News 7/18/14

Top News

CVS Caremark signs a clinical affiliation agreement with four healthcare providers (ProHealth Physicians, Texas Health Resources, Palmetto Health, and The Baton Rouge Clinic) whose patients will gain access to clinical support, chronic disease monitoring, and wellness programs at CVS drugstores and MinuteClinic retail clinics. MinuteClinic will send electronic medical histories and visit summaries to each patient’s PCP and CVS will share messages and alerts. CVS announced in February 2014 that its MinuteClinic division would move from its homegrown EHR to Epic’s EpicCare, saying it needed a platform that would allow it to share information with other providers more quickly and give it patient portal and analytics capabilities.

Reader Comments

From Pop Counter: “Re: EHR vendors counting patients. Epic touts 50 or 60 percent coverage of the US population. How do they arrive at that number and how does it align with market share?” It’s an arguably flawed SWAG that doesn’t have a lot to do with market share, but it is a great marketing point from a company that claims to employ no marketing people, where huge marketing billboards magically appear on its HIMSS booth walls without human intervention. The “percentage of the US population” claim is also being used to impress the Department of Defense in its EHR selection. I’ve heard that Epic simply asks its customers (even the non-live ones) to estimate the number of patients they serve, applies some mysteriously derived percentage of potential overlap with other Epic sites, and then just adds it up. But let’s look at it from the point of view of an EHR company engineer being asked by the marketing department to arrive at such a number. Being objective and pedantically pragmatic as engineers often are, you would point out these challenges:

• We don’t host every client system, so we can’t just run some super-query of unique medical record numbers. We have to ask the hospitals to report the number back to us.
• Even though an individual health system may have successfully applied the one-patient, one-record rule, there’s no easy way to de-dupe overlapping patients across multiple clients without some kind of master person index algorithm. As a vendor with multiple health system clients in the same geographic area, we can’t easily account for patients who have information in all of them.
• We would be counting imported CCD record from someone else’s system. Should we really count that as a complete patient record in our system when it wasn’t even created there?
• We have a massive number of old patient demographics that we imported from our legacy system during conversion and we haven’t seen some of those people for 10 or more years.
• Some patients in our database have died, quite likely elsewhere so that we don’t have a record of it.
• Since we have an ambulatory system, we get an easy “credit” for a patient who merely drops by for a one-time ophthalmology consultation or lab test with no plans to return. The “record” in our system is minimal, containing (if we’re lucky) allergies, chronic conditions, and medication reconciliation. Almost everything of value is stored by other providers.
• We as a vendor who sells primarily to large academic medical centers can boast of more patients because of higher churn from referrals, specialty clinics, and large ambulatory practices, all of which see patients who are also in the EHR databases of many other providers. Ambulatory visit patients greatly outnumber hospital inpatients, so the numbers are artificially skewed to favor vendors with many active sites in both, and in fact a large ambulatory EHR vendor may have more unique patients than any hospital vendor.
• It’s not a zero-sum game. The market-leading system might claim 50 percent of US patients, the runner-up could have 45 percent, the third-place vendor might count 40 percent, and so on. That doesn’t mean we’ve sold more systems, have more users, process more active patients, or house complete data on more patients than anyone else.
• As an engineer, I think we need to be careful about implying that having a high percentage of the population covered reflects attributes of our system or our company that are important to prospects. It’s more accurately a reflection on the size and patient diversity of our existing customers.

From The PACS Designer: “Re: BlackBerry. It’s not seen much in the healthcare setting, but that could change if it becomes a takeover candidate. With its shares selling below $10, BlackBerry might soon become a division of Apple since consolidation in the mobile space is starting to happen. The real question is would that be practical for Apple to pursue.” BlackBerry’s market capitalization is down to around $5 billion after a big drop following the Apple-IBM enterprise announcement, which threatens BlackBerry’s one bright spot of mobile device management revenue. However, the company has $3 billion in cash, an enterprise user base that has no instantly appealing alternative, and a bunch of patents, so someone should be interested.

From Point Taken: “Re: GE Healthcare. Any idea of substantive outcomes from the bold 2012 aspiration from GE, saying that it will invest $3 billion in R&D in the Healthymagination program to foster at least 100 innovations to lower healthcare costs by 2015?” I will leave it to GE to respond if they like. I know they’ve done a lot specifically to develop lower-cost medical technology (not IT) in India, but I haven’t heard otherwise. The few press releases on the Healthymagination site are old, the most recent annual report posted is from 2012, and the newest video on their YouTube channel is from 2012.

From Sext Machine: “Re: doctor sexting during surgery. Thanks for the post – we got a kick out of that at our company. Do you know of other physicians who have gotten in trouble for using SMS messaging to share patient data?” I will defer to readers since the “trouble” involved is likely to be more related to internal discipline rather than being formally charged with violating HIPAA. I will say that I talked to a CIO today who implemented a secure messaging system to avoid users sending PHI via text messaging, but then found additional benefit in using the system to coordinate care among physicians.

From CEO: “Re: social media. We’ve been writing a weekly company blog but haven’t gotten Twitter and LinkedIn followers. How can we get better social media visibility?” I should mention that this was an actual (paraphrased) question I received today from the CEO of an HIStalk sponsor. Here was my excerpted answer, which I figured I might as well share in case anyone else is interested:

Company blogs rarely say anything fresh or insightful, often being cranked out by a marketing person or ghostwriter. They also try to appeal to every kind of reader, from newbie to old pro, programmer to CEO, with content that nobody hates but that nobody loves either. As a result, they aren’t going to get a lot of social media attention because they don’t say anything new. I don’t think your tweets will be all that compelling to Twitter users since they are infrequent, mostly link back to company material on your website, and don’t have much personality. People with big Twitter followings tend to be passionate about a subject other than their employer and that enthusiasm shines through. However, the question is whether that even matters. Companies tend to get wrapped up in the number of followers or retweets without having any idea whether that translates into more business.

HIStalk Announcements and Requests

Reminder: you can nominate a non-management employee, co-worker, or vendor person for the HIStalk BOSS (Beacon Of Selfless Service) award. It’s for people who went above and beyond during a specific incident, such as downtime, an IT crisis, bug fix all-nighter, or anything else in which your nominee sacrificed their own self-interest to fix a problem.

We like Niko Skievaski, the former Epic guy who produced “Struck by Orca,” an entertaining book about ICD-10 (he dropped off autographed copies at our HIMSS14 booth). He’s working on a new book, MU2i (MU2 Illustrated), which will ship in September. Artistic types who are willing to contribute a picture can contact Niko.

This week on HIStalk Practice: Mostashari’s Aledade venture works to set up an ACO in Arkansas. Healthcare IT sees its first billion-dollar acquisition quarter. CVS announces new clinical affiliations and a $1.5 million community health center grant program in partnership with IBM. A new independent practice study finds EHR workarounds are used for three main problems. Takeaways from the recent eHI webinar on ONC’s 10-year vision for interoperability. Providers and consultants are welcome to share an “Idea of the Day” with the HIStalk Practice audience. Thanks for reading.

This week on HIStalk Connect: Dr. Travis covers the growth of ZocDoc, benchmarking its success against his early predictions for the company. Google announces that it will commercialize its glucose monitoring contact lenses through a partnership with medical device manufacturer Novartis, which hopes to have the non-invasive glucose reading lenses on shelves within five years. Apple teams up with IBM to target the enterprise mobile markets. 

Listening: new from the 60-something metal gods Judas Priest, who sound great even with the album’s horrible production. Also: new Linkin Park.

Acquisitions, Funding, Business, and Stock

Athenahealth announces Q2 results: revenue up 27 percent, adjusted EPS $0.32 vs. –$0.08, beating expectations for both.

Microsoft announces that it will cut 18,000 jobs in the next year – 14 percent of its workforce – with the former Nokia unit taking most of the hit. Like all companies desperately ditching headcount to keep Wall Street happy, the Bill-less and Balmer-less Microsoft says it will simplify processes, increase accountability, reduce management layers, and make itself faster and more agile. I don’t recall hearing the announcements when it made processes more complicated, reduced accountability, added management layers, and let itself get slower and fatter. Microsoft paid $7.2 billion for Nokia in September 2013, which was probably the polite thing to do given that Nokia’s demise was hastened by hitching its teetering wagon to Windows Phone.

Behavioral EHR vendor Valant Medical Solutions receives an $11 million private equity investment.

Medical image exchange platform vendor DICOM Grid gets $6 million in funding from Mayo Clinic and Canaan Partners.

Online doctor search vendor BetterDoctor closes $10 million in Series A funding.

Sales

Texas Health Resources (TX) chooses LogicStream Health’s Intelligence Platform to manage and optimize its clinical decision support. I’ve pored over the company’s site for several minutes and I still can’t figure out how its product works given the maddeningly high-level non-detail it provides in abundance.

Desert Imaging (TX) chooses IDS AbbaDox RAD to manage its radiology workflow.

Children’s Hospital Los Angeles (CA) and Wisconsin Statewide Health Information Network sign four-year contracts for Orion Health’s Rhapsody integration engine.

The FHP Health Center (Guam) selects the eClinicalWorks EHR.

University of Kansas Hospital selects Health Catalyst’s data warehouse.

People

Susannah Fox (Pew Research Center) is named as an entrepreneur in residence at the Robert Wood Johnson Foundation.

Informaticist and former ONC Deputy National Coordinator Charles Friedman, PhD is promoted to chair of the Department of Learning Health Sciences at the University of Michigan Medical School. 

Paient satisfaction and physician reputation vendor SayAh names Warren Dodge (Creekside Healthcare Consultants, Altos Solutions) as CEO.

Announcements and Implementations

TeraMedica completes the implementation of its Evercore VNA for the public health system of New South Wales, Australia, saying it’s one of the world’s largest VNAs in covering 7 million patients, 110 facilities, and nine PACS that process 3 million imaging procedures each year.

The Central Texas division of Baylor Scott & White Health goes live on API Healthcare’s ShiftSelect.

Government and Politics

Two subcommittees of the House Energy & Commerce Committee held a joint meeting Thursday to discuss the use of technology to advance medicine. Above is Rep. Phil Gingrey, MD (R-GA) calling out Epic for selling a “closed platform” whose users have received more than half of the $24 billion in HITECH payouts, asking if taxpayers should be subsidizing the purchase of products that are supposed to be interoperable but aren’t. Gingrey says it may be time for the committee to look at the practices of EHR vendors, saying “fraud may be perpetrated on the American taxpayer.”

Three Arkansas Medicaid patients sue the state for refusing to pay for a cystic fibrosis drug that costs $300,000 per year. The patients meet FDA’s treatment criteria, but the state says the patients must first prove that older and cheaper drugs don’t work for them. According to the executive director of the National Association of Medicaid Directors, “We have this public health mentality that all people have to be cured no matter what the cost, and also let the innovators charge whatever they want. Those are fine theories independently, but when you combine them together in a finite budget environment, it’s not sustainable.”

Innovation and Research

In Canada, Telus Health opens an innovation center in Toronto.

Technology

A physician reviews a $3.99 iPhone app that claims to measure blood pressure using only the iPhone, with the developer suggesting it’s a Johns Hopkins product. The physician reviewer  talked to the CEO (who graduated from Hopkins but is otherwise unaffiliated) who says the app is “for entertainment purposes only” and shouldn’t actually be used to measure blood pressure. He says he’ll consider adding that disclaimer, which should not exactly boost sales.

Other

Medscape surveys 18,000 self-selected physicians about their EHRs. My observations:

• The survey asked, “Are you using an EHR?” which is a horrible question given that (a) it doesn’t distinguish between a practice EHR and a hospital EHR and most physicians practice in both settings, and (b) it doesn’t define “using.” All but 7 percent of respondents said they’re using an EHR or planning to do so within two years.
• The most widely used EHRs (again subject to the limitations of failing to distinguish between practice vs. hospital) are Epic (23 percent), followed by Cerner, Allscripts, eClinicalWorks, and NextGen. Three percent or fewer reported using well-known systems such as Practice Fusion, the VA’s VistA, athenahealth, Greenway, and McKesson.
• The top-rated system was the VA’s VistA, which also had the highest reported user satisfaction. However, the VA’s physician users are all employed and use only that EHR, so they’re probably going to be happier than a community-based doctor who has an EHR in the office plus different EHRs at each hospital in which he or she sees patients.
• VistA and Epic were top rated for connectivity.
• Only 42 percent of respondents said they are satisfied with their EHR vendor, and 16 percent say they’ll be replacing their system (it’s not clear how the hospital-based doctors could have answered this since it’s not their call).
• Overall, the survey’s results are questionable in its failure to distinguish among the multiple settings in which the average physician uses EHRs and its lack of definition of “using” (Entering orders? Having a clerk create a bill? Looking at a hospital rounds list on an iPhone?) For that reason, I would characterize its conclusions as entertaining but hardly authoritative. However, I doubt that will stop vendors and lazy writers from crafting clickbait headlines and swaggeringly wordsmithed stories about the results.

In the UK, Homerton University Hospital NHS Foundation Trust goes live with RFID technology that will track the movement and location of paper charts within the facility. The hospital says it won’t even bother to file patient notes alphabetically since they can just be shelved and located later by RFID. Paper records were tracked previously using Cerner Millennium.

An article in Health and Human Rights Journal profiles New York City’s jail system, which tweaked its eClinicalWorks EHR to help protect the rights of high-risk inmates (the article fails to note the difference between jails and prisons, the former being local facilities housing both those awaiting trial as well as those serving short sentences, so calling their occupants “prisoners” isn’t correct). EHR templates were created to identify injury patterns in vulnerable populations (LGBT, mental illness, injured, held in solitary confinement) consistent with inmate wrongdoing, officer misconduct, sexual assault, and self-harm.

Weird News Andy simply titles this story as “Smile.” Police arrest an upstate New York man for flying a $1,300 video-recording drone in front of the windows of a medical facility’s exam rooms. “Front Row Dave” says he made a mistake but won’t stop “droning.” His Facebook page has a picture of his drone, which appears to be a DJI Phantom 2 Vision+ Quadcopter with FPV HD Video Camera and 3-Axis Gimbal. The video above was made by a guy on a cruise using that same drone, which must be a voyeur’s delight. I’m thinking about flying one over HIMSS conference airspace in Chicago, or perhaps in the exhibit hall.

Sponsor Updates

• Orchestrate Healthcare posts a blog entry, “Healthcare Business Intelligence: Harness the Power.”
• PerfectServe’s VP/Chief Clinical Officer Leigh Ann Myers, RN writes a blog post, “Changing the Culture for SBAR Communications.”
• Kareo opens an operations center in Las Vegas, NV.
• Regenstrief Institute joins ConvergeHEALTH by Deloitte’s real-world evidence and analytics consortium.
• AirWatch by VMware opens registration and lineup of analyst speakers for the Airwatch Connect Global Tour 2014 in Atlanta, London, and Sydney.
• McKesson launches Benchmark Analytics, which provides reports and consulting services to optimize performance.
• GetWellNetwork’s CEO Michael O’Neil discusses the CDC Morbidity and Mortality report on the cost of cancer survivorship with a local journal.
• Kareo and Falcon EHR partner to provide cloud solutions to nephrology practices.

EPtalk by Dr. Jayne

HIMSS15 is looking for proposals for preconference symposia. We’re returning to Chicago this year, so dig out your winter boots and scarves. I’m not convinced that moving to April is going to allow the meeting to escape winter’s wrath. I seem to be cursed any time my travel remotely involves Chicago, so I’m not sure I’m looking forward to it.

Continuing the Open Payments saga from earlier this week, I was finally confirmed as a real, live physician so that I could access my data. I don’t have any data listed for the 2013 program year and that’s probably accurate, plus or minus a martini. I know I provided my NPI to one device manufacturer when we had drinks, but the reporting threshold is $10 and I’m not sure I topped that even though the cocktail in question was good.

Speaking of money, AMDIS released its annual report on CMIO salaries. There were 120 respondents and average compensation was up, according to the report. Based on the compensation of CMIOs I know well, the range isn’t terribly reflective of our reality in the trenches. The report also noted that although salaries have increased, job satisfaction is on the decline. I would agree that job satisfaction is an issue. It could be that my role has matured or perhaps it’s all the government regulations, but the job isn’t as much fun as it used to be. I’m the kind of CMIO that enjoys rolling up my sleeves and digging into cool projects, so every time I have to sit on another committee or address another regulation, it sucks a little bit of my life away.

I was surprised to see that more than 70 percent of respondents maintain a clinical practice. It’s getting harder and harder to do so. I’m one of the CMIOs whose own organization doesn’t support administrators who want to continue seeing patients. My clinical opportunities are cobbled together at a variety of facilities, which makes scheduling a bit of a challenge.

It’s hard to interpret the data with the relatively small sample size, however. I’m not sure how many CMIOs there are in the US, but there are many more people doing CMIO-type roles without the title and often without the compensation. Of respondents, 25 percent are certified in the subspecialty with another 25 percent considering it. Unfortunately many of my strongest colleagues are unable to sit for the exam since they didn’t maintain a primary board certification. I’m somewhat ambivalent about that personally and hope that those physicians who are certified but don’t see patients any more aren’t required to keep up a primary certification for no reason.

On the other hand, I had an email this week from a recruiter looking for a board certified physician to fill a locum tenens job in the US Virgin Islands, so maybe that primary certification is a good thing after all. They actually said “soaking in the sun with beverage in hand” in the opening paragraph, so they get full credit for that one. Doubtful that the actual experience would live up to the hype, like so much in healthcare these days.

I love some of the headlines I see: recently “MU drives patient savings” has been my favorite. Based on the duration of the program and what was actually involved in Stage 1, coupled with the relatively small numbers of providers attesting for Stage 2, I’m not sure we can arrive at this conclusion. Did they factor in the time cost of visits running late because providers were playing catch-up with the ever-increasing and burdensome requirements? Interestingly, the study in question had data provided by HIMSS.

Another great one cited Stage 2 EHRs as not being ready for data sharing. I don’t disagree with this one, although I think they focused too much on the technical problems of CCDA exchange and not enough on the philosophical problems. Some of the documents I see coming into our system are technically correct, but really don’t tell the clinician what he or she needs to know. For example, a patient who was seen in the emergency department for a laceration. I’d rather have the physician’s pen-and-ink sketch of the wound than any syntactically correct description, but there’s no room for that in the game of data exchange.

It’s probably a good thing that I can’t keep up with all the news that hits my inbox because it would just aggravate me. If I’m going to be aggravated, I’d rather be annoyed by the challenges of my latest pastry therapy project. For those playing along at home, this week’s specimen is the Blueberry-Lemon Bundt Cake from my good friend Martha Stewart. And thanks to YouTube for videos on how to zest a lemon without going insane. The picture doesn’t do it justice, but I loved the cake pan.

Got a favorite Bundt cake pan or recipe? Email me.

Contacts

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

More news: HIStalk Practice, HIStalk Connect.

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Morning Headlines 7/17/14

Acting head of VA says agency needs $17.6 billion to fix problems

Interim VA Secretary Sloan Gibson testified before the Senate Veterans Affairs Committee today, reporting that the VA would need $17.6 billion in additional funds over the next three years to fix the departments problems.

Program Evaluation of Remote Heart Failure Monitoring

A study published in Telemedicine and e-Health finds significant reductions in overall hospitalization rates followed the implementation of a remote patient monitoring system, but equivalent drops in hospitalization were also seen within the studies control group, leaving researchers with little choice but to conclude that remote monitoring seems promising, but additional research is needed.

States shirking Medicaid fraud reduction: report

An OIG report finds that 14 states are still not reporting enrollment data used to fight fraud within the Medicaid Interstate Match program.

Readers Write: Medication Electronic Prior Authorization, the Next Big Thing for EHRs

Medication Electronic Prior Authorization, the Next Big Thing for EHRs
By Tony Schueth

Electronic prescribing (ePrescribing) has surpassed the tipping point, where more prescriptions are being written electronically than on paper. Now the industry must start thinking about the next big thing that will take ePrescribing to the next level and address one of healthcare’s most inefficient processes: prior authorization (PA) of prescriptions.

With ePrescribing considered table stakes in an electronic health record (EHR), software developers should be thinking about innovations that will take ePrescribing from a humdrum utility to a must-have. Electronic prior authorization (ePA) for the pharmacy benefit offers that innovation opportunity.

EPA is the #1 ePrescribing capability desired by physicians, according to market research conducted by NCPDP’s ePA Task Group. In order to foster a standardized approach to satisfy this demand, NCPDP approved an electronic data interchange (EDI) standard for ePA last year.

By design, the ePA transaction can be integrated with the EHR ePrescribing work flow, enabling prescribers to complete the prior authorization process within two minutes as compared with the manual process, which involves many phone calls and faxes that can take days to weeks to complete (15 days, on average). Considering that specialty medications dominate the drug pipeline and require prior authorization up to 95 percent of the time, the need for ePA is urgent.

Seven states have mandated the use of ePA beginning in late 2014 and eight others are engaged in ePA regulatory activity. In May, the National Committee on Vital Health Statistics (NCVHS) recommended that the Department of Health and Human Services adopt the NCPDP transaction as the standard for medication PAs. NCVHS recommendations regarding ePrescribing and related transactions often become requirements for payer participation in Medicare Part D.

The coming regulatory mandates afford EHR vendors the opportunity to be ahead of the curve. Rather than scrambling to meet multiple state regulatory deadlines at the last minute, vendors can take advantage of the interval between Meaningful Use (MU) Stages 2 and 3 to begin development of ePA functionality while there is still breathing room to concentrate on work flow enhancements.

The availability of ePA may sway some physicians in their EHR choice. Recently, Surescripts found that 28 percent of physicians surveyed would switch their EHR for one that supports ePA. While this percentage may be exaggerated based upon a single feature, there is no question that a robust replacement market for EHRs exists. Many physicians are looking to transition from early purchases of basic EHRs to more sophisticated solutions.

EDI networks such as Surescripts have begun offering ePA connectivity, while such established ePA services vendors as CoverMyMeds have introduced APIs to ease EHR integration. Some service providers offer connectivity for all ePAs – even if a pharmacy benefit manager or other payer isn’t electronically enabled, electronically initiated ePAs are delivered via fax.

The time is right. EPA is a logical and useful enhancement that physicians desire. A transaction standard that ensures compatibility is in place. Regulators are beginning to mandate its use. The number of PAs is growing. EDI networks and service vendors are eager to ease integration.

With the rare opportunity posed by the MU Stage 2 delay, vendors can roll out a new feature that is a “win-win-win-win” benefit for physicians, patients, payers, and EHR vendors.

Tony Schueth is founder, CEO and managing partner at Point-of-Care Partners of Coral Springs, FL.

Readers Write: Data Exchange with C-CDA: Are We There Yet?

Data Exchange with C-CDA: Are We There Yet?
By Brian Ahier

Do you think you have all the interoperability criteria to meet current and future stages of the EHR Incentive Programs? A new study published in JAMIA found that most providers don’t.

The study concluded that providers likely are lacking critical capabilities. It found that some EHR systems still don’t exchange data correctly using Consolidated Clinical Document Architecture (C-CDA), which may prevent providers from receiving future Meaningful Use (MU) incentives.

After sampling several platforms used to produce Consolidated Clinical Document Architecture (C-CDA) files, the research team from the Substitutable Medical Applications and Reusable Technology (SMART) C-CDA Collaborative — funded by the ONC as part of the SHARP research program — found a number of technical problems and obstacles which prevented accurate data exchange between different EHR systems.

There is already wide-scale production and exchange of C-CDA documents among healthcare providers this year due to the EHR incentive program and for meeting Meaningful Use requirements. Indeed, live production of C-CDAs is already underway for anyone using 2014 Certified EHR Technology (CEHRT). C-CDA documents enable several aspects of Meaningful Use, including transitions of care and patient-facing download and transmission.

Stage 2 Meaningful Use requires that providers be capable of producing C-CDA files, which contain both machine-readable and human-readable templates used to exchange patient data between EHRs during transitions of care. While all 2014 CEHRT must have the ability to create these files, some vendors are unfortunately not using the basic XML and HL7 technology correctly.

To find out how these variations affect providers and their participation in Stage 2, the researchers sampled 107 healthcare organizations using 21 EHR systems. They examined seven important elements of the documents: demographics, problems, allergies, medications, results, vital signs, and smoking status, all of which are required to be included in the C-CDA for Stage 2. They found errors in the XML that conflicted with HL7 standard usages, rendering the document ineligible to meet the Stage 2 rules for interoperability.

One key takeaway from this research is that live exchange of C-CDA documents is likely to omit relevant clinical information and increase the burden of manual review for provider organizations receiving the C-CDA documents. Common challenges included omission or misuse of allergic reactions, omission of dose frequency, and omission of results in interpretation. Unfortunately, only some of these errors can be detected automatically.

The team found 615 errors and data expression variation across 11 key areas. The errors included “incorrect data within XML elements, terminology misuse or omission, inappropriate or variable XML organization or identifiers, inclusion versus omission of optional elements, problematic reference to narrative text from structured body, and inconsistent data representation.”

"Although progress has been made since Stage 1 of MU, any expectation that C-CDA documents could provide complete and consistently structured patient data is premature," the researchers warned. The authors also note that more robust CEHRT testing and certification standards could prevent many of these troubling errors and variations in the technology and that the industry may also benefit from the implementation of data quality metrics in the real-world environment.

The researchers recommended several steps to improve interoperability: providing richer, more standardized samples in an online format; requiring EHR certification testing to include validation of codes and vocabulary; reducing the number of data elements that are optional; and improving monitoring to track real-world document quality.

The researchers make the case for using a lightweight, automated reporting mechanism to assess the aggregate quality of clinical documents in real-world use. They recommend starting with an existing assessment tool such as Model-Driven Health Tools or the SMART C-CDA Scorecard. This tool would form the basis of an open-source data quality service that would:

• Run within a provider firewall or at a trusted cloud provider
• Automatically process documents posted by an EHR
• Assess each document to identify errors and yield a summary score
• Generate interval reports to summarize bulk data coverage and quality
• Expose reports through an information dashboard
• Facilitate MU attestation

"However, without timely policy to move these elements forward, semantically robust document exchange will not happen anytime soon," the authors stated. “Future policy, market adoption and availability of widespread terminology validation will determine if C-CDA documents can mature into efficient workhorses of interoperability,” the report concludes. It would seem that if policy changes are not put in place, there could be risk in the Meaningful Use program not actually being all that meaningful.

This month CMS released the proposed 2015 Physician Fee Schedule. Among other things,it includes proposals to revise the physician supervision requirements for Chronic Care Management (CCM) services and proposes to require CCM practitioners to use EHRs certified to meet at least the 2014 Edition Meaningful Use criteria, which require the ability "to capture data and ultimately produce summary records according to the HL7 Consolidated Clinical Document Architecture standard."

Since this new proposed rule includes expanding the use of the certification program beyond Meaningful Use and specifically mentions the C-CDA standard, I thought I would ask Joshua Mandel, one of the authors of the study, for his thoughts.

"It’s not too surprising that CMS’s efforts to improve chronic care management would build on Meaningful Use requirements," he said. "In the section you’ve quoted, CMS, is simply saying that Eligible Providers would need to use MU-certified systems (just as they must use MU-certified systems to attest for MU incentive payments). And so C-CDA capabilities come along for the ride in that decision. I can certainly say C-CDA is better than nothing; and C-CDA 1.1 is a specification that exists and has been implemented today, so it’s a natural choice here."

While there are challenges in implementing and making good use of C-CDA documents, there is little doubt that HHS is continuing to drive the use of these standards forward through various policy levers. The ability to exchange relevant clinical information for transitions of care is a key enabler in transforming our healthcare system to paying for quality instead of quantity.

Despite these challenges, we are beginning to see success in the marketplace. Building on this success and continuing to improve content standards is critical if true interoperability is to become a reality.

Brian Ahier is director of standards and government affairs for Medicity, A Healthagen Business of Salt Lake City, UT.

CIO Unplugged 7/16/14

The views and opinions expressed in this blog are mine personally and are not necessarily representative of current or former employers.

Abdication of Authority and the Poets

I used to write a fair amount of poetry in my early teens. I continued writing for about 10 years, but stopped shortly after marriage and after the birth of our first child. Julie remarked one day that my poetry had lost its romantic flair and creativity, reading more like a stuffy business letter. As I re-read some of the stuff I wrote, she was absolutely correct. “Dear Julie,” I would begin, and then end with something akin to, “With all due respect.”

Actually, even as I review some of my earliest material, I become increasingly critical of my writing. I think of how I might rephrase specific stanzas using today’s vernacular. Then again, sometimes when you mix the old and new, the outcome is not all that much better. I finally came to accept that while imperfect with today’s eyes, the poems of old were indeed perfect for the time in which I originally wrote them. A zeitgeist sort of thing, I suppose.

As I rummaged through old online files, I found several presentations I’d done around IT governance. I was shocked to find myself in disagreement with many of my original suppositions. But, as with my retrospective with poetry, those governance models were possibly the best for that point in time.

Or were they? With this historical vantage point, I noticed a disturbing trend that not only led me into a long-term malaise, but many of my peer group as well. Subconsciously, we ceded more and more control of IT to our customers, unknowingly setting the stage for a silent yet unintended overthrow.

Today, we are scratching our heads and wondering where the power of the CIO has gone. As I’ve said before, many of us are downright impotent, and I’m ringing the bell loudly to awaken the sleeping spirit.

My findings were disturbing. At one point, I want to cry, and then in the next second, laugh. We often blame our customers for uncontrolled IT costs and say crazy things like, “There is no such thing as an IT project.” We load governance councils with individuals who are unqualified to help make technology decisions and yet complain about the insufficient funds for infrastructure. Giving away control only doomed us to the Tragedy of the Commons.

From a historical perspective, the pendulum has swung a full 180 degrees. I applaud inviting others into the tent. Absolutely it was and remains the right thing to do. But somewhere along the line, we left the tent. We maintained our responsibility but abdicated our authority. We abandoned our leadership rights.

Many are now outside the tent looking in, running IT by title only. Not influence. Not leading. Just reacting. Yuck!

Do we want to swing all the way back? No! I suspect for most of us we need to shift more toward center. The governance continuum will vary by the culture, organizational challenges, environmental factors, and ultimately our individual leadership capabilities. We need to appreciate the journey, learn from it, and modify.

Let’s reconnect to our mantle of authority and lead governance. Not be ruled by governance.

Ed Marx is a CIO currently working for a large integrated health system. Ed encourages your interaction through this blog. Add a comment by clicking the link at the bottom of this post. You can also connect with him directly through his profile pages on social networking sites LinkedIn and Facebook and you can follow him via Twitter — user name marxists.

Morning Headlines 7/16/14

M*Modal Receives Approval to Emerge From Chapter 11

MModal confirms that it will emerge from bankruptcy within three weeks as its Plan of Reorganization is approved by the courts.

Novartis and Google to Work on Smart Contact Lenses

Google and medical device manufacturer Novartis have entered into a licensing agreement to commercialize Google’s recently unveiled glucose monitoring contact lenses.

Best Hospitals 2014-15: Overview and Honor Roll

US News and World Report publishes its 2014 Top Hospitals list with Mayo Clinic taking first place, followed by Massachusetts General Hospital and Johns Hopkins.

New challenge for team that passed Turing test: health insurance

Three computer scientists from the team that recently claimed to have beaten the Turing Test are leaving the artificial intelligence field and heading to a Santa Rosa company where they will help build a website designed to help consumers shop for Medicare plans.

News 7/16/14

Top News

IBM and Apple announce a partnership to develop business applications for iPhones and iPads. IBM will also sell Apple products and provide on-site services to business clients, while Apple gains business credibility and a tie-in to IBM’s big data capabilities that will make its devices decision-making tools. The deal also gives Apple’s iOS more enterprise credibility against the more widely used Android operating system. The companies say more than 100 business apps will be available by fall.

Reader Comments

From Baron Schkinn: “Re: Siemens. The rumor is surfacing again that Cerner will buy the health IT division of Siemens and close the deal by the end of the summer, coming from an inside source who I trust. That would give Cerner a replacement for its failed ProFit, a backup center in another earthquake zone, a shot at selling to the significant number of Invision and MedSeries4 clients, and would make Cerner the #1 vendor over McKesson in revenue. They would still be left with two poor ambulatory solutions that would make them non-competitive with Epic.” Unverified, other than the seemingly solid rumor that Siemens is shopping the business it describes on its website in a predictably confusing fashion as “the Siemens Healthcare Information Technology business of Health Services, Siemens Healthcare” (which offers several humorous acronym-powered punning opportunities.) Cerner might be willing to pay the rumored $1.4 billion just to get the Siemens customer base and a few worthwhile niche-filling nuggets (MobileMD, although nothing else comes to mind given Soarian’s minimal-and-dropping competitiveness) but it would seem to be a better fit for private equity. Cerner doesn’t do a lot of acquisitions and one that size might spook Wall Street, which Cerner doesn’t like doing, but anything can happen when it comes to acquisitions.

From BadBuy: “Re: Sunquest. Significantly behind full-year sales target, with the top two reps at just over 50 percent. Vista/Huntsman Gay made out like bandits.” Unverified. Roper Industries acquired Sunquest in July 2012 for $1.42 billion after what I’ve heard was shockingly minimal due diligence. I would assume that former owners Huntsman Gay Global Capital and Vista Equity Partners did indeed do quite well for themselves given that the former paid only $208 million to acquire 51 percent of Sunquest in December 2010, with Vista holding on to 49 percent. That means Roper paid more than three times that valuation just 19 months later. Roper executives talked up Sunquest’s revenue growth and implementation improvements in the company’s most recent earnings call, adding that Sunquest will have “quite an exceptional year in 2014.” Roper’s diversified growth is steady – share price has more than tripled in the past five years. The longer you work in this or any other industry, the more you realize it’s the generic money guys, not the deep subject matter experts or passionate advocates, who do really well. “Owning” has more potential reward (and risk) than “doing.”

From Binge and Purge: “Re: Johnathan Samples. You’ve probably already heard, but he has left Greenway after 13 years and started a new company.” Samples, who was Greenway’s chief innovation officer through last month, threw in with former Greenway Chief Product Strategist Jason Colquitt at Across Healthcare, which offers what appears to be an unfocused array of consulting and software development services.

From Yalie: “Re: Yale-New Haven. Anything in writing about their hard Epic downtime system-wide for two days last week?” The local paper says a network switch went down Friday for a handful of hours, requiring the hospital to cancel elective surgeries. Epic information was still available from cached copies.

HIStalk Announcements and Requests

I’ve confirmed that Epic’s FDA 510k submission was for a bedside matching system, not a blood bank system.

We hear a lot about the suits in the healthcare corner offices, but not enough about the cube-dwellers who perform the actual work that pays for them. I am offering the HIStalk BOSS (Beacon of Selfless Service) Award to recognize those trench warriors (provider or vendor) who toil without bonuses, reserved parking spaces, or the ever-present validation of company-paid butt kissers. The BOSS Award isn’t a trophy or cash, but rather recognition in HIStalk of a non-management employee who went above and beyond during a specific event (downtime, sales demo, screaming surgeon demanding a new laptop, etc.) to save the day. Anyone who observed the individual’s laudable effort firsthand can nominate someone – a supervisor, peer, or customer. Submit your candidate here.

We like to keep in touch with HIStalk’s sponsors and we just sent an e-mail to all the contacts on our list. Let Lorre know if we missed you.

Acquisitions, Funding, Business, and Stock

The US Bankruptcy Court approves MModal’s reorganization plan, allowing the company to emerge from bankruptcy in August as it had originally announced.

The Teamsters Union urges McKesson’s shareholders to approve its proxy proposal to eliminate the company’s change-of-control terms that will give its top executives $283 million if new owners fire them, including $140.5 million for John Hammergren alone.

Craneware announces $70 million in sales in the first half of 2014, up 80 percent year over year.

Sales

Saint Mary’s Hospital (CT) selects Wellsoft’s EDIS.

Wheeling Hospital (WV) adds Sunrise Financial Manager to its Allscripts systems.

Carrus Hospitals (TX) will deploy Medhost’s clinical and financial solutions via the company’s hosted Medhost Direct platform.

People

Rob Lipowski (Cleveland Clinic) joins Perceptive Software as director of healthcare solutions.

Perry Lewis (McKesson) is named VP of industry relations of CoverMyMeds.

“Inc.” profiles Beyond Lucid Technologies Founder and CEO Jonathon Feit, who has Tourette Syndrome. It points out the difficulty he has in performing company pitches and recorded videos without the characteristic twitching. His company sells an electronic patient record system for first responders.

Announcements and Implementations

Summit Healthcare announces that 26 facilities are live on its Summit Care Exchange technology, which allows providers to send CCDs to a Health Information Service Provider via Direct to meet Meaningful Use requirements.  

EHNAC and WEDI launch an accreditation program for practice management systems, announcing GE Healthcare, Medinformatix, and NextGen as pilot participants.

Elsevier Clinical Solutions announces its Clinical Documentation Improvement Reference App, which provides clinical term look-up and medical necessity information with an emphasis on ICD-10.

New Orleans-based startup Clinicate launches its clinical file-sharing solution for providers and patients. It also contains some unrelated tools such as drug lookup. It’s free for patients and a single provider can use the system free for up to 100MB of storage.

Healthcare Data Solutions announces availability of the HealthcareData360 EHR market intelligence database, which allows looking up EHR decision-makers both within and across connected provider organizations.

Government and Politics

NIST and OCR will co-host “Safeguarding Health Information: Building Assurance through HIPAA Security” on September 23-24, 2014 at the Grand Hyatt in Washington, DC. Onsite attendance runs $345, while Webcast attendees will pay $200.

The FCC’s 17-year-old system crashes under the weight of 800,000 comments filed regarding net neutrality, forcing it to extend the comments deadline until midnight Friday. Comments can be filed (and read, in the case of the most recent 10,000 comments) here.

Eighty-nine House lawmakers sign a letter requesting that CMS remove penalties for clinical laboratories that perform tests for Medicare patients, explaining, “Pathologists have limited direct contact with patients and do not operate in EHRs. Instead, pathologists use sophisticated computerized laboratory information systems (LISs) to support the work of analyzing patient specimens and generating test results.” CMS granted pathologists a hardship exception for 2015, but the College of American Pathologists wants the requirement to be eliminated permanently.

Innovation and Research

Three computer scientists who developed the first program that passed the Turing test — convincing a human that they are interacting with another human rather than a computer — have joined startup Wholesale Change, which will develop online tools to help consumers choose Medicare insurance plans.

@Cascadia tweeted about Israel-based Tyto Care, which offers a handheld device and cloud platform that allows patients to do their own physical examination while being guided remotely by their doctor.

Chicago-area researchers query the EHRs of 23 primary care practices to identify patients likely to have undiagnosed hypertension based on their historical pattern of in-office blood pressure readings, inviting those patients to follow up with a more comprehensive series of readings. The practices not only alerted patients, but also turned their work into a quality improvement project by continuing to remind both patients and physicians of the need for follow-up until an ICD-9 code was entered indicating that hypertension had been either confirmed or ruled out.

Technology

The Alcon division of Novartis AG licenses Google’s smart contact lens technology that will measure and report blood glucose levels. Meanwhile, the former Google X director who led the development of the contact lens as well as Google Glass announces his departure from Google and his excitement at going to work for Amazon. He made headlines last week by saying that Glass is “not necessarily the definitive answer” for wearable technology.

Welch Allyn adds customizable patient scoring to its Connex vital signs monitor, allowing hospitals to use their own Early Warning Score to identify deteriorating patients. The company’s clinical surveillance system can send the results wirelessly to the hospital’s EMR and can also monitor for falls, pressure ulcers, and respiratory distress.

Other 

A new HIMSS Analytics report says “germ-related hospital applications” have high growth potential. That oddly phrased category (clinicians never say “germs” unless talking slowly to laypeople who possess limited medical comprehension) includes systems for infection surveillance, patient acuity, and laboratory outreach.

HIMSS14 is named the fourth-largest medical meeting of 2013 with its 36,5325 attendees, following the FIME (Florida International Medical Expo) trade show in Miami, the Greater New York Dental Meeting, and RSNA.

Two surgeons from UNC Hospitals (NC) open a burn center in Malawi, which has 14 million people and only 20 surgeons. One of the UNC surgeons added that UNC’s new Epic electronic medical record and potentially the addition of telemedicine services will help it treat patients in their local areas of North Carolina rather than transporting them to Chapel Hill.

Let’s hope Massachusetts isn’t the national healthcare model everybody brags on: healthcare will eat up almost a third of the new state budget vs. the 20 percent it consumed in 2001.

An article describes how 25-bed Cottage Hospital (NH) became one of the first hospitals to attest for Meaningful Use Stage 2. It’s a Medhost facility and hired an informatics nurse to keep things moving along.

“US News & World Report” lists its “Best Hospitals 2014-15”: (1) Mayo Clinic; (2) Mass General; (3) Johns Hopkins; (4) Cleveland Clinic; (5) UCLA Medical Center; (6) New York-Presbyterian; (7) HUP; (8) UCSF; (9) Brigham and Women’s; (10) Northwestern Memorial; (11) University of Washington; (12) Cedars-Sinai, tied with UPMC; (14) Duke; (15) NYU Langone; (16) Mount Sinai; and (17) Barnes-Jewish. 

“The Wall Street Journal” reports that the ambitious $54 million biotech facility created from the converted Brooklyn Army Terminal stands nearly empty, reportedly because of squabbles between its two developers, SUNY Downstate Medical Center and the city’s Economic Development Corp. The project’s former executive director, who left last year, said public agencies are lousy at running speculative developments because they have too much bureaucracy behind them and lack the mindset to get it done. The project is limping along by renting space to non-biotech companies at a discount despite its mission of boosting the city’s biotech presence.

Madison, WI’s weekly hippie newspaper covers Epic’s purchase of wacky artwork at the summer art fair run by the Madison Museum of Contemporary Art, saying that Judy Faulkner brings an employee team armed with a “generous budget” (some of it in cash) to find big, bold, and whimsical pieces.

A father whose six-week-old daughter died of a liver tumor after spending her entire life in the hospital posts a request on Reddit asking for help to Photoshop the only photos he had of her, all of them showing her with tubes in place since she had never been without them. His post generated 2,700 comments of support and many photographs and drawings. He called attention to “Now I Lay Me Down to Sleep,” whose volunteer photographers take portraits of families with their dying or deceased child.

Sponsor Updates

• The Sunquest User Group conference is being held this week at the JW Marriott Desert Ridge Resort in Scottsdale, AZ.
• HealthMEDX sponsored the “Prescription for Change” technology discussion for long-term and post-acute care providers, with CEO Pam Pure and Medical Director Charles Rogers, MD participating.
• Laura Argauer of CTG co-presented “Using Transformational Data Analytics to Improve Care Valuation, Management and Outcomes of Chronic Kidney Disease Patients” at the Healthcare Analytics Symposium & Expo 2014 this week.
• Health Catalyst shares a case study on Crystal Run Healthcare (NY), explaining why they bought rather than built a data warehouse.
• Predixion CEO Simon Arkell will discuss the explosion of connected devices and predictive analytics challenges in healthcare during the Microsoft Worldwide Partnership Conference in Washington, DC this week.
• Kari Bunting, RN of MedStar Franklin Square Medical Center (MD) will present her research on reducing excessive uterine contractions aided by PeriGen’s PeriCALM Patterns EFM at the Summer Institute in Nursing Informatics in Baltimore, MD this week.

Contacts

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

More news: HIStalk Practice, HIStalk Connect.

Get HIStalk updates.
Contact us online.

Morning Headlines 7/15/14

E-Prescribing Trends in the United States

E-Prescribing rates in the US have climbed dramatically since 2011, according to new data published by ONC. In 2011, just seven percent of providers were live with e-prescribing, compared to 70 percent that use the technology today.

New resources improve states’ abilities to advance Medicaid payment and delivery system reform

HHS unveils a new program called the Medicaid Innovation Accelerator Program which will work with state agencies to award $100 million in federal funding help promote innovation aimed at advancing Medicaid-specific delivery system improvements.

MMRGlobal Subsidiary Receives Clinical Trials Patent

MMRGlobal receives a US patent titled “Electronic Health Records in Clinical Trials” which the company’s press release says will “opens the door to completely new revenue generating opportunities,” likely by demanding license fees from research organizations and pharmaceutical companies using EHR data within clinical trials.

British Government Picks Illumina to Sequence 100,000 Genomes

US-based gene sequencing firm Illumina lands a $160 million deal with the British government to sequence 100,000 human genomes.

Curbside Consult with Dr. Jayne 7/14/14

I wrote a few weeks ago about my adventures with the CMS physician portal. Since the reporting of payments and gifts from drug and device manufacturers to physicians is now mandatory, physicians are wise to make sure the information is accurate because it is going to be released to the public.

I had gone on the site and registered for basic portal access in June, but had read that I would have to return in July to register specifically for access to the Open Payments data. Once I went to the Open Payments link (thank goodness the website at least has a decent breadcrumb trail at the top), it asked me to create my profile. It also allows physicians to nominate “authorized representatives” to handle physician information.

It also requires entirely too much other information that CMS should already know about us from our NPI, Medicare, and other applications: NPI, license number, practice type, specialty code, DEA number, etc. The first words that popped into my head (of course in a snarky voice) were “administrative simplification.”

Rather than have the specialty codes on a pick list, I had to launch a 359-page PDF to figure it out. Finally, Page 212 had a link to Appendix C, where the answer was still nowhere to be found; the appendix had a link to the CMS taxonomy crosswalk. I’m not sure why they couldn’t have hooked up the link on the actual application to the crosswalk in the first place.

Even though the crosswalk lists my specialty code as “08” in the column that says “Medicare Specialty Code,” what they actually wanted was the code in the “Provider Taxonomy Code” column. Don’t bother trying to cut and past the 10-digit code into the form because it won’t work right. I was able to finally get through all the steps, only to learn that I won’t be able to do anything else until my profile is “registered” after my identity as a physician is confirmed. I’m surprised they didn’t ask for my blood type.

When I write about my initial experience, I also asked for a good martini recipe to help me get through it. Weird News Andy was happy to oblige with one that plays to my literary passions:

Charles Dickens Martini

1) Make a martini as you see fit

2) Add an olive or twist

I’m still laughing. There are so many Dickens titles that seem appropriate for healthcare IT: Great Expectations, Hard Times, and Bleak House, to name a few. It looks like my attempts to see my Open Payments data are turning into either a serial or a novel.

Have a literary suggestion that meshes with our lives in the IT trenches? Email me.

Email Dr. Jayne.

HIStalk Interviews Susan DeVore, CEO, Premier

Susan DeVore is president and CEO of Premier, Inc. of Charlotte, NC.

Describe what Premier does, especially with regard to healthcare IT and data.

Premier is, I think, the largest healthcare improvement alliance in the country. We are integrating data from hundreds and thousands of hospitals on our platform to solve the cost, quality, safety, and population health or outcomes problems.

We’ve got a 59 percent footprint. We’re serving 3,000 hospitals in various ways. We have about 110,000 non-acute care sites. We have insights with data on one in three patients in the country.

It’s a massive business intelligence platform that we’re wrapping around services and capabilities to help these healthcare systems transform from the inside.

Premier was a hospital group purchasing alliance and is now a publicly traded informatics company that offers solutions for supply chain, labor management, population health, and quality. How does that all fit together to help hospitals as payment models change?

We’ve been building these data assets and this supply chain capability for a long time. Over the last three or four years, we’ve fundamentally rebuilt our entire foundational infrastructure. It was clear to us that all of these one-off solutions and individual vendor solutions aren’t going to solve the complexity of healthcare problems.

We decided a while back that providers needed to be able to connect the data, have the business intelligence come from all vendors and all payers, and be normalized and cleansed and standardized. We needed a social business capability on the front end so that we could accelerate the best practice sharing, content review, and knowledge transfer among these healthcare systems. We decided this was going to be the only way you could really solve the cost, quality, and outcomes problems.

As a provider, knowing where you stand in the continuum and not just how well you improve on your own is a pretty big deal. Will vendors struggle to compete as the market finds that their single tools may not offer enough?

The problem for any single vendor is that they only have a piece of the picture. Even EHR vendors. In our mind, they’re only one system of probably 12 or 13 different sources of data that you need to solve the problem. Any one payer that tries to solve the problem, or comes from a payer, has a view into only the payer population.

When we set out to do this, we said, we’ve got to be vendor agnostic and we’ve got to be payer agnostic. Health systems want to change the way patients get cared for, regardless of which EHR system they use or which payer they have a contract with. They want to change the way care is delivered for a patient population.

We think it’s a differentiator. We think that it will be critical that vendors are required to make their information exchangeable and not require that our health systems have to pay every time they want to make the information exchangeable.

How do you see that happening? It’s been a sore spot with providers that systems are supposed to be interoperable, yet they often aren’t unless you write a check and probably accept less functionality than you want.

I think there are three things that are going to drive it. The first is that providers are going to drive it, a coalition of providers who need the information to be more effective at what they do. Providers are increasingly dissatisfied with the lack of the exchangeability or the interoperability, so I think they’re going to require it.

Secondly, I think consumers are going to require it. Consumers are going to say, I need to make the decisions. I need the transparency to the information. I want it.

Thirdly, we need policy change. The thing that will accelerate it is if policy makers start to realize we can’t solve the cost, quality, and outcomes problem in healthcare without it. Those three things could push it faster.

Hospitals are trying to figure out what role they will play in the retooled healthcare system. How can information help them determine their business model?

Because we have this 59 percent footprint and we cover basically every geography, we see health systems that have been morphing now for several years. They have affiliated physicians. They have affiliated nursing homes. They have partnerships in the community. They’re building virtual IDNs, virtual ACOs, real IDNs, and real ACOs and have been for a long time.

They also usually have in those community markets more sophistication, maybe, and more capital to help build the integrated capabilities and to help access the integrated capabilities.

From our perspective, if and when the healthcare system moves to a more bundled payment world — whatever form that takes — this integrated data is going to be extremely important. It doesn’t have to all come from the source system. Many of our health system’s big IDNs are saying, do I really have to switch everything out? Or in an open data, big data, cloud-based, shared infrastructure world, can I find ways to go get the data and put it together?

These health systems are going to be an integral part of what healthcare looks like in a future state world. They’ve been starting to build this capability and put these pieces together for a long time.

If the pie gets bigger for our healthcare system, and they have a lot of pieces as opposed to one singular hospital piece, I think this is a pretty natural evolution.

Are providers jumping too quickly into ACO arrangements?

I think they’re experimenting with ACO models. As opposed to jumping all in, they’re trying it on a population. They’re now receiving data from CMS, which was something healthcare systems had never historically been able to do. They’re learning a lot. They’re figuring out how to manage the provider risk.

What we say to them, and what they say to us is, we’re trying to future-proof them and they’re trying to future-proof themselves. Whether it’s an efficiency measure that is measuring cost three days before acute care stay and then post, a bundled payment program, an ACO, or Medicare Advantage — if you’re able to connect data and you’re able to turn that data into business intelligence, pulling it from all vendors and all payers and putting it in the hands of your providers and change the way care is delivered, then there may be multiple models for a while we’re in the transition. That infrastructure is going to position you to navigate through those various models.

How will it be different for an academic medical center versus a community hospital?

They have different challenges. Community-based systems are integrating physicians very significantly. They have to have data and connected information in order to influence the practice of medicine.

In an academic center, you’ve got a more employed model that you can deal with, but you have other challenges. How do you fund research? How do you fund all the other activities and pay for and compete in the community healthcare system?

We have them all. We have academics. We have small. We have large. We have big IDNs. Some of our academics will tell us it’s easier for small community systems to drive change. Our community systems will say it’s easier for academics because they’re larger with more funding and more resources.

The truth is, this is performance improvement. You need the data. You need the data connected. You need to operate and change your operation. Whether you’re an academic or whether you’re a community health system, we can see the change happening in both and in neither. It has more to do with the culture, the measurement, the data, the infrastructure, and the willingness.

You’ve suggested the possibility of acquisitions. What areas interest you?

We report publicly in two segments — a supply chain segment and a performance services segment, which is where all of our HIT assets, informatics, and consulting and collaborative activities are.

We have said, and continue and to say, over on the performance services side, we are interested in ambulatory data acquisition and connectivity of ambulatory data to acute care data. We’re interested in all kinds of population health and data analytics technologies and capabilities for our members to build this population health capability. We’re interested in major things in both of those buckets.

We’re also interested in the area of patient-reported outcomes and in the implementation of standardized, more cost-effective, clinically-effective healthcare. We’re looking at all kinds of things in those areas.

On the supply chain side, we think there’s still a ways to go in changing supply chain capabilities in healthcare systems. We’re looking at workflow kinds of capabilities, alternate site capabilities, and the connectivity for supply chain between all the alternate site locations and the hospital or health locations. We have a specialty pharmacy. We think it’s a critical element to population health, so we have some interest there also on the supply chain pharma side.

Do you have any final thoughts?

It’s a very dynamic time. Integrated information that’s vendor agnostic and payer agnostic is critical.

Health systems have spent hundreds of millions of dollars installing EHRs. They’re increasingly dissatisfied with the inability to exchange information. They’re not so interested in spending hundreds of millions more to build data warehouses.

We think there’s a real opportunity for shared infrastructure and shared integrated data management capabilities. We are making significant investments there.

Morning Headlines 7/14/14

WellPoint CEO: Insurer readies for technology wave

Joseph Swedish, CEO of the insurance company WellPoint, says in an interview that he will drive the company to adopt new technologies to reduce health costs, including telehealth, workplace health kiosks, and participation on insurance exchanges.

Verona’s Epic Systems adding employees

Epic adds 600 employees since February, bringing its total to 7,400. Epic has seen tremendous growth in the past three years when, in June 2011, the company’s head count sat at just 4,200.

Duke Medicine’s Big Data Plan to Improve Population Health

Ex-NASA Geospatial Scientist Sohayla Pruittan launches Duke Medicines new location-centric population health platform that will analyze health trends down to individual neighborhoods. She says, “When we visually map a population and a health issue, we want to give an understanding about why something is happening in a neighborhood. Are there certain socioeconomic factors that are contributing? Do they not have access to certain things? Do they have too much access to certain things like fast food restaurants?”

Key statistics for Summary Care Records

In England, the Health & Social Care Information Centre announces that nearly 41 million Summary Care Records have been generated by 5,454 practice offices thus far.

Monday Morning Update 7/14/14

Top News

Former health system CEO Joe Swedish, now CEO of WellPoint, says he’ll focus the company on technologies such as telemedicine, kiosks, and smartphone-based instruments (he didn’t mention the company’s partnership with IBM to develop Watson-powered applications). Swedish is also driving use of WellPoint’s databases that are populated from processing 581 million medical claims each year. It’s good to work for an insurance company – Swedish’s shares are worth $15 million and he’s paid $7.5 million per year. I remember him way back when he was CEO of Winter Park Hospital (FL).

Reader Comments

From A Concerned Customer: “Re: NantHealth. We as a customer are hearing of extensive layoffs of the iSirona people. Almost all of the account executives were let go.” Unverified.

From LISPro: “Re: Epic. I’ve heard the company has submitted to the FDA for 510k certification of their new blood bank module.” Unverified.

From Not From Me: “Re: Intermountain. The short-term choice (three or so years) would have been Epic, but we went with Cerner because of Epic’s dated technology, Cerner’s openness, and the feeling that we would be more of a partner than a customer with Cerner. The partnership is more than words. We’re working closely with Cerner and their horde of sharp, dedicated people on the implementation. We have some pieces they don’t and those are being built into the Cerner system, while some of our own development efforts have been redirected since Cerner already has that functionality. The first rollout is scheduled for December and I think it will go well due to the way the teams are working together.” Unverified.

HIStalk Announcements and Requests

Two-thirds of poll respondents have used their PCP’s patient portal in the past six months. New poll to your right: what contributed most to your present success? Young people will be interested to learn what worked for their more experienced healthcare IT peers. Click the “comments” link in the poll to elaborate further.

Thanks to the following sponsors, new and renewing, that recently supported HIStalk, HIStalk Practice, and HIStalk Connect. Click a logo for more information.

Acquisitions, Funding, Business, and Stock 

Epic says that it has 7,400 employees, 600 more than it reported in February, probably boosted by the college graduation of its latest round of hires.

QPID Health will move its offices to Federal Street in Boston to accommodate expected growth.

People

Brad Holcomb, RN (St. John’s Health System, First Consulting Group, BHL Consulting Group) died on May 14 at 47. His wife Lucretia said it would be OK for me to mention the donations page a family friend has set up for their children.

Announcements and Implementations

Valence Health announces its Further 2014 conference, September 10-12 in Chicago. It’s open to anyone and the cost is amazingly low: $500 includes registration, meals, entertainment by Second City, and two nights’ accommodations at the Drake Hotel ($400 per night on the hotel’s site for those dates.) If you’re local to Chicago, you can go for $199 without hotel. Some of the agenda is specific to customers, but a lot of it isn’t, covering value-based care, clinically integrated networks, patient engagement, and predictive risk. I would attend myself if I didn’t have a conflict , and may yet in fact, since it looks worth juggling other stuff around.

Technology

A hospital in Spain is using the Oculus Rift virtual reality gaming headset in the OR for nervous surgical patients. The immersive device provides calming scenic movies with music that minimize the patient’s perception of the OR’s noises and bright lights. Facebook must have been impressed since it bought the company for $2 billion in March even though the headset won’t be available to consumers until next year. The founder of Oculus is a 21-year-old California college dropout.

An article profiles the use by Duke Medicine (NC) of a geographic information system tied to its homegrown clinical database query tool, allowing researchers to study medical issues by neighborhood, socioeconomic indicators, and even proximity to fast food restaurants, all in real time.

Other

In England,the Health & Social Care Information Centre reports that Summary Care Records have been created for 41 million patients, with only 1.4 percent of them opting out of the program. The SCR program was intended to give off-hours providers fast access to a patient’s medications and allergies using information from practice-based EHRs. Around 5,500 practices have created SCRs for patients. SCR was until recently a floundering part of the now-defunct National Programme for IT. A British Medical Association IT committee chair called for its shutdown in early 2013, saying that while 23 million SCR records had been created, only 100 hospitals and after-hours providers were using them.

An article by former FDA Deputy Commissioner Scott Gottlieb, MD says existing policies don’t encourage researchers to develop high-priced cures for diseases that would reduce overall lifetime patient cost for chronic conditions. He suggests a system in which payers can finance their longer-term benefit through government-backed guarantees and accounting rule changes.

I found a cool heart rate app that  works sort of like a pulse oximeter – you put your finger on the phone’s rear-facing camera, the app turns on its flash so it shines through your finger, and then it measures and displays your heartbeat as a real-time graph. It seems to be quite accurate, making it useful for people who exercise or who have atrial fibrillation. The developer claims 25 million users and offers others for cardio exercise, sleep cycle analysis, biofeedback stress reduction, and blood glucose logging.

Weird News Andy sniffed out this story: a woman who received experimental treatment for paralysis eight years ago in which cells from her nose were injected into her spine grows another nose from the injection site. WNA also suggested taking the stairs in hospitals after a study finds that elevator buttons have more germs than restrooms.

Contacts

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

More news: HIStalk Practice, HIStalk Connect.

Get HIStalk updates.
Contact us online.

Morning Headlines 7/11/14

HIT Policy Committee DRAFT Summary of the June 10, 2014 Virtual Meeting

During Tuesday’s HIT Policy Committee meeting, CMS reported that only 972 providers and 10 hospitals have attested for Stage 2 of Meaningful Use.

Cerner ups campus cost to $4.45B, will seek $110M TIF bump

Cerner increases the budget on its new Kansas City campus by $160 million, to $4.45 billion, and is asking the local and state government to cover $110 million of that through tax breaks.

The Experience of Young Adults on HealthCare.gov: Suggestions for Improvement

A study published in the Annals of Internal Medicine concludes that Healthcare.gov’s user interface was perceived as confusing and unintuitive by millennials.

Moody’s Assigns AA3 To Providence Health & Services Series 2014B Bonds; Outlook Stable

Moody’s gives Providence Health’s bonds a strong, stable Aa3 rating, something that is not always the case for health systems in the midst of an Epic implementation. The rating notes, “PHS has nearly completed its system-wide implementation of the Epic electronic medical record (EMR) system. Implementation has spanned many years, and has occupied a significant portion of the system’s capital budget. Outsized operating expenses related to Epic have suppressed margins but are now expected to reach a steady state going forward.”

News 7/11/14

Top News

National Coordinator Karen DeSalvo reorganizes the HIT Policy Committee. Also announced by ONC: only 972 EPs and 10 hospitals have attested to Meaningful Use Stage 2. Athenahealth users lead the EP Stage 2 attestation by far. Clearly ONC’s budget and influence are shrinking as disenchantment with the Meaningful Use program grows and providers focus on more strategic goals than lapping at Uncle’s Sam’s ever-distancing carrot.

Reader Comments

From McLayoffs: “Re: McKesson. Decimated their ranks last week, so I wouldn’t be surprised if they sold off that business. It’s not one that John Hammergren ever wanted to be in, but inherited when he took over. All non-essential implementation teams were dissolved and upgrades are rumored to be handled by national support. A lot of good people were lost last week. I’m not surprised that Siemens is calling it quits as well, with Epic dominating the market. I’m even seeing Cerner to Epic conversions now.” Unverified.

From Punch Bowl: “Re: Nuance. Acquiring Notable Solutions, Inc.” Unverified. NSI offers solutions for document capture and forms processing to a variety of industries.

From Kites Away: “Re: research question for your audience. Is strategic planning a useful exercise? Why or why not?” I will let readers weigh in. My opinion is that it’s a good exercise even though the assumptions and predictions often turn out to be wildly off. It makes people focus on the current state and to consider the array of possible future states.

HIStalk Announcements and Requests

This week on HIStalk Practice: Key takeaways from the 2015 proposed physician fee schedule. The ONC Health IT Policy Committee presents the latest round of Meaningful Use attestation numbers (and notes the vendors leading the pack). Cigna creates 100 collaborative care arrangements with large physician groups. The Accountable Care Coalition of Greater New York uses new grant money to launch a medication adherence program, while Milwaukee Health Services uses new funds to upgrade its EHR. Online consumer service providers and the DMV pilot a patient identity management program. Thanks for reading.

This week on HIStalk Connect: Dr. Travis breaks down Rock Health’s recent “Mid-Year Digital Health Funding Report.” In Europe, the $2 billion Human Brain Project is under threat of boycott from the scientific community over its hard line stance on funding out-of-scope projects. Syria is getting international support through an ICU telehealth program that is helping resolve the country’s physician shortage. AdhereTech raises a $1.25 million Series A for its connected pill bottle. 

I received two items from readers that I’m going to decline to run because I don’t think it’s fair to the companies involved, but I want to explain why. First was a healthcare IT vendor CEO who was arrested for battery, which I don’t think is fair game because it’s personal and being arrested isn’t the same as being found guilty. Second is a lawsuit brought against a company that alleges it broke its contract with an offshore development shop, which has the same problem in being just an allegation so far. I like good rumors and gossip as much (probably more) than the average person, but both of these documents name people who shouldn’t be tried on the pages of HIStalk. I’ll report the final legal decisions once they are out.

Acquisitions, Funding, Business, and Stock

Revenue cycle vendor RevSpring acquires Talksoft, which offers an automated appointment reminder service.

Allscripts acquires UK-based Oasis Medical Solutions and will implement its Oasis Patient Administration System as a single-source solution for the UK market.

USA Mobility, along with its previously acquired Amcom Software, changes its name and Nasdaq ticker symbol to Spok (pronounced “spoke”).

Oncology data analysis vendor Syapse raises $10 million in a Series B funding round. Its product integrates genomic information with the EMR to display data for decision-making, suggest treatment plans, and track outcomes.

Sales

Centegra Health System (IL) adds revenue performance improvement solutions to its existing MedAssets agreement.

Carrus Hospitals (TX) will deploy Medhost’s clinical and financial solutions via the company’s hosted Medhost Direct platform.

Memorial Sloan Kettering Cancer Center will implement Allscripts dbMotion and continue its use of Sunrise EHR.

People

Health Data Specialists promotes Chad Jones to Cerner practice director.

Harold Paz, MD (Penn State Milton S. Hershey Medical Center) is named EVP/CMO of Aetna.

George Murillo (Leidos Health) is named western area VP of Orchestrate Healthcare.

Announcements and Implementations

Awarepoint announces the availability of awareAssets V3.0 for RTLS-based asset tracking and workflow optimization.

Lexmark’s Perceptive Software launches Perceptive Cloud Share, a cloud-based content management system for video, images, and other rich media.

DSS adds real-time abnormal lab results alerts to the VA’s VistA CPRS Version 31.

Elsevier launches PolicyNavigator, a knowledge management tool for healthcare policies and procedures.

Healthcare Engagement Solutions launches the Uniphy clinician communications platform.

MediSafe releases its medication adherence app for Google’s Android Wear smartwatch technology.

Government and Politics

The HIMSS EHR Association weighs in on HHS’s proposed Meaningful Use changes, saying pretty much the same thing as other groups before it: (a) turn the proposed rule into a final rule quickly and without changes since providers are otherwise forced to make decisions blindly; (b) define the types of delays that are acceptable for not implementing 2014-certified EHRS – vendor delays, lack of provider resources, lack of local interoperability options, etc.; (c) simplify the combinations stages, objectives, and EHR certification year; (d) simplify the proposed CQMs; (e) delay MU Stage 3 to avoid the same rush and confusion that accompanied the rollout of Stage 2.

A tiny observational study published in Annals of Internal Medicine finds that the government failed in its attempt to make Healthcare.gov as easy for millennials to use as popular websites. Its recommendations: (a) allow clicking on health insurance terminology to bring up a definition; (b) make it clearer that preventive care is included in all plans offered; (c) make the dental insurance option clearer; (d) improve sorting and filtering of available plans; (e) explain the available tax credit and cost-sharing options that reduce cost; and (f) call “catastrophic” plans something else, such as “minimal” or “value.”

CMS designates non-profit Health Care Cost Institute as the first national Qualified Entity, meaning it can merge Medicare claims data with commercial payer data to provide price and quality transparency.

CMS gives Tennessee 10 days to fix its $35 million Medicaid eligibility system, saying it is preventing people from signing up for insurance on Healthcare.gov. CMS says state workers ignored requests to assign more people to the project and failed to help new users navigate its system. The state blames Northrop Grumman for missed deadlines and has paid the company only $5 million so far.

A GAO report says the VA-DoD integrated EHR (iEHR) plan met only one of six required conditions in FY2013. The VA and DoD abandoned their two-year-old plan to develop a single EHR in February 2013 due to cost and timelines, leading Congress to threaten to cut off 75 percent of the iEHR budget unless six conditions were met (define a budget, set a timeline, break out annual and total spending, define how costs would be shared, establish data standardization, and comply with government acquisition policies.) The only fully satisfied condition was creation of a cost-sharing schedule. The joint oversight group says the plan has changed to the point that the original goals no longer measure the program’s success, leading GAO to recommend holding the VA and DoD responsible for publishing accurate budgets, maintaining a deployment schedule, developing data standardization rules, and proving that they are indeed compliant with federal purchasing policies.

Other

Cerner increases the estimated cost of its new 16,000-employee campus to $4.45 billion and wants Kansas City’s tax commission to chip in an additional $110 million in tax breaks, boosting the total taxpayer support to $1.745 billion.

Quick — who’s the CEO of Microsoft? No, it’s Satya Nadella, and he plans to rejuvenate the company by moving from “devices and services” to “platforms and productivity,” emphasizing mobile-first and cloud-first.

Partners HealthCare seeks a $145 million loan to help it pay for a new building, raising its total debt to $4 billion. Part of that money was targeted for its $1.2 billion Epic implementation.

A Florida lawsuit questions whether release of information companies can charge lawyers more than patients for copies of their hospital medical records. An attorney became upset at being charged $1.00 per page by HealthPort for a client’s medical records when state law specifies $0.25 per page, but HealthPort says the lower rate only applies to patients even though it recently lost a case using that argument.

A new bond issue for Providence Health & Services (WA) gets high, stable rating, with its ratings agency noting that, “PHS has nearly completed its system-wide implementation of the Epic electronic medical record (EMR) system. Implementation has spanned many years, and has occupied a significant portion of the system’s capital budget. Outsized operating expenses related to Epic have suppressed margins but are now expected to reach a steady state going forward.”

Weird News Andy likes the idea of “virtual gastric banding” described in this article, where hypnotists convince patients they’ve had weight loss surgery, sometimes even causing them to lose weight afterward from the power of suggestion alone. Of course WNA questions the $1,500 cost in  wondering, “Can the patient then hypnotize the hypnotist to induce memories of payment?” WNA also likes a rare case in which a man suffers a blood clot in his brain after head-banging at a Motorhead concert, leading WNA to suggest renaming the band “Subdural Hematoma.”

Bizarre: city police charge a 17-year-old boy with child pornography for sending explicit photos of himself to his 15-year-old girlfriend and then ask a judge’s permission to inject him with arousal drugs in a local hospital so they can snap new pictures to compare to those he allegedly sent. I immediately thought of the “sketch artist” principal’s office scene in “Porky’s,” not safe for work or for those with a non-warped sense of humor but possibly the funniest four minutes (shot straight through with no edits) in movie history.

Sponsor Updates

• PatientSafe Solutions’ Cheryl Parker shares how informatics nurses contribute to products roadmaps through analysis, compliance, consultation, coordination, facilitation. and integration.
• Lucca Consulting Group offers post-implement feedback and testimonials.
• MedData will participate in the Annual MI Emergency Medicine Assembly July 27-30 in Mackinac Island, MI.
• A report by Imprivata and the Ponemon Institute says pager inefficiency and the inability to use text messaging costs the average hospital approximately $1.75 million per year.

EPtalk by Dr. Jayne

One of the things I enjoy least about my work in the CMIO trenches is keeping up with the ever-present stream of new rules, proposed rules, and all the supporting documents that go with them. It shouldn’t be a surprise that only a very small percentage of Eligible Providers have attested to Stage 2 Meaningful Use. As of May 1, only 50 Eligible Providers were on the books. Although the individual measures are not that difficult, keeping up with the voluminous documentation on all of them is a chore, as is preparing the documentation needed for attestation and potential audits.

CMS hasn’t disappointed in releasing its proposed rule to update the Medicare Physician Fee Schedule in 2014. I didn’t have time to read the 600-plus page rule myself, but luckily one of my vendors digests the information for its customers and sends out the highlight reel. As we always suspected, parts of MU are becoming mandatory independent of the actual MU program. Physicians billing for chronic care management would be required to use an EHR certified under 2014 criteria.

I was excited to see that Medicare is considering coverage for telemedicine services, including psychotherapy and wellness visits. I question, however, exactly how the digital prostate exam (and I don’t mean high-tech digital) or other sensitive exam maneuvers can be done via telemedicine, although I agree that a lot of the preventive counseling aspects of an annual visit don’t require a face-to-face visit if you already have a good relationship with your patient. Although those services aren’t specifically part of the Medicare “Annual Wellness Visit” paradigm, they are recommended services.

Are we setting ourselves up to have different kinds of wellness visits for patients, such as the Medicare Annual by phone, the Medicare Annual in person, the “G-Code Special” for those physical exams that have to be performed in person, and more? Patients can barely keep track of the services they need at present without having to worry how they’re delivered. And you can bet that if we try to bundle any of them into other in-person services, we won’t get paid. The Medicare Annual Wellness visit does recommend biometric assessment. I’m not sure I trust my patients to report what the scale actually says and we’re not yet in the Star Trek world of the medical tricorder. Although coverage for telemedicine sounds great in person, it just goes to show that the devil is in the details.

One of the other things I enjoy least about my work is dealing with difficult physicians. Although I’m not responsible for physician discipline per se, I do have to provide input when physicians are creating issues during implementation and training. I had mentioned a few weeks ago that we would start deploying new practices after Independence Day. This week has not disappointed for sheer magnitude of “stuff you just can’t make up.”

One of our surgeons decided to book two elective cases at the same time as his prearranged EHR training, then demanded that we train him later that evening. What do you even say to that? They weren’t emergencies. Although our trainers are happy to accommodate evening sessions when requested in advance, they can’t do it on short notice due to family and other obligations. I really think that he hopes to stall his go-live by staying untrained.

His power play failed, however, and he only ended up short-changing himself since his partner showed up and training was delivered. He’s just going to have to play catch-up because we have 22 go-lives teed up behind this cohort and there’s no room for game playing. His partner was an absolute joy to work with and decided to move his own go-live forward. I’m betting the practice dynamic is going to be pretty interesting in the coming weeks. Hopefully positive peer pressure will win the day.

One of the things I enjoy most about my work is the people I have gotten to know over the years. Although it seems like there’s a lot of movement around the industry, especially among the sales force, there’s still a sense that we’re all in this together and a willingness to help out whether you work directly together or not. I was able to meet up with a friend who used to work for one of my vendors and learn about his adventures in a different part of the industry. Another consultant I worked with early in my career turned up on a project I’m peripherally attached to. It’s definitely a small world and I’m glad to have people with whom I can commiserate. Maybe if I’m lucky though one will read the 600 pages of federal regulations and give me the Cliffs Notes version.

Will trade wine for summaries – email me.

Contacts

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

More news: HIStalk Practice, HIStalk Connect.

Get HIStalk updates.
Contact us online.

Morning Headlines 7/10/14

RWJF Project Tracks Impact of Reform on Hospital Utilization

The Robert Wood Johnson Foundation announces a new surveillance program called the Hospital ACA Monitoring Project designed in collaboration with state hospital associations  to measure the impact that the Affordable Care Act has on hospital utilization.

Electronic Health Records: Fiscal Year 2013 Expenditure Plan Lacks Key Information Needed to Inform Future Funding Decisions

The DoD and VA have failed a GAO audit of their integrated EHR plans, satisfying just one of the six areas evaluated. When Congress approved the 2013 VA and DoD EHR budget requests, a provision was added preventing more than 25 percent of the funds from being distributed unless the GAO confirmed that the departments were on track with their plans.

2014 Most Wired

2014 Most Wired Hospital’s list has been published, an effort collectively undertaken by the American Hospital Association, CHIME, McKesson, AT&T, and H&HN.

Health IT from the Investor’s Chair 7/9/14

From a recent HIStalk post:

CareCloud borrows $25.5 million from a growth capital lender. I’m never cheered by a company taking on debt just like I wouldn’t be thrilled about a relative signing up for a home equity loan, but I guess it’s good news to be found credit-worthy and to have your plan for using the money vetted by someone whose objectivity is inarguable given their interest (no pun intended) in being repaid.

Investor’s Chair Thoughts

Let me present an alternative viewpoint on venture debt. Debt can be a great part of a company’s capital structure. Let’s use my favorite fictional company, eEngageLytics, as an example.

eEngageLytics has an outstanding business with high recurring revenues and a good margin profile, but needs growth capital to continue to expand, hire more sales people and finally sponsor HIStalk! In fact, with an additional $25 million, it would grow even faster than it has to date, and I have a fancy business plan to prove it!

Rather than sell more shares through a venture fundraising though, I’ll finance it through venture debt, as that can be a much more capital efficient way of funding the company. This fact remains true even if I expect to raise more equity capital in the future: the longer I wait, the more eEngageLytics will grow, and the higher the valuation will be for a subsequent equity round. Raising some debt right away allows me to kick the can down the road a bit, perhaps until after eEngageLytics is actually profitable (another major valuation inflection point).

How does the debt versus equity math work? To help us understand more clearly, let’s start by assuming that eEngageLytics would be valued at $100 million in its Series C round. That would mean that the company would have to sell 25 percent of its equity to current or new investors to raise the $25 million it needs to support its meteoric (but achievable) growth plan. Not only would an equity capital raise involve diluting current investors (who would now own a smaller slice of the eEngageLytics pie), but there would likely be other restrictions and obligations demanded by the investors (such as a board seat or two, some kind of dividend and many other “bells and whistles” inherent in a Series C preferred stock).

Now, there are, of course, other costs and complications inherent in both options:

• Like all lenders (except maybe Mom), venture lenders charge interest – but we’re currently living in a very low interest rate environment, so the CFO must model out the difference between the interest payments from debt and the dividend payments that equity investors often require. Venture debt for a quality company like eEngageLytics is running between 5-9 percent of the total amount (varying based on how much and when I actually pull down the money from the $25 million commitment – another example of the flexibility of debt financing). Let’s call it 7 percent on average, so that’s a max of $1.75 million per year.
• Also unlike Mom, debt holders always want to be paid back – often before a liquidity event, so our company must have a way to pay back out of future cash flows (a topic our lender will obviously focus on).
• Venture lenders have other ways to get paid besides the interest payments. There’s generally a warrant component, which allows them to purchase stock at a preferred rate – but it’s typically less than 1 percent, so dilution is minimal (especially in comparison to an all-equity deal).
• There’s typically various fees associated with the debt commitment, similar to closing costs for a mortgage; but, again, they are typically fairly reasonable (in this example, the likely fee would be about 1 percent of the total loan amount and some end of term fee to the lender (around 3 percent of the aggregate amount loaned.) Contrast that to the 6-7 percent ($1.5 – 1.75 million) that an investment bank would generally charge for a capital raise of this size.
• Don’t forget, however, that the availability of debt of this size is highly stage dependent. When eEngageLytics was developing its products and getting its first few customers, it was a bad credit risk and could barely get a corporate credit card – hence its need to fund through equity. Now that it needs money “only” to accelerate growth and tide itself over until profitability (or to buy hardware, or to make an attractive acquisition, etc.), it’s a far better candidate for debt.

Taking the various fees and interest payments together, eEngageLytic’s CFO can generally calculate an effective interest rate (like my mortgage broker does) and we see that, in this case, I’m paying a fully loaded interest rate of 15 percent per year, inclusive of the various fees. That’s about $3.75 million per year. Factor in the effects of compound interest and it costs current shareholders $32 million to repay the loan (assuming they borrow the full amount over the three-year term we’re using for illustrative purposes).

Let’s now flash forward a few years and assume that I’m able to sell eEngageLytics for a cool half a billion dollars (maybe a national payer like Aetna or United will step up – they’re always good for that). Had we sold 25 percent of our equity, the earlier eEngageLytics shareholders would collectively receive gross proceeds of $375 million (75 percent of $500 million). Fortunately, however, the management team are regular HIStalk readers (or get good advice from other sources) and, realizing that the amount of money they raise in no way equals how cool they are, raises the $25 million in debt rather than equity capital. Factoring out the debt repayment discussed above, and eEngageLytics shareholders in this scenario receive $468 million, a whopping $93 million more (which will allow even Inga to buy a few new pairs of shoes!).

So, bottom line, I see using debt as part of a company’s capital structure as a powerful tool to grow a business while minimizing dilution to founders, employees, and other shareholders. Here in the Bay Area (as shown on the HBO series Silicon Valley with occasionally frightening accuracy), the size of one’s capital raise is often viewed as a proxy for all sorts of things – “coolness” being just one of them. The bottom line is that entrepreneurs need to consider all the costs and benefits of different sources and types of capital, and when it’s appropriate, to use each to fund a business.

Finally, to return to Mr. HIStalk’s home equity loan analogy: assuming I’m taking out equity for a good reason (say, to renovate my kitchen, not to go on vacation), I’d rather have to pay back the loan (debt) than have to share part of my house (or proceeds when I sell it) with another party if I allow them to purchase some of my equity instead. Debt has responsibilities that equity doesn’t (such as an obligation to repay), but it typically allows the borrower more control and the opportunity to maintain their ownership. Which option makes sense depends on the situation.

Ben Rooks spent a decade as an equity analyst and six years as an investment banker. He has many friends who are venture capitalists, but he’d rather see returns go to entrepreneurs then to investors! Five years ago he formed ST Advisors to work with companies on strategic issues, only one of which is capital structure. He lives in San Francisco and absolutely loves e-mail.

Morning Headlines 7/9/14

Siemens Said to Explore Sale of Hospital IT Business

Bloomberg reports that Siemens is soliciting buyers for its health IT business unit, valued at $1.4 billion, so that it can focus on its energy and industrial units.

What Looks Like Overcharging By Your Hospital Might Not Be

A study finds that Medicare reimbursement rates at hospitals using EHRs are comparable to those still working on paper, contrary to earlier allegations suggesting that EHRs were driving up reimbursement by promoting copy and paste fraud. Critics point out that the study only analyzed inpatient records, and fails to address the original fraud allegations which were focused on ED reimbursements.

Critics worry health IT regulatory plan is already outdated

The public comments period closes on the FDASIA’s recently proposed health IT regulatory framework. The comments offered a mix of both criticism and support from various industry groups. The ONC’s policy advisory committee today moved immediately forward in a vote to endorse the framework.

Vials of Smallpox Virus Found in Unapproved Maryland Lab

Six vials of the smallpox virus, thought to be misplaced remnants from a 1950’s research lab, were found abandoned in an FDA lab in Maryland this week and are now undergoing testing to determine if they are still active. Smallpox samples are now considered so dangerous that only two labs in the world are authorized to store the pathogen, a CDC lab in Atlanta, and a VECTOR Institute lab in Russia.