Bill Anderson is chairman and CEO of Medhost of Franklin, TN.
Tell me about yourself and the company.
I have been associated with Medhost for about seven years. I’m currently the chairman and CEO. Prior to that, I was involved in a number of different businesses. Going back to 1990s, I was an early participant in writing home banking software.
The company is in two businesses. We’re in inpatient healthcare IT and consumer engagement solutions, including the YourCareEverywhere.com website.
You have a fair number of small and rural hospitals as customers. What does their world look like today?
The world is tough in the community hospital market. We divide the hospital world into three buckets. The large tertiary care hospitals that are building communities of care — it’s largely Cerner and Epic territory up there. There are the small standalone facilities that are probably under 50 beds that are CPSI and Athena territory. We compete in the middle market, which is a full-service hospital, but without the complexities of the tertiary care hospital.
They’re not under as much financial stress as the smaller hospitals, although they clearly have more financial stress than the big tertiary care hospitals, which financially are doing much better. Still, there are a number of suburban rural hospitals that are under stress right now with the decline in inpatient volume, the increased fixed costs for regulation, and the insurance risk that they’re having to take on with readmission penalties and things like that.
Does economy of scale favor the huge health systems to the point it will become impossible for small communities to keep their full-service hospitals?
Clearly there are economies of scale. One would like to think that at some point in time, there would be allowances made for that. I’m not sure that’s literally going to happen.
There’s clearly overcapacity in the industry. I think as many as 40 percent of the total hospitals and 30 percent of the beds will probably be taken out of the system ultimately.
When people question that, I go back to the 1980s, when I was in the financial services industry and banking business. There were about 18,000 banks in the United States. Today, there are about 6,000. A lot of the same things were happening. Technology is changing how people use their hospitals, just like they did with banks. I would ask people, "When was the last time you stood in a teller line?" You had increasing regulation, and with the technology, place became less important.
I think there’s going to be a lot of disruption in the hospital market. Still, there are going to have to be geographically convenient locations. In the middle market, there will be winners and losers, but in general, we’ll continue to have a robust community hospital market.
Hospitals provide community pride and large-scale employment to a different degree than banks. Who’s going to figure out the economic answer to having access in communities that can’t support what they already have?
There are two answers to that. There were economic issues and community pride that were involved in the banks that went away also. Economics tend to override those types of things.
One of the reasons we offer our community engagement solution is that hospitals are going to have to build an affinity with consumers outside their normal community. There’s no reason that a hospital can’t build the same type of relationship with a consumer that’s 50 miles away that they did with people in their local town. You just can’t do it by putting billboards up. You have to be able to move into the modern age, do digital marketing, things like that. Not every community is going to have one, but you’re still going to be able to have a sense of community with your community hospital.
Consumers are going to welcome self-service, just like they have in other parts of the economy. For many things where you’ve had to have hands-on visits with a clinician, due to the shortage of clinicians and due to the inconvenience involved, you’re going to see things like telemedicine starting to take a real position in the marketplace. There are going to be alternative delivery channels, not just stand-alone EDs and urgent care centers, but also, the Minute Clinics and those types of things. You’re going to see a diversification of healthcare delivery that’s going to improve the convenience and hopefully the adherence with patients.
One of the things that I thought was interesting recently, because we have a condition management program, is that the federal government has allowed the YMCAs to get reimbursement for things like chronic conditions like diabetes. You can go on the YMCA sites and see that they run diabetes management programs to try to help pre-diabetics. This would probably not have been something that the healthcare delivery system would have been in favor of years ago, but it’s a consumer-friendly type of initiative. Let’s move these types of preventative programs and maybe even some care programs out into other venues so that consumers have better access to them.
The last time we talked, you identified McKesson Paragon and Meditech as your EHR competitors. How has that changed?
If anything, it is firming up. In the large tertiary care hospitals, the battle is probably over. Cerner and Epic largely own that space. It’s based upon the fact that those particular type of big facilities are building communities of care that do complex types of procedures. They offer robust products.
At the smaller end, in particular in the critical access hospitals, they can’t afford a lot. They have to look at total cost of ownership. Somebody could give them a program, but because of the total cost of ownership with training and these types of things, IT requirements, they need a pretty straightforward solution. We’re in between there. We have pretty robust product. We would have what I would call segment-appropriate features and we’re focused on trying to meet the needs of that segment. The battle lines are pretty much in place.
One issue that should be interesting to people in the industry is that we are currently in a lawsuit with Epic. Epic has an interoperability platform called Care Everywhere that is essentially sold with the full suite of Epic products. They’ve got a trademark on it. The trademark, of course, relates to an interoperability product. We have a product called YourCareEverywhere.com, which is an online health and wellness content site, which the Patent and Trademark Office was getting ready to issue a trademark on. Epic is taking us to federal court to block the PTO from issuing that trademark.
In our opinion, the trademark law doesn’t support that. In our investigation of it, we found some other interesting examples. For example, there’s a primary care physician group in Kentucky called Primary Care Everywhere and Epic is also going after them. There’s a company called Access Technology in Texas that has a product called Powering Care Everywhere that does billing for home health that they went after and Access filed for a declaratory judgment in Texas to keep them from doing that.
This is just another example of Epic’s bad behavior of using their market position to bully people around, or at least in my opinion. What they’re trying to do is to broaden their trademark in the courts as opposed to in the PTO, where they wouldn’t be able to do that. Given that your readership is largely people in the industry, they’re probably reasonably interested in Epic’s continuing bad behavior.
What was your reaction when McKesson announced that it was looking for a buyer for its enterprise business that includes Paragon?
I understand why McKesson did that. The RelayHealth business was a terrific business, and I think the deal they’ve done with Change is, for McKesson shareholders — from somebody who’s not an expert but is looking from the outside — a great deal. What they have left, though, is a collection of assets — it’s not really a company — of which Paragon is one. Paragon has about 198 facilities — not that thought about it very much [laughs] –and on the average, they’re smaller than our facilities. In a world where scale is important, that’s a sub-scaled business.
Probably the most interesting thing to happen lately was that Cerner, Meditech, and Medhost all exhibited at the Insight conference. McKesson, for obvious reasons, withdrew their support. The fact that that actually happened is indicative of where the Paragon product is going.
How are modest-sized health systems addressing population health management and consumerism?
We certainly hope they’re addressing consumerism by working with us, with co-branded sites, marketing services, condition management, and things like that. Population health is a term that means what individuals think it means. There are two aspects of it. One is managing the population. There are hospitals doing that in the analog way out there in our market today. They’re having things like diabetes clinics and clinics to help people with heart disease and COPD. They’re trying to help people and manage the population in the analog world. We’re trying to give them tools to help do that.
The other side of that is, I’m going to take the insurance risk on these. When you hear about population health products from our competitors or other participants in the industry, what they’re really talking about is, how do I analytically manage populations that I have insurance risk on? How can I identify high risk people? How can I reach out to them? How can I see if they make progress? In the middle market, that’s less of a need today than it may be in the future.
If I’m a big urban hospital, chances are at some point in time, I’m going to be part of an ACO, or because I’m big in things like hip replacements and I’m getting bundled payments, so there will be more need to be able to manage these types of bundled payments and things because they do more sophisticated systems. The needs for population health depends on what kind of facility you are operating.
Everybody agrees that managing a population requires data from outside the four walls, and lack of that data can be interpreted either as a reasonably evolving market state or an indication that someone is intentionally blocking data. Does data blocking exist?
I do in fact believe that there is data blocking. Some of it is not with bad intent. Some of it is a natural result of the tort law system we have in the United States. Nurse notes and physician notes could be pretty sensitive in the context of potential litigation. People have legitimate reasons for wanting to manage the information flow.
Having said that, ultimately people are going to have to recognize that this is the patient’s data. The patient is going to get care in a number of different venues. It’s probably not going to be a supportable decision to say, I’m going to block the patient’s access to their information in a convenient way that allows them to pick their venue of care. It may take one of these lawsuits that I’m not particularly fond of to establish that that’s a dangerous thing to do.
For instance, if someone comes into an emergency room and there is information available that is being blocked that would affect the care and something happens to that patient, arguably the person who blocked the information contributed to whatever bad happened. The regulations and the laws support the fact that that’s the patient’s information and this whole Balkanization of data is a bad thing. I don’t think it’s actually been driven home to some of the providers that there is exposure in that.
Can the argument be made that interoperability would create the same universally beneficial outcomes in healthcare as it did in banking?
Yes and no. People are sensitive to banking information, too. Interestingly enough, when I was at H&R Block, I had the first credit card that allowed you to download transactions. There were actually two, the Web card and the CompuServe card. In fact, I have a patent on that, which Block never enforced.
At the time we set that up, people said, "I don’t understand why anybody would want to download transactions. Just geeks would want to do that." The reality was that everybody that ordered through a catalog — nobody was ordering online back then — wanted to know when their stuff was shipped, so they watched their credit card bills. There were economic reasons that the average person wanted to be able to see that transaction.
There are going to be reasons that the average person is going to say, "I have to be able to get access to my medical records." The easiest one is, I go to a new primary care physician or I go to an urgent care center and the first thing I have to do is I have to fill out 20 pages of information about my health history. I should be able to have access to my medical records and my health history so that I don’t have to do that, because I will probably as an individual do not such a great job of that.
There are differences in healthcare, but once the consumer gets involved with managing their own care — which is starting to happen in a big way right now — they’re not going to tolerate this Balkanization of data in healthcare any more than they would have tolerated it in other places.
One of the most bizarre things that you see out there is that a patient may be getting care from the same entity in three or four different places. Let’s say I go to an inpatient facility, I go to a specialist, I go to my primary care physician. They may all work for the same company, but I may have three patient portals. Only in healthcare would you ever see something like that.