Intelligent Healthcare Information Integration 10/23/09

From the Pediatric Trenches

“Dit, dit, dit, dit…dit, dit…dit, dit, dit…fresh from the front lines of the world of pediatric HIT, this is your humble grunt in the trenches reporter, Gregg Alexander, with breaking news.”

That is how I was going to start this offering. However, after traveling to Dallas to give a talk for Eclipsys’ EUN and flying directly from there to direct the “Pediatric Office of the Future” exhibit at the American Academy of Pediatrics’ National Conference and Exhibition in Washington, D.C., somewhere en route I encountered a virulent little chest-congester, sinus-stuffer, feel-like-heller of a cold germ. While very grateful it isn’t the H1N1 variety virus, it is nonetheless one powerful little booger. Thus, my writing has been delayed by both overwork and, now, by oversnot.

Here in HIStalk Practice land, I’d like to share with you what I recently experienced at the above-mentioned AAP Peds Office of the Future or “POF.” (I’d give you a bigger picture view, but the work kept my leash pretty short, thus keeping my view of anything beyond the exhibit hall quite limited). It was not the experience I expected. Let me explain…

As many of you know, with the economic downturn, many conferences are experiencing reduced attendance and diminished vendor participation. The American Academy of Family Practice (AAFP) held their annual conference up in Boston just before the AAP show and, by all the reports I received, had a decline of around 30% in attendance. (Unconfirmed.) I was worried we would experience the same. However, much to my most happy surprise, pediatricians and their entourages turned out in record numbers! From all around the globe, the pediatrically-inclined came and saw and conquered … OK, maybe the only thing they conquered was the dreary D.C. weather, but they for sure turned out.

View from the ceiling during set-up. POF is white-canopied booth in front.

Top off a record-setting attendance with an exhibit hall floor which, to my completely subjective view, was one of the most broad-swept product and informational offerings I’ve ever seen and you have a real event. Our POF exhibit also had a nice breadth of sponsors. With your indulgence, I’d like to take a moment to gratefully acknowledge them here: athenahealth, Doctations, Eclipsys, Sage, Medicomp, PediaPals, QuickMedical, and (a special thanks, Mr H.) HIStalk Practice. I also would appreciate your forbearance while I acclaim the good folks who represented each of these companies: I cannot begin to describe the wonderful efforts of every single one of the representatives from each of them. Each was more pleasant and more enjoyable with whom to work than the next.

If you didn’t make the AAP show this year, you missed out. Well done, AAP. If you did, and if you happened to come by the POF, I’d certainly appreciate your input on how we can make it better for next year in San Francisco (woo hoo!) Please send along your thoughts in an email to me or add them to the comments section after this post. We already have some great plans and sponsors, but want your ideas.

For all you vendor types who are reading along, take note: pediatricians are showing up, despite the economy, and their interest in moving forward with HIT has finally started to ascend. (We’ve been a bit behind the learning curve, but it’s looking like we’re about to play some catch-up.)

One last thanks: Mr. H sponsored a very informal meet-and-greet happy hour which I admit I didn’t really advertise to any extreme. (I think I was a little reluctant from a “who’d care about meeting me” perspective.) While I didn’t think anyone would show up, actually a nice little smattering of folks made it by, some friends, some now-friends, and I learned some good stuff and had some great chats (despite feeling like warmed-over death from the bug.) Thanks, Mr. H … and thanks to all who stopped by.

From the (pediatric) trenches …

“I believe in equality for everyone, except reporters and photographers.” – Mahatma Gandhi

Dr. Gregg Alexander is a grunt-in-the-trenches pediatrician and geek. His personal manifesto home page…er..blog…yeh, that’s it, his blog – and he – can be reached through http://madisonpediatric.com or doc@madisonpediatric.com.

An HIT Moment with … Jonathan Phillips

An HIT Moment with ... is a quick interview with someone we find interesting. Jon Phillips is managing director of Healthcare Growth Partners, LLC of Chicago, IL.

What economic and market conditions have most affected vendors in the past year and how does the next 12 months look?

Fundamentally, vendors are indirect victims of the challenges facing their customers. Hospitals have seen access to capital disappear, operating results worsen (due to reductions in elective volumes and increases in Medicaid and self-pay/uninsured visits) and dramatic declines in investment income (which helps to fund operations).

Physicians are seeing operating pressures as well, not to mention the indirect impact of declines in value of real estate and other investments and the effect that has on their ability and willingness to spend. Insurers and suppliers remain profitable, but have become quite cautious as the healthcare reform debate works its way through Washington.

As a result of this pressure on customers, vendors are feeling significant stress related to their financial performance. The capital markets see it differently — HCIT valuations are at or near all-time highs as public investors assume that ARRA-related stimulus spending will drive billions in revenue to vendors in the space. At some point, the capital markets expectations will have to meet the reality of customer spending, or customer spending will have to dramatically accelerate to meet capital markets expectations.

The good news is that we are hearing customer purchasing trends are starting to look up, particularly on the physician side of things. However, given the fact that ARRA actually froze much of the market this year as purchasers have been waiting for clarity, our sense is that there is still a long way to go for vendors to feel that they can achieve strong sales growth.

Spending will likely improve across the board in 2010 with solutions demonstrating clear ROI leading the way. Physician sales of EMRs and related capabilities will continue to be strong as practices position for stimulus benefits. Hospital solutions, payer solutions, and supplier solutions are likely to see cautious growth next year as the implications of any healthcare reform package are weighed with regard to how the new environment will impact IT requirements.

We still see strong interest in “pay as you go” models, providing opportunities for providers to acquire systems capabilities while managing upfront capital outlays. While those types of models seem to be spurring sales, many vendors struggle when making the shift to that type of a model since, absent some type of third-party financing, the “pay as you go” model can wreak havoc on the balance sheet of a company used to selling perpetual licenses.

What will drive the M&A market this year?

The M&A market for the balance of this year and into next will be driven by two main trends. First, you will see an increase in the number of distressed transactions. We look at distressed transactions as ones in which the seller is effectively forced to consummate a transaction, generally due to liquidity (i.e. the company is running out of cash).

We expected the distressed market to pick up sooner than it has, but a number of factors have impacted that part of the M&A market. First, with the potential stimulus spending hanging out there, investors have been willing to continue to fund companies operating at a loss in hopes that revenues will pick up and profitability will be achieved in the near term. Unfortunately for many of those companies, revenue growth will recover, but too slowly for them to reach profitability in a reasonable period.

Second, many companies aggressively cut costs late last year and early this year to extend their financial runway. There is not a lot more “fat” for them to be able to take out of their businesses. The result of these two factors is that a number of companies will likely be at or near the end of their financial runway over the next six months. The closer a business gets to that point, the less leverage it will have in its sale negotiations. As a result, we expect distressed deal volume to pick up.

The second main trend relates to investor expectations versus reality. Because of all of the hype surrounding the stimulus spending on HCIT, healthcare IT stocks have rallied, in many cases to their all-time highs. However, if you look at the results being delivered to date (we’ll see if Q3 continues the trend), revenues have been soft, and earnings improvements have been driven by expense reductions. From our perspective, there is a gap between what the markets expect healthcare IT companies to deliver in revenue growth and what they can deliver organically in the short and mid term.

All of the stimulus talk has actually extended sales cycles, and even as the purchasing environment improves, it will take time for bookings to translate into revenue. Therefore, you will see public and larger private HCIT companies looking to acquisitions to augment their internal growth rates.

What companies need to be bought and which companies need to buy someone?

As we mention above, larger companies facing the reality of their sales efforts will need to buy revenue to augment their organic growth. These targets will most likely fall into two categories — share buys and technology buys. Share buys are situations where the acquirer cares little about the target’s capabilities. They are primarily interested in their customers and the opportunity to either up-sell or cross-sell those customers new solutions. Technology buys are intended to broaden an acquirer’s capabilities, using the acquirer’s distribution reach to push a strong product out to a broader customer base.

In terms of companies needing to be bought, if a business has less than six months’ cash on hand, they should be aggressively pursuing an exit, whatever products and solutions they offer. Often we see businesses waiting, hoping that they will be able to raise money or that the market will quickly improve. When those hopes fail, the outcome is generally far worse for employees, shareholders, and customers than it would have been if the business had elected to pursue an orderly exit process rather than an accelerated distressed sale.

If you were launching or buying a start-up, what niche would you go after?

We’d go after a “lowest common denominator” physician-focused EMR that qualifies for meaningful use and that is seamlessly integrated into a physician’s workflow. This type of a solution would likely be a hybrid offering, providing for electronic documentation and order entry but doing it in a way (perhaps with scanning or e-forms) that works with existing clinician workflow. The solution would be priced very aggressively on a subscription basis and would be offered as a Web-based service. We think that a simple offering like this would have the chance to revolutionize the market by being rapidly adopted by small physician groups.

What kinds of vendors will benefit most from stimulus money, both in the short and long term?

Depending on how meaningful use is defined, vendors most likely to benefit are those that help providers qualify for incentives at the lowest cost.  We also see incumbent HIT vendors in hospitals benefitting as they can help shape hospital spending to hit compliance levels.

The other group that is definitely seeing growth is the consulting side of the business- it seems that many organizations are looking to consultants to help them plan their approach to become meaningful users. Those consultants are likely to continue to benefit as organizations implement the solutions that they recommend. However, most vendors probably won’t benefit quite as much as the markets think — “up to $19B” and “incentives” doesn’t mean that the proceeds go directly to HCIT, it just means that providers are rewarded for utilizing HCIT. There’s a big difference.

It is also important to remember that the government gives and the government can take away. We are highly skeptical of business plans built on the basis of attracting stimulus money. It is important to remember that fundamentally the stimulus incentives are being paid to encourage providers to do something that nearly everyone agrees is in the best interest of the healthcare system. As unlikely and unfair as it might seem, it would not be out of the realm of possibility to imagine a scenario where incentive payments are drastically reduced to help cover some other government shortfall.

News 10/22/09

Aprima Medical Software announces its EHR and PM systems are compatible with Microsoft Windows 7. Seems like new Microsoft updates always get everyone in a tizzy as companies figure out the nuances of the new O/S to ensure it works with the latest application software. I must say I will not be purchasing and loading the Windows 7 upgrade on the day it is released (October 22nd.) I’ll stick with Vista for now, with all the flaws I’ve already uncovered.

The American Academy of Professional Coders introduces an online ICD-10-CM code conversion tool that converts ICD-9-CM codes to ICD-10-CM codes (and vice versa). The tool is free and looks pretty easy to use, even for someone who knows nothing about coding (like me). Note that the site doesn’t provide any sort of data conversion of your existing files, but advises you which ICD-10 codes will take the place of the current ICD-9 scheme.

A Canadian medical office experiences every practice’s worst EMR nightmare: the permanent loss of patient data. Fairview Medical Clinic in Alberta loses all its electronic patient records from 2004 and 2005 when it switches EMRs. Ouch.

Here’s a great, feel-good story. Gateway EDI donates $10,420 to the Denver affiliate of Susan G. Komen for the Cure. At last week’s MGMA meeting, Gateway EDI pledged to donate $5 for every attendee who allowed the company to swipe their card. Because attendance numbers were down over last year, card swipes also fell 17% from last year. So, Gateway threw in some extra money to help a great cause.

The teleradiology market is expanding slower than it was a few years ago. Off-hours teleradiology services increased from 15% to 44% from 2003 to 2007, but appears to be leveling.  The fastest growth is in small, city-based practices that don’t serve hospitals.

Perhaps the slowed growth is tied to inadequate reimbursement from private insurance, as this article suggests. Proponents of new digital and mobile technologies are encouraging new policies that “recognize the virtues” of telemedicine.

By the way, teleradiology company Virtual Radiologic upgrades its vRad Enterprise Connect product work with new mobile device and speech recognition support.

More and more doctors are saying voice recognition software is now ready for prime time. Updates to products such as Nuance’s Dragon NaturallySpeaking have made speech recognition more accurate and robust, making them an increasingly popular EMR input option.

TransforMED, a wholly-owned subsidiary of AAFP, partners with Welch Allyn to help physicians pick their EHR vendor. Even though my initial (cynical) reaction was that practices would only be directed to vendors offering connections to Welch Allyn’s devices, the offering actually looks pretty good. Welch Allyn breaks out its EHR Prep-Select Program into three tiers, based on how much help each practice thinks its need. And, the consultants have solid experience. I’d be curious to hear feedback on their services.

Epocrates announces that its drug reference will run on BlackBerrys.

University Children’s Eye Center (NJ) selects SRS’s hybrid EMR product. The Eye Center’s physicians are on faculty at RWJU and St. Peter’s University Hospital.

Nuesoft Technologies launches a new EHR offering, NueMD. It is CCHIT-certified but only for 2007 standards (why not go all the way if you are building a new product?) The EHR fully integrates with Nuesoft’s PM product to comprise NueMD Complete.

GE introduces a cool new ultrasound device it claims could become the “stethoscope of the 21st century.” The pocket-size device, which is about the size of an iPhone, includes a video screen and has an attached wand with a sensor.

E-mail Inga.

News 10/20/09

GE announces ugly Q2 numbers, which included a 20% drop in earning for the healthcare division. The company as a whole reported a 17% decline in revenue and EPS of $.26 vs. $.54.

You know the ambulatory EHR business is heating up when the big hospital guys are hustling to get a piece of the action. Cerner partners with CDW Healthcare to promote its PowerWorks product, marking the first time that Cerner has teamed up with a national channel partner to offer its complete ambulatory suite of products. And, Healthcare Management Systems, another seasoned hospital vendor, announces a new ambulatory EMR/PM offering called HMS Ambulatory EMR. Of course HMS plans to tightly integrate the product with its inpatient offering (just like Cerner seamlessly integrates all its products). It’s not as if the hospital vendors are just now realizing the importance of aligning with the ambulatory world; rather, everyone seems to be angling for the best possible market position in anticipation of a flood of EMR sales.

Cardinal Health strikes a deal with Orchard Software to distribute Harvest LIS and Pathology Diagnostic IS, which are typically sold in physician offices. Cardinal’s sales force will provide additional feet on the street trying to sell the Orchard products. Yet another example of a big healthcare player that probably paid little attention to the ambulatory world a year ago.

I recently accompanied a family member to a doctor’s appointment and of course took note of the technology in place. We were at a large, single specialty clinic and my family member’s doctor used an EHR, complete with pretty graphs to take home. However, the practice as a whole did not have an EHR, which is curious. As we waited in the exam room, I overheard the front desk calling to remind patients of their upcoming visits. We were handed a paper prescription as we checked out.  And, when the follow-up appointment was made, the receptionist used a NCR duplicate reminder form. I asked what the other copy was for and was told it would go in the patient’s chart. Alas, a reminder that HIT has a long way to go in many practices.

athenahealth completes its $22.3 million all-cash purchase of Anodyne Health Partners.

Iowa Health System and Allscripts launch ePrescribe Iowa, in which physicians will be offered a free Web-based e-prescribing tool.

A New York Times article says that time pressures, mandatory multitasking, and real-time attention demands (including EMRs) are burning out doctors who no longer have any contemplative time.

There is likely correlation between those stresses and the decline of physician-owned practices. The NEJM estimates the number of doctors owning at least part of a practice has been declining 2% annually for the last 25 years. Financial realities and quality of life issues contribute to this trend. However, I can remember growing up in a world when single families owned the corner grocery store, or a local garage, or the pharmacy. Perhaps the big hospital chains are simply the healthcare version of Walmart and CVS.

UnitedHealthcare and Centura Health (CO) select three rural health clinics for its telehealth pilot program. The clinics participating in the Connected Care program will have the ability to link with remote medical specialists using audio/video technologies and health resources.

Researchers find that in some cases a patient’s de-identified data can be re-identified based on correlating anonymous information left in cyberspace. The researchers were able to re-identify private Netflix data, leading privacy advocates to suggest the same thing can be done with medical information. Privacy rights advocate Dr. Deborah Peel points out there are currently no federal laws prohibiting re-identification. Before anyone tries to re-identify my private data, I’d like the record to reflect that The Sound of Music is my all-time favorite flick.

Regional health insurer MVP Health Care announces plans to reimburse 22,000 physicians using RelayHealth’s webVisit consultations. MVP is partnering with IPA Mohawk Valley Medical Associates (NY) to offer physicians immediate reimbursement and subsidies to defray deployment expenses for the RelayHealth service.

Surescripts says it is adopting a new version of a technical standard being recommended as part of the HITECH act. The new standard allows physicians to use EHR software to electronically access prescription information from pharmacies and health plans. Interestingly, CMS has yet to adopt the standard — though Surescripts is ready, just in case.

E-mail Inga.

From MGMA 10/14/09

What is missing from this picture? If you guessed a crush of people, you are correct! I took this shot in the early afternoon, while most attendees were hunkered down in the educational sessions. Admittedly, during the breaks, attendees made their way to the exhibit hall. Attendees were offered a free lunch and had to walk to the back of the exhibit hall to reach the food, so that obviously gave traffic a boost.

Speaking of the free lunch: like a free EMR, free isn’t always cheap enough. Barbeque sandwiches and corn on the cob. I pitied an exhibitor who had barbeque sauce splash all over her white shirt. I’m sure it was plenty tasty, but it looked a bit too messy and was not what my palate had in mind.

The best session I sat in was “HITECH Action Plan: EHR Incentive Payments and Practical Implementation Issues.” Rosemarie Nelson, who is a principal at MGMA Health Care Consulting Group and an obviously seasoned presenter, offered straightforward advice for administrators looking to move to EHR and qualify for stimulus funds. Some of the tidbits were very simple, but perhaps not something every practice knows: standardize over customize, get a lawyer to review your EHR contract, find a non-techie doctor to be a champion. Her co-presenter was attorney David Schoolcraft, who also supplied good commentary. Based on the questions from the audience, it’s obvious there is still a lot of confusion about what it will take to get stimulus funds. And, I would guess the majority of people in that room (maybe 300?) did not have an EMR in place. In an attempt to stress urgency and warn practices that meaningful use won’t happen overnight, Nelson pointed out that going to EMR was a bit like have a baby: no matter how hard you try, it still takes nine months.

I noticed that sessions that covered financial strategies were packed. I didn’t sit in any, but obviously the money side of the practice is a top priority for administrators at the moment.

I know I mentioned this already, but NextGen has a cool-looking booth. I said spaceship before, but I am changing that to space station. And I was mesmerized by the screen used by the demo guy. (Sorry the above picture is a bit blurry. I was trying to be sly and I didn’t get up quite close enough.) The screen is just like an iPhone and totally touch screen. I have seen them before, but I have to say that anyone a little bit techie can be easily sucked into watching just because the technology is so fun.

A reader sent a note informing me that I should have named the MED3OOO guys to the best dressed list. They had some sort of “come bond with us” theme and all the guys were dressed up in tuxes, a la James Bond. I also noticed a couple of Bond girls (the kind Mr. H would appreciate).

Futurist Mark Anderson helped sponsor the Digital Physician Educational Pavilion, which got screwed with a lousy booth location. The premise was to have two different communities set up and demonstrate interoperability, including how practices with different EMRs can connect via an HIE application. It looked like about 10 different vendors participated. However, their space was past all the regular booths, and not even near where they were serving the free lunch. It’s too bad because it had the potential to be a great educational tool for participants.

As I reflect on what I learned over the last couple of days, I fear that a lot of practices are not going to be ready for 2011 stimulus money — and that may be a conscious choice on their part. The money incentives and penalties may not be enough to effect change. And, doctors may not finding the products that allow them to maintain productivity, regardless of effect on quality of care. There are still plenty of seemingly successful vendors that are pushing products that automate some processes that aren’t full-blown EMRs, and they’ll continue to have some short-term success. With the current economic environment and uncertainty in healthcare legislation, practices are going to be holding their pocketbooks close for a little bit longer. If a practice has the money and inclination for change, there is plenty of innovative technology (from some of the  big-name players as well as lots of little guys).  No doubt it’s still a pretty dynamic and exciting time to be in HIT.

E-mail Inga.