flow of product safety information.

Epic Has a Cow (Campus)

Photo: Amber Arnold, State Journal

Facts and Background
Epic Systems is finishing up construction of the third office complex on its 950-acre Verona, WI campus. The Farm Campus will house 1,000 employees.

Whimsy is a strong attraction for candidates not overjoyed at the prospect of moving from a major metro area to Wisconsin farm country. The company needs the space and can afford it, employees and customers like it, construction costs are way less in Verona than many places, and building a cool building probably doesn’t cost much more than putting up a drab one. Non-profit hospitals and thus patients (and taxpayers via the federal government) are paying for it, but healthcare waste and extravagance is a target-rich environment.


  • Epic has 6,500 employees, hired 1,000 people in the past year, and took in $1.5 billion in revenue.
  • Construction of a fourth campus will begin almost immediately, expected to have a Harry Potter-type theme.
  • The 11,000-seat Deep Space auditorium will be ready for Epic’s user group meeting in three weeks.
  • Cost of the Farm Campus and Deep Space was estimated at $400 million by the city, with the total value of the property estimated at $800 million.
  • The company has 4,500 offices on the Verona property.

Merge Purges Surges


Facts and Background
Merge Healthcare fired CEO Jeff Surges after another bad quarter in which revenue fell and losses increased, replacing him with former CEO Justin Dearborn.

Merge has a lot of problems as a company. Jeff Surges may or may not have been one of them. He gave a pretty rosy outlook during last quarter’s earnings call, so poor results forced the company’s hand.


  • Surges joined Merge in November 2010, but was a director of the company since May 2010.
  • He came from Allscripts, where he had been president for three years. Both Chicago-based companies have struggled with proxy fights, management turnover, and poor financial performance.
  • Surges was named as one of Modern Healthcare’s “Healthcare’s Hottest” fluff award at #21 in September 2012, although perhaps they were referring to his seat.
  • MRGE shares have dropped almost 50 percent in the past week.
  • MRGE share price tripled during Justin Dearborn’s previous stint as CEO from 2008-2010.

Health Plan’s Leased Copy Machines End Up Costing $1.2 Million


Facts and Background
Affinity Health Plan pays $1.2 million for failing to erase the hard drives of leased photocopiers it returned to Canon Financial Services, which were later found to contain the protected health information of 345,000 patients.

It’s likely that most hospitals have made the same mistake, either because they didn’t think of copiers as containing PHI or wrote unenforced policies for their disposal. It’s interesting that Canon Financial Services didn’t erase the drives themselves just like a seller of refurbished computers would – while not all customers copy PHI, all of them copy confidential information.


  • Talk about bad luck – one of the returned copiers was then sold to CBS, giving its news people an easy story to hype.
  • The Federal Trade Commission offers a reminder that “digital copiers are computers” and provides advice on how to secure their information.
  • Affinity should sue Canon Financial Services for failing to exercise reasonable care to prevent exposure of its data.

EHRs Aren’t Disruptive


Facts and Background
A blog entry by the Clayton Christensen Institute for Disruptive Innovation says that EHRs aren’t disruptive.

Who said they were or should be? EHRs were primarily designed make data retrieval more convenient for regulators and insurance companies, not to provide innovative benefits to clinicians or patients. EHRs, rightly or wrongly, reflect what the market requires, excepting of course the skewing of that market by HITECH.


  • The article says that 80 percent of hospitals now have EHRs, yet none of the $81 billion per year in healthcare savings predicted by the vendor-funded 2005 RAND study have materialized. Nobody believed that study other than Presidents Bush and Obama, so that’s hardly a surprise.
  • It points out that “disruption” means small companies with cheaper, simpler technologies that target small customers or non-customers, but then move upstream to threaten entrenched competitors. That’s not the case in healthcare, where EHRs are a “sustaining innovation” that offer more features at a higher cost, but within the same customer business model.
  • “Implementing new technology to sustain the way you already make money almost always keeps costs high and prevents true disruption.”
  • The article recommends building systems that are based around doctor workflows instead of replicating paper, but that’s a lazy conclusion that assumes doctors are in charge rather than the government, insurance companies, and employers. The real problem is the lack of motivation for disruption and the absence of possible disruptors. There’s nobody to arm with technology to topple the status quo.


Mr. H, Inga, Dr. Jayne, Dr. Gregg, Lt. Dan, Dr. Travis.

More news: HIStalk Practice, HIStalk Connect.

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