Why is the large provider business model obsolescing?

Margaret Thatcher said, “Anyone who finds themselves on public transport after the age of 26 must consider themselves a failure.” There’s probably some sort of corollary for anyone twice that age that spends part of every day writing to imaginary people on the web.

When I write I like to pick a side and stand by it instead of standing in the middle of the road where you can get run over by the traffic from both sides. Likewise, I don’t look for consensus around an idea. Consensus is the process of everyone abandoning their beliefs and principles and meeting in the middle. When was it decided that meeting in the middle is beneficial? So, achieving consensus about a problem is nothing more than that state of lukewarm affection one feels when one neither believes in nor objects to a proposition.

Having this approach to solving business problems tends to yield a high number of critics. I don’t mind critics; those are the same people who after seeing me walk across a swimming pool would say that my walking only proves that I can’t swim. I rather enjoy it when someone offers a decidedly personal attack on something I wrote if only because it means they can’t find a legitimate business principle on which to base their argument. I love the debate, and I don’t expect anyone to agree with me just because I say it is so.

In trying to promote a different way of looking at the large provider business model, I’ve learned that it’s not possible to lead from within the crowd. The “as-is” hospital business model (how the hospital is run) was created over time, by followers. I may be wrong, but the most innovative alteration I have seen to the hospital business model in the last decade has been the addition of mini Starbucks, and the revamping of their lobbies to make hospitals look more like hotels.  The future will be created by someone who believes the strategy of how hospitals run can be done better. I believe firmly in the notion that improving the business model by building off the current one is like trying to cure a cold with leeches.

The approach that has been used to grow the business for the last fifty years is that the hospital is responsible for everything. And yet, who is responsible for the hospital? Who is accountable for the fact that the business model is obsolescing itself?  We have loads of new stuff—expensive stuff.  No other industry can tout new and improved services better than healthcare.  However, in those industries new and improved means faster, smaller, cheaper–it means adding services to reach significantly more customers, not fewer.

Each new and improved procedure with its more costly overhead has application to a smaller percentage of the health population, thereby allocating that overhead across fewer patients.  In turn, that makes the low-margin services unprofitable.  Those services will be cut lose, picked up by new entrants with lower overhead.  Those entrants will make a good business out of services discarded by hospitals.  The cycle will repeat, as it has for decades.  The profitable new entrants will move up-market.

Is it a question of scale versus scope, or scale and scope?  What happens if instead of continuing to repeat the cycle, large healthcare providers were to invert it?  What makes them more relevant, adding the capability to perform a procedure used once a month or one used once an hour?  Which is more important to the future model, inpatient care or outpatient care?  I suggest that “in” or “out” will become irrelevant.

Those phone booths in the photo used to be the way to make public calls, now you can’t even find a booth.  Maybe some day someone will take a photo of a group of hospitals stacked next to each other in a vacant lot.

Hospital Business Strategy–One size fits none

One size fits none, or is it one.  The patient rarely buys what the hospital is selling.  The hospital sells a hip replacement—the patient is buying the ability to play golf for ten more years.

Clayton Christensen conducted a study which showed that seventy percent of today’s patients would have been in the ICU thirty years ago, and seventy percent of the patients in today’s ICUs would have died thirty years ago.  The question the study seemed to leave unaddressed is who is now caring for those patients who were not in the ICU and who didn’t die.  Wanna’ bet most have been outsourced to non-hospital care givers?

There was a successful business model in that group of patients when they were treated at the hospital thirty years ago.  There is an even larger business model today for that same set of patients; only it is no longer owned by the hospital.  Neither are the associated revenues.

Hospitals have more high-end capability—and cost—than the average patient will utilize—sort of an 80/20 rule on steroids.  Each successive clinical breakthrough enables the hospital to solve a problem for a mere handful of patients; one that will have no application to 99% of patients in their service area.

What if instead of continuing to expand the reach for the stars model ad nauseam, the hospital flipped the model on its side and catered to the ninety-nine percent?  What if the business model centered on serving mainstream customers?  But then who or what would handle the other one percent of the cases?  An autonomous business unit could be established to serve those cases, or they could be outsourced to a group which did.

Poken: How to push the EMR to the cloud

For those wondering if the fact that I have not written recently is a result of me having mellowed or having found the world more to my liking, not true.  I have been busy earning minus points as I tried to get it sorted in those wide open spaces of my mind.  It is difficult for me to find much comfort in sleep when I think all the leftist gremlins are in cahoots—I see two masons shaking hands and I think conspiracy.

Now, before this begins to read like I wandered too far from the republican rest home, I note that some of my best friends actually know democrats; so I am not as close-minded, or perhaps clothes-minded, as I would like to be.

Some are slow to adapt ideas to a changing world, aimlessly swatting new ideas away with a no-pest-strip as though they were plague carrying mosquitos.  Their thoughts, frozen in time, move so slowly they have been overtaken by a skateboard—and that skateboard was under someone’s arm.  These are the same individuals whose ability to play outside of the comfort of their own sandbox has not been seen since the internet was powered by steam.  It is a little like being a dinosaur while those around you are still floundering in the primordial bisque, still trying to wrap their synapses around the cold ideas distilled in the anecdote.

That is not to suggest that others do not think.  I am sure they have dozens of thoughts scribbled on the inside of their head, but those thoughts are erased each time they play with their hair—brains not big enough to swing a cat in without giving it a minor concussion.  There are fomenting alchemies of thought nuggets, but never quite enough to turn base metals into gold.  Sometimes, when the lighting is just right, you can see their curve of illogic thought arching overhead like static electricity.

In normal prose, I tend to be few of words.  I can get through entire days uttering no more than ‘uh-huh,’ a condition to which I attribute having exited the womb not fully-formed.  Writing is different than the spoken word.  For one thing it is infinitely easier and more pleasingly voyeuristic, for it can more entertaining to write about venomous ideas, not enough to kill my prey, simply to stun it.

Where then do ideas originate?  They are not like sex in a packet where all you have to do is add water.  The lack of thinking has led us to a tragic age most refuse to take tragically.  Thought patterns are aborted before they germinate, as though the thinker was taking intellectual contraceptives.  But believe it or not, I often find myself hoisted high on the petard of my own self-induced mesanic naivetés.  When a spark of a thought enters my mind, I rarely let it go quietly into that good night.  Instead I tear at it like Henry VIII coming off a forced diet—I know I mixed the metaphor, but I liked it.

I know rarely how my mind moves me from thoughts A to B.  Today proved no different.  Take the Poken.  This device is the newest technological mind-nibblet—a tiny jump-drive device about the size of prune whose purpose in life is to help two individuals sync their personal contacts by pok-in’ their respective Pokens.

You have got to hand it to them, for it sounds like it could be more entertaining than syncing one’s Blackberry.  If I understand correctly the concept, if my Poken pokes your Poken the Pokii mate—Pokii may or may not be the correct form of the plural, but it will have to do for now.  Once the mating process has ended, and before mine finishes its cigarette, I have your contact information and you have mine.

This could be an interesting way to swap business contacts, but as I live in the land of the Jabberwocky my mind does not work that way.  “Then he got an idea, an awful idea. The Grinch got a wonderful, awful idea.”

I jested about the Poken a few days ago, and then I thought about how this device could be made to work in healthcare.  The Poken is a communication device, sending and receiving secure requests to the cloud to permit one to access and update contact information.  Not much of a healthcare offering doing that, but what if?  What if instead of letting me share my contact information with someone I select, it, or something like it, allowed me to share my personal health record with my physician?  What if my physician was able to update my health record using a similar device?

The EMR and PMR applications would be in the cloud.  The Poken would provide the “handshake.”  One fully functional EMR.  The rest is history.  Thanks for playing along.

 

Patient Expectation Management

“Dinner is warm, it’s in the dog.”

Let’s see what we can somehow tie this to patients; I couldn’t resist using the title. The phrase came from my friend’s wife. She’d said it to him after he and I came home late from work one night, he having forgotten his promise to call her if we were to be late. Apparently, she hadn’t forgotten his promise. We walked into the kitchen.  “Dinner’s warm—it’s in the dog.”  She walked out of the kitchen.  I think that’s one of the best lines I’ve ever heard.

He was one of my mentors. We spent a lot of time consulting on out-of-town engagements. I remember one time I took out my phone to call my wife when he grabbed me by the wrists and explained I shouldn’t do that. We had just finished working a 10 or 12 hour day of consulting and had stopped by a bar to grab a steak and beer. I remember there was loud music playing. When I inquired as to why I shouldn’t call he explained.

“When your wife is chasing three children around the house and trying to prepare dinner, she doesn’t want to hear music and laughter and clinking beer glasses. She needs to know that you are having as bad a night as she is. So call her from outside, and make it sound like tonight’s dinner would be something from a vending machine.”

“But it’s raining,” I whimpered. Indeed it was, but seeing the wisdom in his words I headed out and made my call.

So, back to the dinner and the dog, and the steak and the phone call. In reality, they are both the same thing. It all comes down to Expectations. In healthcare it comes down to patient expectations.

PEM can be a number of things; Patient experience management, Patient equity management, and Patient expectation management. In this instance, we are discussing the latter. A set of expectations existed in both scenarios. One could argue as to whether the expectations were realistic—and one did argue just that—only to learn that neither of our wives considered the realism of their expectations to be a critical success factor. In that respect, the two women about whom I write are a lot like patients, their expectations are set, and they will either be met or missed.

Each time expectations are missed, their expectationbar is lowered. Soon, the expectation bar is set so low it’s difficult to miss them, but miss them we do. What happens next? Patients leave. They leave and go somewhere they know will also fail to meet their expectations. However, they’d rather give their money to someone who may disappoint them than somebody who continued to disappoint them.

 

To some patients, EHR is a non-issue

LAST CHRISTMAS

It is easy to remove one’s self from what is important as we trade metaphorical tomatoes about what is wrong with EHR, what may happen regarding reform, and why the N-HIN is DOA.  Debating healthcare IT on the internet is an esoteric and antiseptic conversation, one with few if any catastrophic implications to anyone other than the person trying to sell a used, hundred million dollar EHR on eBay.

We write about the fact that it is supposed to do something to benefit the patient.  Is there a more sterile word than patient?  Whether we use patient or patients, we keep it faceless, nameless, and ubiquitous.  They do not have to be real for us to accomplish our task; in fact, I think we do our best work as long as we keep them at arm’s length.

We calculate ROIs for EHR around people who exist to us only by their patient IDs.

What if these hominoid avatars turned out to be real people?  What if indeed?

Two weeks ago I learned of a real patient; a friend, thirty-seven, mother of three.  Lots of tests.  They call itmyelodysplastic syndromes, MDS—MDS sounds more polite.  One would think that because it has its own acronym that might infer good news.  It does not.

The thing I like best about Google is knowing that if an answer exists to a query, I can find it.  I may have to vary the syntax a few times, but sooner or later I will find that for which I am looking.  The converse can be quite disquieting, especially if you happen to enter a phrase like, ‘survival rates for MDS.’  After a few tries I realized that the reason I was not getting any hits to my query had nothing to do with poor syntax.  It had everything to do with a lack of survivors.

Last Christmas—rather strange title for a blog.  In this instance the title has nothing to do with anything religious.  It is simply a line in the sand, a statement with a high degree of probability.  Unfortunately, “Last Christmas” does not have the same meaning as the phrase, ‘this past Christmas.’

She has had thirty-eight Christmases.  Apparently, MDS is able to alter simple mathematical series.  If presented with the numerical series 1, 2, 3…37, 38, 39, and if we were asked to supply the next number, we would all offer the wrong answer—40.  In her case there may be no next number; the series will likely end with 39.  MDS math.

Then there are the three children, each one of them in the same grade as my three children.  They will be learning a different version of MDS math.  All the numerical series in their lives will reset and begin again with the value of one.  First Christmas since mom died.  First birthday since mom died.  Every life event will be dated based on its relationship to an awful life-ending event.

It will be their B.C and A.D.

EHR probably has very little value when you break it down to the level of an individual patient.  Stalin said something like, “one death is a tragedy, and a thousand deaths is a statistic.”  While it is unlikely that he was discussing patient outcomes, the import is the same.

Rule One: There are some awful diseases that will kill people.

Rule Two: Doctors are not allowed to change Rule One.

I guess it goes to show us that as we debated things that we view as being crucial components of whatever lies under the catch-all phrase of healthcare, when it comes down to someone you know who you know is probably not going to get better, they do not seem very important.


Patients are issuing RFPs for healthcare services

The following is my latest post for healthsystem CIO.com.

If a patient fell in the woods and nobody heard him, so what?

I’ve spent a lot of time trying to understand what a patient is worth to a hospital over a period of let us say five to ten years. Simply put, what is the ROI of a patient?  Apparently, no one has answered this question. If they have, the answer is well hidden.

Why are hospital marketing departments continuously searching for new patients when they already have access to a ready supply of past and current patients?  It will always be much cheaper to retain those patients, than to try to acquire new ones.

Patients are both customers and consumers. Unless the patient is in the back of an ambulance being driven to the nearest hospital, as I was the night I had my heart attack, the patient can choose which hospital to purchase services from.

Choice. If I wish to “hire” a healthcare procedure, how might I go about doing so?  This concept of a customer hiring a product or service comes from Harvard’s Clayton Crhistensen.  It flies in the face of how businesses, hospitals included, normally view their business.  It employs a pull model, driven by patients (customers), rather than pushing services down to the customers.

The entire healthcare provider model is being turned on its head and the only people who do not acknowledge it are those running the hospitals.

Hospitals replicate each other’s services instead of making themselves unique.  They sacrifice and outsource their highly sought, low margin services to other organizations that are able to quickly raise the profitability of those same services.

Let us examine this notion of hiring a service from a more easily understood example.  If I want to “hire” a large HDMI flat-screen television I issue an RFP (Request for Proposal) to the market.  I do not walk into Best Buy and see what they have to offer and repeat this process across several chain stores.  I go to the web, input my hiring criteria, obtain information, and evaluate my options. Through social networking, I force vendors to submit their RFP responses to me.

For some reason the large provider business model continues to operate under the premise that healthcare can treat people who research options before making a purchase as an anomaly.  They approach patient acquisition as though they still have the keys to the car, having their chief marketing officer authorize the installation of billboards touting their urology expertise, believing incorrectly that this type of direct marketing will offset patients’ ability to choose their own provider.  Look at your numbers.  Does that approach appear to be working?

Of course not.

Patients want to hire healthcare services the same way they want to purchase breakfast cereal. Patients want to own the hiring decision.

When I had my heart attack eight years ago, I wasn’t able to choose among hospitals. I could not tell the ambulance driver, “My insurance does not cover this hospital.” I could not tell him, “I’ve heard good things about the cardiology department at hospital ABC.”

After being treated, I issued an RFP for cardiovascular services.  I did considerable research and decided to hire my cardio services from Penn Medicine.  I now hire all of my cardio services from Penn, and my decision had nothing to do with which organization was covered by my insurer.

The large provider business model is being disrupted. It is being disrupted by prospective patients—consumers of healthcare and customers.  Providers will be faced with patients who hire their services under two new models; “pay as you go” and “pay for performance.”

When you have a few minutes, Google your name-brand hospital. You’ll get thousands of responses. Almost all of them have been initiated by current and prior patients.  Many of the responses will not convey a positive message.

The healthcare market is changing to a patient-driven model. But nothing the C-suite is doing acknowledges that shift. Large providers fail to recognize the fact that patients are doing the hiring, that patients are issuing RFPs. No hospitals take a business approach to maximizing the life time value of a patient. In fact, no hospitals can even tell you the lifetime value of a patient.  Yet the lifetime value of an individual patient is probably seven figures.

Instead, the business strategy of most hospitals is to replicate the business strategies of their competitors.  Few hospitals appear to operate strategically.  They operate against budgets because that is how their boards measure them. If the hospital next door buys a machine that goes “ping,” hospitals feel the need to purchase the machine that goes “ping,” even though it adds no value to their bottom line.

Whether or not hospitals acknowledge it, patients are now driving the business model. Each patient, or prospective patient, is an asset—not the MRI and not the machine that goes “ping.” Each patient/asset may be worth more than a million dollars.

Hospitals need to get beyond the magnificence of their own credentials. Prospective patients do not care about marketing or billboards. Patients, especially informed patients, are narcissistic; they care about themselves, not how providers market their services.

There is one thing, and only one thing, about patient experience management that the C-suite needs to understand. Patients are learning to hire healthcare from among a range of options. If you want them to hire you, you have got to give them a reason to buy. Being like the hospital next door is not enough.

I am convinced IT can play a substantial role in providing former and prospective patients the information they need to drive the hiring process to their organization.  It is a combination of churn management and patient experience management, and the experience which has to be managed starts before the patient hires its provider.

 

Is the term “Payor” healthcare’s oxymoron?

One of the great things about fall is that as I prune back the vestiges of my virtual garden I am able to collect basketful upon basketful of overly ripe metaphorical tomatoes, perfect for tossing at aberrant analogies and inappropriate idioms.

It’s a curious time.  We give away money to the middle class and rich so they can upgrade their BMWs on the backs of the poor.  The feds market that idea as though that pittance will either jump start the economy, or to hide the fact that that the administration has managed to budget for a nine trillion dollar deficit gap over ten years.

By now we know there are no quick fixes, no magic formulas for fixing the economy.  Finding a formula that works will be more difficult than learning how to neatly fold a fitted bed sheet.

“Is it the essential paradox of the age of Obama that we have to destroy the village in order to save it, bust the budget in hopes someday we’ll balance it?” Nancy Gibbs, Time, September 9, 2009.

“It takes an idiot to raze a village.” Paul Roemer, today.

Congress is trying to decide what the final bill will look like without ever having read the first draft.  How will we know when they have something that makes sense?  Do we watch the Congressional chimney to see if the smoke is white or black?  Does that mean we have a bill, or is it simply that the chef burnt the Peking Duck?

Then there are the payors.  Get me started, or don’t.  We all know that one of the driving factors for reform is the behavior of the payors.  A friend asks—for full disclosure I note that she is one of “them”—why do people view health insurers differently from auto, life, or home owners insurance.  She was serious.

Here’s my take on the answer.  If the health insurance firms provided life insurance they’d be exhuming the deceased and trying to prove they weren’t dead.  Car smashed, get a check.  House leaks, get a check.  Die, get a check.  Need surgery.  Not so fast.  Let’s see if you’re covered for that.  If not, whew.  If yes, let our doctors decide if you really need the surgery.  It won’t cost you a minute of your time as our doctors don’t even need to examine you.  You see how this plays out?

It happened to me after my heart attack, albeit with my disability payor, sort of the evil step sister of the health side.  My doctor put me on six months disability, naturally, the payor declined to pay.  There doctor, who never examined me decided I was fine, at least that’s what their letter stated.  How do we know these doctors even exist?  Have they ever been seen in the daylight?

Most Americans don’t believe that insurance companies are interested in helping people.  They like us fine when people are payors.  They are much less fond of us when people become patients.  It’s a simple matter of flow theory.  As long as the flow of cash is in-bound, all is well.  When people move to the dark side, from payors to patients, payors have no patience.

Is there anyone who believes that there is a single payor in the country whose mission statement says anything about doing all we can to help those who need us?  Of course not.  Payors have claims adjusters.  What is their role?  It’s certainly not to adjust the payment higher.

Do payors incent their employees to pay out as little as possible?  I believe they do.  Do payors penalize or retrain people who pay out too much?  I believe they do.  Do they design the claims and dispute process so as to make it so cumbersome on patients and doctors that parties give up prior to settling?  I believe they do.

I believe the payor business model is not much different from that of tobacco companies.  For years tobacco firms claimed there was no public evidence to support the fact that nicotine was addictive.  It turns out they buried the evidence.  Payors claim they are not bad actors.  Some claim the moon landing was faked.

I am a firm believer that pictures can sometimes convey more than mere words.  To me, this link explains a lot about what’s wrong with healthcare.

http://www.youtube.com/watch?v=Z7Forzj5-O0 Start playing at 6 minutes and 40 seconds.

Controlling the patient dialog

Remember when there were 200 firms in the Fortune 100?

How long ago was that? I think it was around the same time when people still thought you shouldn’t wear white after Labor Day. Time to drop-kick those white pumps to the back of the closet. What made me think of that bit of nonsense was a meeting I had recently with one of the sharpest people I’ve had the pleasure to meet professionally, and a classmate of mine from grad school. She happens to be the founder and president of one of the country’s go-to firms for dealing with business ethics. Having served as a board member for several publicly-traded firms, as well as chairing their audit committees, when the Andersen and Enron scandals hit she went looking for professionals who could help her help her firms. When she couldn’t find the help, she created it.

That conversation got me thinking and made me wonder why there were no longer 200 firms in the Fortune 100. Was it; is it, a matter of business ethics? How often do unethical practices come up when firms interact with their customers? A couple of takeaways from the meeting—for board members to be able to meet their obligation, they ought to do more than reply on the meeting book pulled together by the firm they serve. Simply relying on the book presumes ethical behavior, a presumption not always supported by fact—how much should one believe if the information is being provided by someone who purchased a $900 shower curtain?

What can they do? Due diligence is being reinvented, and the Social Network is leading the charge. One example is to go to Yahoo Chat to see what’s really being said about your organization. Other things I’ve done to obtain facts and opinions, things which particularly gauge how customers and employees feel about the firm include Google Reader, Facebook, Twitter, and YouTube, to name just a few. You don’t need patient focus groups to learn what’s being said, or to learn how good a job your hospital is doing. The patients already have a laser focus. In many instances the group lacking the focus is the healthcare provider.

Firms should focus on maintaining a strong Reputation Bank, one strong enough to be able to handle withdrawals, because you never know when there might be a run on the bank. Might be a good time to look at your own bank deposit slips.  Deposits can be made easily through the social media network.  You can’t stop patients from talking about you but you can shape what they say.

Microsoft EMR: It’s Not Just a Matter of When, It’s a Matter of Who

This guest post ties nicely to some of what I have been writing about regarding why I think firms like Apple, Microsoft, and Google will be the real N-HIN, why PHRs will become EMRs on super smart next gen devices.

Its author is Austin Merritt of softwareadvice.com, a web site that provides advice on selecting EHR software.  I think the strategic reason for Microsoft’s entry into EMR would not be because there are big bucks to be made from a limited number of physicians but because it gives them a foothold into two of the key stakeholders; doctors and patients, one via an EMR and the other through its PHR.  If that is where they intend to stop, they’ve wasted everyone’s time.  I think they have bigger plans, and those plans include having patients walk in to the doctor’s office, both having the same EMR on the same or compatible devices.  The rest of this post is Austin’s.

Microsoft Dynamics is largely present in just about every software market but medical. And they’re missing out big time. The United States healthcare IT market is growing at about 13% per year and is expected to reach $35 billion in 20111. The biggest opportunity for growth in the industry is among ambulatory care physician practices, partly due to the Stimulus Bill requiring the use of electronic health records (EHR) systems by 2015.

You would think Microsoft would be in such a promising industry, but you won’t find a Microsoft EHR available. The primary reason why is that EHRs are highly specialized, and Microsoft’s main products (Dynamics, CRM, and SharePoint) don’t come anywhere near the needs of physician practices. It would be very difficult for Microsoft to build an EHR from scratch and introduce it to the market. So what should Microsoft do to enter the industry? Acquire a current player.

Such an entry into the medical market would mimic the acquisition spree that Microsoft conducted between 2000 and 2002, when it acquired Great PlainsNavision, Damgaard, and several related vendors. These systems were re-branded and offered as Microsoft Dynamics. Before these acquisitions, Microsoft was not present in the enterprise resource planning (ERP) application market. Its only ERP presence was as an infrastructure vendor, licensing SQL Server databases and related platforms to support application rollouts. However, this lack of application presence gave competitors such as Oracle and SAP the opportunity to squeeze Microsoft out of the ERP infrastructure market by pushing Unix, Oracle databases and IBM DB2. By acquiring several applications, Microsoft was able to drive sales of its SQL Server and Windows Servers directly, in addition to the Dynamics applications themselves. This strategy proved effective in giving Microsoft a multi-billion dollar share of the lucrative ERP market.

Setting its sights on the medical market, Microsoft is starting to squeeze its way in with a few smaller acquisitions and developments of its own, mainly Amalga and HealthVault. However, these current medical offerings are on the periphery of the market and do not really target the sweet spot: electronic health records for physician practices. An intelligent acquisition of a large EHR player would provide a key piece of the puzzle for Microsoft’s entry into the medical market.

Acquired by Microsoft in 2006, Amalga provides information connectivity and interoperability to large healthcare networks. It is the primary Microsoft healthcare offering in the industry at this point, although it is not available in the United States. Microsoft may be planning to offer it domestically, as it did with Navision Damgaard, or may be looking to acquire a domestic vendor to complement it. Regardless of Microsoft’s strategy, Amalga still would not address the physician practice EHR market.

On the other end of the spectrum, HealthVault is a patient-managed, centralized health records solution. It is essentially designed to be a reference point for consumers, not a substitute for medical records. If Microsoft were able to introduce an EHR to the market and enable its users to make records accessible to patients, labs, specialists and pharmacies via HealthVault, then they would really be on to something. This synergy with its other products would just be an added bonus to having its own EHR.

So what would Microsoft prioritize as its key acquisition criteria when evaluating EHR targets? They would certainly want target vendors who possess the following:

  1. Large market share and name brand recognition. Microsoft usually likes to be the largest name in the business, so they would definitely want to sell a “big-name” system with which most buyers are already familiar.
  2. A scalable product for small and large practices. Microsoft would need to be able to cover a wide range of medical customers. While its bread and butter is always in the small and mid-size market, they would want scalability into the largest organizations.
  3. A .Net architecture to drag along infrastructure sales. Reinforcing the position of .Net in the medical software marketplace would be important because it would drive further sales of Microsoft infrastructure while squeezing out Unix, Oracle and IBM.
  4. An established, indirect sales channel. Microsoft historically favors selling through partners, including the existing Dynamics dealer network. An EHR vendor with a large dealer network would provide Microsoft an easily transferable sales channel and process.

So which EHR vendor should Microsoft acquire? This is where it starts to get interesting. We decided to examine Microsoft’s ten most logical targets in detail. Two very popular products, GE Healthcare’s Centricity and McKesson’s Practice Partner, did not make the top ten list. While these systems meet many criteria, the parent companies – General Electric and McKesson – are not really acquirable by Microsoft. The remaining ten are outlined below.

MARKET SHARE SCALABLE PRODUCT .NET ARCHITECTURE INDIRECT CHANNEL
NextGen
Greenway
Pulse
Aprima
Allscripts/Misys
eClinicalWorks
Eclipsys
athenaHealth
Epic
Cerner
  • NextGen – One of the “biggest names” in EHRs, NextGen focuses on medium to large enterprises. However, its system is certainly able to scale down to smaller practices. While it is often too expensive for groups with less than ten physicians, it has a strong position in the sweet spot of the market. Its .Net-based system is sold both directly and through a channel network, so NextGen is a good fit for Microsoft.
  • GreenWay – GreenWay has a nice product, but is toward the smaller end of the companies on this list. It sells primarily directly and has some channel partners. PrimeSuite 2008, its EHR and practice management sytem, is .Net-based and is popular among small and mid-sized groups. Microsoft could leverage its resources and Greenway’s technology to become a major force in the industry. Moreover, Greenway doesn’t come with any legacy of old architecture or acquired customers.
  • Pulse – Pulse has quickly climbed its way into the ranks of bigger EHR vendors and will likely stay here for some time. They were one of the first vendors to achieve 2011 CCHIT certification and are receiving a lot of buzz as a result. While the system is scalable and .Net based, Microsoft would likely want to pursue bigger fish for now.
  • Aprima – Aprima (formerly known as iMedica) has focused on its .Net framework and N-tier architecture from the beginning. As a result, its modern platform and interface make it widely received among physicians across a broad range of specialties. While Microsoft would likely focus on larger companies first, Aprima could be a nice additional partner to champion .Net.
  • AllScripts/Misys – A large brand and a publicly-traded company, it is a logical first place to look. After all, the company claims to have 160,000 physicians using its products. However, the 2008 merger between AllScripts and Misys presents the usual integration challenge, which might keep this firm busy for quite a while. Although we think the future of AllScripts/Misys is very promising, Microsoft probably wouldn’t get involved at this point.
  • eClinicalWorks – This system is probably the most ubiquitous of the list, especially among smaller practices. The recent deal to sell eClinicalWorks through WalMart will definitely increase its brand recognition and share of the market. However, the system is built in Java, an open programming language that is the traditional enterprise alternative to Microsoft .Net. Microsoft would most likely rather acquire a pure .Net system or one that is at least close to it, especially with Oracle, IBM and SAP all embracing Java.
  • Eclipsys – Eclipsys acquired MediNotes in 2009 in an attempt to move users to its Peak Practice EHR. While Eclipsys is fairly popular among hospitals, Peak Practice has not achieved similar success among small to mid-size outpatient practices. Existing MediNotes users are not thrilled about being forced to purchase Peak Practice and we’ve seen quite a few seeking a new solution from a new vendor. We think the success of the MediNotes deal is unclear and Microsoft would steer clear for now.
  • Athena – The youngest company on this list, Athena’s product offering is slightly different from the others. Its system is offered via software as a service (SaaS) and is combined with outsourced billing and revenue cycle management services. This offering is indeed unique, but not a suitable target for Microsoft due to its SaaS offering and labor-intensive service component.
  • Epic – This company possesses an interesting niche in the market. It has only 190 clients, but 150,000 physicians using its products. This is due to its focus on only the largest healthcare organizations in the United States. While this focus is great for Epic, it wouldn’t be effective for Microsoft. Epic will never be able to achieve the ubiquity in the small to mid-sized market where Microsoft dominates. It also sells direct, contrary to Microsoft’s traditional indirect sales mode.
  • Cerner – Cerner’s cash cow is Millenium, a product designed primarily for hospitals. PowerWorks, its outpatient EHR, does not possess the market share among physician practices that Millenium enjoys among hospitals. While Cerner is a recognized name, few practices consider PowerWorks. It is also an older system. Cerner would need to improve its PowerWorks offering before becoming a suitable target for Microsoft.

Although NextGen is not currently dominant amongst small practices, Microsoft could bring them downmarket. NextGen is unable to serve these smaller buyers for two reasons: 1) small practices cannot afford an enterprise expenditure; and, 2) NextGen does not want to (and maybe cannot) devote resources to chasing smaller deals. If Microsoft owned NextGen, they could double down on pursuing smaller practices, perhaps through their channel partners. They may even lower prices to buy market share and make up the difference with revenue from services, SQL licenses, and maintenance.

Which EHR do you think Microsoft should acquire?

Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942

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A guest post–An EMR that increases productivity

The following is a guest blog by James T. Loynes, MD.  During a recent call he told me about an EMR he wrote for his oncology practice.  My initial thought was, “Just what we need, another EMR.”  The more I listened, the more I thought he had something different, something that actually was built towards an eye for best practices.  I asked him if he would tell you about it.  The rest of this is his.

The Path to Excellence Is Under Construction

James T. Loynes, MD

No really, I am not crazy.  I just want to do things better.  That’s the reason I built my own EMR.  I worked with an excellent group of programmers to design my Hematology-Oncology EMR piece by piece over a period of three years.   I fixed every design flaw and mistake.  Problem by problem I made it right.

It wasn’t easy and it wasn’t quick.  I examined how I care for patients.  I evaluated how paper and information flowed through my office.  I met with nurses, secretaries and transcriptionists to determine how we could do things better.  I knew that technology could be a powerful tool to improve patient care.

Even as a medical student, I never understood why it was so hard to find patient information.  Charts could be lost or misplaced.  Medication lists were always a moving target.   Why couldn’t we use technology to make things easier and more efficient?  I was annoyed that I had to dictate the exact same information visit after visit.  I was consistently slowed down because I had to find and repeat documentation.

I listened to stories from patients about other physicians who spent entire visits looking at the computer screen because that is what their EMR demanded.  I saw EMR generated notes that had so much information that it was difficult to read.  I made it a point to avoid these pitfalls.

I needed my EMR to make me better, smarter, and faster.   Since there was not an oncology EMR available that filled my needs, I built my own.  I started by designing a web based program that helped me with my chemo orders.  I designed it to fit my (physician) needs.  I wanted to be more efficient.  I wanted to take better care of patients.  I wanted to be able to find information when I need it.

I like paper!  I know this is EMR blasphemy, so don’t tell anyone.  I can write on it, put it in my pocket, or give it to someone.  It is easy to read and anyone can use it!  You know what else I can do with paper?  I can throw it away or recycle it.  While I like paper, I don’t like to file or find it.  As we all know, maintaining a paper chart demands a huge amount of work.  A tremendous amount of time is spent finding, carrying, copying, thinning, and building a paper chart.  I decided that I need paper, but I wanted my EMR to get rid of the paper chart by electronically putting paper where I can find it on demand.

My EMR is web based.  I can access it with any computer that has internet access.  The system can support one physician or fifty. I have hundreds of templates that I can easily edit.  I have order templates, note templates, chemo templates, and nursing templates.  The system automatically fills in designated portions of the physician notes.  The EMR remembers information from previous notes and places in a manner that allows me to dictate new information only.  Dictation time and expenses are dramatically reduced.  Treatment calendars accurately track chemotherapy dates and cycles.  The nurses can write phone notes, enter vitals, and document core nursing measures.  They can perform medication reconciliation and take verbal orders.   I can easily monitor my billing codes and keep track of information needed for the ASCO Quality Oncology Practice Initiative.  I can build treatment plans and treatment summaries.  The system monitors chart access.  Preliminary notes or chemotherapy orders prep the EMR for improved productivity.   Patient lists speed up chart access.  Medications lists and visit summaries can be printed on demand.

This EMR could be easily altered to accommodate different practice specialties.  What would happen if you had 30 physicians in the same community using this web based EMR?  Providers at a small practice have access to the same technology as the largest practice.  Instead of 30 different methods of documentation, each provider could use the same system.  There would be nothing to download and very little equipment would be needed.   Communication would improve exponentially.  The whole community would save on medical costs because there would be less duplication of efforts.  The work of others could be viewed by all.  In the end, everyone benefits, and patients receive better patient care through the use of technology.  Alright, maybe I am a little crazy, but sometimes that’s what it takes.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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