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August 20, 2015 News 10 Comments

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Investors and genome sequencing company Illumina form Helix, an app store-like service that will sequence and store a user’s DNA for free, but then offer the user pay-as-you-go apps to access it in the future. A customer might pay $20 to see if they have a specific genetic variant, then Helix will additionally sequence all of their medically relevant variants at their own cost of $500, hoping to sell the customer other information they need later without requiring a second round of sequencing. Partners such as LabCorp and Mayo Clinic will be paid a royalty-type fee, both for getting customers to submit their initial DNA sample and for each app they sell.


San Diego-based Illumina sold $1.8 billion of DNA equipment and tests last year and is hoping to penetrate the market for consumers, who so far have shown little interest in having their DNA sequenced. The FDA may weigh in with regulatory requirements. As the excellent MIT Technology Review concludes, “With Helix, says Flatley, companies won’t have to invest in starting a laboratory any more. Instead, he says, any developer with a computer will be able to start a genomics company.”

Reader Comments


From Gotham Growler: “Re: NYHHC. Glen Tullman was right in the Allscripts lawsuit.” The 2012 Allscripts lawsuit had nothing to do with the current investigation into HHC’s payments to consultants or how it has managed (or mismanaged, depending on who you believe) its Epic project. Allscripts claimed that HHC’s choice of Epic over Allscripts was unfair because HHC incorrectly calculated the total cost of ownership of Allscripts, which the company says was $500 million less than the number HHC used to choose Epic. The Allscripts analysis from its lawsuit (above) shows that HHC pegged the cost of all three options (Epic, Allscripts, or doing nothing) at around $1.4 billion, which is where the project estimate stands today. The lawsuit backfired, with Allscripts earning negative publicity from an industry generally puzzled at what the company hoped to gain by suing a prospect after losing a selection — HHC responded publicly in stating that the Allscripts TCO claims were “absurd,” that Allscripts was getting beaten soundly in the market by Epic because it “lacks a truly integrated solution,” and that the lawsuit was “an ill-fated attempt to reassure investors and inflate its sagging stock price.” Allscripts filed the lawsuit on December 13, 2012. Six days later, the company announced that it had failed to find a buyer for itself and had instead hired Paul Black as CEO and fired its executive team of CEO Glen Tullman, President Lee Shapiro, Chief Client Officer Laurie McGraw, and EVP of Culture and Talent Diane Adams. Allscripts dropped the HHC lawsuit three months later. MDRX shares are up 30 percent since Black took over, although they significantly trail the Nasdaq’s 64 percent overall rise over that time.

10-13-2012 6-23-27 PM

I went back to my October 2012 post about HHC’s original Epic decision, where I now recall that the $1.4 billion project cost was clearly spelled out to documents prepared for HHC’s board. That suggests that newspaper reports that the project is running double the expected costs of $700 million are incorrect – HHC estimated $1.4 billion from the beginning. The most interesting aspect of the lawsuit is that it disclosed that Epic’s software license fees represented $303 million of the $1.4 billion project, which is pure profit to Epic since the software carries no incremental costs. People always observe that Epic gets only a small portion of a total project cost of $500 million or $1 billion as license fees, but the lawsuit indicates that it’s around 25 percent. The Epic financial magic is high license fees, billing out freshly graduated liberal arts majors at multiples of their $50 hourly salary, and charging a significant portion of the license fees as annual maintenance with rebates for behaving in ways that Epic likes (applying updates, not bad-mouthing the company, and following Epic’s consultant hiring processes, for example.) Not too much different than any other vendor except for using newbies and putting lots of restrictive clauses in the contracts.


From Quality is Job Open: “Re: Quality Systems/NextGen. They let CTO Steve Puckett go, but are also swapping out all of their development leadership to create an Office of the CTO with an SVP of engineering, chief architect, and chief product officer.” Unverified, but the recruiter’s email I ran across seems to confirm that newly appointed CEO Rusty Frantz is retooling the whole product development group.


From Fly on the Wall: “Re: MediGain. The CEO and chairman are gone after a series of lawsuits claiming financial improprieties. As reported on HIStalk on 10/29/14, MediGain received an investment of $38 million from Prudential Capital Group. The latest lawsuit was filed by MedVision in January 2015, claiming that MediGain failed to pay the founders the monies due them.” Unverified, but the bios of Greg Hackney and Dinesh Butani have been removed from the executive page of the coding and revenue cycle vendor’s site.


From Don: “Re: Theranos shout-out. I’ve used the service for nine months in Phoenix. No DMV type experience – draw stations are at Walgreens and have weekend hours. Great for people without insurance coverage, with PT/INR at $2.70 vs. $99.50 hospital bills Medicare, who pays $4.98. Fast turnaround and results are available via web, smartphone, app, and PDF download. Tests drawn at PCP are available in four hours and are available on his eClinicalWorks system and patient portal. No lab order required in Arizona. As long as Theranos meets CLIA-88, CAP, JCAHO, and other regulatory requirements, we will use them whenever possible. My only concern is that convenience and pricing could deteriorate as the company expands to meet financial viability.”

HIStalk Announcements and Requests

This week on HIStalk Practice: Circle Health launches new practice business model in San Francisco. Telemedicine comes to a pet near you. Urgent Clinics Medical Care implements DocuTap tech at Houston facilities. Millenials may not be as averse to primary care office visits as their addictions to devices would have you believe. HHS encourages health IT-savvy practices to submit nominations for the 2015 Million Hearts Hypertension Control Challenge. Palliative care via telemedicine makes a difference in rural California. Large group practices weigh in with favored vendors based on customer satisfaction.

This week on HIStalk Connect: Doctors working at Al-Shifa Hospital in the Gaza Strip have developed a 3D-printed stethoscope that can be produced for 30 cents and performs as well as modern commercial alternatives. Nutritional supplement startup WellPath announces new integration points with both Fitbit and 23andMe in an effort to enhance its ability to personalize nutritional supplements. Finnish designers have launched a Kickstarter campaign to fund the Oura Ring, a ring that tracks activity levels, caloric burn, heart rate, respiration rate, and sleep cycles.


August 25 (Tuesday) 1:00 ET. “Cerner’s Takeover of Siemens: An Update (Including the DoD Project).” Sponsored by HIStalk. Presenters: Vince Ciotti, principal, HIS Professionals; Frank Poggio, president and CEO, The Kelzon Group. Vince and Frank delivered HIStalk’s most popular webinar, "Cerner’s Takeover of Siemens, Are You Ready?" which has been viewed nearly 6,000 times. Vince and Frank return with their brutally honest (and often humorous) opinions about what has happened with Cerner since then, including its participation in the successful DoD bid and what that might mean for Cerner’s customers and competitors, based on their having seen it all in their decades of experience. 

September 9 (Wednesday) 2:00 ET. “Need to cleanse, unify and manage the provider data in your EMR master file and other IT systems?” Phynd’s Unified Provider Management platform allows healthcare organizations to maintain a single, verified, customized profile for each provider across legacy IT systems. This 30-minute presentation will explain how Phynd’s system can help synchronize internal provider information in real time; create provider interoperability among systems; and manage, update, and analyze provider information with workflow tools to improve revenue cycle and clinical communication.

Previous webinars are on the YouTube channel. Contact Lorre for webinar services including discounts for signing up by Labor Day.

Acquisitions, Funding, Business, and Stock


Physician-patient matching service Grand Rounds raises another $55 million in financing, increasing its total to $106 million. Companies provide the service to their employees, who can seek second opinions, find insurance-covered doctors and have appointments made for them, and ask for medical help while hospitalized. The company digitizes and stores the medical records of its users within its app. The co-founders are Owen Tripp (co-founder of Reputation.com) and Rusty Hoffman, MD (chief of interventional radiology at Stanford Hospital).


Doctor appointment booking app ZocDoc is valued at $1.8 billion from its most recent funding round, earning them the already-overused and annoying “unicorn” label by people whose lips are too busy to say “billion-dollar valuation.”


NeuroPsychiatric Hospitals (IN) chooses Medhost’s clinical and financial solutions.



Kennedy Health (NJ) promotes Tom Balcavage from VP/CIO to SVP of technology and program services, where he will oversee ambulatory, product line, dialysis, patient experience, and imaging as well as IT.


Consumer healthcare expense management system vendor CoPatient names Tom Torre (Alegeus Technologies) as CEO.


William Tierney, MD (Regenstrief Institute) is named inaugural chair of population health for Dell Medical School at the University of Texas at Austin.


Healthcare software vendor Ability Network names board chair Mark Pulido (BenefitPoint) as CEO. He was CEO of McKesson until the company fired him along most of the executives involved in its 1999 acquisition of book-cooking HBO & Company for $14 billion, with the June 1999 hit list including Pulido, Chairman Charlie McCall, CFO Richard Hawkins, Al Bergonzi, David Held, Jay Lapine, and Mike Smeraski.

Announcements and Implementations


Allscripts will use CoverMyMeds as its prescription electronic prior authorization (ePA) solution. That’s how I read this somewhat vague announcement, anyway – Allscripts announced in December 2014 that it had developed its eAuth product for Express Scripts patients, so perhaps this agreement expands its reach.

Cerner will integrate the CoverMyMeds ePA solution with Millennium.

Cancer diagnostic vendor Guardant Health and oncology IT vendor Flatiron Health will develop a cloud-based platform to integrate liquid biopsy-based genetic testing results from Guardant’s equipment with clinical treatments and outcomes information to improve the targeting of cancer therapies.

Privacy and Security

The health minister of the Netherlands will propose that doctors be forced to turn over the medical records of patients to disability fraud investigators, although planned European Union privacy legislation may override that requirement by giving individuals more control over information about them, especially their health records. That new EU regulation will impact England’s NHS, which is making the data of non-opt-out patients available to researchers, drug chains, and private companies.

Carilion Clinic (VA) reprimands or fires 14 employees in unspecified roles for accessing patient records without legitimate need.

A former Florida TV news anchor sues his former employer, claiming he was fired for covering a story about paper medical records found in an abandoned storage unit whose contents were auctioned off. Matthew Dougherty says the station’s news director ordered him to “kill the story” when he found that the owner of the records was his own family physician, threatening him with statements that he had violated HIPAA.



The Kansas City paper writes a surprisingly insightful article on the lack of EHR interoperability, opening with a brilliant question: “Why, then, does a windowless office in Truman Medical Center need to scan 2.9 million pages of paper medical records that started out as electronic ones?” That’s pretty eloquent for a site that co-features the usual eyeball-pandering cute dog video right next to it. I like its term of “digital dead ends,” which it summarizes as, “All that scanning springs from institutional rivalries over control of your medical data. Records emerging from all that scanning give your doctor the digital age version of something pieced together with duct tape — and rendered less valuable in the process.”

It isn’t just a US problem that nobody likes taking a pay cut: China passes a law prohibiting doctors from selling drugs to patients at a markup, so to offset their loss of income, the doctors doubled the rate of inpatient care. As the abstract concludes, “The reform had an unintended consequence: China’s healthcare providers have sought new, potentially inappropriate forms of revenue.”


Cleveland Clinic kicks McDonald’s out of its food court after years of trying to cancel the company’s lease, apparently convinced that the people who eat there (many of whom its own clinical employees) can’t be trusted to choose their food wisely during the very few hours each lifetime they’re inside the hallowed Clinic’s food court walls rather than everywhere else in Cleveland, which has 25 surviving McDonald’s. They should have instead used their copy of the franchise as a living laboratory to learn how to shift consumption to the healthier options that McDonald’s offers and that nobody buys, like salads, apple slices, and non-sugary drinks. McDonald’s, like Walmart and drug dealers, meets consumer demand that won’t go away no matter how much finger-waggers try unsuccessfully to legislate away the supply.

Sponsor Updates

  • MedData offers “The ABCs of ICD-10: Background and New Features.”
  • Navicure will exhibit at the 2015 Community Health Institute & Expo August 23-25 in Orlando.
  • ESD is included on the Inc. 500. Nordic also made the list, as did The HCI Group.
  • Netsmart offers “Leading the Interoperability Charge with Local Health Departments.”
  • Direct Consulting Associates opens its new exhibit in the Technology Showcase at the HIMSS Innovation center in Cleveland.
  • Nordic will exhibit at NeXXpo August 25 in Madison, WI.
  • SyTrue CEO Kyle Silvestro is featured in “Five Things You Never Suspected About Your Healthcare Data.”
  • Park Place International offers “Approaching VDI.”
  • Experian Health/Passport will exhibit at the National Association of Chain Drug Stores Total Store Expo August 22-25 in Denver.
  • Patientco offers “Learn How a Meditech Hospital Boosted Patient Revenue 17% by Bringing Patient Payments In House.”
  • QPID Health is identified as a sample vendor in the NLP-Clinical Enterprise category of Gartner’s Hype Cycle for healthcare technologies.
  • PMD offers “The Many Faces of Android Devices.”
  • Anthelio Healthcare Solutions is named to the HCI 100.
  • Point-of-Care Partners offers a presentation on “Advancements in Technology to Streamline and Expedite Patient Access.”
  • EClinicalWorks will exhibit at the Collaborative Care Summit 2015 August 20-21 in San Diego.
  • Extension Healthcare offers “Imitation is the Sincerest Form of Flattery.”
  • Galen Healthcare Solutions posts “Reducing Complexity in Healthcare IT: Part 2 … Preparing to move forward.”
  • Greenway Health offers “Patient Engagement: Is Fear of Commitment Keeping Your Patients From Getting Engaged?”
  • Healthfinch will exhibit at the NeXXpo: Business in Fast Forward event August 25 in Madison, WI.
  • Healthgrades offers “A Day in the Life of a Web Developer.”
  • HealthMedx will exhibit at the Missouri Health Care Association Annual Convention August 24-25 in Branson.
  • Healthwise offers “Exploring the relationship between plain language and ethics.”
  • Ingenious Med will exhibit at the HFMA Mid-America Summer Institute August 26-28 in Minneapolis.
  • InstaMed offers “The Top 3 Essentials of Payment Security in Healthcare.”
  • InterSystems publishes “Redefining Relationships: Information Sharing Among Frenemies.”


Mr. H, Lorre, Jennifer, Dr. Jayne, Dr. Gregg, Lt. Dan.

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Currently there are "10 comments" on this Article:

  1. I am amazed at the valuation of ZocDoc. It is a great idea but that company is run by some of the most inept people I have ever spoken with. They took a group of people that worked on apps or websites such as living social and put together a great tool for looking for doctors. Unfortunately those same inexperienced app and widget employee who has little healthcare experience are the ones that are running the company. If it works, good for them but I have a feeling though that the real top level physicians are not on ZocDoc and this is an advertising tool for doctors that are good or mediocre but they are not the top in the field. Unbelievable valuation.

  2. Thanks for brining the details of the HHC situation back to the surface. But, Epic, and no other vendors either, have been shown to have any control over what people say about them. Can you find one single legal action? – No. Can you find any examples of people criticizing vendors? All over the damn place. Even Epic – Dr. Wachter – even when he’s woefully biased and inaccurate.

  3. “The most interesting aspect of the lawsuit is that it disclosed that Epic’s software license fees represented $303 million of the $1.4 billion project, which is pure profit to Epic since the software carries no incremental costs.”

    I don’t see another line item for Epic in there. This tells me that out of the $303 million, Epic is also including the maintenance and support in there. Those new grads may be inexperienced and cheaper than consultants, but they’re not free. I wouldn’t be surprised, if over 15 years a good third of that amount was salaries and other employee expenses for that specific customer. Plus you have to figure that Epic has to pay developers, administrative costs, their own hardware, software, etc. over those 15 years and that money has to come out of somewhere too. Of course it gets divided among all the different contracts and Epic gets a healthy profit, but to say that it’s pure profit is ridiculous.

  4. Only Epic can get away with having hardware (needed to run their software), interfaces (needed to operate their software), implementation support (needed to install their software) and an application support team (needed to maintain their software) somehow NOT attributed to the overall cost of EPIC. Judy might be the best illusionist of our time.

  5. As a former healthcare software entrepreneur and CEO I can assure you there is no such thing as ‘pure profit’ in selling software to the next customer. If you could freeze all the regulatory, competitive changes and user requested enhancements, and the changes in medicine and management that need to be continuously made to the product, then maybe you get ‘pure profit’.

    The incremental or marginal profit on the sale of software can be 90%, but I also can assure you that if the company wants to stay in business for more than a decade it better be plowing all that marginal profit into ever expanding requirements. In addition the ongoing sales and marketing operating costs usually are 20% or more of revenue, and there is no profit in that, nor finance, or HR, or QA, etc.

  6. Left unasked is the question of why the Epic implementation assistance and analyst costs are higher- is Epic more difficult to maintain and install because of poor product, or because of good product? This analysis is all cost and no benefit.

  7. Funny phrasing, but likely nobody got it.
    The negative association of “McDonalds, Walmart and drug dealers” with undesirable human nature seemed overly accurate – by not limiting the concept to “Illegal” drug dealers.

  8. Like AC said, that line item holds more than it appears. Since they did a 15-yr TCO, the bulk of that figure is going to be accounted for in the 20% annual maintenance costs. Epic also requires some expensive non-Epic software (I’m looking at you InterSystems), so it could vary a bit based on what they included in the “third party” line item. If it’s pure Epic, though, that’s about $75M of straight up license costs, which as you say has no incremental cost to Epic, but that’s true of every software vendor and (in my opinion) hard to begrudge anyone looking to make back some of the money they spend on development and other things AC mentions.

  9. It’s interesting as confirmation, but not entirely surprising, that Epic uses new grads. Meditech does much the same thing. It’s always been my understanding that Epic and Meditech have very similar corporate cultures. And Judy Faulkner has some shared history with Meditech very early in her career.

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  • Susan Hassell: You can't simply pile on more work and expect employees to not be stressed. How about not reducing FTEs until you implem...
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