HIStalk Interviews Jennifer Lyle, CEO, Software Testing Solutions

Jennifer Lyle is co-founder and CEO of Software Testing Solutions of Tucson, AZ.

Tell me about yourself and about the company.

I’m co-founder and CEO of Software Testing Solutions. We’ve been around since 1999. We specialize in building technology-based quality assurance solutions to hospitals. We provide an automated testing solution — focused on laboratories and the blood banks to date –– to help them test, re-test, and maintain regulatory compliance throughout those systems in a way that’s much more efficient, much more effective, and with a lot more coverage than was possible manually.

The hospitals I’ve worked at all tried to use off-the-shelf scripting tools to write their own software testing scripts, but all of them abandoned the idea because of some application quirk or Citrix problem. Or, they realized we would never get enough benefit to have been worth the analyst time required. How is your product different?

That’s absolutely true. I think the latest studies show that across all the companies that try, it’s only like a 37% success rate. It’s very difficult to take the tool off the shelf and to take people who are not automation experts and have them develop robust, maintainable, and reusable scripts.

That’s where we are different. My background is as an automation engineer. The other co-founders of the company were a programmer and a med tech. We were able to take our expertise and our years and years of industry experience of how to use that tool and build something that really became an expert in the functionality of the system under test, so it was completely reusable and maintainable for the client.

The other problem with automated testing tools as they come off the shelf is that the average medical person is not an automation engineer. They can’t sit down and figure out exactly how to programmatically get the script to do what they want or set up the variables to do the variations of the testing that they want. 

Our solutions have a very straightforward front end that makes the system look a lot like a Cerner application or a Sunquest application under test. They fill in the blanks and use drop-down boxes to tell the system how and what they want to test. We keep the underpinnings up to date, so as the system under test goes through release after release by the vendor, we maintain it. The user never sees the underlying testing tool. This way, they can use it from the very first time and use it for years and years. We have folks that have been using it for over eight years in testing and validation.

I assume that software vendors use automation for their in-house QA testing. Do they offer similar tools to their customers so they can do their own validation?

Not that we’ve found. The vendors work very hard to do a very good job of testing their application that they’re developing with the data that they have.

As you know, every hospital sets up their catalog and their procedures totally differently than the next hospital. The flags they’re going to use, the warnings they want turned on, and where they want them turned on vary. It’s hard for those application developers to write a scripting tool that’s robust enough to make it productive for the client.

We prefer to not partner too tightly with any one vendor, especially in the world of the laboratory and the blood bank. The regulatory agencies prefer that if you’re getting assistance in your testing that it not be from the vendor who’s providing the solution. They believe that the more eyes that are looking at the system with a different perspective, the better the chances are that you’re going to find errors. If the people who programmed it are the people who are testing it, it’s testing with blinders on.

Your flagship offering is for the Sunquest LIS, but you’re now offering similar products for Allscripts / Eclipsys Sunrise and Epic, right?

Right. We’ve just started a division called Ratio. The focus of that division is on meeting the testing and validation needs of hospitals implementing CPOE systems. We’re going to be in the GE market, the Allscripts / Eclipsys Sunrise market, and Epic and Cerner as well.

It just seems such a like a perfect, natural flow to go from the laboratory and the blood bank now into the CPOE area. We’re having such a massive rollout of CPOE systems that it’s getting very difficult for the hospitals to exhaustively test all the permutations of patients and orders, where warnings should fire, where messages should appear, and where something should be allowed but something else shouldn’t. Automation would serve that industry very, very well right now. We’ve got the technology to do that.

It’s laborious for analysts to have to do all that testing and documentation. But to automate the process, do you need the cooperation of the application vendors?

We make them standalone. We don’t have any tight relationships with the vendors. Our clients are the end-user hospitals. They provide access to the systems to help us develop our testing scripts and to help us understand the sets of conditions that they want to test — what therapeutic duplications they want to test, what allergies, what drug-diagnosis interaction.

That lets us tailor it to how the hospitals want to use it, since again, it varies so much from hospital to hospital of what they need and what they want. We really want to serve the end-user community here. The vendors are doing the absolute best job possible with testing their solutions in-house, but once those systems are out in the field, you have the variety that comes with the unique configuration of every single institution.

Hospitals would ideally test often, every time they or their vendor make a change. Is your product more of a turnkey solution than a toolkit?

It is turnkey. When we provide that the solution to the client, we train them on how to use it. It’s very, very straightforward and simple for them to use.

Maybe you’ve put a new laboratory interface in and you want to make sure your Epic lab orders are crossing correctly over to your downstream and ancillary systems. With a few clicks of the mouse, our solution will extract all of your lab’s procedures out of your Epic database and, with a click of the button, it will place the orders for you. Once the lab has resulted those orders, another button will go in and look them all up and take the screen prints of those transactions coming back. You can do your results review checking at the same time. We provide a basic set of the patient-procedure pairings or patient-medication order pairings that you want to do.

What we’d love to do over time is continue to work with other industry-leading groups to identify the most common serious medication errors out there so we can build an even bigger sampling of prepackaged conditions.  We can quickly tailor those to a site, let them test it that way, and also give them the ability to add their own. Such as, if in my institution, I want to make sure that if a patient comes in with these demographics and these particular drugs are ordered, I want to see this type of warning.

We want to do both. We want to give you that prepackaged capability, right now, right off-the-shelf within an hour’s worth of training … have it be there and be productive for you and have it grow with you as your institution changes.

I would assume the primary return on investment is to free up analyst time, plus the chance to avoid a software-caused medical disaster that could lead to a lawsuit. What ROI parameters do customers consider before purchasing?

You’re definitely looking at the time and labor savings. You’re looking at a much more accurate testing protocol because it is being done by a computer, not by a human. It allows you to thoroughly do regression testing, which is going to get your releases in quicker as well. As you mentioned earlier, that’s a big problem with the vendors coming out with new releases. It takes the client quite a while to be able to implement those and a lot of that piece is in the testing.

The other area we’re seeing more concern about is providing proof of testing and being able to document. There’s a stronger push by the government getting more into Meaningful Use criteria and mandating certain testing. Our tool provides great comprehensive documentation in the form of reports and screen prints that these combinations have been tested and have been exercised. We can repeat this again at any point that the hospital desires: monthly, quarterly, annually, or when they take a new release. Whatever they feel is appropriate for their site.

Who’s your competition?

We’re very innovative in this particular role. In this particular area, I don’t know of anybody who has this style of an automated solution. There are consultants that you can hire to come in and manually exercise your system and check on it. The Leapfrog Group has their great CPOE tool that you can use and take to see how you’re doing on that performance, but that’s a pretty limited scope of combinations that you’re going to be testing. 

I think this is the leading edge. This is the next place where we can take a great step with technology to make CPOE implementations faster, to make them stronger, to get the benefit out of them, and the Meaningful Use that we’re trying to get out there, and show that the patient safety element is still out there as we implement.

As CPOE is implemented properly, it drives the quality of care and efficiency. When it’s flawed, it can lead to more issues. If we’re going to do it, let’s do it right and let’s make sure it’s functioning as we expect.

What are the challenges and rewards of being a small company offering a niche product that is targeted to customers of specific application vendors?

We’re focusing on the key players in the CPOE world. We’ve leveraged off of our installed base from the laboratory and blood bank side, where a lot of those site have Epic and Allscripts / Eclipsys in them. We’re also developing it with another client for GE and for Cerner.

I think when we have those fully out there, that’s a good representative piece of the market. We’ll continue to look forward and build more solutions for other vendors out there as the client need appears.

You’ve been in business for ten years. What skills and characteristics does it take to succeed?

It’s very customer-focused. We need to deliver value to our end user. We have to make a difference in their software quality. They need to be able to see a meaningful return of their investment in the form of time freed up from the analysts. They have to feel that they are catching things that would have gotten into production and caused patient harm, and we need to provide this at a very cost-effective price point.

So far, that’s what we’ve been able to deliver. In the entire history of our business, we’ve offered a full one-year, 100% money-back guarantee to all of our clients. We guarantee to people who have invested in our product that this is going to work for you. If it doesn’t, then we’re going to make sure you have your funds back to go find something that will work for you.

Putting that hospital’s needs first, respecting their business, and earning a seat there and providing value is what’s kept us in business and kept with us very, very loyal customers.

Have customers contacted  you and said, “Wow … this would have been a disaster if your system hadn’t caught this problem.”

Yes. We’ve had a number of those in the blood bank. We’ve had a number of those with implementing CPOE and the results for review crossing back where certain laboratory flags on tests results were not being carried correctly back into the results viewer in the HIS system, so the physicians were not seeing appropriate results. All of which could have caused a lot of harm if they had gotten through.

Where do you see the healthcare IT industry going in the next five to ten years?

I think it’s explosively growing. ARRA and our move toward CPOE is going to give us an unprecedented opportunity to get more technology out there and to drive quality care. It’s going to provide some challenges along the way. I think as long as we keep making sure we’re focusing on solving the little challenges that come up as we implement these great steps, these great strides, we’re going to see a huge benefit going forward.

We just have to make sure that, as we implement it, it really is working correctly. The tolerance for error in our industry is very, very small. But I think we’re going to see care at great new levels and great more efficiency. That’s what we’re really looking for – patient safety and a more efficient use of resources.

HIStalk Interviews Dewey Howell MD PhD, CEO, Design Clinicals

Dewey Howell MD, PhD is founder and CEO of Design Clinicals of Seattle, WA.

How’s business?

Business is good. We’re seeing more and more interest in med rec and what we’re doing, not only with medication reconciliation, but some of the stuff we’ve added to our platform around Core Measures and a number of modules that extend beyond that med rec fit into organizations’ Meaningful Use plans quite well. Like every vendor in the space, we’re definitely seeing an uptick in business because of all the Meaningful Use discussion.

I think most of the readers know what medication reconciliation means, but in case someone doesn’t, can you give a description?

Medication reconciliation is nothing new. It’s something that doctors, nurses, and pharmacists have been doing for decades. It’s just the process of gathering medications when a patient arrives at your organization, reviewing that list, and making sure it’s accurate. Then every time you write new orders or change a patient’s care, you review that list again and make sure that they aren’t pieces of that list that you need to re-address. Finally, when you send the patient back home, looking over their home medications before they arrived at the organization, making sure the patient knows exactly what you want them to do at home or how you want them to proceed with any instructions around the medications. Again, med school, nursing school, and pharmacy school 101.

When we talked three years ago, you said hospitals were just checking off Joint Commission’s medication reconciliation box but not really improving patient safety because of low compliance with paper-based processes. Is that still the case?

We are primarily still seeing folks doing this on paper. That’s because so many of the vendor systems still haven’t provided electronic solutions and work flow that is manageable in the context of the other systems.

I think the real problem is that we consider med rec a very broad piece that touches nurses, pharmacists, and doctors. In many hospital systems, those functions are very different applications. To really make it work, you need a process that touches all of those users. That’s hard to do in the silo design of a lot of those systems.

Do you think that doctors are adequately involved or it is it just being turfed off to nurses and pharmacists?

I think as a hospital moves to physician order entry, doctors are by necessity involved, because at that point when they’re writing their orders, it’s at those points that the medication reconciliation needs to happen. If the doctors are doing that electronically, it had better be included into their electronic workflow.

A lot of nurses and pharmacists are still carrying the brunt of reconciling. That’s because it has been perceived as an administrative task. Just document it on paper so we can have it on the medical record that we’ve touched these meds and looked at them, as opposed to having it as a real integral part of the clinician’s thought process at the time of ordering.

The rules change as of July 1, right?

Joint Commission surveyed med rec for a few years in 2006. Then in 2009, Joint Commission stopped scoring med rec because hospitals weren’t able to meet the strict language of the mandate. Hospital after hospital was getting cited on their survey, so Joint Commission took a couple years off. 

They just recently announced that coming July 1, they’ll be re-scoring it again. They’ve revised the goal. They put out that goal for public review several months ago. Now it’s been finalized and published for scoring on July 1.

Do you think the nature of medication reconciliation will change with interoperability and HIEs?

I think it will. Medication reconciliation has been put into Meaningful Use. It’s in that discretionary set or menu set for Phase 1, but it’s very clear that it’s going to continue to be an important part of the Meaningful Use standards in Phase 2 and 3.

You mentioned HIEs. I think in an HIE environment, it becomes really critical to have a tool that allows you to reconcile medications across multiple sources. HIEs are great for bringing a wide variety of data, including medications, together from hospital after hospital and a variety of clinics in a connected community. But to make that data usable still requires a human reconciliation process because there’s a limit to what can be reconciled electronically by computer logic.

Compared to either paper or functions that vendors would typically call medication reconciliation, what are the key functionality points of your application and why is it superior?

The first one starts out on intake. We’ve taken a great deal of care to make sure that the medication list that’s gathered by nursing, or if they use pharmacy or pharmacy techs on intake, that the list is as accurate as possible. One of the first challenges with med rec is getting as accurate a list as is possible. There’s a component that is never going to be solved by any solution because patients don’t know what they take.

Whenever possible, if the solution can help with things like common misspellings get translated automatically and ensuring that the doses and the routes and the frequencies are relevant to that med. The idea is that the path of least resistance is medication sentences and orders documented on the med history list that makes sense. You don’t end up with these really dirty lists that the doctors don’t know what to do with and that don’t make clinical sense.

The other two pieces that have become critical are allowing the doctor to review that list at the time of ordering — not as a separate process, but an integral part of the ordering process. Just by doing admission med orders, med rec has been satisfied, as opposed to doing your admission orders, then coming over to a piece of paper or another system or screen and doing med rec. It should be integrated right into the way the doctor orders. That’s how we’ve done since Day One. 

The other really superior piece is translating that intent to the doctor at the reconciliation steps into a very usable, patient-friendly, complete instruction sheet for the patient. It tells the patient in very clear language what to stop, what to continue, and what’s changed. It all gets translated. Even free text stuff that the doctor types gets translated. A lot of folks will say they translate in patient lay language, but there’s a lot of sort of techie challenges around doing that in a practical way. We’ve been doing it that way for four years, so it ends up being really quite complete.

We have support for something we call minimal use workflow. In the new mandate, they call it 24-hour areas or something along those lines. It allows you to designate certain areas of your hospital — whether that’s the ED or day surgery or endoscopy, these outpatient treatment center areas — where you don’t have to do the full-blown reconcile and address every single med, but rather in an abbreviated process that really makes a lot of clinical sense.

You got more live sites then when we talked last time. What are you learning from them?

We have good coverage now around the country. I think what we’re seeing is that, similar to what we saw early on but it’s just been repeated many times now, if you engage your doctors in a process of medication reconciliation that makes sense to them, the process goes a lot better if doctors, nurses, and pharmacists are all engaged, as opposed to saying “this is a nursing problem” or “this is a pharmacy problem”.

You tell the doctors, “We’re not taking something that was previously a clerical job and making them do it. What were doing is enhancing the normal work and thought process that you do anyway, while at the same time, satisfying the med rec mandate.” With that kind of explanation and understanding, I think docs engage.

CIOs are worried about CPOE because it’s hard to implement. What advice would you have for the CPOE designers?

Our application is a great way to start off in CPOE and to meet that CPOE portion of Meaningful Use, because 30% of patients have to have at least med order done electronically. Across all of our sites, the organizations that are using our product meet that level of performance just by doing med rec and admission transfer and discharge. It’s a very easy to meet that part of the mandate.

Really? They meet the new more stringent medication reconciliation criteria plus count as a a CPOE order each time you do it on a patient?

That’s exactly right.

That’s pretty cool.

Yeah, exactly. We have a few of our newer customers and some of our existing clients that are specifically using the use of our product as meeting those two parts of the mandate.

Go ahead, I didn’t mean to interrupt you.

Vendors have struggled with CPOE.  When they put together those systems, they were so focused on medications and medication ordering, and I think it’s a real chilly feel for a lot of CPOE system. There’s a couple of reasons. A lot of CPOE systems were historically started with experience that industry had from pharmacy ordering systems, and doctors aren’t pharmacists, as you know. Taking something from pharmaceuticals and what’s dispensable and what’s on the pharmacy shelf to an order that the doctor expects is a very difficult process.

I think the approach that many vendors have had is that CPOE systems basically spend six to nine months building that abstraction or taking the order from the pharmacy level to the physician level. You end of making a lot of decisions in a conference room with a small group of people. Maybe they’re not all clinically relevant decisions, so you end of doing a whole lot of reiteration and it can be a big mess, depending on the expertise on your team and how much resource you have to build those systems.

We did something very different. We started out with a product from First DataBank called Order View. This was brand new when we started the company. We built our application from scratch around it. It’s a product that was specifically designed for CPOE systems. Going from pharmacy-level data, that First DataBank had been very good at obviously, to physician-level orders. What’s brilliant about the product is you have the ability to present data to the doctors in the way they expect to see it, but at the same time, you can turn that into a pharmacy-fillable order without a lot of effort. It comes out of the box ready to do that.

With CPOE, most of the real patient benefit involves medications. You can’t make a patient better with diagnostic testing or lab tests along and you’re not going to harm a patient in most cases by doing those incorrectly. Without meds, there’s not much of a CPOE patient safety story.

Absolutely right. I think that’s why going with a product like ours — that is really so focused on medications and has spent four and half years getting medication ordering right — as your initial strategy into CPOE makes a lot of sense. It’s where the big bang for the buck is, for two reasons. One, as you mentioned, in patient safety. And two, for physician usability. 

With CPOE systems, it’s an order of magnitude easier to make entering a nursing order or a rad or or diet orders — making that entry process easy for doctors is an order magnitude simpler than making a pharmacy order easy and effective.

If you look down the road, where do you see the company and the medication reconciliation piece going?

I think organizations realize the importance of medication reconciliation. I think as we’ve grown and gotten more market share, people are relaxing that here’s a solution to med rec that works. They don’t have to change their corporate strategy. They don’t’ have to change their HIE or HIS strategy and still implement this third-party vendor. My hope is we’re going to see a lot more traction in helping with that medication ordering space.

We talked about the inpatient all in this interview so far, but we actually have a fair amount of use in outpatient areas as well. Beyond that market penetration for medication reconciliation, we have a couple of development partners that we’ve built this medication reconciliation out to full CPOE. It was a logical next step for us, because as we just talked, we got the medication ordering and that very central portion of CPOE done right and better than most vendors out there have been able to achieve. It made sense to layer in the additional clinical modules to have a complete system.

So you’re now able to operate as an integrated CPOE system?

That’s right. It’s a standalone CPOE system that stands outside of the HIS vendor, but it integrates with the HIE or HIS strategy, sharing data back and forth as needed for effective CPOE. It’s pretty tough to have a fully standalone island CPOE system because there are so many dependencies, but coming in the very first part of Quarter 1, we’re going have our CPOE system up and running.

What kind of customers would be prospects for it?

Since we just have a couple of development partners and are just building out the project, we haven’t done a market analysis. My guess is it’s going to be the small- to medium-sized hospitals, a couple hundred beds and less, that maybe have a system where their docs have tried to do some portions of the order entry and it hasn’t gone very well, so they’ve really struggled to get adoption and they’re not sure how they’re going to get the doctors to become Meaningful Users.

Most organizations are in the very low percentages of adoption. These small organizations, to have a CPOE system that actually promotes physician adoption while at the same time being easy to employ without requiring a big, extensive build and implementation process, is a pretty attractive thing.

Any final thoughts?

We didn’t talk much at the beginning about how the medication reconciliation mandate has changed. I think it is probably pretty important to note that the mandate is a bit different from the original one. It gives organizations a little bit more flexibility. The thing I like the most about the changes to the mandate is it’s less prescriptive. It says that we recognize that med rec isn’t the same everywhere — it’s not even the same within a given organization. This enables organizations to meet the mandate, following the sprit of the mandate as opposed to following the letter of the law without it accomplishing much. That’s what I like most about the changes to the mandate.

HIStalk Interviews Jennifer Bordenick, CEO, eHealth Initiative

Jennifer Covich Bordenick is CEO of eHealth Initiative and the eHealth Initiative Foundation of Washington, DC.

Tell me about yourself and eHealth Initiative.

I’ve been working in health care quality technology for about 18 years. I started out working at a hospital. I worked with health plans and did QA for a number of years along with technology organizations. I started at eHealth Initiative about eight years ago and was appointed as CEO last January.

We are a non-profit, non-partisan membership organization. Our mission is to drive improvement in health care through the use of health IT. We educate, research, and advocate for the use of health IT to improve quality of care.

We’ve got about 210 corporate members. Some of them are influential groups in HIT. We are multi-stakeholder, so we’ve got clinicians, labs, vendors, and hospitals. Everybody is on board. We’re not really beholden to anybody, which makes it nice. We’ve got a nice multi-stakeholder consensus when we are advocating for a position.

I should probably also mention we’ve got the Connecting Communities Coalition, which is a group of about 260 regional, state, and local initiatives that work on health information exchange.

eHealth Initiative had a big part in getting healthcare IT into the stimulus bill.  I noticed that not many more than half of your 2010 follow-up survey respondents said care delivery had improved as a result. Is this going to be like England’s NPfIT or will taxpayers and patients eventually see a return on investment for all these billions?

Gosh, I hope not. I mean, it’s incredible that the federal government made this significant investment. It would be to all of our benefit for this to work, so I certainly hope this works. I think a good number of things are going to come out of it. So what’s the question exactly?

For folks who aren’t seeing the quality improvement, how do we know we’ll see it at some point?

I think the one thing you can say is that we’re going to start measuring it. We haven’t measured it before. If there are improvements, we’re going to see if there are. If there aren’t improvements, we’ll see that there aren’t any improvements. One of the things you can’t do is you can’t improve if you can’t measure it. So I think that’s the first thing — that we’re going to start doing that.

In terms of the money hitting the system and when we’re going to see the improvements from the federal investment, I would imagine that’s going to be two years down the line because the money hasn’t come out yet. But I do think that the market has already started to move significantly and it’s significantly accelerated the adoption of technology.

People are talking about it. When I started doing this 15 years ago, it was not cool. Nobody new what health IT was or HIT. Now there’s a sense out there that is important, and not just that this needs to happen, but that it has to happen.

A couple of years ago we were really fighting and advocating and trying to prove to Congress and to the market why you should do this, why you should invest in this. Now we actually have the investment. So now it’s kind of, how do we do this to make sure that it works?

Most of the poster children for health IT have been organizations that already did it without having the government help pay for it, bigger organizations like Kaiser. Is there concern that maybe this doesn’t scale down to the vast majority of providers that aren’t as big or as savvy as a Kaiser?

I think that’s a valid concern. I mean, the folks that have been successful in the past are the names that we’ve all heard of. But it’s like any new field or industry. You always have those early adapters.

I think that we’ve seen just in our survey of Health Information Exchange over the last seven years … we’ve seen the numbers grow and grow. Especially in and industry that is growing and learning from itself. I think you’re going to see more names up there. There’s definitely more technology out there now and more successes stories then there were eight years ago.

A lot of the incentives encourage people to buy systems that are already out there that they had already passed on. Is there a concern that all of this came about before the whole concept of health care reform? We’re putting out a lot of automation just as we’re changing the goals as we realign care in a different direction around Accountable Care Organizations or whatever the next attempt to make it better will be.

Well, actually, if you look at the legislation and you look at what’s really happening, it’s complimentary, because you can’t move to Accountable Care Organizations unless you have an infrastructure that supports data and technology. I mean, you just can’t get there. You can’t coordinate care unless you can connect those organizations and identify those patients. You can’t do any of that without the electronic infrastructure. So you really need one to get to the other.

I think HITECH and the stimulus package create a foundation to build these changes on and the payment adjustments and the bundling and all that’s going to come about because of health care reform. If you look at the timing as well, the health IT changes should start to kick in before the ACOP. In theory, they should compliment each other.

A survey came out recently suggesting that hospital CIOs are less optimistic that they’ll be able to meet the Meaningful Use requirements. Are you worried that there may be enough skeptical providers out there that the incentives won’t be enough?

Yes, I am. I think the timing on this is quite aggressive. I think there are a number of folks that aren’t going to attempt this in 2011. I think there will be a number of folks that will just wait and hang on. I think we’re going to see a bigger number of folks for this in 2012 once the ground has cleared.

So yes, I don’t think anybody can look at this program and say it’s not aggressive. It’s incredibly aggressive. The timelines are aggressive. Everybody’s concerned about resources, money, and time.

You mentioned HIEs. It seems that there are still questions about if they’ve really found a business model that will work once the grant money runs out. What’s your thought on how HIEs fit into the picture?

My thought is that health information change initiatives have been around for a number of years. I mean, we’ve been tracking them for eight years. This program, the state-designated entity, just started this year. You’ve got 56 new state-designated entities that we’re just starting to track now. But even before they existed, there were groups out there doing this. I don’t think one is reliant on the other.

Your point as far as sustainable business model is incredibly valid. This has been the number one challenge every year when we survey folks — getting the model. The issue with health information exchange it’s a public utility and it helps everybody. So who pays? It’s a really difficult thing to figure out. What’s the right business model for that?

EMR vendors have been successful in basically having their products mandated, without any penalty or downside for them except having to pay for certification. Will they see any negative impact from the movement as opposed to all the positive impact they’ve seen so far?

It’s like any other product. People are going to buy it or they’re not going to buy it. If it’s certified or not, if the customer feels that it’s meeting their needs, if the physicians feel it’s the right product, they’re going to continue to buy it.

Despite the fact there’s a mandate, there’s a lot of competition out there and there’s a lot of vendors to choose from. Hopefully like anything else it will just move the way the market is supposed to move and people will compete.

The investment timeline is short. Does it inhibit competition and innovation by encouraging the purchase of systems that were build long before HITECH, possibly eating up provider budget money that could have been spent on more innovative systems that might not even be on the market yet?

I think there’s a fine line between standardization and innovation. We have to deal with it throughout this program…I will say there’s dozens and dozens of products that have been certified. So I think that there are a number of groups out there. There’s all the old favorites that we’ve all heard of but, there’s also a lot of new ones there. It might not create completely level playing field, but I do think there’s still opportunities for innovation.

What does it mean that we now have two big insurance companies that have bought HIE technology vendors?

I think they realized the need for an infrastructure for data and quality. They maybe positioning themselves for the ACOP piece, which is coming up. I think there’s a real recognition right now that people need to invest in data and quality. You can’t do a lot of the stuff without the data. I can’t comment too much on that because I don’t too much about the specifics. I just know probably what you know.

The issue about the data is who’s controlling it and with what kind of privacy and security. We know that some vendors have decided it’s OK for them to sell de-identified patient data without individual patient approval. We’re also trying to build a national framework around a set of individual state laws. 

I think what you’re getting at is the privacy and information sharing issues, which is of great concern to patients, providers, and everybody. Who owns the information? Who can you share it with? Who can look at my information? That’s a really valid issue and I think that’s important.

As far as whose technology creates the infrastructure … just because a road is built by a certain company, does that mean you’re not going to want to drive down that road? Probably not. We’re talking about HIEs, the infrastructure or the wires that are going to connect all these different pieces together. What’s going to be most important is the laws and regulations around privacy information sharing and not who owns it. Who created the technology, not whose application it is.

But when people start talking about technology, they’re all for it until they start talking about healthcare privacy, which brings out a lot of emotion. Will we ever figure how to ease the fears of patients about their medical data?

I think that we overcame it with banking. People exchange all kinds of information on the Internet right now, especially if you look at the younger generations. People put all kinds of stuff out there on Facebook and Twitter. I think there’s a different set of concerns growing up with each generation. I think that we are going to be able to adjust to privacy issues.

I think that the other thing is that people want mobility and convenience. Everybody wants the app on their iPhone that allows them to refill their prescription with the press of a button. People want that convenience, and I think at some point that’s going to override some of the other issues.

HITECH is mostly about making providers more efficient or more effective. Do we have a vision of population health, things like obesity, personal choices, chronic disease management, and lack of access to care that has nothing to do with making doctor encounters more efficient?

This is really the golden opportunity. This is the stuff that really excites me. Having the data to find a cure for cancer. It’s all about population health. And once we have the identified data where we can actually look at what works and what doesn’t work, I mean, it’s going to be incredibly valuable to all of us. I think everybody kind of understands that’s going to be good thing.

Part of the problem is that we really need to drive the agenda and the message and win the communication battle that’s going on here. We really need to be able to explain to patients and help patients understand health IT and how it’s a good investment and a smart investment. It’s going to make your care better. It’s going to help us find cures for diseases. This is a good thing. I think that’s the battle that everybody’s engaged in right now with a lot of this.

Do you think consumers are interested in that discussion?

I think that there are consumers that are interested. Like anything else, it’s the people that have the most interaction with the system. If you have a chronic care condition or if you have a lot of doctor’s appointments or you have children like I do, you’re always at the doctor’s office. You know there are convenience issues. There are real issues about your care. The more interaction that you have with the health care system, then the more screwed up you realize it is. I mean, let’s be honest.

So I think that, yes, we can explain this to people. I think it makes sense to people once they understand the issues. There’s always going to be privacy concerns. There are always going to be privacy advocates that say, “You shouldn’t do this.” There’s still people that say, “You shouldn’t do banking online” or “You shouldn’t use Amazon.com because somebody might get your credit card information.” There’s always going to be that element and that group that’s concerned about it. But we can’t let that … we have to deal with the issues and figure out what the policies are going to be surrounding that. Then we have to move forward.

You said something I agree with, that the value of HITECH is to get providers on the data grid so really useful things can be done with population data analysis, which is happening with Kaiser. Do you think the idea has been sold well that the HITECH benefits may be more societal than individual?

No, I don’t think it’s been sold well at all. I think that the message has not been clear. I think it hasn’t been loud. I think that we can all do a better job with that.

There aren’t enough examples out there for people to say, “Oh, I get it” or say, “I understand now — you need my information so you can figure out that this medicine works really well for people with my condition.” You know there’s not a lot. We don’t talk about that. 

That’s so important. There’s not a lot of people unless you interact with the health care system a lot who realize that, “Oh, OK, this is why my doctor’s EHR needs to talk to my specialist EHR — so I don’t have to lug my images across town to the radiologist. So they can get them and look at them and shoot back the results to me.” People either have to have a close interaction with the health care system or they have to have a more profound idea of why this is needed for the greater good. We haven’t done a good job of that.

I would think you are encouraged by what Kaiser has done, making it a cornerstone of their strategy and communicating in clear terms what they’re doing and why.

Yes, I think they’ve done some good pieces. I think United has done a couple of good commercials. There are definitely groups that are trying to do that. But more of us need to do that. It has to get down to the doctor’s level. The doctor has to understand why this important and be able to explain it the patient while they’re in their office.

What do we follow HITECH with?

What comes next? [laughs]. I think the data will reveal a lot. If we can figure out how we’re doing out there, that will lead us in the direction we need to go in. We’ll be able to see where we can improve, make care better, see where care is bad, see who’s doing it right and who’s doing it wrong. I think that’s really important.

I also think healthcare reform and the payment structure … that’s really the bottom line. If we can’t figure those out, we’re all going to be stuck in this hole for a long time. We’ve got to get to that point, and I don’t think we can without data. It’s going to be hard to argue why it’s needed unless we have clear-cut data. Payment reform is important and data is important.  

The one time that was tried with mammography, there was an uproar by patients who felt they were entitled to mammograms and providers whose income was threatened even though the information was scientifically valid. Can we ever separate politics from healthcare enough that all this data can be used to make objective decisions?

Gosh, we have to. People don’t want politicians in their bedrooms and they shouldn’t want them in their exam rooms, either. I think it’s really important that we find a way to keep politics out of it. HITECH was bipartisan. Republicans and Democrats agreed on this health IT stuff. For us to all of a sudden disagree on that – that would be really sad because I think both sides see the need for it. I hope we’ll be able to get through this.

HIStalk Interviews Beth Raucher MD, Chief Medical Officer, Lutheran HealthCare

Beth Raucher, MD is executive vice president and chief medical officer of Lutheran HealthCare, Brooklyn, NY.

Tell me about yourself and about the hospital.

I am a physician with training in internal medicine and infectious diseases. I’m the chief medical officer here. You can think of me as the doctor who represents both the medical staff, all the doctors in the hospital, and the administration. I have one foot in each door. I help the medical staff come to the hospital and move their way so they can do their patient care. I help the administration work with the doctors to meet their needs.

My role in the electronic health record was the lead physician on the project. I helped make some of the design decisions and work flow decisions, things that would work best for the hospital. I had previous experience doing that in another job before I came to Lutheran four and half years ago.

Yours is the largest hospital I’ve heard of that has implemented Medsphere’s OpenVista. You’re a teaching hospital, too. What parts of the system are you live on and how has it gone?

The part that we are on live now is order entry. All the providers — the doctors, the nurse practitioners, the PAs, the CRNAs, and anyone that’s allowed to write an order — put the order electronically into the system. The nurses pick up the order and the pharmacies pick up the orders through the system. Orders also go to the laboratory, radiology, dietary, and other ancillary services.

The other thing we’re doing now is that the nursing assistants are putting vital signs into the system. The doctors are seeing that in the system. That’s the patient’s temperature, pulse, blood pressure, and heart rate.

That’s a pretty impressive accomplishment going right up with full CPOE and closed loop to pharmacy. Most people struggle with those and save them until last. How did this project compare to the one you did previously at the other hospital and what did you learn from that?

What I learned there was that was a multi-hospital system. It was a little different because that project required us to get consensus in a couple of different hospital systems before we could go out there and train and implement it. But we used a lot of trainers and people who were on the floors super users and other people to help the doctors and the nurses at go-live.

We took that model that I had used successfully elsewhere and brought it here. We had a lot of super users, mostly from our own nursing staff. We had a few physicians.

In addition, we hired a bunch of super users from a training company who did the classroom training a couple months ahead of go-live. They were here at go-live and out on the floor, super users and the employees from the company, all wearing yellow vests. If you needed help, all you needed to do was look for someone wearing a yellow vest and you knew you had some help. They were there 24 hours a day, seven days a week for a full two weeks.

That’s an interesting approach. A lot of hospitals don’t understand that implementation is a hump that you need to get through, but then your labor needs go back down. Was using an outside company something you’d heard of elsewhere?

When we hired this company at my previous job, it was a relatively new company. I think that the chief medical information officer who I worked with at that implementation had done some implementations before using a lot of super users and possibly an outside company. I’m not sure. But he was very clear that you needed to have elbow-to-elbow support for the providers when we went live.

Between him and the leadership of the company, we figured out ratios of numbers of people we needed on each unit and super users. I was able to make a recommendation to do a similar type of thing here. It didn’t really matter to me what company, just that we had enough people. Go-live to me is the big show. You’re either going to make it or break it at go-live.

Did you replace other systems when you implemented OpenVista or was it purely paper to electronic at that point?

In the inpatient unit, it was paper to electronic. In the emergency room, we replaced their electronic system with this one.

What have you learned or what advice would you have for someone else trying to follow your footsteps in the CPOE journey?

You have to have great communication with your clinical staff. This was a long time in coming. From the time we signed the contract until we built everything and started training and implemented it, was about three years.

Medsphere was a young company. We were trying to figure out exactly what we needed to do when, so it took time. But you get the physicians on board in physician advisory committees. You get the nurses on board with nursing advisory committees. You keep them up to date.

This was probably a good time to do something like this because there’s no physician — unless they have their head in the sand — who would not know about electronic health records and Meaningful Use and the importance to the Obama Administration. In addition, a number of our bigger groups have already put these into their offices. It’s not like ten years ago when the physicians at Stanford said, “We’re not doing this.” That just wasn’t going to happen because timing is everything. This was the right time to do this. There’s no question about it.

We made it easier for the physicians. We gave the physicians three options for training. We didn’t put any pressure on them. We told them, “You decide what your skill level is and do what’s best for you.” We offered them Web-based training. We offered them classroom training with a proctor. We offered them true classroom training, where they went in sync with an instructor for four hours. They had their choice. 

All of them at the end of their training had to do a validation test. About a half hour or 45-minute test where they had to go through some exercises and show an instructor in the classroom — even if they had done the Web-based training in their office or at home — that they could do the basic things, like log on, find a patient, make some orders, and things like that.

But we knew that the hard stuff — like some of the harder orders, like complex orders like IVs with additives in them, or insulin sliding scales — that was going to come with practice. That was something that the super users and other folks on the floor were able to guide them through the first time they did those things.

When you choose OpenVista, what other systems did you consider? What led you to make the decision that you made?

I wasn’t here then. I had just come when the final decision was being made. But I know that they did go to other hospitals that had rolled out some of the bigger programs like Cerner, Epic, Eclipsys, and Mediware. I think they did do their due diligence in the two years before that with all those companies.

OpenVista was a funny story. The CIO apparently learned about VistA through some technology newsletter that he got and realized that you could download it free of charge. I think you could buy it for $17 or something like that because it was in the public domain. He downloaded it and realized we couldn’t do a thing with it [laughs]. It was too complicated. Then I guess Medsphere got out there and started to advertise. They met with them and decided to go with it.

Eclipsys and Epic all of those are probably, I don’t know, three or four more times expensive then what we’re paying for OpenVista because it is open source. What we’re really paying for is the support, the interfaces, and obviously the hardware we would have had to pay with any system. The training cost we would have paid no matter what system. It was something we could afford.

What parts of it do you plan to implement?

We’re going to implement all of it. We’re likely to go to medication bar coding next. Then, to full documentation, clindoc, with notes from the doctors and the nurses. The ED already is everything. They have clindoc and they have order entry. They replaced their system in full. Otherwise, it would have been taking a step back for them. That’s the likely scenario, but it’s not in stone yet.

Are there other key clinical systems that you use outside of OpenVista?

We went with their radiology system. Right now, we’re still using our interface to our laboratory system, which is Sunquest. We’re using their pharmacy system.

I think the reason we didn’t go with the laboratory system was because our system actually was more sophisticated and better then the one that the VA had. Theirs was sunsetting and they were going to be moving to one of the commercial laboratory systems anyway.

Do you have physicians who learned VistA at the VA and are happy to have a system that they already know how to use?

There were a couple of residents that rotated through the VAs as medical students when we announced that we were going to be using OpenVista. A couple of people had used or had read about it and heard that it was a great system. So that was very positive. There’s been a lot of national press about the VA’s system.

You mentioned Meaningful Use earlier. What are the hospital’s plans for it and how are you doing?

Just by going live the way we did, we basically have completed the option of CPOE. That’s one indicator we don’t have to worry about. On Day One, we were at 93% acceptance by the physicians. The other seven percent was only because there are physician extenders that enter their orders and it’s only measured by physicians. But in reality, 100% of our orders are being entered into the OpenVista system now.

The other parts of Meaningful Use – we’re looking into the software and we’re working with the company. Medshpere expects to be certified for Meaningful Use sometime in January, I believe. A lot of the validation for Meaningful Use for us will be in the clindoc part of the system. That’s where we’ll be able to get the data from to show Meaningful Use. We have some of it now, but we still have to go into that phase to be able to show the first stage of Meaningful Use. We’re hoping to do that before the end of 2011.

Many hospitals are concerned about their ambulatory strategy and exchanging information with employed or affiliated practices. What are you doing along those lines?

Our ambulatory practices were already up on another health record called eClinicalWorks. Our strategy now is to try to interface both systems so that we can share basic information like medications, allergies, previous visits, and those types of things. Which you know is very doable, and that’s working well. But they were way out ahead. They did a project with the City of New York and so they’re using that software very successfully.

What about interoperability? Are you working on projects involving health information exchange or any data sharing with outside facilities?

Yes, we’re working with a couple of other Brooklyn facilities on RHIOs and health information exchanges both. We’re working with a visiting nurse service and a number of the local community-based health programs. So yes, we’re actively involved in that.

Organizations will need data to prepare for Accountable Care Organizations and other reimbursement plans. What thoughts do you have about that?

You’re absolutely right. It’s going to be critical. We’re looking at everything that we build to make sure it’s discrete data and we’ll be able to get it out in a usable form. We have been doing chart review for some of the indicators that we have to do for CMS core measures for care of patients with heart attack, heart failure, and pneumonia. There are a bunch of indicators they look at to see what kind of care you’re giving and they publicly report those indicators.

Up to this point, it was chart review and we did that by hand. Now we’re trying to figure out how to use the electronic health record. As we build our screens, notes, and templates, we’re making sure we can get that information out in an electronic way and hopefully make life much easier for the data abstractors.

Any final thoughts?

So far, so good. I was very proud of our staff here. I really was. They just took it all in stride. We went live late on a Saturday. Those who came in on Sunday thought it was great. The masses came in on Monday and it was just a regular day. Challenging for everybody, but nobody stormed my office. It was great.

HIStalk Interviews Beth Pickard, President and CEO, Clairvia

Beth Pickard is president and CEO of Clairvia of Durham, NC.

Tell me about yourself and about Clairvia.

I’ve been in the staff management business for health care organizations my entire career, going on 25-plus years, implementing software solutions to improve the staffing and hospital organization. Clairvia is the second company that I’ve managed in staffing. We’re seeing staffing management being transformed into new staffing practices. This company is focused on the patient experience and the value that staffing brings to that patient experience.

Give me the elevator speech definition of Care Value Management.

Care Value Management is a transformational solution that bridges the gap by linking workforce management to the patient experience. It integrates the patient’s condition to the care levels that are required to move each patient through the hospital organization to the best possible outcomes.

In the old days, resource allocation or staff management meant a rigid model based on acuity or historical trends. How is real-time staff resource allocation different?

The biggest difference is that the data is real time now. Historically, it was retrospective or just looking at the next shift.

All of our solution sets are utilized by clinicians at the bedside. That’s a core strength of our technologies as well.

The third piece is that we never linked the value those resources brought to improving the patient’s movement through the organization. In other words, we always predicted or planned for the next shift, but what we hadn’t done is look at, “Are these staffing levels actually making the patient better quicker or moving them through the organization with a better experience?” It was more in terms of looking at what staff we needed versus were those staff members really impacting the patient’s care.

Success used to be measured by simply getting through the shift with the predicted low staffing number, regardless of the clinical result.

What’s really changed is the value-based proposition. We have to start looking at what improves quality and cost, and obviously staff resources. We have to start looking at what care models do improve quality or how they impact cost or the patient experience.

How is your system used in the management of a typical nurse shift? 

A patient comes into an organization. We immediately put them on a plan of care based off of their reimbursable working DRG. At all points in time of rounding and working with that patient, we know in our minds what that patient’s planned movement through the organization is.

It changes as their condition changes. At all times, the collaborative team is working towards whether or not that patient is moving to expected outcomes and moving to their expected discharge date in the system.

Think of it as managing to a flow and ensuring that the resources are available at all points in time so that that flow is complete or as it’s happening or occurring as planned. As charge nurses and caregivers are planning for those patient needs, they do interdisciplinary rounds. They’re managing to that expected progress as well as assigning caregivers who will actually provide the care for those expected events.

Are your prospective customers already doing that process of managing to an expected outcome and discharge date, or is that a concept you have to sell them on?

Absolutely. I would say that the technology enables the process. Typically we find that the planned discharge dates are managed in silos of organizations or departments within the hospital. The technology enables everyone to have more of a collaborative approach. That’s one of the transformational processes that occurs.

Almost everyone is looking for ways to ensure that the patient tracks or moves through the organization to the reimbursable plan for cost as well as having a good experience. I would say that it’s not something that we’ve had to sell. I think we are one of the few systems out there that as we’re tracking to the length of stay, we’ve linked the staffing component to that management. They are fully integrated and affect each other. You have to have the resources available and working to impact the length of stay management. 

We have both of those pieces. It is the key and the value of the system. You’ll find people that have one or the other, but there hasn’t been another technology that has linked the two together.

Hospitals are always transferring patients for many reasons, not all of which are clinical in nature, without really considering the skills and staffing levels on the receiving unit. Can your system help make the transfer process more efficient?

Absolutely. One of the first things it does is to get patients in the correct location. We’re very much linked into capacity management. As you’re looking for available beds, you’re also checking to be sure that — based on their progression of care and their planned care – patients are being placed in the right area.

That’s the number one most expensive error that organizations make: getting them from the ER to the correct care area. Then once they’re in that care area, we obviously have already assigned and have waiting the correct resources to provide that care. 

If you’re moving them from the ER to the ICU, we start looking at well how’s that patient been tracking through the ICU to ensure that they also move in a timely manner from the ICU, which is a high-resource cost, to routine care. But most importantly, that their outcomes are also good and their condition is also what we would consider ready to move to that next level of care.

A lot of hospitals have bought bed-tracking type applications. Do you see this as the level above those systems?

Patient flow is one piece. But with patient flow, you have to see whether the staffing is available to move that patient where they need to go. Is the unit staffed to transfer them from one area to the other? Without the complete staffing area, you’re missing a key piece.

But the second most important piece that I remind people about is that this is an outcomes system. That’s where our success is really driven. We’re tracking which patients are moving to the best outcome, because at the end of the day, it’s not always a good idea to move people faster through an organization. 

We talk more about optimizing. What’s most important is that at each point in time of their stay, they’re achieving the desired level of wellness or the desired outcome. I think that’s a key and critical component in a value-based organization or an accountable care organization.

You just landed a large customer in Sutter. What are their plans for your products?

The key to their implementation was to leverage existing clinical data. When people ask me why didn’t we do this 25 years ago like I wish we did, I say we really didn’t have the clinical data available to track whether or not the patients’ progression or health-wellness was improving. 

The key for Sutter was that it managed and evaluated the outcomes of each of their patients and ensured that the resources were available for safe, effective care. Very key to the implementation is the clinical integration and leveraging the rich clinical data that they’re getting through their Epic implementation.

What kind of success metrics do they have?

At each of point along the way, we’ll look at total resource cost, length of stay or patient cost by DRG, NDNQI outcomes, employee satisfaction, position satisfaction, and patient satisfaction outcomes. With all of our implementations, we benchmark those indicators and then track them post-implementation to assure that our clients really get the results that they technology should provide them.

States like California where Sutter is located is have mandated nurse staffing levels. Do you think those requirements do enough to ensure that patients have access to the care they need?

States like California have mandated staffing levels are because there’s never been a way to measure whether or not staffing levels really affected patient care. In California, what we’ll be able to do is see which staffing levels have the associated better outcome.

We’ll get past strict ratio staffing, which basically says that since we don’t know what staffing levels produce the best outcomes, we’re going to mandate them. We’ll collect data that will show which models of care or which ratios provide the best patient experience or best patient’s stay or quality by patient population.

You can imagine the data that we now have by patient population and staffing ratios is going to provide us the evidence for new models of care and staffing. That’s how we’re going to get better. We’re not going to get better with just looking at whether or not we’re using outside agency use or overtime costs.

Most hospitals have already done what I call the “squeezing” in their staff resources. We must look at are the staffing levels that actually making most patients get better. That’s where our technology solutions are going to help move organizations. California is a very good area for needing the technology.

Other than the technology readiness that enabled the real-time use of data, how do you think the political and the healthcare delivery climate is to come up with a potential way to introduce new models?

I think they’re going to have to. Very little is written about how hospitals are going to save dollars or show efficiencies.

With 60- 70% of their cost being staffing, they’re going to have to look at new ways of doing things to get better. Not only for efficiency of the care, but to retain and attract the best talent. Hospitals that are providing and managing their patients to good quality outcomes will attract the best talent — not only nurses and caregivers, but physicians.

Those are the hospitals that are going to be ready for what we know already to be an acute shortage of talent over the next several years. I see it as a way of retaining and tracking the best talent, as well as providing the good patient experience.

One solution companies came up with was the shift-bidding model to use your own experienced employees who wanted to work extra shifts. How are hospitals using your shift-bidding application?

It’s absolutely popular. It’s used by 100% of our clients. Employee self-service eliminates the paper in the scheduling and staffing process because you close the loop between signing up and posting shifts. It absolutely has enabled our clients to move from a paper-intensive process to paperless. 

A second benefit is that it definitely improved employee satisfaction. Staff love it. Employees, especially new nurses, want to work for organizations that allows that communication and transparency in the scheduling and staffing process. Employee satisfaction and moving to a paperless process have been enabled through those types of technologies.

I’ve not seen a time where so many people at the top are saying that nurses should have a voice on determining how healthcare delivery should change. As a nurse, what do you think of that?

In my entire career, it’s the most exciting work that I’ve been involved with. We’re finally focused on what brings value to the patient’s care or the patient’s experience. We know patient care brings value, including both the medical and nursing or caregiver care. 

To finally be in a place where we have data available to affect and make those decisions to improve patient care is a good time. It has been extremely rewarding to work with the clients we’re implementing.

HIStalk Interviews John Glaser, CEO Health Services Business, Siemens Healthcare

John Glaser is CEO of the Health Services Business of Siemens Healthcare.

I’m not clear on your exact title and the scope of your job. Maybe you could explain that to me.

The exact title is CEO, Health Services Business of Siemens Healthcare. I’m responsible for, across the globe, the healthcare IT business. This is and Soarian, Invision, MedSeries4. Not only the products, but also the services that go with them … the hosting, managed services, implementation services. That is the pretty typical portfolio that I’m responsible for.

Almost never do provider CIOs become vendor CEOs. What motivated Siemens to pick you for the job and for you to take it?

Their motives were a couple. One is that having lived like I have for two decades on the customer side of it, I would bring an orientation to know what it’s like to go through CPOE implementations to what it’s like to sit in front of the board and request a capital budget. And that perspective would be helpful and useful in the course of the normal discussions one would have with a vendor.

I suspect that the other thing that was attractive to them was the demonstrated ability to lead and manage a complex organization, so there’s a high likelihood that I could actually get something done. Partners HealthCare isn’t the same as Siemens, but nonetheless, Partners HealthCare is a large, complex, highly matrixed organization.

I think the third is that I have a knowledge base of this industry, from CHIME circles or having spent time at ONC or to HIMSS or a variety of Institute of Medicine committees. There’s an understanding of the range of healthcare at the government level, but also because a number of these groups are part of our multi-stakeholders. How to plan things.

That’s probably a series of reasons – the customer orientation, the leadership ability, and the sheer knowledge that comes if you spend a lot of time in this industry.

The reason for me is that I spent 22 years at Partners, both 15 years at Partners itself and seven years at the Brigham and Women’s prior to that. I think we did some pretty good work and we have a lot to be proud of in that. But it can happen to anybody, if you get an itch, to try something different. That itch initially led me to spend some time with ONC and that itch continued.

When Siemens called and said, “Janet Dillione has moved on. Would you be interested in the CEO position?” I thought, well this would be … I’d learn a lot by sitting on this other side of the industry that I know and have been part of for quite some time.

It may sound corny in a way, but I believe deeply in the fact that the technology can improve care. I’m going to give every waking breath I have to that. I thought, I can have an impact – different, but a significant impact – by sitting on the vendor side of this. I have impacted Partners, but you can have a different impact. It was new, it was interesting, it had a wide streak of altruistic ability or potential there. That was the reason I decided to do that.

It’s a bold pick for them, not because you’re not qualified, but companies at that size that are conglomerates with international spans usually have someone they’ve groomed internally or they pick some interchangeable business leader that really doesn’t, in their minds, even need domain-specific knowledge. Is that an indication that Siemens is changing, or has it always been brave enough to say, “We don’t follow the mold and groom people by moving them from manufacturing nuclear weapons and sticking them in healthcare?”

I think it has learned, particularly under Peter Loscher, the new CEO – and I had an interview with him – that they believe you have to be careful in the idea of the interchangeable CEO. There really is deep domain knowledge that comes with it, and a series of relationships that can be very important. They are increasingly picking people that come from an industry who know that industry well and hence are likely to be much more effective at developing strategies and knowing what will work and what will not work.

Obviously you’re complemented by all kinds of people who know how do to the finance stuff that goes in the vendor community and the sales and marketing that goes with that. There’s a lot of corporate talent that can be applied. So I think they’re careful with the interchangeability idea. Sometimes that works, but sometimes it doesn’t.

I also think that they understood that here you’re putting someone who’s the CEO of a large business unit who you haven’t seen demonstrating their stuff for some period of time. They probably thought that on that, while I’m unproven in our situation or context, there is proof elsewhere. One of your earlier questions about having customer perspective and stuff like that, he brings that to the table.

I think it was a bold move on their part, a smart move on their part. It’s certainly not a typical move.

The most important question – is your office nicer than what you had at Partners?

[Laughs] It is truly bigger. I’d be comfortable living in a trailer for the rest of my life. You know, seriously, I don’t need that much. I’m a pretty simple guy in a lot of ways. It’s certainly bigger with a couch and whole bunch of tables and you could put a bowling alley in there if you wanted to. You have to plan on three minutes extra just to go from one end to the other. So it’s nice. It’s a nice place. That’s cool. That’s kind of neat. I don’t need all that space, but I’m certainly not going to start walling it off and living in something the size of a phone booth.

It seems like the hardest thing to get used to would be the incredible span of control that you now have. It was big at Partners, but it was somewhat localized and now it’s international. Has that been a struggle to understand, much less to change to how you want it run?

At Partners, I had 1,500 staff. At that point, you don’t know who most of the folks are. You don’t know all the things that are going on or that are being done. You can know that when your staff is 100, but you cannot know that when it’s 1,500.

One of the challenges of going from a staff of 100 to 1,500 is that your efficiency becomes more abstract and you’re more removed from the daily reality of stuff. So that I’ve gotten used to years ago and just realize that you’re very dependent on the folks who report to you and you trust them and they do good work and every now and then there’s an issue and you have to handle it.

When you come to Siemens, which has a staff of 4,800, it’s the same phenomenon. I don’t really know who all these people are or what they’re all doing or exactly what’s going on here or there. But you’ve got a team that is much closer to you to help you.

The thing that’s been a really steep learning curve is that this is a complex, large organization. It’s matrixed. I’ve been trying to figure out who does what. If you want to float an idea, how exactly does that work? Not only the formal way that it would work, but if you really want to vet an idea and build an alliance, who are you building an alliance with? That has been navigation in a complex organization both politically and formally how you get things done. It’s something you have to learn and I think it will take a while to learn.

Because it is global, you realize that the healthcare system in Japan is different and the healthcare system in Germany is different. These differences are real. It can be cultural differences in addition to the fact that Japan has 9,000 hospitals. Golly, that’s almost twice the number in the US. Average length of stay is almost three weeks. It’s just a different healthcare system, and hence you have to understand that and how systems work and that the role of the physician and the nurse can be different. In the US, things that the nurse does, in other countries, the doctor does that. Documentation is not the same as it is in the US. You have to understand that and appreciate all of those kinds of differences so that you can be effective.

The other is that there’s so much going on. There’s 1,000 customers and we’re in on the order of 20 different countries here. At any given moment, there’s some issue somewhere or something not working like you’d like it to work. You have to triage and knowing what to pay attention to and what not to. That takes a little bit of an experiential gain and refinement of antennae. The analogy that I use sometimes is that when you have your first kid and they cry, you’re all over it, but by the time you have your third, you can distinguish a cry that matters from one that doesn’t.

It’s been a steep learning curve in lots of different ways: complex organization, different countries, really learning about products and what they do and the services and where they’re strong and where they’re not so strong. I’ve been making a boatload of visits out to customer sites, who are they and what are they doing and what are the issues? It’s really neat if you want to be in a mode where you’re learning a lot all the time. Man, this is terrific.

It must be easier for you since you know a lot of the CIOs out there.

I think that’s true. When you’re sitting across from a CIO colleague, you know exactly what their life is like – the issues they face and the things that are hard for them. I get to meet with a lot of CEOs and a couple of times I met with board members. Shoot, I remember sitting across from the CEO of Partners and the CEO of the Brigham and Mass General and what they worry about and how they think.

Certainly a lot of the CIOs I know by name. You can be in these meetings and think, golly, I remember exactly what things were like. And it wasn’t that long ago that I had conversations about capital budgets and strategic direction and what should we do about Meaningful Use and personal health records, all that stuff. It is a very familiar territory.

When you entered discussions with Siemens about the job, was there an agenda on their part about wanting change, or was there an allowance that you’re going to want to make changes?

As you know, they went through some tough years when Soarian first came out. In the last couple of years, it’s been a nice recovery. I don’t think it’s complete, but a nice recovery. You see that KLAS score, you see that in sales, etc. It’s a nice recovery.

The basic directive is to continue the recovery. Let’s see what we can do here, let’s make it as good as it can possibly be.

Within that direction, I got a chance to look at the team, at the budget. Basically the FY11 budget was nailed down, but in a couple of areas we’ve got to add some investment if we really want to do this well. I was able to re-open the budget and insert some things along those lines.

The team had gone through a set of changes over the summer. Tom Miller, who was in the interim role, was orchestrating that. He and I talked all the time about who to put in what chair and what chairs to leave open for when I arrived. There was a real willingness to let me put an imprint on it, both people and roles, but also what is the agenda and what does the budget look like?

Soarian was a punchline for a number of years, but it’s suddenly the overnight success. With the recent KLAS recognition, it’s real. Obviously it was on that trajectory before you got there unless you’re a true miracle worker, but what’s changed and where does it go from here?

I’ve got to give Janet Dillione and Tom Miller a lot of credit for orchestrating that. To your point, coming in with a KLAS score of #3 overall – terrific, golly, that’s not where it was a couple of years ago. It was a lot of focus. There’s no substitute for saying, “We’ve got trouble with quality of software here. We’ve gotta focus.”

That’s not something you turn around in a week. That takes months and can take years. Plus you’ve got to put up with a customer base that’s saying, “Oh my God, I got trouble in River City here” and to help make sure that they don’t wind up in a bad place and stay the course, etc.

In the times I got into trouble with Partners, it was when systems were not behaving like they ought to. There is no substitute for just focusing and putting the best talent you’ve got on it. It’s like a form of guerilla warfare – day in and day out, week in and week out. You get enough small and medium-sized victories and you’ll get through it. In the meantime, you provide air cover for the team, trying to keep the distractions or whatever away. There was a lot of focus getting into that, focus on product, focus on service. It sounds simple, but man, that’s not an easy journey to go through.

So I think that’s a credit to the folks who were there and to Janet and Tom who preceded me. Where to from here? We’re entering a decade of healthcare which will be one of the most profound we’ve seen in 40 years. You’d probably have to go back to the Medicare and Medicaid act to see something as substantive as this. Healthcare is a payment system. When you change that, you change the industry in a very big way.

The Affordable Care Act and the financial changes and the private sector response moving to bundles and episodes and prove your quality and we’re going to pay you in a holistic sense, which is managing a diabetic over the course of a year or managing a total hip surgery through the rehab phase as a single payment, and by the way, prove quality to get your money.

That will be a big change. The level of financial risk will be a lot higher. There will be lots of experiments and Congress will futz with it, but hardly likely to materially change it in the near term. It was not lost on the Republicans that we’ve got a problem here in healthcare cost and quality. So that will be a hell of a time. It will be a hell of a time for providers – doctors, hospitals, health systems – but it will also be for those of us who serve them through products and services.

To be specific about it, if you look at the stuff we have, we’ve gotta have a stronger ambulatory-based story offering. We’ll continue to work with NextGen, but you’ve gotta have that integrated suite. I think Epic and Cerner have shown the value of that in the market.

We have to have much stronger analytics than we currently have, because you’re going to want to know if a diminished quality score’s going to cost you a lot of money or it’s not. We have to have better interoperability offerings that go with this. We’re going to grow the services base that we have because people put out a lot of money on this stuff and they go through this tough exercise of getting it in and now the stakes are higher and they want to make sure that they get yield. I think we’ve got some strong stuff.

I think the Soarian inpatient clinicals are strong, revenue cycle is strong, but you’ve got to round out ambulatory, round out analytics, round out the interoperability and the services base.

I can see partnering or acquiring on the analytics side, but there’s only so many ways to skin the ambulatory cat. What can you do there?

We’re looking at that now. We’ve got a couple of ideas on the table. Obviously we’ve got a relationship with NextGen, so we’re engaging them in the conversation about how they might help with that.

In a way, what an EHR does is pretty well understood. You have to write prescriptions and record a problem list and things like that. That doesn’t diminish the challenge, but in some ways there’s not a lot of mystery here. These things have been around for several decades.

I’m going to fast-forward five years from now, in which there’s a big shift in payment and you’re responsible for cohorts, for population management. You’re going to get paid by bundles and episodes. What exactly does that do to the ambulatory record? How different is it? That’s the analysis that’s underway – how different is that?

In a way, you can bring in consultants and smart people to help you take you through it, but if you look around the country, there are risk arrangements in place now. There are people doing population management now. You can learn a lot from them. So we’re plotting out the specifics of that. I think we need to get a little crisper, frankly, in our own assessment.

You mentioned Epic and Cerner. In all but the smallest hospitals, that’s where all the action is, with maybe Allscripts becoming a player, although two of those three weren’t very strong on the ambulatory side and had to become that. Can you gear up in time as people make their decisions now?

I think that’s fair. I think obviously the faster we get this done, the better, but we’re not going to have it done by the end of this calendar year, that’s for sure.

There’s a normal replacement pattern that goes on in this industry. At any given time, there’s enough people who have said, for whatever reason — my incumbent vendor, I’ve had it. There’s a normal churn you can arrive at. I don’t believe that you get to the year 2015 that nobody buys any more for a period of time. Even through the Meaningful Use ebb and flow, there’s a normal churn that goes on.

An unknown at this point is whether there is a second wave coming. There’s a first wave that was Meaningful Use induced. People scrambled to round out their portfolio to get their payment. There’s a second wave probable. The second wave has two things that will drive it. One is a whole bunch of people got to Meaningful Use by cobbling things together. By hook or by crook, they assembled this piece and that piece and they jury-rigged this and jury-rigged that and by golly, they’re going to get it done in 2011 and 2012 to get their payment. But they know that this is not a long-term answer. They’re here for the couple of years until they get to Meaningful Use payment, then you go into this couple of year window before the penalties start kicking in and they may say let’s do it for real at that point.

That will be one phenomenon, because not everybody did a wholesale replacement. I may not have the capital, I’ve got other commitments, so I’m just going to cross the finish line in whatever fashion, but not a long-term fashion by any stretch.

The second is the read, and it’s hard to know, whether the payment reform stuff will cause hospitals to say, hey listen, we made a commitment a couple of years ago, but boy, given what is coming down the pike here, this just isn’t keeping up with what we’ve gotta do. Is it an EHR or ambulatory? Sure, but it’s different enough that we need a different set of capabilities to complement the normal core set.

I think we’ll see both play on top of the normal churn that goes on. Obviously I’d rather have it sooner than later, but I don’t believe that if you’re not there at a particular point in time there won’t be a shot.

You mentioned Soarian, which is clearly the new star. What happens with Invision and MedSeries4? Will those customers be encouraged to move to Soarian, which doesn’t seem like a good fit?

We’ve got some work to do on Soarian before you could legitimately turn to an Invision or MS4 customer and say, listen, the things that you like about MS4 and Invision, not just the feature function, but the cost of it, that we can get you that in Soarian, too. So we have some work to do to fill out some Soarian gaps. There’s still development engine that has to go on for a couple of years.

We’re increasingly hosting it and using the cloud techniques of virtualization so you can drop the cost of hosting it down to what it would cost you to today to host MS4. In addition, there’s been some really nice progress on getting the time required to do an implementation down and the variability of implementation down such that the conversion process is relatively inexpensive and relatively quick. We still have some work to do there.

We won’t move anybody unless they want to until we’re in a good position to say, you’ll not only be equivalent, you’ll be better off, and they’ll have the same price points and the same brief, straightforward implementation that they’ve seen before. The timetable is slightly fuzzy around the edges, but some people are moving now. I think it will be a couple of years before we’re in a great position to really tell the rest of the base that it’s in your interest to move rather than stay where you are.

You’re making a lot of changes and you had to start there almost immediately by overseeing layoffs. How is employee morale?

I think it’s pretty good. Obviously as you know and you cover, we’re moving 475 jobs offshore. It seems high, but we’re adding about 600-700 positions in other areas. It’s a combination of working with the folks who are affected over a two-year period of time and saying, hey, we’ve got this role over here and happy to fit you in there and retrain you if you’d like to do that and make sure that we do all that we can so that you land well. The other part of it is making sure that we reduce as much as we possibly can the people who wind up out of a job.

We have to make sure people understand what’s going to happen in the provider community. The financial pressures will become significant. I mean scary significant. They will be turning to us and saying, “You’ve got to reduce your costs.” Then it won’t be the normal arm-wrestling with a vendor that goes on – that will be real. What we cannot do is be in a position where they cannot afford us. If that is the case, we will have failed them. And what we cannot do is fail those who, day in and day out, deliver care. That is just not why we’re here.

Whether it is hosting costs will be reduced or implementation costs being reduced or support costs being reduced, we have got to reduce the cost, because they are in a position where they will need that if we are to serve them and serve them well. I remind them, not that they need much reminding, that at the end of the day, there are real physicians and real nurses taking care of real people who are just like us and the people that we love and our job is to serve them. That’s fundamentally why we’re here and we’ll fail to serve them if we become increasingly out of cost reach.

That obviously, to your point, had a morale plunge. I think overall morale is pretty darned good, because what people see, as in earlier this week, Number 3, that’s pretty darned good given where we were. Man, we’re getting’ our mojo back. We have some work to do, but golly, all that hard work over the last couple of years, that’s starting to pay off. And then they hear from customers who are live with CPOE and are pleased with that.

I think the net of it is the feeling that after a struggle, they’re back and they’re where they want to be, mindful of all the work still to be done. By and large, it’s pretty high. The morale is pretty darned good, mindful of all the challenges we face and some of the tough choices we will continue to have to make.

If companies have a personality, and I tend to think they do based on their corporate culture, Siemens always to me seemed really rigid and conservative and quite cold. It just never seemed like it was a very fun, creative, and hip kind of company based on the Web site and the marketing materials. Do you think that’s accurate and do you think that needs to or will change?

I don’t know that it’s accurate. It’s an engineering company at its core. It’s a 76 billion euro company, 420,000 people and all the stuff they do. They do fast trains, they do windmills, they do water purification plants, they do MRIs. They’re an engineering company.

One of the things that comes with an engineering company is a drier appearance. They’re not inherently marketeers. They believe if you engineer a perfect product, people will realize the spec and they’ll buy it. Sometimes I think the coldness is really engineers. They’re not cold, they just don’t understand the need for sizzle and pizazz and that kind of activity.

There’s a need to change that. They understand that it’s not inherent in their DNA that they know how to be more flashy. I don’t know that it’s cold, it’s just engineering-like, for lack of a better word.

I think we have to, and part of the things I got more money for, be more effective and out there in marketing and methods and stuff like that. It matters. People won’t inherently buy from the spec sheet. They’ll need certain messages and understanding and a sense, particularly, of the human-ness that comes with healthcare, and that we’re part of that. That we’re trying to change. It won’t always be easy because at their core, they’re engineers.

Do they get your sense of humor?

[Laughs]. Frankly, the real reason for leaving Partners is that I’d used up all my jokes. I had to find a brand new audience. They were going, “Uh no, not again, not that one, I’ve heard that 26 times.” You can’t help be in certain meetings and not come out with this, that, or another, so I think they appreciate it. At times, I have to use my judgment about which ones to use internally versus which ones I can use in a public setting. So far, they’ve shown me they’ve got a sense of humor and they’re quality individuals.

Your stint with ONC probably changed your perspective. We’ve talked about this before. How do you feel about the time you spent there in advising the government and what’s your feeling about how it all turned out?

I thought that was one of the most extraordinary years that I’ve ever had. There you are, in the middle of them, where you’ve got legislative language that says, we need this definition of Meaningful Use and we need it fundamentally by Labor Day of last year, and you realize that Blumenthal didn’t show up until the last week of April. You’ve got three months to get this thing because then it’s got to go into the rule-making process and all that other stuff.

Listening to all these ideas, and they came from all over kingdom come, from small physician practices, public health people, patient advocates, Web 2.0. There were a lot of ideas, but we can’t crush the clinical community, either. We’ve got to narrow this thing down and that’s your job, to come up with a definition of Meaningful Use that’s a good balance that pushes the envelope, but that’s also in reach.

That’s just a really interesting, cool conversation to be in the middle of that and realize it’s not only complicated and hard to figure out, but whatever you do figure out has a phenomenal impact on the industry. You better be darned careful and thoughtful about it. It was just really neat to be in the middle of a very formative time, Meaningful Use and Regional Extension Center grants, all that kind of stuff.

As I mentioned in one of the things I sent you, I came out of there with an extraordinary respect for the government. Whether it’s Blumenthal or all the people who work at ONC, but also the folks that work for CMS and the Office of Management and Budget – they were smart people who worked their butts off and wanted to get this right and very receptive to feedback from people who were out in the community. This was a terrific set of characters and human beings and professionals.

I think what they did in an amazingly short period of time is extraordinary. There are clearly things you might have done a little bit differently, but jeez, when you look at how well the Meaningful Use definition was done and the various grants they had to get out the door and the standards they did … give a lot of credit to the Policy and Standards Committees and all the time spent there … that was just really remarkable. I think it was remarkable for me. It was an extraordinary piece of work done by all those folks in an amazingly short period of time.

One of the things you come out of that with was an appreciation of the challenge of how diverse this country is. There were conversations about Meaningful Use where it was said that this has to work at Mass General, big old academic medical center, but also it also has to work at Seward Community Hospital in Alaska. Three beds, average occupancy 0.8. I though, 0.8? You’ve gotta be kidding me. If you were at Partners and said 0.8 occupancy, people would say you’re off by two orders of magnitude. But it has to work there to make all that happen.

I also have an appreciation for policy. What we did in these meetings at Siemens is think about how far down in bed size can you move. You say, if we did this, if we did that, we could get to 50. Actually, because of the way healthcare works in this country, you’ve gotta get even further south than that, because from a policy perspective, what you can’t do is strand the 20-bed community hospital. You can’t strand the solo practitioner, because that is so much of the care in this country. It’s interesting to me that the policy angle factors into business decisions because business decisions, if they are done well, also help support a broader national policy.

If we look back in two years and we’re doing your report card of how you’ve done at Siemens, how will we know you did a good job?

I’ve been asked a couple of times by people at Siemens the same question. I say, I’ll know we’ve done a good job if those who are our customers say to us, “Our care is better. It’s safer, higher quality, more efficient. We run a more effective operation and we do all the things we wanted to do as a provider and our strategy and our goals and our plan, because of the work we did with you, because of the products you have and the services.” If they say that, and uniformly or 90-odd percent, then we will have done well.

Obviously there’s numbers that you’ve gotta meet and this that and the other, and I’m not naïve about the need to do that, but that won’t be the success metric. Whether we’re 3, 2, or 1 on a KLAS score here, there, or in between – those would be great, but that will be the real – that you walk into one of these places and the CEO shakes your hand and says, “Working with you guys has been terrific, in fact it’s been essential for doing all the things we’ve done.” Then we’ll know that we’ve done a good job and I’ve done a good job and we can be pretty darned pleased with all the time, effort, money, and anxiety that we’ve put into this.

Any final thoughts?

You’ve got good questions, as you always do. I’m having a great time. I think we’ll do some good. I think we have done some good.

I came out of 22 years at Partners believing deeply in the mission of what they do. That is so part of my fiber that it’s kind of scary … sounds a little nauseating, frankly, at times, almost too much of a Boy Scout. But I believe it.

What I think we’re going to be able to do is we’re going to help those places do that. I honestly feel really good about that, that whenever I punch out of my time on this planet, if I can say that we helped a whole bunch of people do good things and care better … not a bad run. I’ll be OK with that.

HIStalk Interviews John Loyack, Thomson Reuters

John Loyack is director of product management for the healthcare division of Thomson Reuters.

Tell me about Thomson Reuters Healthcare and what you do there.

Thomson Reuters Healthcare is the healthcare and science business of Thomson Reuters. Within that business, we have a variety of business units. The three on the healthcare side are our payer business, management decision support, and clinical decision support.

The clinical decision support business is what you might be most familiar with. It’s a number of different offerings that you loop through to a number of acquisitions through the years, but the Micromedex business is probably the largest portion. Another important element of that business was MercuryMD, which was acquired in 2006 and now referred to as Clinical Xpert Navigator.

I’m the director of product management. I oversee the Clinical Xpert Navigator suite of products.

You mentioned the MercuryMD acquisition. What motivated the company to make that acquisition and what’s been done with the products since then?

I think the motivation there was to embed the evidence that Micromedex had available even further into a clinician’s workflow. Pharmacists, nurses, and physicians were very familiar with using Micromedex products. It is a very well-known brand and has been available for years, but it was one of the things that were obviously separate from clinical workflow.

I think the acquisition of MercuryMD provided a pretty strong answer for that, or at least answers the question of how we further embed the clinical evidence that we know clinical staff are using into their workflow. It’s one of our most recent releases. Pharmacy Xpert is our first introduction on what we refer to internally as our Intelligent Evidence suite of offerings. It’s all based on the Clinical Xpert Navigator platform.

There weren’t many CPOE users in 2006 when the acquisition went through. Now that clinicians are interacting directly with systems, it must be easier to present that decision support and clinical evidence.

It’s true, but providing real-time access and patient data for a variety of clinical staff is just an amazingly important driver for this. It’s something that we hear from users even today — that being able to give their clinical staff access to the right information at the right time remains a critical, critical element that helps them avoid drug events and helps them improve performance in a number of different ways.

I remember MercuryMD being the highest-ranked product in KLAS for years, going back nine or10 years ago. How would you characterize the competitive landscape in which it plays and why the scores have always been so high for what is now the Clinical Xpert product?

Mobile patient data systems were MercuryMD’s sweet spot. Providing a variety of clinicians with access to mobile patient data, making it very intuitive and easy to use, and also, very importantly, something that was a predictable and replicable implementation process — something that we could do over and over again regardless of what type of infrastructure the hospital had.

Even though we see lots of standardization today, one of the reasons we’ve been able to maintain this position is the fact that every hospital we deal with has a very different infrastructure. They’re using different vendors. Even within the hospital’s walls, they may be using one vendor for the ADT system and using a different vendor for the pharmacy. Or maybe there’s been an acquisition and Hospital A has acquired Hospital B and one’s using Meditech and one’s using Siemens.

Being able to provide a bridge over top of that, which also addresses one of the major pain points of physicians, is something that MercuryMD and our Clinical Xpert specialize in. That offering alone and our ability to do that constantly over and over again, and being able to go in and say that we can implement the solution in 8-10 weeks and actually delivering on that, is what led to those KLAS results. That hasn’t changed for us, so even now we see hospitals coming to us to say that they’ve decided to move or standardize with this HIS vendor or that one, and we’re very happy to continue to work with them.

I like to think that we have a pretty good relationship with the HIS vendors. We’re providing something that, from the competitive perspective, not all of them offer. Its technology has increased in a number of different ways, whether we’re talking about the speeds of networks or the computing power of devices, but it is something that I think we, along with just a handful of other vendors, are able to offer today. We’ve been able to maintain that position with KLAS by coming through time and time again in terms of the implementation process.

If I remember right, in the old days, the product ran on synched Palms. I would imagine that the iPhone and the iPad have made mobile application strategy completely different than what it was then. How do you think that’s going to play out as far as how your development efforts will be focused with those new tools for clinicians to use?

You’re taking me for a stroll down memory lane. Our first offering did not have a desktop element at all. In 2000, when we first came out with the MData Enterprise System — which was the MercuryMD product offering — that was something that ran on the Palm OS only. It wasn’t until 2002 that we introduced what at the time it was Pocket PC, but then Windows Mobile.

In 2006, we moved over to BlackBerry.  We’ve got a number of sites that are very happily standardizing on the Research In Motion infrastructure and devices today, but we’re also happy to recently announce that we’ve moved on to iPhone as well. Android is clearly part of our roadmap. It’s something that we are working on now and we’ll keep everyone up to speed on our progress with that.

I think by moving in that direction and by keeping up with what the market is asking for, that’s one of the things that allow us to maintain the position that we’re in and continue to show continued value by keeping up with all this. It’s not easy. You could imagine just on those different operating systems that I just mentioned. I haven’t even given any consideration to all the tablets that have been introduced, or the different web browsers that might be used, but those are the other things that we keep up on as well.

Speaking of the iOS in general, we’re very pleased to put our solution over there. I think the results are going to show for themselves. Our clients are thrilled that we’re able to introduce something that runs on the iPhone, the iPod Touch, as well as the iPad. It’s not just one device that we’re moving to. We’re actually able to, as we move from one operating system to the next, keep up with a number of different devices.

When you look at both the increase in demand because of the iPhone, iPad and iPod Touch applications, and also what people are trying to do with Meaningful Use to be prepared, how do you see those playing together and affecting your business?

I think we’re seeing a very positive affect. Thomson Reuters just issued a statement recently on how we support Meaningful Use in general.

This actually might be a good segue into one of the other things that we’ve done with the legacy MercuryMD product line, but the Clinical Xpert Navigator product suite as well.  We’ve taken a look at a number of the specific Meaningful Use objectives and we’re moving down a path to certify a number of our offerings. I think the most important from my perspective is the CareFocus offering, which is a part of the Clinical Xpert Navigator suite.

Our plan is to certify to support core objectives to implement the clinical decision support rules related to a high-priority hospital condition, as well as giving hospitals the ability to track compliance with that rule. It is something that I think from a mobile perspective, the core offering is still one that’s resonating within the market, but we’ve also moved significantly beyond that by introducing our CareFocus offering.

These two offerings, Clinical Xpert Navigator and CareFocus, are providing us with a foundation for the future of the Thomson Reuters clinical decision support business by giving us our foundation that will allow us to introduce what we’re referring to as our Intelligent Evidence product line as well.

I noticed that in hospital reports about use of the CareFocus system, which I would characterize as a patient surveillance system, some of your users have claimed that they had reduced patient mortality by identifying high-risk patients and then suggesting or offering interventions to clinicians in real time. How important is the real-time aspect of that, and have traditional clinical systems vendors developed something similar?

I certainly hope I don’t come across as dramatic, but it is a question of life and death. When you’re giving someone access to important, constantly-changing information about a patient, giving them access to something that is as close to real time as you possibly can is critical. That’s the kind of thing that our sites, our clients, have seen that has led to the success stories that they’re seeing.

In the past, perhaps you had a critical care response team or a critical assessment team that was ultimately looking at a patient and going through information manually and trying to judge it. A lot of times, we were hearing from some of our clients that it was coming down to a judgment call. Folks were going in, and based on their experience, making a judgment on a patient. Certainly, it’s not something that allows you to predict 100% of the time the true situation with the patient, but if you’re doing that in combination with real-time access to patients, I think that’s a really powerful combination.

By giving users the ability to essentially pull the needles out of a haystack, they can say, “I’m a part of a critical assessment team and these are the five that I need to be aware of right now. These are the five that may potentially crash. One of them recently saw a temperature spike, so I need to go give them the attention they need.”

I think the other element that’s important here is not only is it the surveillance, not only is it the real-time element, but we’re giving them something that’s accessible on a mobile device. We’re giving them something that they can access on their BlackBerry and on their iPhone, so now they’re able to go to the point of care and review those results, or they’re checking out for the day and there was something about that one patient that I wasn’t quite sure about. Now a lab result just called in and I can call back to my partner and ask them to take a look at that patient because something’s just changed and I want to make them aware of it. Without a mobile aspect, without a real-time element there, you wouldn’t be able to react in the time that really is required.

I mentioned the announcement of Pharmacy Xpert, the clinical intelligence dashboard for pharmacists. I know you have some folks that are already using it. Tell me how they’re using it and what the results have been.

I don’t think we’re quite at the point where we’re seeing the results pour in, but we do have a number of sites that are using it.  Shall I give you a description of the product overall?

Sure.

The elements that we’ve been talking about so far — Clinical Xpert Navigator and that platform — that ability to integrate into the hospital’s information system and pull data for disparate systems, that’s the core platform combined with the real-time surveillance solution provided by CareFocus. Those two elements, those two components provide the platform for that.

Built on top of that for the very first time, we have integrated Micromedex content, so things like the DrugDex database, DiseaseDex, Drug, and IV Index. We have some profiles that have been built as a part of CareFocus by our editorial staff — our Knowledge Development Team in our Denver office – who have created pharmacy-specific profiles that are an important element of that as well.

Then we introduced a number of pharmacy applications on top of that where the design actually supports pharmacy decision support. It links into the hospital information system. It provides access to the Micromedex content that pharmacists are used to using. To take things a step further, we’ve introduced a number of calculators that are a part of that. Features and benefits that improve the overall pharmacy workflow and provide the total solution combining all those things together.

It sounds like the focus is going to be real-time information and then either mobile access or push-type information. Where do you take the product line from here?

We have a Patient Xpert offering that is something that’s essentially providing access to patient education from any HIS we’re working with. Offerings like our CareNotes offering — that’s another part of the Micromedex suite. We have a pediatric offering that’s under development.

We have a number of things going on in 2011 that will take advantage of that single, consolidation platform that is complimentary to all the EMR/EHR platforms, but something that addresses a variety of different clinical decision support needs. We can do that through a combination of workflow solutions, mobile solutions, and real-time surveillance combined with the evidence that Micromedex has been well known for.

The mHealth market is pretty big, but if you look at just the part of it that affects physicians practicing in hospitals in the United States, what’s your big-picture view of where you see that whole segment going?

I can promise you it is going to be a lot more mobile. We’re reaching a point where some of the research estimates I’ve seen show that we’re going to be in the 90th percentile in terms of physicians using smart phones or mobile devices or a combination of mobile device and mobile health applications just over the next few years.

In the early days of this business, we were very excitedly seeing numbers — and this goes back to 2001-2002 — that said by 2006 we would see 50-some-percent of penetration of mobile devices being used by clinicians, predominantly physicians. It’s just becoming a more and more mobile world. I think that is something that we are very happily looking forward to and beyond that.

I saw a press release from another vendor recently that talked about the iPad’s impact on healthcare and how healthcare alone was I think, the third-ranked industry that was embracing the iPad and using it in very specific ways today. That’s something that I see — healthcare and mobility are two areas that have gone hand in hand for years and will continue to do so.

Final thoughts?

I think being able to provide one patient platform is something that will allow us to reach many, many users. When I think about the base of users that use our solutions, it’s certainly not just physicians – it’s also nurses and pharmacists. Pharmacists tend to be some of our power users. Certainly physicians, of course, but even beyond that, case managers, care managers, and a number of different folks throughout the hospitals that all have access to this type of solution and tell us what an impact it’s having.

As a part of one of our recent releases of CareFocus last year, we introduced the ability to provide alerting functionality. Or, if one of your CareFocus profiles returned new results, users would have the ability to be alerted by e-mail or text notification. That anyone subscribing to a particular list would be told that a targeted patient had been identified.

We continue to take things that step further. That’s something that has introduced us to even newer audiences. We have folks even within the IT department who were supporting all this and rolling this out to folks who are now some of our user base as well.

It’s been a very interesting ride. I can certainly say that it’s an industry that has been a pleasure to watch grow over the last 10 years or so. There’s still room to grow, which makes it exciting. There are a lot of good things going on.

HIStalk Interviews Edward Fotsch MD, CEO, PDR Network (EHR Event)

Edward Fotsch, MD is CEO of PDR Network.

Tell me what PDR Network does.

PDR Network distributes drug safety information, typically FDA-approved drug safety information. The full FDA-approved labels, drug alerts, the new REMS programs, and now increasingly collects drug and device safety information. Our focus is really on the collection and distribution of drug and device safety information, including the appropriate use of drugs and devices.

We publish the PDR, we have PDR.net, PDR Mobile, and a growing suite of services integrated into electronic health records.

Why was EHR Event formed, by whom, and via what process?

We work with a not-for-profit board called the iHealth Alliance. They Alliance is made up of medical society executives, professional liability carriers, and liaison representatives from the FDA. They govern some of the networks that we run, and in exchange for that, help us recruit physicians. Professional liability carriers, for example, promote our services that send drug alerts to doctors because that’s good and protective from a liability standpoint.

In the course of our conversations with them roughly a year ago, when we were talking about adding some drug safety information into electronic health records, we came across the fact that there were concerns from the liability carriers that there was no central place for reporting adverse EHR events or near misses or potential problems or issues with electronic health records. They were interested in creating a single place where they could promote to their insured physicians that they could report adverse EHR events. Then it turned out that medical societies had similar concerns.

Rather than have each of them create a system, the Alliance took on a role of orchestrating all of the interests, including some interest from the FDA and ONC in creating an electronic health record problem reporting system. That’s how it came into play.

Our role in it, in addition to having a seat on the iHealth Alliance board, was really in network operations — in running the servers, if you will, which didn’t seem like a very complicated task. Since business partners we rely on for our core business were interested in it, it was easy to say yes. It frankly turned out to be somewhat more complicated than we originally thought, but now it’s up and available.

What is the relationship with FDA, AHRQ, ONC, and some of the existing tools, such as the MAUDE database?

AHRQ has a thing they call the Common Format, which is a common set of questions for reporting patient safety-related events. They try to promote the use of their common format so that there can be some standardization of patient safety across multiple different reporters or reporting systems. We incorporated the AHRQ common format.

The role of the FDA is pretty much what is expressed in the press release, which is that they’re very supportive. They’re interested in seeing information about EHRs and issues associated with EHRs.

The exact relationship with the FDA and electronic health records, at least from my reading of the press, isn’t clear. Our goal is not necessarily to clarify that or be a spokesperson for the FDA, but we appreciate their support and their promoting the idea of reporting of electronic health record vendors participating in EHR Event.

They currently have some voluntary reporting associated with EHRs, but it is far from ubiquitous. At least based on my understanding of it, it’s more focused on inpatient systems, where EHR Event pretty much looks at inpatient or outpatient systems. One of those areas of perceived growth is in in the outpatient — the typical doc practice.

I’ve now exhausted my knowledge of what’s going on inside the FDA, but we certainly appreciate their support.

I think that Dr. Blumenthal and ONC did a great job of explaining their position. I think any network or new system that’s being rolled out appropriately has some kind of feedback loop, so they were quite supportive. I don’t know if you know if any kind of adverse reporting is going to be a part of Meaningful Use requirements, but if it is, it would certainly make sense. EHRs have great potential. It’s not just because they turn paper into electronic format, but they represent a communications platform to US providers.

To the extent that the federal agencies that either have systems in place or algorithms in place like AHRQ are generally supportive of the effort. This is sort of a “more the merrier” kind of thing.

Assuming ONC doesn’t mandate the use of reporting and FDA hasn’t had much luck in getting people to report into its database, how will it be different with EHR Event?

To my knowledge, the FDA hasn’t had any outreach at all to providers — docs like me. If they made the call, I missed the message. I don’t know how they’ve gone about other reporting initiatives. I certainly know what they’ve done with device and drugs and MedWatch and that kind of thing. From my standpoint, it’s comparing something that doesn’t exist.

I think the reason we got reports rolling in the door within 24 hours, frankly, is because of the relationship that exists between the liability carriers or medical societies and their insured or their members. Actually someone had called and said, “Why isn’t the FDA doing this?” I assume what they were saying is,  “Why hasn’t the FDA created an EHR adverse event reporting system.”

There’s probably a lot of political reasons. I don’t work for the FDA and I wouldn’t speak for them, but I have had a medical license in the US for the better part of three decades and I would say that for any federal agency to take any action is not always a quick process. I don’t know all the steps, but I imagine there would be public notice and this and that, perhaps some politics involved. I’m not an expert. I don’t work for the federal government and I suspect I never will.

There’s also the reality that most physicians, I think, if you ask them, would indicate that they would be more comfortable with a system that is operated largely by their professional liability carriers and their medical societies with whom they have great trust and a longstanding relationship.

Do you think those insurers and medical societies will mandate, to some extent, reporting of errors to back their members?

I don’t think that a medical society has any authority to mandate anything of members. Again, I don’t work for them and wouldn’t speak for them, but how would they do that? Docs practice medicine based on state licensure. I supposed you could talk to the state medical boards, but I think that’s a long slog.

The other problem, of course, is that even if someone mandated that you reported EHR events, how would you actually enforce that? How would you know that they did it?

I don’t look at this so much as a mandate. I look at this as liability carriers are in the business and regularly reach out to their insured doctors saying, “These are the kinds of activities that we suggest you do and these are the kinds of activities that we suggest you avoid.” Having written checks for hundreds of thousands of dollars to professional liability carriers in my years of practice, I can tell you that you know that the only goal they have is to improve patient safety and protect your liability.

I think mandate is probably not the right word. I think educate and encourage and promote are the kinds of things that medical societies and liability carriers are doing and will continue to do.

FDA is supportive and interested, but not to the point they did it themselves, which would seem to be something they would have done if they were all that interested. Is there a plan to share the information that’s collected in EHR Event with FDA?

I guess the premise of your question I’m not in agreement with, which is that if the FDA were interested, they’d do it. I’m sure the FDA has a lot of things they’re interested in. Whether they do it or not probably has to do with budgets and politics and the reality of what it would take to actually get something going.

Again, I’m not an expert in government process, but I’ve been around long enough to know that the federal government doesn’t turn on a dime. The FDA has to follow the rules of the federal government, which has a fair amount of process around it, at least as far as I understand.

But to your question about the FDA learning and getting smarter from the EHR Event reporting system, as a federally designated PSO, there’s some contractual requirements for any third party — whether they be federal, private, not-for-profit — to get reports from the PSO. I assume that the FDA, based on our discussions with them, will enter into an agreement that’s dictated by AHRQ for access to the kinds of reports that will come out of EHR Event, as will liability carriers, as will medical societies, as will regional extension centers.

The big parties that you didn’t name are the vendors of the systems that are having errors reported about them. What involvement have they had or will they have?

They have the option of participating, which means they sign an agreement with the PSO and reports that are pursuant to their system are routed directly to them. But they certainly don’t have to do that. Everyone who participates in this is doing it on a voluntary basis.

So far, the response has been very favorable. I saw the quote in the press release from the e-MDs folks. But I think all of them understand that the systems aren’t perfect.

Probably what we’re seeing more often than not, the real challenge with EHRs like any technology, turns out to be some form of user error. “I didn’t know it would do that,” or “I didn’t know that it pre-populated that,” or “I didn’t know I shouldn’t cut and paste,” or “I wasn’t paying attention to this,” or maybe the user interface was a little confusing. Actual software errors appear to be the exception rather than the rule as it relates to EHR events. That’s at least as I understand it. I don’t get to see the reports because I don’t have that right within the PSO structure.

Anecdotally, from hearing the kinds of issues that liability carriers had talked about that they had seen, and hearing it from the high level of reports that have been coming in, they’re actually more frequent that you have a learning curve type issue, which is I think anticipated and the point of the exercise, which is most liability carriers promote electronic health record adoption, but although they promote it, they also know that these are new systems and new workflows and there’s a learning curve. The interest is in getting as much information as quickly as possible.

Is this is a business? Is there a revenue stream? Does PDR Network make money from this service?

I wish I could say yes, but the truth of the matter is that it’s more or less pro bono work that we’re doing on behalf of partners whose relationship is important to us. There’s other types of adverse event reporting that we’ll be rolling out over the next year that you can actually make money from. We certainly aren’t smart enough to figure out how to make any money off EHR event reporting.

Fortunately, because we are in the business of collecting and disseminating information and run networks and servers and integrate with EHRs and do all that stuff anyway, it’s not a heavy burden for us. But it is not a revenue center. I’m reasonably good at figuring out how to make money, but I haven’t cracked the code on this one.

If I’m a provider, what’s the benefit to me to submitting a problem report?

I guess the same as if it was an adverse drug reaction. Sometimes I have to say that just knowing docs, sometimes it’s sort of being a doc, right? You raise your hand when you see a problem. You certainly don’t make any money for doing it and not everyone will report every problem, but it’s amazing how frequently docs do the right thing even though they’re not getting paid to do it.

I think in this case, there’s probably a general feeling, at least among the target audience, that if nobody says anything about a problem, the problem never gets fixed. The analogy that I would make is that there are 500,000 adverse drug events reported into MedWatch every year, and to my knowledge, nobody makes a cent from reporting them, but they report them anyway. My view is this what docs do. They often do the right thing even though they’re not necessarily getting paid or otherwise not getting some benefit for it.

If I’m a doc and submit my incident, what happens next? How does that help fix the problem?

It goes in the PSO. Those who have the right to do that, which are only a handful of people, will create reports. Other physicians will know that inpatient hospital systems are having these kinds of problems or those kinds of problems, or maybe there’s a software problem, although again more often than not, it seems to be user error type things. The reports will go to groups like professional liability carriers.

I don’t know what the FDA would do. I assume they’re going to access PSO reports because they’ve indicated that they plan to, but the liability carriers and the medical societies and regional extension centers will turn the reports into education programs. There’s an effort to create CME programs that the liability carriers will promote to docs, the specific CME program for docs who want to adopt electronic health records. Oftentimes those programs from liability carriers are tied to patient safety credits that actually reduce liability carrier premiums. But most of the focus is educational.

As for the reporting physician, they’ll get a response back, “Thank you for the report.” If they wish, they can enroll in a monthly update newsletter sort of a thing that will be an extract of the PSO reports — here’s how many patient safety-related reports we got this month, here’s some high-level stuff — although PDR Network, at this point, isn’t planning on creating any CME programs from this. But we know that some of our partners are and we’ll probably help distribute links to the CME programs.

With the FDA’s drug reporting system, there would be capability to immediately trigger some sort of a black box warning or recall. If I’m a provider submitting to this database, do I have any assurance that other providers using the same system, if it’s a system problem, will find out what I reported or that I’ll find out what they reported?

There’s a number of pieces to that. First of all, if you’re familiar with the MedWatch system, it’s quite a bit more complicated than what you described. There’s not really lightning-fast turnaround from MedWatch reports. Black box warnings have to go through an entire process before they come out. Some of them may be triggered by MedWatch, oftentimes not. Often it’s based on post-market studies or some other piece.

Secondly, 95% of of MedWatch reports don’t come from providers directly. They come from the manufacturers. Out of 500,000 that the FDA gets, only 5%, one in 20, are directly reported to the FDA. Most of them go to the manufacturers, who bear the responsibility for chasing down the information and getting all the facts and details. The FDA is certainly not staffed to do all that legwork and the manufacturers have a regulatory requirement to do that.

That kind of infrastructure is not in place for EHRs, or least that I’m aware of. Perhaps it will be someday. I don’t really know what the regulatory environment is going to be for EHRs.

If I have a problem with an EHR and I report it, there’s two pieces to it. One is that my vendor has a responsibility, if it’s a problem with their system, to correct or improve the systems and notify other people of the problem. If they didn’t have a regulatory reason to do that, they’d certainly have a liability reason to do that. We will route those reports dutifully, but we’re not a regulatory agency and we’re not attorneys.

What we can do is get the reports and get them into the hands of groups like liability carriers, medical societies, and regional extension centers and then let them reach out their physicians and educate them. If it turns out that it’s a specific software problem, most of the burden for that will fall on the vendor.

I’m sure that will come up more frequently as an education issue, so how do you educate docs? Part of that is the vendor’s responsibility, part of it’s the liability carrier’s responsibility, part is the regional extension center. That’s why they get, whatever it is, a third of a billion dollars to educate docs about electronic health records.

From the standpoint of who bears the responsibility of acting on a software problem, that will largely be the EHR vendor. They have that responsibility now. Hopefully we can add to the flow and speed of information to them.

Anything else?

Most of folks who’ve called, whether they be press or … we’ve heard a little bit of, “This is overdue.” [laughs] I’m sort of like, “OK, now here it is. Sorry we were too slow.”

I’ve heard a fair number of people say, “The federal government should be doing this” without much knowledge of what it would take for the FDA or some other agency to create a system. There was a real concern, frankly, among the liability carriers that any involvement by the federal government might actually reduce the amount of reporting that occurred. I certainly heard it. It resonated with me as a doc. It’s one thing to report something to my liability carrier or medical society, but as soon as you get the federal government involved, someone’s going to say, “I’m less likely to report that because I just don’t want to deal with it.” 

I think there are challenges associated with it. I think this is a point along the way on education related to EHRs. It’s not a regulatory effort. The federal government is going to do or not do whatever they’re going to do. This is some federal government support and cheerleading and participation, but this is not a mandate from the federal government. Whether that will ever occur or not I really don’t know.

HIStalk Interviews Jonathan Phillips

Jon Phillips is founder and managing director of Healthcare Growth Partners.

Explain what you do. I don’t really understand it except I figure it’s lucrative.

We are an investment bank focused on healthcare technology and services. What we do is analogous to being a real estate agent for companies where we help companies sell themselves, or we help companies buy other companies.

So a good bellwether of how busy that market is would be how often your phone rings. Are you finding that it’s a lot busier now than it was?

What’s interesting is that it is a lot busier now, although the best bellwether is still the number of deals that actually get done. One thing that’s just a fact of life in the mergers and acquisitions business is that when you start a process, you don’t always finish it.

What you see are a lot of situations where companies decide to sell themselves and they don’t get a buyer for reason A, B, or C. It could be that the price that the market thinks that they’re worth isn’t what they think they’re worth and so they decide to wait. Or, it could be that they just don’t get interest at all. Or, it could be that they decide they’d rather do something different — that maybe they’d rather raise money instead of selling themselves, go buy something.

The key challenge in terms of this business is getting things to the finish line. What you’re seeing in the market as a whole is a significant uptick in terms of the number of transactions getting done as compared to a year ago or two years ago, both in terms of the number of deals and the value of those deals.

Where we sit right now is that there are more deals trying to get done than deals that have gotten done, and so you have a lot of folks who haven’t been able to get things done and there’s some interesting dynamics that go along with that.

Do you think it’s because companies that are trying to sell are seeing a top in the market and figure, “Hey, now’s my chance, although I’ll keep going if it doesn’t work out” or do you think they’re desperate, like, “I’ve got to do it now or it’s never going to happen?”

Early in the year, a lot of those were driven by the fact that healthcare mergers and acquisitions activity emerged faster than other sectors. What you saw was a lot of individual shareholders or private equity firms or venture firms looking to sell companies because healthcare was a hot area. Healthcare IT in particular was especially hot, and so you saw a lot of books come out early in the year. Early in the year was driven by, “Hey, the market is hot, and it’s getting hotter. Let’s go out and get a good value for our business.”

Later on in the year, what you started seeing is a little bit of a different trend, where you have some folks who are pulling the trigger on an exit because of tax-related concerns. There are absolutely companies out there that have decided to sell because their sense is that capital gains tax rates are going to go up next year.

Even if capital gains tax rates don’t go up next year — if there’s some type of an extension of the tax breaks — capital gains rates will go up at some point down the road. That does have some impact on decision-making, because even just a five percentage point increase in the tax rate, if you’re doing a $100 million deal, that’s potentially $5 million of more money that you’re paying to the government on January 1 as compared to December 31. That’s been another driver.

The other thing that you’re starting to see — and I still think it’s an early phase of this — but you’re starting to see this phenomenon that I thought we would see a while ago. Companies that are somewhat weaker, that aren’t growing as quickly or aren’t growing at all, or don’t have as strong of a product set and product capability — some of those companies are finally saying. “You know what? Either this market is moving, it’s not moving fast enough, or we’re not moving fast enough in terms of our internal growth to really dig our way out of our current predicament, so we’re going to sell because it’s probably not going to get any better.”

That’s something I think we’re going to see more of, because the way that I characterize the M&A market right now is it’s really kind of a world of haves and have-nots, if you will. Normally what you see in terms of valuation multiples — the multiple of revenue or the multiple of earnings for which a company sells — normally you’ll have a normal distribution of that. If the median multiple is 10 times EBITDA, then you’ll have a bunch of deals happening close to 10 times EBITDA, you’ll have a few deals happening at 15 times EBITDA, and a few deals happening at five times EBITDA.

Where the market is right now is much more in kind of a bimodal distribution. You have a some deals happening at very high multiples, and you have a bunch of deals happening at much lower multiples. You don’t have a lot going on in the middle. I think as this M&A market continues to mature and as the cycle continues, I think you’ll see more activity in the middle. You’ll see more kind of eight to 10 times EBITDA deals happening, but right now, it’s really at the extremes.

I would assume that the number of deals on the high end probably has always been the same. Does that mean more people are unloading for less than they expected or less than historically has been the case?

There are certainly a few more deals on the high end than over the last couple of years at least, but it does mean that more people are unloading at the low end.

Some of that comes back to putting yourself in an investor’s shoes, where you’re an investor in a company that is $3 million in revenue, and you put money in it maybe five years ago, maybe seven years ago. Just to use hospitals as an example, although it would apply to the physician software, it would apply to payer software in 2008, when the hospital spending really froze because of the capital markets early in the year in terms of the auction rate securities and the lack of liquidity for hospitals, later in the year as the market downturn occurred when hospital spending slowed, then the growth source for a lot of these companies slowed down.

But coming into 2009, you had this grand stimulus package that was going to drive all this growth in healthcare IT. Well now it’s a year and a half later, and a lot of those companies that were doing $3 million in 2008 did $3 million or maybe $3.1 or $3.2 million in 2009, and did maybe a little bit more than that or are going to do a little bit more than that in 2010. But from an investor perspective, they’re saying, “How long am I going to have to wait for this market?”

While there are certain subsets that are seeing tremendous growth, my opinion just from talking to a lot of different companies out there, a lot of companies are having a tough time just getting decent growth because resources are geared toward making sure that you can get your Meaningful Use dollars. Resources that aren’t geared toward Meaningful Use dollars are severely restrained, and they’re going to be focused on those things that are going to drive the highest ROI for the hospital.

It’s very competitive for those capital dollars. As a result, demand is soft, and investors say, “Well, do I want to count on demand improving in 2011? I’m going to have to invest more. I’m going to have to wait a few more years.” Or maybe it’s not throwing up the white flag, but it’s certainly, effectively surrendering and saying, “All right, I didn’t do well on this one. I’m going to move on to the next one.”

If you look at the effect of federal money on the potential for company profitability, when do you see that peaking?

I think you’re going to see it peaking in 2012 or 2013.

Really? So you don’t think it’s here yet, so there’s still a lot of opportunity for companies to improve their bottom lines in the next couple of years?

I think there are a lot of opportunities to do that, but the problem is you have to be really disciplined leading up to that point.

Part of the challenge that you see with folks who are selling at less than optimal values is that they’ve found themselves between a rock and a hard place. They see the potential a couple years down the road, that whether they would be direct beneficiaries of the stimulus dollars or not. As those dollars flow into the system, it will create a much more favorable capital spending environment for hospitals. Maybe not much more, but at least a more favorable capital spending environment for hospitals, but you’ve got to get there.

Candidly, I’m still of the view that if you really dig into the performance of the large majority of companies out there — whether they’re selling to hospitals or physicians — I think that the reality of sales momentum is far short of the story that’s been told. Not story as in a negative thing, but kind of the potential that’s out there. I just think this market, it moves slowly. You’ve been around the market long enough.

It’s like nothing happens fast here, and while the HITECH dollars would drive all the spending, effectively what they did is they froze things for a very long time. Consultants got a ton of business over that timeframe as people tried to figure out what to do.

But now as the middle-of-the-market folks are actually implementing their plans, it still is just going to take time. In that time, you have to be really disciplined. You’ve got to figure out a way that you’re not going to be reliant on outside money to come in to fund you. You have to make sure that you can figure out a way to cash flow yourself rather than being dependent on an investor to do it because investors very likely will get impatient with your performance if you can’t show that very immediate path to profitability.

Given how slow this market, is you’ve got to be able to hunker down and make it through. Down the road, there’s a ton of money to be made here, but it’s going to take time.

Companies will need to ride the wave up now and then down again when the surge of money runs out. Do you think that’s a concern, where companies look good now but will be terrible later?

I think there’s definitely some of that. That’s one of the things that as folks are looking at investment opportunities or are looking at companies you want to line up with. You do have to be careful about that.

It comes back to if you look at what happened to the professional services space in healthcare IT leading up to Y2K and then what happened after that. You look at it and you go, “Wow. All these companies were growing like crazy, and then business fell off really quickly.”

It wasn’t all just Y2K-driven, but what it came back to was you had the combination of the outside threat went away, you had a recession that came along, and then hospitals cut back on the professional services spending. You had this very quick retrenchment that a lot of those organizations had to do. For some of the bigger ones, it was really hard to dig out of that at all because it’s one thing to grow, it’s hard to cut. I think that’s the risk that you see.

And once again, not until 2015 or beyond, but the risk that you will see is that there will be all this money flowing through the system and folks will invest on the assumption that that will be there forever. It won’t. You’ll certainly see some businesses that will really struggle at that point.

Who are the potential buyers out there, and what is it they’re looking for?

In terms of the buyers, my fundamental belief is that this is still more of a buyer’s market than a seller’s market, if you want to have kind of a general view of the market. Now in certain subsectors of the market, it’s definitely a seller’s market. You can’t just say it’s a buyer’s market across the board, but in more places than not, it’s a buyer’s market.

Before getting to who the specific buyers are, generally what buyers are going to be looking for are businesses that can grow and that are growing, and businesses that either are or can show that they can be immediately profitable. Folks really aren’t interested in spending much money on businesses that are declining in revenue or going sideways on revenue and are either just making a tiny bit of money or losing money. Those are tough things to get to the finish line, and the value that you’re likely to see in situations like that will tend to be that you’re not going to get great valuation multiples.

Where you’re going to see the really big valuation multiples are going to be in situations where the business is growing, they’re making money, there’s significant growth left for them to go after, and then you’ll see some of these well-capitalized strategic buyers stepping in and making a play. The case examples on that really come back to you look at the deals that Ingenix has done over the last few months, and obviously varying multiples in terms of what they paid for things. But they’ve certainly been willing to pay more aggressively for businesses that they feel they can use their existing infrastructure — their existing customer reach — to generate substantial incremental value. Ingenix absolutely is going to continue to be a significant buyer. Emdeon is going to be a significant buyer.

You look at the McKesson / US Oncology deal. Very interesting in terms of how that changes the axis of that company a little bit beyond where they’ve ever sat before. In organizations like that, you’re going to see substantial increased acquisition activity because they can afford to look at a lot of different things and they’ll be able to pick and choose those deals that make the most sense for them.

I think, realistically, all of the large — whether it’s a diversified healthcare entity like a McKesson, or a specific healthcare IT company like an Allscripts — I think you’re just going to see a lot of acquisition activity on an ongoing basis because there are a lot of companies that want to sell and I’m not going to say there’s a very short list of buyers, but it’s not a huge list of buyers. The pure healthcare IT- and healthcare-focused companies are going to be able to pick and choose and pick those things that are going to drive the most value for them.

I think you’re going to see more folks coming into healthcare from outside of the space. Traditional software players are absolutely going to continue to increase their presence in healthcare. You’ll see traditional services players increasing their presence in healthcare.

Then, alongside all those groups, you’re going to see the private equity universe, whether bio guys or growth equity investors. You’re going to see them looking at healthcare technology and services as well because at the end of the day, it’s a market that healthcare as a whole is going to be growing in  2-3-times GDP over the foreseeable future. Healthcare technology and services will be growing faster than that. So if you get a business that is just growing at the market rate, it’s a nice business. If you get a business that can grow faster than that market rate, it could be a great business.

I think there’s a pretty broad universe of buyers right now. The problem is that buyers are picky because they’re getting to see a lot of different things, so they can afford to be picky.

In the past, the big money came from outsiders who didn’t know the market very well and got taken to the cleaners by buying something that industry folks would have thought was puzzling. Would you agree that if there’s big money to be made, it’s probably going to be somebody who just wants to buy a foothold in healthcare and doesn’t really understand the positioning of a specific company?

I think that’s one of the ways. The “stupid money” coming in is something that has been around healthcare forever. I don’t think that goes away. I actually think the folks who can stand to make the most money and make the best returns, in my opinion, are ones where you can make a very simple case. Some of this comes back to the case that can be made for somebody coming into healthcare from outside of healthcare.

But if you think about healthcare IT at its most basic level; you have, just round numbers, 6,000 hospitals. You have anywhere between 600,000 and 800,000 physicians and thousands of other care providers in this space. Just think about the provider universe and think about how fragmented that provider universe is and how hard it is to have a footprint that touches more than a fraction of that provider universe.

In my opinion, where folks will get the best exit multiple — where they’ll get paid the highest multiple for their business — and where the acquirers will make the most money on that are situations where you have an acquirer who has really broad reach and you have a seller — a target — who has a great product that is getting traction on its own, but will get a lot more traction if it can just access that acquirer’s distribution network.

Those are the situations where, honestly, if you look at the financial models, acquirers can afford to pay a lot. They can afford to pay what may seem to be irrational prices because the return that they get is incredible.

You go back to my favorite case study on that is the McKesson acquisition of ALI way back when. They hit the market just right. They bought a great company with a great product. They paid a huge number for it, but it really worked out for them and they made a mint on it because they could increase the price. They rolled it out to their customer base and it’s been a great outcome for them.

I think you look at some of the other deals that have happened over the last 10-15 years in the space and those are generally the deals that are the best outcome for everybody — that you have something where it’s a great product, a great capability, a great solution that gets acquired by someone who has a customer base that’s already interested in that solution. You put the two together and they get to take the market by storm. The sellers made a lot of money when they sold, and the buyers make a lot of money on being able to sell that product to their customers.

Sounds like it’s time for Oracle to buy Cerner. What do you think?

I don’t know about that.

You know Oracle wants in. They’ve got to buy something. They have so much cash that surely they want to be in healthcare.

They definitely want to be in healthcare, and I think you certainly can make a case that they’d buy Cerner. I actually think if they were trying to really mix it up, the angle that somebody would take — and once again, I know Epic’s not for sale and Meditech’s not for sale and eClinicalWorks isn’t for sale — but the concept of a big outsider coming in and picking up one of those folks would be the really big game-changer. They’d have to pay a huge number and maybe there’s not a number that’s big enough, but that could be a huge game changer.

But you’re right. From Oracle’s perspective, they did pick up Phase Forward, which makes them not the 800-pound gorilla, but the 2,000-pound gorilla in the clinical trial software space. But they certainly can’t sit here and look at the hospital market and the physician market and say, “Well, we’re not going to touch that.” I mean, there’s too much potential spend there for them to overlook it. The question is whether Oracle and folks like them, whether they decide to take a big jump or a little jump.

Interestingly, if you look at what historically works the best for folks entering the space, generally the big jumps have been tough. You think about McKesson/HBO. You think about Siemens/SMS, GE/IDX. You run down the really big deals and they haven’t worked out that well as compared to some of the ones where there have been much, much smaller plays. They’ve generally worked out a lot better.

If you had Larry Ellison’s wallet, how much would you be willing to spend on Epic?

That’s a great question. I would be willing to spend if I had his wallet — and I don’t have his balance sheet in front of me — but if I had his wallet, I’d be willing to pay a huge number for Epic because I think that in doing that, you’re effectively locking up a lot of the market for a long time to come. You go in and you say, “Well, what are the biggest hospitals in the United States worth from an IT spending perspective over the next 10 years?” You’re not talking about a two-year horizon or a five-year horizon. You’re talking about a really long-term horizon just given the decision cycles on these systems, and it’s a really big number.

You didn’t give me a number, so let me give you mine and you tell me if it’s too high or too low. I was thinking between $5 and $10 billion.

I actually would have said, without knowing exactly where Epic’s numbers are, $5 to $7 billion.

Of course that means you’ve got to have a seller.

Now honestly, I think that Judy and her team would still probably say no. I’d be surprised if somebody hasn’t come to Epic and offered them an absolutely tremendous number. But from Epic’s perspective — and I think this is part of the issue you’d see with a lot of folks out there — that’s not why they’re doing it. It’s not to just throw a bunch of cash in the bank.

I think if they felt that doing something like that would allow them to do a significantly better job of serving their customers, I think they’d do it and I think maybe they’d even do it for a much more reasonable price. I think that’s the take with Epic. That’s not the reason that they’re in the game.

Give me a handful of companies that most people haven’t heard of that you like.

As I look at the market, I think that there are a couple things that are going to be really, really important. The most interesting area for me really, circles around cost containment and quality management. What it gets back to is the fundamental challenge that we have as a healthcare system is that we have no control over cost and we’ve got, effectively, a fee-for-service model. We have a piecework model.

As we roll forward in healthcare broadly, we’re going to run into situations where those new approaches to care delivery and to care management and case management. Those companies are going to have a chance to build a tremendous amount of value.

There are a number of companies that are focused on — some people call it physician analytics, and some people call it the quality infrastructure. Some of these guys are thinking about it as local HIEs, but technology platforms that allow for capturing information from disparate sources and analyzing that information and deriving useful, actionable outputs from that information. That for me is a huge opportunity. The challenge that you see is that a lot of companies that play in that space are coming at it from very different angles.

I haven’t come across a company that I’d say wow, they’ve really got it. Some folks are coming at it from the HIE angle, some people are coming at it from the payer angle, some folks are coming at it from a clinical trials angle, but you haven’t had somebody who comes out and says well, here’s an infrastructure that it’s truly going to support  — whether it’s called an ACO or whatever the buzzword of the day is that’s used to describe that — but here’s an infrastructure that’s going to allow for integrating disparate data sets. In flagging issues with patients getting the right intervention and then monitoring the results, those types of things are going to be huge.

One of the other areas that I get really excited about is the home monitoring space. Home monitoring has been just a backwater in healthcare for such a long time because the reimbursement models haven’t been there to support it. Now what you’re seeing is the beginning of a trend toward coming up with new ways to go about monitoring patients when they’re in a home environment.

Honestly, once again it’s reimbursement-driven because people are fast-forwarding to when they’re not going to get paid for the 30-day readmits and saying, “All right, how are we going to keep these people out of the hospital?” Well, there are these tools that are out there that have been well proven that if you’re doing the right types of monitoring at home, you can keep people out of the hospital. Well, that’s getting pretty exciting.

Area one, it’s not interoperability, it’s really interoperable analytics. Area two is home monitoring.

I still get intrigued by the fact that I think there are a lot of opportunities in just niche-y areas that the big guys don’t necessarily focus on. Even in areas where the big guys do focus, you have the opportunity to build real expertise and just own a sub-segment.

You look at folks like Curaspan out there, in terms of the discharge management, and you look at TeleTracking in terms of the patient flow solutions. Folks like that that just pick what they’re going to do and they do it really well and just stick to their knitting and build up. Those are pretty exciting. I think most folks have probably heard of those guys, but that’s really exciting.

I know a lot of people disagree with me on this one, but I still come back to I think there’s still opportunity for — whether you call them best-of-breed or departmental solutions — I still think there are opportunities within hospitals for non-enterprise vendors. Now, do I think there’s an opportunity in a hospital for a non-enterprise vendor that has one function that’s a very narrow function? Probably not. If you just have a software product that handles valet parking at the hospital, yeah, you’re probably at risk for somebody taking you out.

But if you have a suite around access management that you could go in and you’re better than the access management capabilities of the hospital’s enterprise vendor and you have enough functionality that you’re not just a one-trick pony, there’s real opportunity for that.

I think you will see a consolidation in terms of the number of vendors because you don’t want to have 200 vendors out there. You want to have a manageable amount. The key is if you want to play in the hospital market and you’re not an enterprise guy, you’ve just got to figure out how to get big enough and add enough capability that you’re one of the surviving vendors. That’s pretty exciting to me. I think it’s an area where there haven’t been a lot of folks focusing on it, and I think some companies can really take some interesting steps there.

Last question. You get one-sentence answers.Give me three predictions on anything related to healthcare IT.

Prediction #1 is that the M&A market in healthcare IT will be very strong in late 2010 and through 2011, and then will fall off significantly in 2012.

Prediction #2 is that by the end of 2011, there will be multiple deals north of a billion dollars in the space, which would be a big disconnect from history that generally, there’s one of those deals every couple years. But before the end of 2011, there will be multiple large deals.

The third prediction would be that the actual payout for stimulus funds will be a fraction of the total potential amount.

HIStalk Interviews Sunny Sanyal, CEO, T-System

Sunny Sanyal is CEO of T-System of Dallas, TX.

Let me ask you the obvious question first. You were president of McKesson Provider Technologies until recently. How do you feel about what you accomplished there?

I was there for a little over six years. I had a great time and accomplished a lot.

I started back in 2004. This was about the time when Horizon Clinicals components were being introduced to the market. I feel like I had a great run. I had introduced a lot of new products, created a successful clinical footprint in the industry, and then it was time to move on.

I’ve always worked in big companies like McKesson. I worked at GE until it was time for me to go out on my own and do something different. I wanted to be in an industry where the company is a market leader, with a strong reputation, with good products, and where there’s market momentum.

That’s why I picked T-System. It’s a good, solid company, perfect products, and the ED is extraordinarily active right now. It made a lot of sense from a market perspective. It’s one of the last green field areas in healthcare IT. I feel really good about this transition and I’m enjoying it.

How different do you think it will be running a company instead of a corporate division?

It is very different in many ways. First and foremost, in a large company, you’re part of a divisional president’s role. There are a number of things that are already in place for you. The infrastructure is there. There’s a much larger portion of your time is spent in communications, communications up and down, horizontally, bringing people along.

In a smaller company, the time from thought to decision to action is extraordinarily short. I come up with an idea, I take a few minutes for us to get a bunch of people together and discuss what we’re going to do, and then immediately actions are taken. I find that extremely exhilarating. That aspect of a small company I’m really enjoying.

T-System is doing well as a company. It has very happy customers, so it makes for a very nice work environment where I can sit back and think and take time to make the right decisions.

Before Meaningful Use, ED wasn’t much of a conversation starter, but now everybody is talking about it. What are your thoughts on how the ED and ED information systems fit with Meaningful Use?

It’s been a rollercoaster ride. Initially, there was no mention of ED as a place of service applying to the Meaningful Use metrics. Then it looked like ED was in all the way. That meant hospitals could on make their Meaningful Use, especially for Stage 1, with just ED alone. At the same time, for those without an EDIS plan, there was no way for them to make their Meaningful Use metrics.

But now we’re stopped a halfway mark, where the patients that are transferred from the ED into inpatient are the ones that count towards the metrics.

Here’s the effect as I see it. Most hospitals were fairly behind in terms of their plans for an ED information system. They had been giving the inpatient automation a much higher priority. But when the second revision of the Meaningful Use criteria came out, it just caught everyone off guard, both from the vendor’s side and from the hospital’s side. Everyone all of a sudden had to scramble to change their plans to create an ED IT strategy pretty quickly.

Now that’s it’s been pulled back at the halfway mark, I think most hospitals that didn’t have a plan are taking a little bit of a breather, taking a sigh of relief. But at the same time, they realize that sooner or later with Stage 2, they’re going to have to deal with this, so they might as well start thinking about how the ED plays a role in their IT strategy.

I think for us, from a market perspective and T-System perspective, we’ve done exactly the right things. We wanted the market to go active, and at the same time we want the CIOs and IT organizations and the hospital executives to think about what they’re doing with the ED — think a little bit about what’s the right way for them to enable collaboration of care across the enterprise and collaboration of information sharing across the enterprise. For me, I believe that for T-System, we had a good positive impact.

Everybody who’s trying to make a case for interoperability always drags out the example of the unconscious patient in the ED, which then implies there’s probably some benefit to tying the ED in with the community-based systems out there for physician practices for allergy information or past medical history. How do you feel that plays out, and what are your strengths and weaknesses as a standalone ED systems vendor?

Meaningful Use was intended to facilitate collaboration of care across the community — all settings of care — and allow the community-based systems to connect with the inpatient and ED-based systems.

The way we see it is, when do you draw the line? If you’re a CIO at a hospital, what constitutes inside your circle for the enterprise system versus an outside? Whether the ED is part of the enterprise system or ED is part of the best of breed. It’s not about just the ED. It’s about the ED, it’s about oncology, it’s about other departments, it’s about the community physicians, and it’s about skilled nursing facilities and the LTACS.

At the end of the day, we know as a best-of-breed vendor that we absolutely have to go overboard and over-deliver on being open and providing interoperability capabilities. That’s the focus of our product road map — to be able to accept information coming from outside, not just problems and allergies and meds, but pretty much the entire medical record. Anything from the medical record that needs to be transferred in, we need to be able to accept that.

At the same time, we need to be able to provide that going back out in multiple formats — in whatever format other institutions want it and codified. So as a best of breed vendor, our focus is squarely on making that happen and making that the priority for us.

T-System had an investment earlier this year from Francisco Partners. It was interesting then that Ingenix bought Picis. What do you think that means overall for the industry in the place of companies like yours, and how does that change Picis as your competitor?

The investment from Francisco Partners essentially allows us to continue on as a best-of-breed vendor. They made an investment because they see a growth opportunity in the ED. They see a company that has a various, large customer base that has a potential to provide more add-on solutions into the base and migrate at the base EDIS solutions. It was a decision based on T-System as a company, based on the market — a number of criteria.

In terms of Picis as a competitor, the acquisition by Ingenix — I can’t comment on that in terms of what led to it or the pros and cons of that. As far as a competitor, they’re still the exact same competitor they were before. I don’t think the Ingenix factor or acquisition has changed much for us from that perspective.

When you look at companies quickly trying to get foothold before the window closes on what everybody thinks will be a bunch of purchases that are fueled by the HITECH act, how do you see companies financing going forward? Do you think there will be more private equity? Do you think companies will merge or will they go public?

I’ll use examples that I’ve seen in the industry over the years. For best-of breed-vendors, there are only two roads. Either you get a tremendous amount of market share and you’re successful as a best-of-breed vendor, or you’re small and your sub-scale and you need to merge with others in order to get scale, and ultimately you end up getting acquired. I’ve seen that happen several times.

We’ve seen that in the radiology space. There were a lot of PACS vendors. While a number of them went out of business, a majority of them ended up consolidating and merging with each other. The best-of-breed vendor ALI, if you remember, got acquired by McKesson and they’re getting a tremendous amount of market share and critical mass.

I feel that’s where we are in the ED space as well. On one hand, you have T-System with over 1,700 hospitals that have a pretty substantial footprint and substantial critical mass. Then there’s a whole bunch of others that are small players. Over time, I believe that small players will continue to merge and either get acquired by the strategics or merge with each other.

Since you came from a background of a larger company that was more interested in making acquisitions than being acquired, will that change the perspective on T-System as far as whether or not you intend to grow by acquisition? Do you see that changing the trajectory that T-System would have taken without you?

If an acquisition makes sense in that it would either allow us to expand our capabilities or accelerate our time to market by acquiring some key technologies, we’d absolutely do that. I’m open to doing that. But a vendor today, it’s still about investing and growing.

We have a very large customer footprint on the T-Sheets. That’s the product that we started with. Our opportunity to grow just by migrating our customer base to an EDIS over the years, and at the same time because given the green field market, there’s still a ton of EDs out there that don’t have an EDI system — I see a significant opportunity for us to continue to grow organically.

Our emphasis right now is in organic growth. We’re going to put together partnerships just like we did with Shareable Ink, our DigitalShare solution. We’ll continue doing that where it makes sense for us to accelerate time to market, but the core focus for us is to continue to invest in our core EDIS solutions and grow our presence in the ED space.

You mentioned Shareable Ink. The T-Sheet documentation system is legendary, and now you’ve got the DigitalShare system. Can you describe, for readers who may not be familiar with it, what the technology does and how it facilitates the ED’s transition from paper?

The T-Sheets have refined and fine-tuned the workflow in the ED. Physicians would use the T-Sheets to document their care. Physicians and nurses use it to chart and create a very complete chart — complete both clinically and operationally. It not only provides full documentation of care, but also makes it incredibly simple from a billing perspective. T-Sheets have been very instrumental in driving efficiency in the ED. 

Shareable Ink gives us the capabilities of a digital pen to be merged with the T-Sheets. When you’re using the digital pen to do exactly what you did previously with a T-Sheet, that process of using the digital pen on the T-Sheet actually captures information from the T-Sheet digitally and creates, immediately, a reviewable, editable, shareable version of that documentation of the T-Sheet that was done on the T-Sheet. It creates an electronic version. All the data elements are then available for either reporting or for transmission to someone else or some other system.

Essentially, we’ve taken the best of two worlds, which is the T-Sheets that were very well regarded. It’s almost an icon of emergency medicine. Physicians these days coming out of their ED residencies have used T-Sheets or know about T-Sheets. It’s a very well-oiled from a workflow perspective — very well put together. Combining that with something that gives you a digital output, we think, is what makes it unique.

It’s interesting as a paradigm. You came from a company that had a CPOE system that had some mixed success, but now you’re with a company that took the other approach of basically saying paper works, and if we can automate the paper, that’s good enough. How do you see those two paradigms playing off each other when people are trying to get doctors to interact with electronic medical records?

I see it quite a bit differently. If you think about physician charting, pen by itself is not bad. But the reason we went down the path of DigitalShare is what’s good about the T-Sheets is the user interface, the ergonomics, the layout, the clinical content, and the decision support that’s baked in there. That makes the physician very efficient. That provides the right information and/or decision support at the point where he needs it.

That simplicity, if you can use a tool like the pen — which has always been the best user interface tool — we have combined a very powerful user interface tool and input device with a very, very solid and very efficient workflow application. That’s what made it strong.

In the ED, you need both charting and ordering capabilities. DigitalShare provides just the charting portion of it. It provides the documentation capabilities. Future versions could very easily migrate into orders, but at this point, the focus is on physician charting in the ED with DigitalShare.

Other vendors probably would have said, “We’ve got this cool thing that works on paper, let’s stick it on an iPad.” You’re taking a slightly different approach. Can you see a point where the limitations of what you’re doing will lead you to what other vendors might have done first, which is going all electronic instead of converting the pen to electronic data?

Very few enterprise vendors have gotten into the physician documentation space as well as a company like T-System has. In the enterprise space, the natural inclination is to first, automate the orders because that’s how everything gets done in the hospital. The doctor places orders, orders get fulfilled, and a patient gets patient care delivered. Automating orders has historically been the highest priority and the first place for enterprise vendors to tackle.

In our case, what goes on in the ED is the T-Sheets and the electronic documentation in the ED is actually what drives the ED workflow. Orders are a by-product of the documentation as the physician is working with a patient and charting and documenting their findings. Orders are a by-product, or the second thing that happens.

From our perspective, we had to begin with where the most deficiencies are going to be. Deficiencies are in what the physician does 90% of the time or 95% of the time in the ED, which is treat the patient, talk to the patient, and document what they’re doing. We decided that we would take the approach of what makes the physician most efficient. Having the most efficient documentation system in the ED is what drives productivity in the ED. We took that and we tackled that problem first.

Where does T-System EV fit in?

The EV is a full-blown ED information system. It’s built on the same paradigm as a T-Sheet. If you’re a T-Sheet user and you’re used to documenting using T-Sheets, you pull up EV — which is Electronic Version of the documentation system — and what you get is the exact same paradigm, same concepts, with traditional capabilities — because in a digital environment, you can do a lot more with the content. At the same time, the simplicity is maintained in the electronic system.  

Think of T-System EV as a full-blown ED information system. It has a tracking board, nursing documentation, physician documentation, ordering capabilities, and CPOE. It has preserved the integrity and the workflow efficiencies of T-Sheets and uses the same paradigms of markings and circles and backslashes.

It also produces a prose version of the report, which in the case of paper T-Sheets, you mark on the sheet and the marking becomes the documentation. In the case of the electronic version, we can use technology not only to preserve the markings, but also transfer the markings into a prose form of the report, which can then be given downstream to other physicians, nurses, and referring physicians.

How do you qualify the extremely large number of T-Sheet users as to whether they would move to DigitalShare or T-System EV?

The customers that have an IT plan that includes the ED in there and they’re planning to go to a full-blown ED information system — they would go directly to an EDIS system. We would migrate them from the T-Sheets to EV.

The ones that either don’t have a plan, or have a plan but it’s still a couple of years out and they want to do something in the interim — they want to capture information and report and get feedback on it or exchange data out of the ED electronically — those are the ones that we would target for DigitalShare.

It’s a step, but at the same time, we also see a scenario where customers could potentially continue to use DigitalShare long-term. They don’t have to go through TEV. They may choose to do their physician documentation with DigitalShare. For nursing and order entry, they may use some other functionality or some other capability.

I’m sure you looked at the company’s strategies and what you would bring to the table before you took the job. What are those strategies?

The company has very deep roots in the clinical domain. T-System became very successful because they really understood the physician and nursing requirements of the ED and how care was delivered.

The strength that I bring to the table is my 23rd year in healthcare IT, healthcare technology. I bring IT background. I bring experience with how to take solutions like TEV and scale them up, grow the business, and at the same time, add the focus for making it more CIO-friendly and enhancing interoperability with other electronic systems.

I saw this as an opportunity to take something that’s clinically very, very rich and very strong and invest in the right technologies and make appropriate adjustments to the product road map to make this a very, very strong, clinically rich IT product.

When you look around the industry, what do you think are the good things and the bad things about it?

On one hand, Meaningful Use has stirred up a pretty significant level of activity in this industry. In the 23 years that I’ve been in this space, I’ve not seen this level of commitment to doing digitization in care delivery. That’s the good news. There’s a lot of activity, its forefront, it’s on everyone’s minds. It has also taken up the mind share of the C-suite, so CEOs and CFOs are involved. It’s something they know they need to do and they’re moving forward with it.

What I’m really concerned about is the quest for stimulus funds might be driving hospitals to make certain decisions that might be more short-term decisions versus longer term. For example, when the initial Meaningful Use criteria came out it did not include the ED, there was very little discussion about putting systems in the ED. Then later, when the Meaningful Use criteria changed to include EDs, I almost saw a stampede of hospitals trying to figure out what their ED strategy needed to be.

They weren’t taking the time to think it through. Instead, they were just blanket going about saying, “Okay, we’ve got an enterprise system, we’ll just stick it in the ED. I don’t care if the docs like it or not.” I see that as a real big problem.

What hospitals really need to do is what’s good for them for the long term in terms of patient care, safety, and efficiency. Those are the right decisions that they need to make. I’m seeing a lot of rush through these decisions and with a short-term perspective in mind.

I think that’s where the industry needs to take a step back and take a little bit of time out and let’s do it the right way. Yes, it’s about Meaningful Use, but Meaningful Use is not about just putting a system in the inpatient setting. It’s about setting up the system so that they will be open, they will be able to interact with the community, and they will be able to exchange information across all the settings of care in the community.

If someone were to ask you to name some predictions that you have that might be surprising to what traditional thinking would have, what would you say?

That’s a tough question. It’s hard to predict what’s going to happen in healthcare and healthcare technology.

Let’s fast forward five-plus years out. In five-plus years out we’re going to see a new breed. Post-Meaningful Use, post-Stage 1, 2, and 3. I think we’re going to see a pullback from people that have done the first generation of digitization and now really want optimal solutions. They may have gone down a path of putting in systems with a vendor that they felt like they had to live with because they didn’t have any other choice and the timeframes weren’t right and they couldn’t rip it out and replace it.

I think five years from now, we’re going to see a full swing of replacement systems being put in in the hospitals. When I walk around the hospitals and I see systems in place that are not doing the job, but yet the hospital has already made a decision and the system’s in place and it’s too late for them to pull it out because then they won’t be able to make the Meaningful Use criteria, it leads me to believe that the replacement cycle for these systems is going to be sooner than later.

I feel five years from now, we’re going to see a host of SaaS-type of applications with newer solutions that are more best of breed-like and that are open and interoperable. The technologies are moving very rapidly in that direction to facilitate that level of interoperability.

Any concluding thoughts?

I think these are absolutely exciting times. These are extraordinary times for healthcare and healthcare technologies. One of the things that we always look at being in the ED space is what’s going to happen to the additional 40 or 50 million patients that are going to get potentially covered under healthcare reform. Where do they go?

There was traditionally the acute care space and an ambulatory space. We’re seeing, potentially, a third place of service, with the ED and urgent cares forming that in-between space and that third space becoming very, very active. It’s very high volumes of patient care being provided by EDs and urgent care clinics.

That’s an exciting thing for us. We’re watching this very closely. We’re watching the trends. That’s an area that, as T-System, is exciting for us because that’s where our strength is. We’re going to watch that play out very carefully.

HIStalk Interviews Michael Rothman, Co-Founder, Rothman Healthcare Corporation

Michael Rothman, PhD is co-founder, chief science officer, and board chair of Rothman Healthcare Corporation of San Francisco, CA.

Tell me about yourself and about Rothman Healthcare.

I have a PhD in chemistry. I’ve been doing data analysis for 30 years. I spent a good chunk of that time working for IBM, including a stint at IBM Watson Research Lab. I then went off and did consulting for a while. 

The reason that I got involved in this whole thing is a personal one. My mother was a patient at Sarasota Memorial Hospital. She went in to have a valve replacement operation. She did well initially, and then started fading. The problem is that no one understood that she was getting sicker until she was very ill. Without going into the whole story, she ended up dying about a week and a half later.

My brother and I spent a long time trying to understand what had gone wrong. What we decided was that, in a way, the system had failed her. It really is almost impossible to look at the electronic medical record and catch a slow deterioration in a patient’s condition, especially with the fact that there are so many different doctors and nurses that take care of a single patient.

We asked the question: why isn’t there a simple measure of a patient’s overall condition that can be plotted versus time to show a doctor or a nurse that someone is getting sicker?

We went in and spoke to the CEO of Sarasota Memorial, who let us come in to the hospital and try out some ideas for several weeks. That led to a real project about four months later. Over the next couple of years, we analyzed about 60,000 patient visits and data extracted from the electronic medical record at four different hospitals. That led to development of software — in fact, a product and a company to deliver that product — to do that very simple thing that we started out to do: provide a measure of a patient’s condition so that a doctor or nurse can see if a patient is getting sicker.

I have to ask the obvious question in terms of how Sarasota came to be involved with your product. Was that related to … you know what I’m getting at. Was this in terms of a lawsuit or something about your mother’s treatment, or was this just their interest in improving what you had seen firsthand?

That’s interesting. No, it was not involved with a lawsuit. We actually considered the idea of suing and rejected it because it’s an empty thing to do. It would not have been of any value to us to get a sum of money. What we wanted to do was try and prevent what happened to our mother from happening to someone else. No, there were no legal negotiations involved.

Did they undertake this with you in the spirit of recognizing that they had room for improvement and that you had something to offer as someone with skin in the game?

They were a pioneer in electronic medical records. My mother died in 2003 and they had already had an EMR, I think, seven or eight years.

Yes, they’re an Eclipsys client.

Yes, yes, and they had been frustrated really, by the lack of insight that they had been able to extract from all this data. They had all this data and it’s difficult to maintain, it’s expensive, and they were waiting for the real demonstration of value.

My brother had worked in data visualization for many years, and as I said, I worked in data analysis. When we came there, it just caught their attention. The CEO was very sympathetic about what had happened in my mother’s case, but there was something else in the background. There was this underlying feeling that something should be done with all this data.

Maybe what we want is people who are coming at it in a very fresh way. We did not have medical backgrounds. In fact, if we had, I don’t think that we really would have been successful, as it turns out.

If this could happen at Sarasota, it could happen anywhere because that’s a highly regarded hospital using a highly regarded clinical system that they’ve used very well for a long time. If you were talking about the experience of Sarasota to this point, what would be their results?

We developed this index, which we named in honor of my mother — the Florence A. Rothman Index. This is a general measure of a patient’s condition. It’s now part of a software product which we deliver and is being used at Sarasota Memorial.

In terms of a measure of success of this endeavor, it really was if we could help one person avoid what had happened to my mother, then that was the sign of success. But I think we’ve helped many people at this point, but I also think we can help many more.

I guess the toughest part is that you don’t really have any way to know whether your product helped. There’s no recordable event that says, “Hey, we just saved this patient because of something we showed a clinician.” Is that going to be a challenge to go into another site to have something more than just anecdotal discussion?

In fact, we did a clinical trial at Sarasota with 1,600 patients over about five months. It was with a randomized, concurrent control group. If a patient was born in an even year, his doctors or nurses would be able to see the graph, and if he or she was born in an odd year, they wouldn’t be able to see the graph.

We then looked at the outcome as measured, in this case by discharge disposition. What we found was that more patients ended up in a healthier condition and so were able to be discharged to home rather than to rehab or skilled nursing facility. We had a seven per cent increase in discharges to home. It turned out to be a number that was statistically significant.

We’re in the process of setting up clinical trials at a number of other hospitals to replicate this and to extend the work, and to show that we have benefit at not just Sarasota, but other hospitals as well.

As I was trying to conceptualize why this works, I thought of the stock market, where you may track five stocks and think you know everything there is until you look at a stock market index and a long-term trend. Then you realize that you got so wrapped up in the trees that you didn’t see the forest. Does it happen often that the data there but clinicians miss the trend?

Yes, that’s part of it. The thing is, there’s plenty of data. We’re not creating any more data. What we’re doing is two things. We take 26 different medical measurements which are available, basically, at all hospitals. We extract the amount of risk which is inherent in the value of each of these measurements and come up with a single score.

Now in a sense, that’s what a doctor or nurse does when they go in. They come up with an overall sense of how the patient is and a good doctor does it well, or a good nurse does it well. But the problem is if a doctor is rushed, a nurse is rushed, how completely can they really evaluate all the data that’s there? Even even more importantly, do they really know how that patient was the day before when maybe this is the first time they’ve ever seen the patient?

Getting that trend is very difficult to do, even if you’re a doctor and you’re sitting down and studying what’s in the medical record. It’s hard to figure out what the trend is, especially if it’s a gradual deterioration.

There’s one other thing, and that is doctors tend to look at three things when they’re doing an evaluation. They look at vital signs, they look at lab tests, and they look at the last doctor’s notes. However, there is a source of information that they tend to overlook, and that is the nurse’s assessments.

The nurses do what is called “the head to toe assessment” of the patient. It’s something that’s taught at nursing school. They evaluate each physiological system and they record it on the computer. Really, doctors don’t look at it.

One of the things that we’ve done is we’ve said, “Hey, this is actually very valuable information about how someone is.” So we used nursing data in the calculation of our score. It gives the doctor access to something that he doesn’t normally look at.

How did you come up with the 26? How do you know those are the most relevant ones? Are you continuing to see how well the correlate with patient status changes, or do you think you’ll be adding more measures?

We started by going to the electronic medical record and saying, “What’s there?” We looked to see what measurements really are available on all patients. Not only are they available on all patients, but they’re available and they are taken on a continuing basis on all patients. That really brings you down to a relatively small number of potential variables.

Then we tested the variables against different measurements and we looked at the independence of variables. We spent a long time working on the model building itself, but in answer to your question, are we continuing to test it and look for opportunities to enhance it? The answer is yes, although we are comfortable with what we have now. I’m sure that there will be opportunities to enhance it in the future.

Do you think there’ll be ways that you can build into the presentation of the information the ability to collect new information that will help you determine if the correlation is better since your system does not accept data entry?

Let me say two things. One is we’re presenting doctors and the nurses with this graph, and basically, every time a piece of data is entered into the electronic medical record, we recalculate the score and we put another point on the graph. That’s the operational side of it.

But what you’re getting at really is something that we thought of right at the outset, and that is when someone is doing medical research, one of the tough things is to have a good measure of an outcome. If you’re looking for mortality as an outcome, generally mortality is very low in procedures or when you’re dealing with one drug or another. So you need large sample sizes to get specifically significant differences between drug A and drug B, or procedure A and procedure B.

At the point at which our index becomes generally accepted as a measure of patient condition, all of a sudden you have another measure of outcome. You can say, “Hey, we have procedure A and the folks who went through procedure A ended up with an average score of 75 after a week, and procedure B, the folks ended up with a score of 65. And just to calibrate you, 100 is the best and 0 is close to the worst.”

You have a way of getting a quick read on the impact of procedure A versus procedure B, or drug A versus drug B, or workflow A versus workflow B. I think there’s a lot of potential in terms of helping in medical research.

Do you see it as being something that’s applied like a pain scale or a blood sugar reading where there’s a standing order that says if the patient’s Rothman Index gets to this, then transfer them to ICU?

We are not prescriptive, nor diagnostic. We’re not telling a doctor or a nurse what’s wrong with the patient or what to do. We’re basically alerting them that something is happening. But what you’re talking about sounds like the rapid response team Initiative. Is that what you’re referring to?

Yes. It seems like one of the key problems is failure to act. There’s something going on, no one notices, there’s no predefined pathways — someone just says, “Wow, this is bad,” and then nothing happens.

Absolutely. There was a talk given by Dr. Edgar Jimenez, who is the president of the World Federation of Societies of Intensive and Critical Care Medicine. He’s also an assistant professor of medicine at the University of Florida, University of Central Florida, and Florida State University, as well as director of medical critical care at Orlando Regional Medical Center. It was a talk given at the 6th International Conference on Rapid Response Systems in May at Pittsburgh. He was talking about some work that he’s done, preliminary work at Orlando Regional Medical Center with regard to rapid response teams.

One of the problems with rapid response teams is it takes the nurse on the floor to activate the system. Some nurses are going to be great at it, some nurses are not going to be great at it, but many times nurses are overwhelmed. As you say, someone can deteriorate and no one notice, so the team doesn’t get called.

They are very excited about the system because of a capability that we have. We produce a graph showing the patient’s condition over time. We can actually produce a single screen with several hundred graphs on it so you can look at the entire hospital on one screen. The graphs are color-coded and it’s really quite easy to see a decline, even though the size of the graphs themselves is small.

One of the clinical trials that we’re going to be doing is on the order of surveillance, where a member of the rapid response team sits in an office and looks at the entire hospital and says, “Hey, there’s a downturn on the sixth floor,” and picks up the phone and calls the nurse on the sixth floor and says, “What’s going on with Mr. Smith?” If the answer is, “I thought he was going home tomorrow, I didn’t know there was anything going on,” then the rapid response team becomes proactive. They activate themselves. They really become a backup for the doctors and nurses to try and prevent people from falling through the cracks.

I would think there’s some potential use even for things like staffing or for nurse acuity; where you have patients whose diagnosis doesn’t really tell you the significance of their care requirements. The number is relative, right? It isn’t just that your number gets worse, but that if your number is lower than some other guy’s number, you’re in worse condition?

It’s an absolute value and it also shows you changes. It’s interesting that you say that because whenever we’ve spoken to, especially a chief nursing officer, she says, “Hey, I can use this as an acuity tool to help me with staffing.” I think there is some dissatisfaction with the tools that are out there because they require nurses to enter data and they can be subjective.

Our system is, in a sense, an absolute measure of the patient’s condition. As I’ve said, we color-code the graph — red being the worst — and so you can say, “Hey, if I have five red patients in one nursing unit, one thing I’m not going to do is assign them all to the same nurse because that’s going to lead to a bad outcome.” It could also be used at a higher level in terms of management of nursing hours, although we’ve not gone down that pathway yet. But it’s been suggested.

I’m a believer in the 80/20 rule –– show me the 20% of patients who are the sickest and if I manage those well, I’ll improve my overall outcomes.

Yes, I think you are right on. We really think that we have a potential of making significant impact in the quality of healthcare and we have people who have had many years’ experience in hospitals who feel the same way. It’s very exciting for us.

I know that you worked with Helios, or ObjectsPlus as it used to be called, when you started connecting to Eclipsys at Sarasota. What kind of interfacing would be required for a non-Eclipsys user and how difficult is it to manage those interfaces?

We’ve spoken to a couple of the other EMR vendors. We are prepared to interface with any of the systems.

Really, we are self-contained. We touch the world in two ways. On the one hand, we go up to the hospital’s database and we extract data periodically, but we do it in a way which has no impact on response time. Hospitals are very sensitive to anything that may degrade their response time for doctors and nurses, so we have a way of not doing that. Basically, it’s not a real-time query, so we wait for real-time queries to finish.

The other place is when a nurse goes to a nursing station and she goes to her computer and she wants to see the graph. All we need to do is know who the current patient is that you’re looking at and we can be either loosely integrated or tightly integrated with the system. With Eclipsys, we’re tightly integrated, so that there’s actually a tab on the main screen that says Rothman Index. A Sunrise Clinical Manager user wouldn’t know that they’re not using Eclipsys-native software.

But if it’s a looser integration, it might be an icon on the desktop. You click on that icon and you’re already logged on to our system through a single sign-on software system which is controlling their screen. We would know which patient you’re pointing at. We just need to know which patient it is and our server has the data and has the values of the Index, and would then be able to display a graph.

Does it alert or is it just display? Does somebody have to notice that the number’s bad or can it automatically page and escalate?

We produce a graph, but we also produce a number. That number can be used in a rule that is created by the hospital to generate an alert.

What parts of the system do you consider the proprietary and how do you envision this turning into a business?

The algorithm is proprietary, although we’re submitting an article for publication which will give the general outlines of what we’re doing. Doctors don’t like the idea of a black box. I guess that’s the proprietary element of it — the algorithm.

We’ve submitted several patent applications on the work. But we’ve spent years now validating this and so, in a sense, the protection that we have is the fact that we’ve done all this work. If someone wanted to do the same thing, it’s going to take them quite a bit of time.

Are you going to try to sell this directly to hospitals or partner with vendors? How do you see this getting out in the field?

We’re starting out by selling it to individual hospitals. We’re starting clinical trials at a number of them. The basic idea is an annual license fee, which is based on the size of the hospital. But we can see going into the future that we might partner with one or another or maybe all of the EMR companies to make it available to their customers.

Is it satisfying to see this turn into a business when the original point of it was a very personal circumstance that you knew you could improve for others?

I think that in order to deliver this and really have the largest impact, we needed to make it into a business. If it were simply a study or a paper, I don’t think that it would have reached a lot of people.

The fact that we were willing to go the extra distance to make it into a product that hospitals would be able to use easily and it will reach a lot of people, that really is a way to achieve our original goal. We just didn’t want this to happen to someone else’s mother. I think we’re going to end up accomplishing that goal.

HIStalk Interviews Kevin Maher, VP, McKesson Health Solutions

Kevin Maher, MHA is VP of product and outcomes management at McKesson Health Solutions.

Give me the elevator pitch on Personal Health Advisor.

I think about Personal Health Advisor as a multi-channel consumer engagement platform at its highest level. It’s really aimed at helping consumers to help them utilize online health tools and, in general, to provide consumers with both inbound and outbound health advice, recommendations, and services.

Who is the targeted user or customer?

The targeted users are health plan members and the target clients are typically health plans, which I would describe as any organization that holds some degree of financial risk for a population. That could translate into at least three segments. Certainly the payer segment, which is where we are focused today. Second, the employer in the self-insured employer market. Third would be the kind I like to describe as the fledgling ACO market.

There’s always a survey claiming consumers want to use tools like secure e-mail, personal health records, and assessment tools. So why don’t they?

I think our point of view on that would be that a lot of the lack of use goes to a few things. One is not enough skin in the game overall today. I agree that consumers are still largely shielded from the financial cost and burden of delivering healthcare.

I think a second issue we’re dealing with is who’s the trusted source for information — the payer or the provider? Our position is that the provider is a much, much better trusted source than the payer, so anything sponsored by the payer — or potentially, by the employer — in and of itself will create some barrier to use.

I think some of those barriers can be removed if the design of the benefit structure encourages the use of online, member-focused tools, which is what we are beginning to see with the clients that we’re working with on this solution.

So you’re saying an insurance company might say, “Sign up for our personal health record and get a gift certificate or get a discount on your premium”?

Correct, and it has to be meaningful. I think what the research has shown, and what we seem to see, is at the individual level, you’re talking somewhere around $500-$600 a year. You’d need to see that level of impact — the consumer would need to see that, and at the family level, at least double that to $1,200 or so — to really move the dial on engagement.

So to your point, without the right level of incentive, we’re seeing use rates in the single-digit range. When we see that level of benefit impact, whether or not it’s discounts or reductions in premium or gift certificates, we can see engagement rates upwards of 50%. That seems to be the big dial that the payer has ability to control and throttle.

When they provide these incentives or whatever encouragement that form takes, how do they do that beyond “you have to complete a questionnaire”? Are there targets that encourage actual outcomes that are wellness related and not just looking at a screen?

I would say that there are probably a few health plans that have moved to outcomes. Or, I wouldn’t even say health plans. I would say more employers, that have moved toward more outcomes-based rewards model, vis-à-vis the Safeways of the world.

I think most of the market is still on “perform an activity and we will reward you.” I think that transition from activity to outcome is likely to be a 3-5-year transition, but we’re certainly beginning to see clients thinking about using more biometric results to ultimately get that, or give that reward. So, whether or not it’s some kind of annual biometrics that’s evaluating blood pressure, LDL panels, BMI — that’s certainly the early, preventive information that consumers need to know about.

More employers and providers also talk about the use of Bluetooth wireless devices that are providing more immediate or more continuous feedback on some of those key metrics versus a 12-month look at it. But I would say again, most of the market today continues to be focused on — and I say this because it’s the reality and it’s relatively still a new concept — but most of the market is paying for activities today. That activity could be, to your point, completing a HRA, participating in a program, getting the biometrics done, seeing their physicians for preventive care testing, etc.

McKesson operates a 24-hour-a-day nurse hotline. In terms of a key differentiator, what resources does that require on McKesson’s end and what infrastructure do you have in place?

We’re the company that was formerly known as AccessHealth, which was actually the first company that offered a nurse hotline to the payer market. We, today, have about 30 million lives under management that we’re providing nurse line services to.

Approximately 600 nurses is a major differentiator. I mean, it provides that human channel, and I think a number of things that we are doing to tie the offline world and online world are, for example, nurses or nutritionists or pharmacists we have available. So we think about our line as a clinical hotline, not just providing nurse recommendations for acute health problems.

The nurses reinforce getting the preventive testing. They’re able to use that information to reinforce the availability of incentives that the sponsor is offering if a member performs a certain function. A clinical staff has the ability to push content after a call to a secure message center as a reminder — could be content, could be videos.

The ability to take information from provider, member, and health plan data and make that information exposed to the nurse, and make that nurse or that clinician smarter about the member’s health. Remember when we get that data, we’re able to push content from the call center or from a telephonic interaction into an a member care plan and tie those two again, those two different worlds come together through the integration of data.

I’m interested in the data sources that the Personal Health Advisor can collect and put together for the subscriber to review.

We have core data sources as follows. It’s basic member eligibility information. It is provider linkage information of provider files, again, from the payer. Medical claim information, pharmacy claim information, HRA health risk assessment information; and biometric information. And the biometric information at this point is contained to blood pressure, BMI, validated smoking cessation smoking status, and the lipid profile.

One of the things that interested me after the e-Patient Dave fiasco at Beth Israel Deaconess was information that may be correct or meaningful for billing purposes that may not be something that a consumer should be turned loose to interpret. Is there any level of oversight or preparation to ensure that what lay people see on the site is something they won’t misinterpret?

The medical claims, I think, is where it gets dicey. What we’re doing there is all of that information is being coded. It’s being coded using the SNOMED standard terminology codes. When members see that information in their personal health record, all they need to do is basically hover over whatever detail is on the page.

Say one of the line items was diabetes. You hover over that, click on it, and it presents a consumer definition of whether or not is was a diagnosis or a procedure code. It provides a consumer again, some sort of definition associated with each of the pieces of information that are being generated by claims data.

Underlying that is that we have mapped all of our clinical reference system content, and you may be familiar with that content. That content, historically, was sold into the provider market, continues to be a strong leader in the provider market. Providers historically printed these kinds of one- to two-pagers out for their members when their members would leave the office, explaining what their upcoming procedure was or their condition is that they’ve been recently diagnosed with.

That’s how we’re handling that pure medical information.

Who do you compete with in reaching the consumer and how is your offering different?

There are two or three big competitors that we see. I think, first and foremost, is WebMD. I think what’s different about our solution than WebMD probably revolves around the point that you made earlier — the telephonic channel, in addition to just the online channel. That’s number one.

I think, secondly, I’m not sure I’ve seen a whole lot of momentum or press release around extending the channel to a mobile channel. We’ve added three capabilities to our mobile channel for PHA. One includes taking the PHR and making that available through the mobile device. Second, is a pharmacy adherence tool. Third is a messaging tool that leverages our clinical staff.

I think it’s the telephonic channel and the mobile channels that we believe are our key differentiators from a WebMD. And then we’ve got our classical health management payer/employer competitors such as OptumHealth, Health Dialog, or Healthways. But we also see ourselves competing with other services that would be competitors of A.D.A.M. I mean, those are potential partners, longer-term.

Do your offerings leverage RelayHealth’s tools?

We looked at that. We do not leverage the RelayHealth tool today, but certainly know that long term, we’re going to need to figure out — along with the rest of the industry — how do you tether this PHR closer to the doctor? I think that’s a downfall in any PHR that is not somehow associated with, tethered to, or connected to that provider’s EMR. We know that’s a challenge we’re going to have to solve in order to make that PHR ultimately more valuable to both the member and the provider.

Quite frankly, the reason we did not reevaluate that when we were first building that, and the big drawback that we could not solve with Relay, was the belief that in the markets that we were selling to, that we needed to be able to pre-populate these personal health records with some type of information in particular, given that we were focused on the payer market.

We felt that we needed to be able to pre-populate this information with claims, and I think we all are aware that there’s significant … it goes back to one of your questions about ‘why aren’t these tools used as often as they are?’ At the time, clearly one of the big feedbacks that consumers were giving around PHRs is too much time to populate that information. We wanted to remove that barrier by pre-populating, and unfortunately, Relay did not have that capability.

What tools are needed to make a difference in either improved outcomes or reduced costs?

I think we think several things. We need to continue to evolve this solution to provide tools that focus on members that are driving the spend, which typically are members with chronic disease. I believe we’re going to need to add a number of features, both through the mobile channel as well as the online channel, that focuses on members with chronic disease.

I think number two is something that we’re working on right now that would tie together the concepts of multi-source data, number one.

Number two is using this data, and then be providing very clear information as it relates to this data — where they can go to take part in programs that utilize this information and where they’re sitting on this data. So are you in range or out of range on your blood pressure or whatever? Letting the member know what the incentive opportunity is and then making it clear in a single view. What are the activities, or what are the metrics you need to get to in order to collect that measure?

This is something that we’re working on right now. We’re calling it a Health Report Card, but it’s literally, you can think of it as a stoplight report — a red, yellow, green report that is a single view, that again, pulls together all of the major sources from claims data, self-reported data, biometric data – that presents whether or not incentives and opportunity, and if an incentive is an opportunity — if the member has to do these three activities, all in a single view — I think we view that as a critical aspect as well.

Pulling together the pieces from the various tools into a single actionable view for the member, and I think ultimately, this data — because of the conversation we had — needs to be able to be accessed to the provider as well. So much of this comes down to — is the provider also focused on making sure that the member’s getting the preventative testing that they need and helping support the messages that the payer is trying to deliver to that consumer, in terms of behavior change?

HIStalk Interviews Leland Babitch, CMIO, Detroit Medical Center

Leland Babitch, MD, MBA is chief medical information officer at Detroit Medical Center, Detroit, MI.

Tell me about yourself and about your job.

I’m chief medical information officer for the Detroit Medical Center, an eight-hospital system in the city of Detroit and surrounding suburbs. We have both academic hospitals and also more community-based hospitals. About 1,600 beds total, and I think about $3.6 billion in revenue.

I’ve been in the position of CMIO for two years. Prior to that I, was the medical director for information services at the Children’s Hospital of Michigan, and worked closely with our CMO — because we didn’t have a CMIO prior to myself — on the rollout of CPOE, nursing documentation, and closed loop med administration from 2006 through 2007 at our eight hospitals.

DMC tried CPOE in 2003 and said it would regroup and try it again. What lessons were learned from that first attempt?

In 2003 we did try at one hospital — a more community-based hospital — on two units. We did it on our rehab unit, the psych unit. I think the first lesson we learned there was that it was really just designed as, or worked out as, an IT project. I mean, it was really IT-led and there wasn’t clinical involvement from the get-go.

There wasn’t really a leadership pattern that had physician and nursing components to it. There wasn’t a design phase that included a lot of clinicians. There wasn’t leadership buy-in from the hospital. We took the product from the vendor and implemented what they gave us. It was really doomed to fail from the start.

How would you compare Cerner and Epic?

I think they are very similar corporations. We do not have Epic at any of our sites. We’ve been with Cerner since 1998. I think at the time that we were making the decision around CPOE, we entertained the option of switching from Cerner to somebody else, including Epic.

As we looked at Epic, especially back then, the problem was that Epic didn’t scale very well. So whereas it might do well in a large clinic setting, or even in a single large hospital, going up to the scale and size of the database that we had — and it’s continued to grow — was not something we were convinced they could do well. I am not a technical person, I will warn you. That’s what I’ve been told by our CIO and other IT people. It really was an issue of scalability.

If you look at the two vendors competing head-to-head, people talk about the usability of Epic maybe being better. I think they will spar back and forth with each other and the other large vendors in terms of usability, and there are places were each vendor excels.

At the end of the day, the success of a CPOE or EMR launch is partially dependent upon the technology and the vendor, but really it comes down to the team that’s implementing it. It’s the experience and the policies that are in place around it. The clinical transformation is really what makes it work.

We are soon becoming part of the Vanguard System, and Vanguard does not have Cerner. They’re primarily McKesson and Meditech at their existing sites. We are far more advanced than they are at any of their hospitals right now. We’re at HIMSS Level 6 at all of our sites and they just finished nursing documentation at their last site in the past couple of months. They won’t have CPOE in any of them until 2011.

They’re looking, nonetheless, because there’s a lot we’ve learned, in terms of infrastructure and lessons learned, that are applicable regardless of the EMR. The things that we’ve done will work just as well in a McKesson and Meditech environment as they did in the Cerner environment.

How do you think it will change selling out to an investor-owned chain, which are usually less far along in informatics?

It’s not going to change the mission of Detroit Medical Center, especially in the medium run. We have guarantees built into our contract in terms of what we do with the community. We will not close any of the hospitals for the next ten years. We will not change our policies on charity care for the next ten years, at least.

I think in a lot of ways, just because of where we are, we can’t change that significantly. I mean, they can’t come into the DMC in the middle of one of the poorest inner cities in the nation and expect that they’re suddenly going to turn us into a Mayo Clinic where we’re getting tertiary referrals only and picking and choosing patients that come our way. We’re always going to have a base of taking care of our community at the core of what we do.

It makes us think of financials in a different way. There’s really no difference between a for-profit and a not-for-profit. If there’s no margin, there’s no mission. Before, we didn’t call it a profit, it was technically that we were retaining earnings. But nonetheless, if we were losing money, we were in trouble.

At least now we will have some capital that’s put into to allow us to do some of the things that we haven’t been able to do for years and years, in terms of improving our infrastructure. Things that put us at a competitive disadvantage with our suburban counterparts in the same area who had a better payer mix or may have had some reserves that they were able to put away and were able to build the hospitals with Zen gardens. I don’t think we’re going to be wasteful with our money, but it will give us the opportunity to take some of our infrastructure and make it better than before.

From an EMR perspective, I think Vanguard is expecting us to continue along the same path. We fully intend to meet Meaningful Use at the very first opportunity to report, somewhere around April 1, and to receive the first round of checks. As far as Vanguard is concerned, we will take our lessons learned and share them with them and help them to get there, too, so that they don’t miss out on their opportunity.

We’re lucky because out of our eight hospitals — seven separate physical buildings — we have six provider numbers. A lot of the institutions that have the problems of going under one provider number, we don’t have as much. Vanguard in San Antonio, I believe, is all under one provider number. There’s less incentive for them and other hospitals systems right now the way they designed Meaningful use because the dollars just don’t scale to all the separate buildings that they may have.

If Vanguard were to ask whether you could demonstrate higher quality or lower cost since you reached Stage 6, could you?

The press release that got us to this conversation points specifically to pressure ulcers and saving money, and being able to document our before and after because we went into it with that goal. It was part of our launch of that project. The Cerner Lighthouse project was a profit-sharing model, so they went at risk with us. We implemented it, and therefore, we can demonstrate an agreed-on return on investment.

The lessons learned are diffuse. They’re hard to measure. What we want to point out is that this one case, we’re saving $4.5 million. With CPOE and closed-loop medication administration, we had a 75% reduction in medication errors.

In other areas, it’s much harder to put a dollar price tag. We do know, for instance, compared year over year if you look at our Blue Cross perfect scores on core measures, $2.5-3 million increase on quality outcomes, and measures for Blue Cross / Blue Shield reimbursement initiative. How much of that was because of the EMR? Likely a significant portion. I mean, a lot of the changes we made to our EMR in 2008 and 2009 were focused on Core Measures.

There are lots of returns and I think Vanguard realizes that our quality metrics are very good. To a large extent, that is because of the EMR.

Tell me how the Lighthouse Project works.

Cerner essentially packages together a bunch of components. They may be PowerForms, which are for nursing documentation. Parts may involve physician documentation or M pages, which are Millennium pages, an HTML-based view of data from around the EMR, and physician documentation is a component of that. All of those can be packaged together into a Lighthouse. There’s a few dozen of them now. They focus on things like DVT, stroke, and community-acquired pneumonia.

When you look at your key patient priorities, what supporting technologies do you think you’ll need?

Right now we’re really focused on bloodstream infections. We are looking are looking to implement the Cerner Lighthouse for that. We are also interested in the early identification of sepsis and have just put in some tools to alert users of patient status changes for the worse. I also want to take pieces from a Lighthouse that focus on transfusions because I think there’s some low-hanging fruit there in terms of our utilization.

I think that we have a lot that we can do in terms of nursing satisfaction and nursing productivity if we can continue to roll out our automated infrastructure and bring data from monitors and other integrated devices directly into the EMR. We trialed the technology on a few of our floors with success. The problem there is the upfront cost of connecting and/or upgrading the devices so that they can interact with the system.

We actually demonstrated the technology for getting floor vitals into the EMR last year at Cerner health conference. We’re going to be demoing and trying newer units internally over the coming months.

I think we are getting to the point where we will have the luxury of starting to get information out of the system rather than just feeding it all the time. We have some rules and alerts that we’ve gotten from another Cerner client around sepsis.The rules take existing data and report concerning trends and then present those to end users, allowing them to activate rapid response teams faster and earlier.

I think that’s really what the future’s about. It’s the system giving us much more clinical decision support aside from just drug-drug or drug-allergy alerts. At the end of the day, we want the computer to do some computing. You want it to some of the thinking for you. That’s something I’m very excited about.

I’m presenting on the use of the iPad and iPhones at their health conference. Between Android and iPads and iPhones and whatnot, I think that there’s a lot of opportunity to view and enter data and interact with the EMR aside from using WOWs or fixed desktops, depending on what situation the end user is in because those aren’t all the available resources for them.

If you look out five to ten years, where do you think healthcare IT will change the most?

I think that it’s going to stop being about entering the data and it’ll become more about using the data. I think that what we have to get over is the CPOE, the nursing documentation, the physician documentation. All of which, quite honestly, especially in today’s systems, are a little bit harder than to do it the old-fashioned way.

I believe that there will be convergence in functionality and usability, so that the need to train end-users will diminish. I have looked at examples of workflow and screenshots from multiple vendors for the same process and it is remarkable how similar they look.

I think it was and article from the 1830s in The London Times where they said, ”This device is getting in the way of the physician-patient relationship and will never be widely accepted.” They were talking about the stethoscope. I tell people all the time that I am a stethescopist. Early on, you’ve got to convince people that the tool is safe, effective, and useful. Eventually, they accept it, bring it into their regular routines, and even ask for innovations around it.

But by the time I retire, I anticipate that my job will be obsolete. You will be able to move from one hospital system to one down the street and there won’t be a large learning curve in using the EMR. There won’t even really be a thought process in it anymore. There will obviously be enhancements, upgrades, and constant innovation, but it won’t be about the type of sales and promotion that I have to do today.

Any concluding thoughts?

I think this press release on our savings has gotten a lot of air play — you know, bloggers and others. I’m a little surprised by it. Our goal was really to do a little to counteract the New England Journal article from Boston where they were saying that there is no good evidence of real savings from an EMR implementation. It shows there are real examples of real returns and aside from the monies that the Feds are going to give us, which will not quite match what we’ve spent so far.

There are immeasurable returns, and those that are more measurable, and all of that will be considered. This is a process that we undertook, not because of dollars and cents, but because of the common sense behind it. It’s about patient safety at the end of the day. I really do believe that we are adding to the patient’s safety.

We are seeing improving financials year over year for the past several years, and that was part of what attracted Vanguard to us. We were using it as a cornerstone of our profile. We were one of the first on the block. Maybe the first, really, using the EMR as a marketing tool and leveraging it in that way, saying, “We have100% CPOE at our hospitals. Does your doctor do that?” or ” We scan all of our meds before we give them to you or your mother or your kid. Does your hospital do that?”

We see it as a differentiator. We know in the long run it won’t be. It will become something everybody has. But we saw it as important for the physician and the goals of the organization, such that we really turned on a dime.

From our CIO walking through the door and saying, “Our first and foremost goal right now is system stability” to saying, “System stability is key, and critical, but our first and foremost goal is to get the most advanced and safest EMR and systems that we can have.” That was in a very short timeframe that we went from one mandate to another because our CEO and our board really had made the decision to move forward with it.

HIStalk Interviews Paul Hensler, CEO, Kern Medical Center

Paul Hensler, FACHE is CEO of Kern Medical Center of Bakersfield, CA.

Tell me about Kern Medical Center.

KMC is a 222-bed academic medical center. We have eight residency programs with the UCLA School of Medicine. We’re the only trauma center between Los Angeles and Fresno. It’s a county-owned facility.

You’re going to be going live soon on Medsphere OpenVista. You’re still on for November, right?

No, we’ve delayed it. We had a rather serious virus.

I heard about that.

It took our IT staff off of everything but getting the virus fixed for about three weeks. As we looked at moving back, we started getting into the holidays and so on, and really felt we needed five weeks of uninterrupted training. We decided to go live February 8th.

What would you say are the good and the bad things about the project?

I’ve been very happy with both sides. Plus, our employees have really stepped up and have done a great job with the builds and have not taken the shortcuts. For just what they were offered, the staff’s just put a tremendous amount of good work into it.

The Medsphere staff has been great to worth with. We started this off with the idea of it being a partnership, and I think it really has been.

How large is your IT staff and what capabilities do you have in-house?

The reason I’m hesitating is we’re moving to a model of the county IT staff taking care of the infrastructure that would move all of our servers downtown. Then we have a small staff left out here to deal with applications. I think out here we have about eight FTEs, but then we’re also supported by people who work at the downtown location. I think probably another six or so are totally devoted to us, as well as some other county IT staff that helps out on specialty things.

It’s difficult for a small- to medium-sized hospital to be looking at a $40 million expenditure for an EMR system. Do you feel that you had to give up something to go with OpenVista or do you have any regrets?

Not yet. We started integrated testing this morning. As of midday, it’s going very well. It looks like it’s a system that will work for us.

I was familiar with VistA from the VA. I wasn’t at the VA, but a lot of our physicians in San Diego worked at both our place and the VA. Physicians generally like the system. I think some of the things we’re giving up on bells and whistles are things that are distractions anyway. So far I really haven’t had any regrets.

The VA model’s a little different since they have somewhat of a captive audience of physicians and nurses who don’t really get to choose whether to use it. How do you plan to get, specifically, physicians to interact with the system?

Our physicians are employed.

All of your physicians are employed?

Yes. We won’t really run into a lot of the issues of Meaningful Use that community hospitals will. Basically, the physicians have really embraced it. They’ve done a lot of the work on the builds. I think they’re excited to see it come.

Are you replacing anything with OpenVista or is this all new?

The CPOE and the electronic medical record are all new.

Up until you go live, you’re purely paper?

Right.

You mentioned Meaningful Use. When you look at what dollars are on the table and your timelines, how are you feeling about the Meaningful Use possibilities?

Even with the delay it looks good. As you probably know, you really have to be up to speed on July 1 to get 90 days in before October 1. We’ll be live in early February, so that will give us several months of experience to see if we’re falling down in any areas before we do that last 90 days. I think that should go very well.

Would you have done it without the possibility of HITECH payment or was that the deciding factor?

I think that really pushed it a lot. It turns out, in looking at cost savings by having an electronic medical record, that will pay for itself even without the stimulus funds. But the stimulus funds really, I think, are what moved it to the front burner and it’s kept us on a tight timeframe.

You mentioned the cost savings. What kind of outcomes do you hope to achieve when you are fully electronic?

We’ll save about a million dollars a year in forms and paper and the storage of the forms and paper. Probably another million a year when it’s fully implemented on costs to the medical records department. That’s really just a little low-hanging fruit. We’re expecting a lot of operational savings, but they’re just a whole lot more hard to quantify.

On your team that’s implementing, I assume you have representation from physicians and nurses that are involved?

Oh yes, and everybody who will touch it is represented in the steering committee.

Did you do a lot of work with standardizing order sets or evidence-based medicine when you were building the system?

That’s really a lot of the work that’s going on. Our clinical people got much more involved in that than we originally thought we would, and they’ve done a lot of good work.

Are these physicians that are practicing physicians? Do you have a physician in charge of the project or is it just a collaboration?

There’s a physician in charge of the project. She’s one of our thoracic surgeons who’s also practicing. All of the physicians who are involved in the project are all practicing.

Do you have any that are naysayers? Are you hearing from those yet or are they just taking a wait and see attitude?

Really no one is naysaying the project. There’s little things here, little things there that they don’t like and there’s some compromises we need to make with some of the other systems that will have to interface to it that we’ll probably eventually replace. But no serious “let’s just pull the plug and forget about it” type of naysayers.

How do mobile devices fit into your strategy?

Actually, the whole input device is one of the things I was most concerned about because we don’t have experience with it and everybody has different ideas of what they should use.

The mobile devices just seem their screens are just too small. We had a device fair here and had all the various vendors bring in various devices from hand-helds to iPad-like devices, to regular PC screens and laptops and so on. I think most of the users pretty quickly realized they needed a much larger screen than an iPhone or something would accommodate. We ended up selecting laptops in some areas and PCs on carts for other areas.

Will you have remote access?

Yes, it will be Internet available.

When you look around the community, what’s the status of EMR adoption among the physician practices? Will this change anything?

I don’t see a lot of physician practice adoption yet. There are a couple of large groups or specialty groups that have electronic medical records, but the community has a lot of still-solo practitioners and small groups of two and three physicians that don’t seem to have done a whole lot yet.

I don’t know if they’re waiting to see what their respective hospitals do, or waiting for the ARRA funding or exactly what’s happening. Since we have an employed group, I don’t really focus a whole lot on the community physicians.

What about interoperability? Are you looking at that at all?

In terms of being able to share information with…?

Yes, among other facilities or regionally.

There are two very large federally qualified health clinics in our area. One of them is actually holding off on their electronic record. They may go with OpenVista as well after they see how we do. But we plan to, as soon as possible, have two-way communication with those clinics. We do some psych patients with Kaiser.

Probably insurance companies will be the next large thing, and then as the other hospitals come up with their own electronic records, we’ll expect to have interoperability with them.

Are you considering anything related to patients or consumers as far as a patient portal or any kind of functionality that patients would use?

You know, we’ve had discussions about it and that’s more of a long-term goal we’d like to do, but that won’t be available at startup.

As a hospital CEO, what elements of your overall strategies involve information technology?

I think that two of the differentiating factors for successful hospitals: one is imaging, which is fairly heavily IT related; and the other is IT and the ability to store and use information.

This obviously is the most important initiative we’re taking on this year, and I think, will be the framework for a lot of the quality, patient safety, and even financial things we do into the future.

When you look beyond Meaningful Use and ARRA and HITECH, how important will information technology be for hospitals that are trying to succeed under healthcare reform?

I think it will be very important for healthcare reform. It will connect the patient-home and the outpatient setting with the inpatient setting and with the ED so that there’s one record that caregivers in each of those settings can access. It will avoid a lot of duplication of testing. I think it brings together more, the medical group — even if it’s a virtual medical group — by the sharing of that information.

It also will give us a lot of information we can mine on how we’re doing with utilization, with quality, with patient safety. I think those elements will be very important under reform.

Do you think the OpenVista product is going to give you the technologies that you need to be ready?

Yes.

What are your biggest fears or biggest opportunities that you see coming from healthcare reform?

I think there’s just a lot of confusion left in exactly how the 3,000 or so pages of the bill are going to be translated into many thousand pages of regulation and what all that’s going to mean for us. As a county hospital, one of our issues is going to be will the indigent patients who we now see who suddenly have coverage. Will they continue to use us?

Is your fear that they will or that they won’t?

That they won’t.

Some are saying they’re never going to get their EDs cleared with all these folks who suddenly have an insurance card.

Well, they’re already using the emergency department, so it’ll just be that they’ll have a payer source all of a sudden.

The real big issue that concerns me though is having insurance coverage doesn’t necessarily give you access. Dumping another 20 million people with coverage onto the system that’s already pretty undermanned, I think, is going to create a lot of waiting issues and appointment issues. A lot of people who may not be able to find a primary care provider.

There’s a concern that just because you have insurance doesn’t mean you can get an appointment. Do you see there being new roles for extenders of primary care physicians, or will doctors move back into primary care?

We’re in a medically underserved area, so we already have a physician shortage. We are talking to our clinics about how can we use mid-levels — how can we be more efficient with the patients we see?

You don’t want to push patients through too quickly or have too much mid-level intervention because part of the spirit of it is that they have a Medical Home and a primary care physician who spends time with them and properly directs them, properly oversees disease entities, properly refers to specialists. If we get into a “let’s just hurry everybody through the system,” we’re going to go right back to high ED utilization, high inappropriate referrals to specialists, and patients with chronic conditions not getting their meds on time, and not getting seen on time and not having intervention done on time. It’s going to be a balancing act.

Do you think that healthcare reform is going to save money or improve quality or both?

I think there’s going to be several years of very turbulent years while it settles in. I do believe the country already spends more than enough money to cover everybody, but it’s going to be those transitional years where we go from reducing payment from people who are currently insured — since, in theory, those plans won’t have to cover uninsured — to a more even system where almost everybody has coverage. But I think it’s going to reduce the coverage for all of us and it’s going to increase the access problem for all of us.

Certainly there’s already some polarity of the haves and the have-nots when it comes to medical care. Not just insurance, but the quality and quantity of care available. Do you see that gap widening between the haves and the have-nots?

No. If anything I think it’ll probably shrink. You mean in terms of disparity among patients?

Yes.

No, I think that will probably shrink, and that’s probably going to be the problem for people who are used to having a full indemnity insurance card. As those plans drift down to looking more like Medicaid and more and more of the uninsured are covered, I think it’s going to be a leveling of the system. People who have lived at the high end of the system probably aren’t going to like it a whole lot.

Do you think it will create another class of patient and provider that go off the grid and use cash?

That’s what happened in England. There’s a National Health Service, and then there’s the private. Actually, private insurance service is down as well as private hospitals and private physicians. There could be some of that.

When you look out five to ten years, what are the hospital’s biggest opportunities and threats?

Health reform is both our biggest threat and our biggest opportunity. It’s the best of times or worst of times. We just don’t know which it is.

I think that there’ll be the turbulent years while we try to get used to regulation and people taking on different roles and our revenue streams coming from different areas. But I think ultimately, if we have good strategies and execute them well, it will be a real opportunity for us.

With our academic connections, we offer some of the advanced care in the community as well as the broader care, so it should be an opportunity for us in the long term. But I think it will be some difficult years getting there.

HIStalk Interviews Doug Ardoin MD, Physician-in-Chief, Memorial Hermann Healthcare System

Charles Douglas Ardoin Jr, MD is physician-in-chief of Memorial Hermann Healthcare System and president of Memorial Hermann Medical Group of Houston, TX.

What are your responsibilities at Memorial Hermann?

I’m involved with physician integration, physician strategy, business development, physician employment, that kind of thing.

Is Memorial Hermann considering creating an Accountable Care Organization?

Absolutely. Our goal at a company level is to continue to follow what changes, or what additions get addressed through those statements throughout the law that said, “The secretary shall.” We’re waiting to see what kinds of things may occur between now and January 1, 2012, but our goal is to definitely be prepared.

Here’s what’s interesting about this whole ACO thing. There are bundle payment demonstration projects going on around CV surgery. There are some of these ACO pilots that are occurring right now.

What I think is really interesting about this whole concept of Accountable Care Organizations is where in the law they describe what kinds of entities will be able to participate in some of these ACO demonstration projects, or will be able to call themselves Accountable Care Organizations.

What hasn’t come out yet, and I’m sure is going to have to come out from the federal government — almost like a Joint Commission certification or the NCQA designation for Patient-Centered Medical Home — that includes a real set of criteria that says, “OK, we’ve told you from a structure standpoint what’s necessary and what we’re going to allow.” But there’s got to be certain benchmarks that you have to hit so that when you apply to one of our ACO demonstration projects, we can say, “Yes, you meet our certification designation or whatever they’re going to call it to be an ACO and to participate in our ACO demonstration project.”

The thing is, none of that’s really been finalized. In the mean time, we’re keeping our ear to the ground saying, “What is that going to look like down the road?” But in the mean time, we know that we’ve got a very large hospital system in Houston, Texas with a very nice geographic footprint. We have acute care, post-acute care, emergency care, trauma care. We’ve got so much of the aspects of care covered. We have relationships for long-term acute care, and skilled nursing home help — all that stuff covered.

We have a relationship with our academic partner, the University of Texas, which has a large clinical practice group. We have our own employed physician organization. We have a very large IPA with over 3,000 physicians that is part of the Memorial Hermann system. We think we have all of the pieces of the puzzle, if ACO was a puzzle and you had to have all the pieces. We think we have it all to be able to connect it together.

I think we’re still waiting for the federal government to come out and say, “Here’s how you connect it. Here’s how you fill out the application so that you can get in the game.” I think we have minimal stuff we’ve got to go build or buy, so to speak. I think we’ve got just about all the pieces that are going to be necessary to put it together. That’s not to say that in some ways we’re not already engaged in or doing things that fit within the model of an Accountable Care Organization.

Like our family practice residency program. The Memorial Hermann Family Practice Residency Program was the first family practice residency program in the country to receive NCQA designation for Patient-Centered Medical Home. The things like that that we’ve done have been fortuitous. Things we’ve been working on over the last few years that we think, “Wow, OK, this positions us very well for this.”

Another good example is our independent physician organization, which is called the Memorial Hermann Physician Network. We’ve been, for the last four years, developing and engaged in our clinical integration model. So, much like the Advocate Physician Group in Chicago that’s probably been at it for over 10 years now, we’ve been at it for about four years. But, we’ve consistently followed all of the FTC guidelines and recommendations on developing our program.

We do have one clinical integration contract now and we’re looking at developing others. Our independent physician organization — the whole basis of clinical integration — is about high-quality, cost-effective healthcare where you get otherwise independent physicians to come together and agree to develop a quality platform amongst the physicians that’s both specialty-specific and for the organization as a whole. It buys a higher-quality care that we think creates a real differentiation in the marketplace.

In the ACO model that Memorial Hermann is considering, what would the governance structure be?

Right now, the law is not very specific, other than that they say that it has to be a shared governance model. Our intent would be to create a shared governance model so that you have — I don’t want to say ‘equal’ — but the correct representation of physicians and hospitals, and maybe the academic medical center and all of the right components.

We like the concept of the shared governance model. We strongly believe that it’s going to need strong physician leadership in that governance model.

As you’ve looked at what’s being proposed and the goals of the ACO model, what would you say are some of the bigger implications for both hospitals and individual physicians?

For years, hospitals and physicians have wanted to figure out ways to better align incentives around patient care, managing costs, and driving good revenues and things like that. I think physicians and hospitals have looked for some kind of a model that really pulls it all together. I think the ACO can potentially do that because the ACO, at the end of the day, is very much focused on the patient, where it’s really about how do you give the most highly coordinated, highest quality care you can give. Quality from the standpoint of process and outcomes.

How do you really give that high-quality care in a model that’s most cost-effective that can be efficient? I think it’s a way for hospitals and physicians to be fully aligned in that regard, because I wholeheartedly believe if you focus on the patient, you do the right thing by patients, then you shouldn’t have to worry about the money.

If you’re doing the right thing for patients, you’re giving them high-quality care. You’re not over-utilizing. You’re not wasting. You’re not ordering tests that they don’t need. You’re not leaving them in a hospital longer than they need to be where they can get an injury or an infection or something of that nature. You’re truly doing the right things for the patients. If you do that, I think the finances will follow suit.

But I think there are some issues here. I think there’s some upside and downside for patients. The upside for patients is the fact that patients will be able to get a sense that their providers are better connected, a better flow of information. That the continuum of care should be more seamless and patients should feel comforted by the fact that the federal government is not going to relax its quality standards. As a matter of fact, it will only enhance their quality standards over the years, so the ACOs will still have to give high-quality care.

I think the issue, though, is that there may be some impact on provider choice for patients. Because what may end up happening down the road — whether it’s through CMS or private insurance plans that decide to follow the same model — is that you’re going to see, in order to achieve the level of connectivity, information flow, quality, and cost savings, these networks are going to have to be rather exclusive to some degree. I think patients are going to have to be willing to accept the fact that, whereas there will be choice within the network, going outside of the ACO, outside of the network, is going to be detrimental to the whole purpose. I think there will be some impact on provider choice to patients.

I think some of the issues that the federal government needs to work through is this whole concept of continuing to pay fee-for-service for some kind of a bonus for cost savings because I don’t think that’s going to work. I see the government having to migrate quickly to fixed payment for certain procedures, like a bundled payment, and some other type of a fixed, bundled payment for populations of patients — almost like a capitation model — in order to really control costs.

I still think within both of those, there can be rewards for achieving certain quality benchmarks and cost savings as well. But the fee-for-service model, I don’t think it’s going to lend itself to the level of cost saving that the federal government is looking for.

Could the fee-for-service model, in time, go away?

I don’t know if it will go away or become significantly modified. Look, if doctors and hospitals continue to get paid on a per-click basis, then what’s going to prevent them from adding up clicks?

So that’s my concern about rolling this out and continuing to have it in a fee-for-service model. I don’t know that it’s going to drive the level of efficiency and cost savings that could be achieved without suffering the quality.

As healthcare moves more to the ACO or Medical Home models of care, what will hospitals and health systems need to do in terms of physician alignment?

I think what you’ll see are increasing models of integration. In other words, you may see more physician employment. You may see more PHO development — Physician Hospital Organization development — where physicians are still independent, but either through a PHO or an IPA model, they declare their loyalty to a hospital or hospital system. I don’t think that ACOs will necessitate employment of physicians, but I think it is going to necessitate a unique level of loyalty or exclusivity for private, practicing physicians who want to engage with a specific ACO.

What are some things that Memorial has done, or things you think need to be done, to effect change in physician behavior when implementing new models of care or even new technology?

Two completely different kinds of questions there. The technology issue really has to do with how disruptive the technology is. At the end of the day, you’ve got a certain generation of physicians who maybe aren’t as IT adept. Therefore, sometimes they have a hard time adjusting to new technologies. I think a lot of the physicians coming out of residency and fellowship today, because they grew up in the Internet age, are much more accepting of new technologies. Therefore, I don’t think that’s as big of an issue, but technology’s one thing.

Models of care .. I think what you have to do there is really work on the alignment of incentives. I think that when you start talking about creating a new model of care, it can’t be a zero-sum game, obviously, to the physician or to the hospitals. There’s got to be a consensus that drives a win-win so that both the hospitals and the doctors can benefit from a new model of care and the incentives can be aligned.

That means just as what’s been described in the ACO. Developing ways that cost savings can be shared back with the providers, both the physicians and the hospitals, is important. Or, rewards for reaching levels of excellence and quality. I think that’s important, too, where you can reward and align incentives around reaching certain quality benchmarks.

What are your thoughts on incorporating decision support tools into the care process?

Let me just say this. I’m a big proponent of always learning how to work smarter and not harder. In other words, why does a physician, every time they admit a patient to the hospital, have to sit down with pen and paper and go through the ADCVAANDIML of writing admission orders?

If you believe a patient has pneumonia, then why don’t you use a common pneumonia order set to admit the patient, or a pneumonia pathway that has flexibility within it to adjust it for the uniqueness of the patient? All of the basic things that happen every time are there. They get covered. You know they’re going to happen, therefore they don’t get forgotten.

I’m a big believer in using admission order sets or care pathways, these kinds of things. I think they’re smart. I think they work. There’s evidence in the literature that patients do very well when they’re placed on these things.

Regarding clinical decision support, I think their only issue there is that you have to worry about alert fatigue. I think you can overdo clinical decision support where physicians will be able to ignore the suggestions. I think that there’s a fine balance there as to how you offer that in the electronic medical record setting without creating alert fatigue, but I think it’s smart stuff.

I think any time you’re about to prescribe a medication that’s going to interact with the patient’s blood thinner and you hadn’t thought about it, you get a nice alert that says, “Whoa, didn’t you know they were on Coumadin?” or whatever. I think that’s perfectly fine. You’ve just got to be careful how often those things trigger and at what levels.

Does Memorial have much in place in terms of clinical pathways?

Yes. Not all of our hospitals are on computerized physician order entry. We have a few that are, and they use order sets and there’s clinical decision support tools and things like that that are being rolled out.

Shifting gears a bit, how will recent healthcare reform affect Memorial? Are there changes being considered or that are being put in place to control cost and improve efficiencies?

I would say Memorial Hermann is always engaged in continuous improvement around being more efficient, controlling costs better, etc. I don’t necessarily know that the healthcare reform law has changed what we’ve always done around here. We’re a not-for-profit, community-owned healthcare system. We always practice good stewardship of our resources, so there’s always that opportunity to look at how we’re doing things.

I think it’s going to impact us, though, just like it’s going to impact everyone else. You’ve got up to the 26-year-olds that you have to be able to offer insurance for under a family plan. The issues of the no-lifetime max, when that kicks in; issues of the no pre-existings, all these kinds of things.

Our health plan is self-funded and I don’t think we’ve ever, for employees or dependents, turned anyone down for pre-existing illness, but we’re going to have the same kind of pressures. We are a healthcare provider and healthcare system, so I think we will always do our best to provide a benefit for our employees.

But unlike us, I think there are going to be, maybe not so much in healthcare, but certainly other industries, where large employers and even small employers are going to have to weigh the option of — do I provide a benefit or do I pay the fine? Which is less expensive for me? Then let the employees get out there and get insurance on their own.

The other thing we worry about is really how strong will the individual mandates be? What are the chances that instead of more people having insurance, actually less people have insurance? You know, there’s always that chance that actually, individuals, if they’re not being provided insurance through their employer, may say, “Well then, I’m not going to go buy it on the open market until I absolutely need it.” So what are the chances that actually the uninsured will go up?

There’s just so much uncertainty and potential unintended consequences that the best I can say is we’ll just kind of hunker down and try to do our best to be prepared.

How is the health system positioned for qualifying for Meaningful Use?

I’m not the expert on that, but I can tell you according to our chief informatics officer, we are extremely well-positioned for Meaningful Use. I think we’ve hit all but one of the last remaining checkmarks. We’ve been named one of the most wired companies in America and all that kind of stuff.

Trust me, we’ve got an ISD team that’s second to none. We’ve got a leader there who is really, just a rock star, and he’s been with us for several years. Very well respected. We’ve done a lot of work in that area and I can assure you, we’re there. We’ve done a lot of work on that one.

What are your priorities for the next five years?

I can tell you that my boss, the president and CEO, Dan Wolterman, said that my number one priority is learning everything I can about Accountable Care Organizations and preparing all aspects of our physician organization to be prepared to move in that direction. That really is the number one thing.

A lot of it is working with our IPA and our clinical integration model to use that as a tactical platform to get us toward an ACO strategy. Also, to integrate with our employed physician enterprise to basically do the same. It’s about helping the physician organization develop all of those aspects of high-quality, cost-effective care in partnership with the healthcare system.

HIStalk Interviews Paul Brient, President and CEO, PatientKeeper

Paul Brient is president and CEO of PatientKeeper of Newton, MA.

 

Describe what PatientKeeper does.

PatientKeeper focuses very much around automating the day in the life of a physician. We started out about 11 years ago with the observation that physicians weren’t using technology, in hospitals in particular. Some physician practices invested more and more in automating their core workflows, but physicians were largely left out. The general response was to blame the physicians.

We’ve taken a bit of a different tack and said maybe if we blame the technology or looked at the technology differently, we could get physicians to voluntarily adopt technology. Eleven years ago, we weren’t sure that was going to work. Today, we’re pretty excited that we’ve got about 23,000 doctors that have voluntarily adopted our product.

When you look at the Meaningful Use requirements, do you think they put the proper on emphasis on physician utilization?

Certainly the brilliance in Meaningful Use is that it focuses on at least one of the two third-rail workflows in hospitals, that being CPOE. Without it, I know that our organization wouldn’t be spending as much time on CPOE as we are now. I’m certain that our clients would not be spending as much time on CPOE as they are now. That’s one of the last pieces of physician workflow — the other piece being physician documentation — that has really not been adopted in any meaningful way.

If the goal is to get physicians to fully automate their workflow, having focus on it is a good thing. I think, obviously, it’s a very difficult task to come up with the right way to structure those incentives and structure that motivation. I don’t envy anyone in Washington that had to go through that.

In your mind, was it good news or bad news when they throttled back the CPOE target percentage?

It’s certainly a very odd metric for the inpatient hospitals to focus on one medication — I think it’s now ‘per year’ is the interpretation — that needs to be entered electronically. It’s more of a, ‘Hey, this is important — let’s get started.” Here’s a hurdle which I think that it would be pretty unnatural to try to even achieve that particular hurdle because that’s a bit of awkward workflow for doctors. Again, I think it’s a very difficult thing for them to do. I think the key thing is it’s a stake in the ground that says CPOE is important.

Stage 2, hopefully, will be much more significant in terms of really requiring meaningful adoption of CPOE. I think that if that isn’t, then there may be some organizations that don’t really go full-bore. I mean the goal here is to get most of the doctors in a hospital using CPOE. It’s the ultimate goal. One hundred percent is unrealistic given most community hospitals, but 80% and 90% is pretty realistic. How you get there is a little baby step. Hopefully the next step is a bit bigger.

What would you advise hospitals to do now to be ready for the next stage or to accomplish more than just the minimum requirement now?

The timeframes are getting compressed and we spent a long time getting ready. I think it’s a year and a half from the ARRA legislation to the final ruling of Meaningful Use in an overall six-year timeframe, so we spent a lot of time starting. I think that if an organization said, “Hey, I’m just going to try to do the letter of the law here,” there are lots of crazy ways that people have conjectured that an organization could get to the letter of the law in Phase 1.

I think they’re missing the gift of this. The gift is, “Hey, we’re going to give you some more time to get a proper rollout in place. We’re also going to give you some money, because if the first round is relatively easy to comply with, you get the money from that so you can invest in your ongoing rollout.”

I think if you just said, “We’re going to try to maliciously comply,” or “comply to the letter of the law” and don’t have your eye on the prize, you’re then going to get caught in the same squeeze everyone was complaining about when it was a hard hurdle early on.

So unless you’re intending just to say, “We’re going to do Stage 1 and not do Stage 2 and 3,” which I guess would be a strategy, I think that you really need to be focused on how are you going to get to real adoption of CPOE in the provider community, which is still not an easy task just because you have a little more time to get it done.

Will it be different for community-based hospitals whose physicians practice at their discretion versus hospitals that have employed physicians?

I think very much so. We think of the world as three kinds of facilities. As the academic facilities with a large resident population where CPOE has been most successful — where you have the most control, obviously. Then there’s the more employed model hospital in the community setting, although they overlap. And then there’s this, we’ll call it the “classic community hospital,” where you’ve got physicians that are non-employed and in many cases practice at multiple institutions that are your competitors.

That’s obviously the most difficult environment in which to implement these advanced kinds of workflows and get physician adoption. It’s also the environment where we spend a lot of our time because physician adoption of IT has been particularly problematic in those areas. That’s not all of our customer base, but it’s certainly where we can solve some pretty big problems for our customers.

How are hospitals using technology to attract physician business?

It’s interesting. If you put yourself in the seat of a CEO of a community hospital and you’re not employing physicians, you’re trying to get physicians to refer to your facility. There aren’t very many levers that you can pull to make it more attractive for physicians. Most of the levers, really, are around making the physicians more productive and more efficient. Everything from, “Here’s some nice food or doctor’s lunch, they don’t have to go out and get food” to “Here’s some OR block time” and things like that.

We’re seeing a lot of organizations rely on technology and say, “Look, we can put technology in place. It’s going to save you time when you practice here and reduce hassle.” That’s a big win for doctors because essentially, what they do is they sell their time. So if you make them 10% more efficient by coming here versus going there, that translates pretty directly into more patients, more revenue, a more effective physician. We work with a lot of organizations that really have physicians-facing technology as part of their competitive differentiation in the marketplace.

People aren’t paying much attention to is the fact that the majority of community-based physicians practice in multiple facilities. Are there going to be concerns or push-back from doctors that they’re expected to learn more than one system for more than one hospital?

Very much so, and unfortunately, not just more than one from more than one hospital.

We’ve done some studies of community physicians. When you start adding up all the different systems they have to use, even in a hospital, and then you replicate that at two or maybe three hospitals, it’s just chaos. Early in the day when PDAs first started coming, a lot of them had PDAs just for their usernames and passwords. Of course now they’re on their iPhones and Android phones, but it’s a real problem.

If you think about something as critical as order entry, you have to learn two different user interfaces with potentially two different order sets. Since we talk a lot about evidence-based medicine — which is great, except that 70% or so of the orders in the order set aren’t evidence-driven — two hospitals in the community might have very different-looking order sets.

That’s a real challenge and something that I think people … I know our customers in those situations fully appreciate the challenge, but it didn’t really resonate as much, I think, in the Meaningful Use dollar.

You mentioned evidence-based order sets. It’s interesting that in most hospitals, all they’ve done is to take the market basket of every possible order already being used, dump it in an order set, and say, “OK, we’ve accomplished something.” How do you see that progressing to get to where it is more evidence-based and not just reflecting current practice?

It’s really interesting and very challenging. Especially if you start with a notion, which I think is pretty well-documented, that the majority of the orders in an order set aren’t evidence-driven. You end up with these crazy order sets, which is here are all the personal preference items for all the physicians in one order set, so it’s like nine pages long. Clearly that’s not useful really to anyone other than you can check a box and say, “Yes, I have an order set here.”

I think where things are going, and why people are trying to push this, is the core evidence around conditions are reasonably non-controversial, not necessarily practiced by everybody, but at least when you present it to someone, you don’t get a lot of push-back. There’s starting to be organizations like Zynx and Provation and others that have evidence-based order sets you can purchase and you can say, “Here’s the evidence piece.”

The trick is what to do about the rest of the orders. I think that’s where you can end up with the simplest, from a technology perspective. It’s, “Let’s go with doctors together and we’ll agree here, in this medical staff, on all the non-evidence-based orders and which ones we’re going to put in and make it more reasonable.”

Again, that works great in an academic setting where you’re trying to teach everyone to practice medicine, so it’s good. In a community setting, especially one with splitters and voluntary physician staff, it’s almost impossible to get the bandwidth to do that.

I think you’ll see organizations really want to try to say, how do we take evidence and then allow the physician convenience items to be managed separately from the evidence so that we still have a nice evidence-based, consistent practice of medicine here, but if I want the nurse to call me when a temperature is 102 or their hematocrit hasn’t gone up by more than 10% every hour or whatever the triggers I like to use. They’re different with another doctor. I don’t necessarily think that we try to homogenize that across all the surgeons in the community.

Is it reasonable to expect, given the status of the technology today and how people are likely to deploy it, that we’ll see an immediate improvement in healthcare delivery with an increased utilization of technology?

That is the $20 billion question. Clearly with Stage 1 Meaningful Use, we’re not going to see a significant impact on the cost or quality of healthcare delivery. The requirements aren’t such that that’s going to make a difference. It’s a process, and I think that the people that put together Meaningful Use really recognized that process.

I think that in order to really get a big impact, we have to change behavior, and that isn’t just a technology problem. You can put all the standard order sets in the world in front of physicians, but unless they do something different as a result and you’re able to change the way they practice or the way they interact with information or the way they operate with the care teams, then this isn’t going to make a difference at all. Except for perhaps to save some time with ward clerks and save some paper and things like that.

I believe that technology’s a really critical tool. With a fully electronic environment, you can see in real time what’s being ordered. You’ve got computer systems that can generate alerts and understand things. Used properly, it can make a huge difference, but it’s got to be used properly. I don’t think we’re going to see those impacts until the late stages of Meaningful Use, and probably thereafter.

I’m sure you’re familiar with the studies that show in some cases, increases in mortality as a result of putting in CPOE systems. Obviously, that’s using things improperly, but it is not a given and it’s not just a, “Check the box, it’s automated. Look, wow, it’s better!” It’s not like factory automation. It is really something that’s going to become part of the process, part of the culture, but you have to have it in place in order to do that.

If I were to read intent into the Meaningful Use approach, I really think that’s what’s going on here. I think that it’s an investment that will pay off, but it’s not immediate. My fear is that the world at large is looking for an immediate kind of increase and improvement. Just like, frankly, many other automation tasks in other industries, the improvements aren’t that immediate, but they’re there.

Do you think this is the carrot and there’s a stick yet to come?

I don’t know. Certainly, the stick is an important part of the legislation. The stick isn’t that big, frankly. You can take away the Medicare increases for organizations, but of course people remind us that Medicare’s been going down recently. I think it’s going to be difficult, politically, for the government to impose much of a stick. That’s just my conjecture.

I think the stick will come, probably more from peer pressure, if that’s the right term — competition of industries — but these hospitals are geographically separate. But I think if we can get 60-70% of the hospitals in the country to whatever Stage 3 Meaningful Use is, then it becomes a, “Look, you have to do this to keep the doors open.”

Hospitals have adopted all sorts of things. We don’t give them credit for basically going filmless in the imaging side. Most nursing workflow automation, pharmacy automation, lab automation — all these things have happened. Bar code meds administration — all these things have happened without Meaningful use, so I think there will still be pressures in the industry.

I think what this has done is brought these applications that probably would have been very low on the list of priorities to the forefront. I think if there can be a real effort to get most of these hospitals going, the rest will fall in line without a stick.

How big a game-changer is mobile access going to be?

We think it’s fundamentally important for so much of physician adoption. Not so much because it’s the only way, or even the primary way someone would put data in or look at data. But just like your e-mail and your BlackBerry are so fundamentally important to the way knowledge workers work today, without my BlackBerry, my e-mail’s a very different thing.

Likewise with physicians, when we give them desktop access and mobile access, it gives them the ability to work in ways that fit so well the way physicians work, especially these physicians that have multiple, different hospitals. Great, we’ve got lots of computers at our hospital. You go to the next hospital, in some cases they’re a huge pain to get at. Sometimes you can’t get into your other hospital system –  you’re not comfortable on the floor pulling up some of the hospital’s stuff. You get a call — you can’t get access to information in your car, so it really is a really important, critical part of the physician workflow.

If you go into the CPOE world in particular, you see a lot of adoption challenges with CPOE around the simple orders, the bedside order, where you walk in and the nurse says, “I want to give the patient a medication for nausea.” Today, that’s a simple thing. I’ll just note in the chart because I’ve got it here in my hand. It takes 5-10 seconds to write down the order. In the CPOE world, now I’ve got to go get a computer, I’ve got to get logged in, I’ve got to get the order in. Maybe that’s only a minute and a half, but I do that times 20 and now I’ve wasted a half hour of my day being annoyed.

Whereas on my iPhone or my Android, three taps and the person’s got the medicine. That’s even easier than the chart and I know that it’s checked so I don’t have to think about what meds they’re on already. So in cases of contraindication, it comes right away so I can be confident in that. I think it’s a game-changer in CPOE. I think it eliminates some of the real issues that we’ve heard from physicians, even in organizations that have been successful in the CPOE world.

Any final thoughts?

Well, it certainly is an exciting time to be in healthcare IT. I know you’ve been in this industry for quite a long time. I have been my entire career. Up until about two years ago, I showed up at a cocktail party and told people I was in healthcare IT and people kind of looked at me funny and we’d talk about something else. Now, everyone’s excited about it. They’re like, “Wow, this is going to really make an impact,” and I think that’s both a blessing and a curse.

I’m hopeful that, as an industry, we’re able to deliver the impact, the ultimate impact. Bending the cost-curve, improving quality, and frankly, helping make it less painful for patients and doctors. But ultimately, for patients to access the healthcare system. I think technology holds a lot of promise for that.

We didn’t talk a lot about HIE, but I think that’s another area of opportunity for the industry, where it could really become a really important game-changer around patient engagemen,t a reduction in patient frustration that I think can also save a lot of costs.

HIStalk Interviews Jessica Berg, Professor, Case Western Reserve University

Jessica Wilen Berg, JD is a professor of law and bioethics at Case Western Reserve University of Cleveland, OH, with joint appointments in the Schools of Law and Medicine. She conducts research and publishes in the areas of informed consent, human research, reproductive law and ethics, confidentiality, mental health law, professional self-regulation, and e-medicine.

 

Hospitals have transitioned from the charitable care model to a purely business model, some of them with hundreds of millions of dollars in annual profits and paying multi-million dollar executive salaries. How has that changed healthcare for better and for worse?

On the plus side, I think we’ve seen a lot of innovation. I think that’s commonly what you see in a business model, or hope to see in a business model, which is a lot of different attempts to try things in different ways — take on a new technology, try different models of providing services, and in theory, be fairly responsive to the market. Ideally, a business model is set up entirely to be very responsive to the market.

The downside … I don’t think we’ve ever really reconciled ourselves as a society to the notion that healthcare, of all things, is a business. It comes along with all the things that come with the business model. And that is profit motive: there’s a bottom line, you want to stay in business, you want to do better than others, you want to make as much profit as possible.

For people that can’t pay, a business model doesn’t incorporate into it, naturally, anything that affords you a mechanism to offer services for free.

There is no other business model that expects the people who are able to pay to subsidize those who can’t. How are hospitals effectively, or not effectively, meeting that need?

I don’t want to say there’s no other business model that doesn’t assume different sliding scales, because on an international market level, for example — although this, again, is a healthcare example — pharmaceutical companies do somewhat assume that they will make more money in some countries, like this country, to subsidize less money they can make in other countries.

I’m not familiar enough with lots of other business models to say that there aren’t other ones that do that. That being said, it is not typical that a business model always incorporates the fact that there are sliding scales. That some people are going to pay more, and that subsidizes the people who pay less.

Is the hospital industry effectively meeting that need as an efficient arbiter that says, “We can efficiently transfer money from those who can pay into those who can’t and it will all work out?”

It’s not, because it’s not a whole system. I think if it was a system, you might be able to do that, but the people who can pay are not always located in the same areas, either geographic areas or with the same problems, as the people who can’t pay. Within a system, you might be able to do that as long as you cover a large enough area that you’re getting both sides of it.

That’s a fundamental flaw of the way healthcare delivery is organized in the country overall, which is we’ve known for a long time — and this is true of any insurance market, for example — that what you ideally want is a wide mix of problems, and from that perspective here on the payment, you want wide mix of ability to pay in order to get an adequate subsidization.

You’re not going to get that, necessarily, in one inner-city hospital. It could be that your hospital in the high-income suburb has the ability to pull in people who have health insurance, or even out-of-pocket ability to pay for some things that they’re doing, and your inner-city hospital doesn’t have that at all.

The term has been to create hospital systems, so more and more you see hospitals merge together. You may have the satellite units in the suburbs and you may have the one inner-city unit. Usually, your inner-city hospitals are just going to lose money, and a lot of money. They’re dealing with a generally poor population. They’re dealing with significant health problems, a lot of chronic conditions.

Just, as a general rule — this is not always true — they’re going to lose a lot of money. Not to mention, of course, emergency rooms are huge cost losers, basically. Emergency rooms do not even break even. They cost institutions enormous amounts of money.

A hospital network I used to work for had a motto of, “We serve all, but market to few.” Does marketing and competing for paying patients raise costs?

It can drive up costs, and I think there are more fundamental flaws in the system that are really driving the costs than just concern about marketing or the few that can pay. There are lots of debates about what’s driving the increase in cost. The vast increases in new technologies, the fact that very rarely do we get rid of an old technology and add in a new.

Say when you come in, maybe it used to be that all we could do was a direct physician exam. Then, maybe we could do an exam and an x-ray. Now, maybe we could do an exam and x-ray and an MRI because now, if it’s not a bone, maybe it’s a soft tissue injury. Maybe beyond that you could then do a PET scan. I mean, we add technology. We very rarely replace it or get rid of some of the earlier ones.

The technologies, as a whole, do not tend to be things that drive the cost down considerably. Unlike in other fields where you’re saying, “Well, we used to have this way of doing it and it cost this much money and this much time. We found a new, very quick way to do it now, and it’s much less expensive.” That’s rarely what occurs in the healthcare field. Usually the new technology is very, very expensive and doesn’t drive the cost down at all. It drives it up.

Every now and then someone gets the idea of claiming that hospitals are gaming the numbers on the charity care they provide and urge taking away the non-profit status hospitals. What would be the effect if that were to happen?

I want to take a little issue with the idea of gaming. There is a game that goes on, although who set the rules of the game and put it in place in the first time,  it’s not necessarily the hospital. You do have a strange set-up going on where you incentivize the organizations to play a game a certain way, including making sure that their charity numbers become very high.

There’s a lot of debate about what would happen if you get rid of non-profit status. Some of it has to do with, what does it mean when you say you’ve gotten rid of non-profit status? The really quick answer is that non-profit status goes along with some other things, like the ability to get charitable donations from other groups and organizations; and those people, then, to tax-deduct those donations. For people who give money to a hospital, they may not be able to be deduct it if they lose their non-profit status.

I also should say this as a little aside, technically, as a legal matter, non-profit and tax-exempt are slightly different determinations. As a practical matter for whatever we’re doing, you don’t really need to worry about that. But it’s two, slightly different things that are going on here.

The other thing that you might worry about is grants. There are many grant organizations that will not provide grants except to a non-profit. There are some other kinds of things that go along with that. And then, the big part of course is if you take away their tax-exempt status, they’re going to have to pay a significant amount of money out in taxes.

It seems like in hospitals you’ve got these two, polar opposites — big IDNs that make enormous amounts of money and then these tiny community hospitals that struggle to not close up shop because they’re losing money every year. Do you think the larger groups will absorb the smaller ones and would that be good or bad?

I don’t know if it’s good or bad if it happens. Part of it’s going to depend on how we see the evolution of the provision of care, including charity care, over these next few years. But the question of this absorbing the other ones, that’s what’s already happening now if you look at many cities and many hospital environments.

It used to be you had many little hospitals, and by and far, the vast majorities have been absorbed into major systems. Most places have now, two, sometimes three hospital systems rather than many individual hospitals.

On the plus side, as I mentioned before, that does give you some ability to spread across the institutions between some of your hospitals that have the ability to make more money versus some of them that don’t have that ability. On the downside, you do have then, fewer choices of smaller community hospitals. You might get less in the way of unique ways of doing things.

It’s not clear what the overall effect will be of that, but I think we’ve seen the consolidation of hospitals now going on for quite a bit of time.

It’s interesting too, the recent case that came up where the hospital in Marin County is suing Sutter, claiming that Sutter basically pillaged the hospital for $120 million before they walked away and turned it back over. Is that going to be a concern when you’ve got hospital systems that, overall, have a fairly equal balance of income to services provided, but yet maybe not geographically equal?

It’s always a problem and it’s always going to be a hard thing to think about. If you look into the idea behind this, it’s that if you’re a business and you have a manufacturing plant that’s just constantly losing money, or an arm of your business is losing money, as a business, you’re inclination is to say, “Well, we no longer want to have that particular arm. That’s where we’re losing all our money. That’s what we have to do, we have to close that.”

And hospitals, even internally, have started to think that way when they say, “Look, we’re losing all our money on our prenatal care, “ or, “We’re losing all our money on our emergency rooms.” These are areas that don’t tend to be moneymakers. They’re pretty much just not. They’re areas where you lose a lot of money, and so the tendency’s to say, “Well, that’s where we’re losing money, that’s what we close.” The difficulty and the tension, I think, continues between this idea — even as I said in the beginning — that it’s a business model.

In a healthcare model, we’d say, “Well, that’s ridiculous. You’re open because you need those services. That’s the whole point. We need an emergency room. We need those things. You have to stay open.” Even though what we’re saying to you is, “You have to do that, although we know you’re losing money.” That’s the same thing that happens, just on a larger scale when you look at a hospital system that looks around and says, “Well, this hospital’s losing all the money.”

But one response to that might be, “Well that’s how it’s how it’s going to be. The system is that you have to have that there, we need this service. As a community, we need this service.” So then the question is, have we done something wrong in setting up our delivery system that creates this tension?

We told them that they’re a business, even a non-profit business, and then said, “Oh, but we expect that you’re going to provide these services we need for the community,” and created this very uneasy feeling where companies come in, or hospitals systems come in, and they have to say, “We’re going to accept that we’re losing enormous amounts of money on this institution or on this service,” as opposed to really thinking how we’re supposed to fund this in such a way that they don’t feel that degree of pressure. That either we don’t survive at all as a hospital system unless we get rid of this and there’s some other way to maintain the things that the community thinks that it needs.

It hasn’t been too many decades ago when hospitals were mostly run by nuns or by people who were trained in healthcare administration or by doctors. Now they’re mostly run by people who have mainline MBA-type training. Could it be that people trained to think in terms of cost centers and widgets and market share don’t see healthcare as all that different from other businesses?

I don’t know. I mean, some of the people who work and have the degrees have health sciences backgrounds or health administration backgrounds. It’s not like they’re completely foreign to the notion of delivery of health systems versus the business of health, versus the business of anything else. I don’t think you see a ton of transplants across fields, for example. You know, someone who ran Ford and General Motors suddenly running a hospital system. It is a fairly unique and specialized area that people get in to.

It could be different, although there are some great studies that show how horrible physicians are as business people. There’s the same with lawyers, so I can’t say much on my field either. There are studies that show it’s a skill. Management’s a skill, administration is a skill. You might need some more specialized information, and there are degrees in those. There are business degrees in health administration.

But maybe you should have people running an organization whose degree is in running organizations, not in caring for patients. That’s not to say you don’t need some level of communication. You need some way to bridge the gap and we’ve seen that problem. We’ve seen it at its worst in institutions where you have no communication and you really feel like people are making business decisions without thinking about the patient decisions.

It could be that the best model here is some combination of people who have some understanding about how to run and administer a healthcare organization, and people who have understanding about direct patient care.

Hospitals are spending all these millions to implement electronic medical records, subsidized by the government stimulus money. How do you see that changing the hospital business?

Ideally, it reduces cost. The wonder of the electronic medical record is supposed to be that it has all these benefits in terms of actual care to patients, as well as reducing costs, reducing medication errors. Maybe even the ability to engage in some kind of comparative effectiveness research on broad scales if you gather enormous amounts of patient data.

The problem is that it can take many years before it’s actually implemented. In the mean time, you have compatibility issues, you have learning curve issues. You have enormous cost outlays if you do this.

I think, in the end, it’s still the best place to be heading, but it’s hard to say in the short term whether we’re just not going to see a lot of growing pains.

You would think that the for-profits, especially the investor-owned chains, would be the most aggressive in their adoption of information technology like any other industry. And yet in healthcare, they’re probably among the most backward outside of tiny, standalone hospitals. Is that surprising to you?

Not necessarily, because it’s a long-term investment issue and it can be very difficult to do long-term investments. You’re balancing bottom lines at different points. You’ve got to somehow be able to deal with the fact that you have a certain amount of money outlay that you’ve got to do to put in place an electronic medical record system, and the cost estimates are enormous. Somehow you have to then — when you balance your books that year when you’re showing your profits and losses, that’s going to cut into your bottom line significantly — you have to be in a position where you can look long term. And to a certain extent, non-profits have a slightly better situation in doing that.

They’re not quite as focused on the bottom line. They’re not going to have some of the same pressures, or shareholders looking at things going, “Wait a second. What happened here? Why did you authorize this giant outlay that we’re not going to see the effects of for 5-10 years down the road?” They also have possibly the ability to take advantage of, as I said earlier, some grant organizations will give grants to anything but non-profits. The non-profits have the ability to take advantage of some of the grants and such that are out there to encourage the adoption of some of these records.

To the extent that some of them are government institutions — not all non-profits are government institutions, but the ones that are government institutions can have an additional impetus that are getting pushed on from the government itself saying, “You need to go ahead and implement records.” The Veterans Administration hospitals are far ahead of the game in the electronic medical records world, and much of it is because basically, word came from above: “This is what you’re going to implement and what you’re going to do,” and they didn’t have anybody going, “Well, we’re worried about the bottom line in the end.”

I was interested in your research with e-medicine and its impact on the healing aspects of physician-patient relationships. What were your conclusions?

That there are some excellent, excellent tools out there in e-medicine if you use them appropriately and carefully; and there are some that can cause significant problems if you’re not careful. But like anything else, it can be used very well.

Any concluding thoughts?

I do think we’re going to see some movement around this. There’s certainly a lot of interest in it, and at various times we get a lot of political interest and concern about non-profit hospitals and charity care and tax-exempt basis. I think we’ll see something, and we’ve seen some states start to put in place, creative mechanisms to deal with it. I’m not sure if we’ll see something on a federal level, but I do think that we’ll see additional state movement. We’ve already seen localities, as you have already noted, remove tax-exempt status from hospitals where they say, "You know what? You’re not really fitting the model of what we thought we should be using for tax-exemption."