“Established technology is being given a federally funded new lease on life,” athenahealth CEO Jonathan Bush said. “Traditional health software now is on Medicare, being kept alive like grandma.” Bush dubs this program as the “cash for clunkers” program for health IT leaving no doubt what his opinion is regarding the legacy vendors’ solutions.
“I know of no industry where technology is as despised as it is in health care. It’s a statement that it took government money to incentivize healthcare providers to finally do what virtually every other industry has done .”
While one might dismiss Bush’s comments because they are coming from a company with a dog in the fight, the feeling is nearly universal amongst physicians who are the most important users. The best evidence of how abysmal legacy healthIT is, is that the market leader is having trouble getting medical practices to adopt their software even with huge subsidies from large health systems.
In the course of discussions with large health systems, they share their experiences of deployments of a mega Electronic Medical Record (EMR) and how they were offering subsidies to affiliated doctors to adopt the same system. When pressed about how broadly it was being adopted by non-employee physicians (i.e., MDs who have a choice), the penetration was staggeringly low — 0.2% was the average of those who shared figures. This was despite the fact that they were subsidizing 85% of the cost (the maximum allowed by Stark Law).
When I’ve spoken with doctors who have rejected the entreaties from their affiliated health systems, it’s more than the expense (even after a massive subsidy, it’s still several thousand dollars plus monthly costs). Rather, the complexity and lack of user friendliness is the bigger driver. A common statement one hears in healthIT conversations is that doctors hate technology or are afraid of it. Hogwash. They only hate bad technology. Consider the iPad. Doctors are the biggest buyers and it’s not just young doctors.
Flawed Reimbursement Model Leads to Flawed HealthIT
This begs the question, “why is healthIT so bad that massive government and health system subsidies are required to drive adoption?” And how can this possibly be good news? Let me address the issues and then I’ll conclude with the good news. While it may seem easy to bash legacy healthIT vendors, my experience has been that vendors reflect their customers. I would take this a step further. In the case of healthcare, customers reflect the reimbursement model. It’s a reimbursement model that is so broken Americans pay nearly twice as much as other countries to get inferior outcomes.
The “do more, bill more” reimbursement model in the U.S. has been at the root of healthcare’s hyperinflation (not so fun fact: while what we spend on all other goods and services has increased 8x since the 60′s, healthcare costs have skyrocketed 274x). The byproduct is a focus on activity rather than value/outcome. Not surprisingly, the primary IT focus has to get as big a bill out as fast as possible. Despite the fact that most physicians call the patient the most important member of the care team, in reality, the “patient” as architected into most healthIT has been little more than a vessel for billing codes.
More recently, there’s been a drive to add so-called Patient Portals to involve the patient. However, these have been more driven by marketing objectives than truly rethinking the care delivery model. Making the patients central in a system designed for optimizing billing is even less likely than Yahoo or AOL surpassing Facebook in social networking. Web portals are a good analogy for the change afoot. Patient portals are similar to pre-Google web search. That is, it’s not been terribly important and not a substantive stand-alone business. Obviously, Google changed that. Likewise, the next generation patient portals will have central importance in any outcomes-based model particularly with chronic disease that makes up 75% of healthcare spend.
It will expand from simplistic provider-centric patient portal to full-blown Patient Relationship Management as one of the leading thinkers in healthIT, Shahid Shaw, stated in a recent article in a HIMSS publication.
“It will be nowhere as easy for existing legacy EHRs to simply retool their current platforms, like they did for MU.”With that said, Shah outlines nine ways future EHRs need to support ACOs.
1. Sophisticated patient relationship management (PRM). According to Shah, today’s EHRs are more document management systems, rather than sophisticated, customer/patient relationship management systems. “For them to be really useful in ACO environments, they will need to support outreach, communication, patient engagement, and similar features we’re more accustomed to seeing, from marketing automation systems than transactional systems.”
In absence of getting information from their healthcare providers, consumers/patients aren’t sitting idly by. They go to “Dr. Google” looking for information to fill the gaps left by their healthcare providers. Searching for health information is the third most common activity on the web. One site alone — WebMD — receives over 100 million unique visitors every month. Rather than fighting this, smart doctors are using low and no cost tools to harness this energy. Read Doctors Success Hinges on Transactor to Teacher Transition for more.
The best place to get a preview of how system requirements are radically changing is to look at disruptive innovators such as White Glove Health and Qliance deploying a new care/payment model called Direct Primary Care (DPC). They are already operating in the patient-centric, accountable and coordinated models that will become the norm. These venture-backed healthcare delivery organizations were forced to look beyond the traditional U.S.based technology vendors optimized around the flawed reimbursement model that will rapidly wane over the next 2-5 years. In Qliance’s case, they looked at over 240 different U.S.-based EHRs before looking elsewhere. In healthcare-wonk speak, DPC organizations are the “Triple Aim” champs. That is, they have demonstrated the most impressive health outcomes while lowering costs and improving the patient experience. It’s asymmetric competitors like these that are motivating traditional healthcare provider to look beyond their traditional suppliers.
If you would like to be notified when the seminal paper on Direct Primary Care is published this Fall, please contact me via my LinkedIn profile – http://www.linkedin.com/in/chasedave.
Great Products Killed by Convoluted Decisions Processes
When I’m asked why I didn’t get back in to healthcare sooner given my background, I share one of my past experiences. I was at a well-recognized hospital implementing their patient accounting system and we needed to decide the unique patient identifier scheme. It’s an important decision, but they were in year seven of debating what the new scheme should be! It may seem like an absurd example, but it’s indicative of how interminable the decision processes can be in a health system. It virtually guarantees that the only companies that can survive those processes are incumbent vendors — breakthrough young companies die on the vine waiting those processes out.
Consumptive User and Economic Buyer Separation
The role of Chief Medical Informatics Officer (CMIO) is relatively new and long overdue. The idea is a senior level physician plays an integral role in IT decision processes. However, there are still many scenarios where the people who will actually use software are a great distance from those who pay for the software. In other industries, the rise of Software as a Service (SaaS) has closed or eliminated this gap where you see individuals and departments not waiting around for IT to pick something that they don’t want to use. Rather, they can directly contract with the technology company. Naturally, there isn’t unanimity amongst physicians so the physician representative(s) involved in decisions will never reflect 100% of their peers.
There was a parallel scenario 10-15 years ago when multi-million dollar CRM implementations from companies like Siebel weren’t embraced the way dramatically lower-priced Salesforce.com has been embraced today. A key driver of this is the user of Salesforce.com is often the purchaser. Typically, healthIT is at least 10 years behind other industries. Fortunately, the economics of cloud-based, SaaS software are finally coming to healthcare cleaving off some zeros from what is typically spent on legacy healthIT.
One Item For Which HealthIT Vendors are Fully Responsible
Most of the items above put the root cause at the provider level driven in large part by a misaligned reimbursement model. However, there persists one insidious practice. There are various ways for tech vendors to ensure customers stick around as long as possible — lock-in or loyalty. Successful SaaS businesses are built on the loyalty model. Rather than holding data hostage or locking customers into long agreements, they believe that the more freedom you give customers, the more loyal they become (assuming you deliver the goods). In contrast, there’s still the antiquated model of lock-in used by many healthIT vendors. For example, they make it expensive and/or difficult to get access to data in a system to keep any in-house or 3rd party built system from being integrated. These vendors pull it over on naive customers by telling them that it’s a ton of work when it’s only a ton of work if that vendor is incompetent. Like escaping an abusive relationship, healthcare providers must push back on vendors’ bad behavior or else they reward that behavior.
A corollary to the vendor lock-in is healthIT still largely operates in a model akin to Wang and Prodigy where one company supplies the technology from top to bottom. Since the mid-90′s, we have seen how the web has enabled a thriving, heterogeneous model. They byproduct is a vastly expanded market for all technology vendors – old and new.
The Good News
Tectonic shifts are underway. Smart healthcare providers are trying to avoid making the same mistakes newspaper companies made in the late 90′s. For those of us used to the convoluted, interminable decision processes of the past, it is breathtaking to see the decision processes of today. As I detailed in the rise of nimble medicine, not only are entrepreneurial ventures popping up like weeds, healthcare providers are getting far more aggressive about trying new models without doing the equivalent of organizing the Roman Legions.
A great example of this is the New York Digital Health Accelerator. As you can see on their website, they have convened some of the largest and most influential healthcare providers. These organizations recognize that with all of the new requirements coming at them, they need new solutions. This program not only puts in money ($300,000), more importantly, the healthcare providers are committed to mentoring and/or piloting software. The accelerator is modeled after a highly successful program called the FinTech Innovation Lab also run by the New York City Investment Fund. Recognizing that their legacy vendors are overloaded simply keeping up with EMR implementations, each health system leader I have spoken with says they have zero expectation they will get what they need now from their legacy vendors. However, they are clear that the new systems must tie in with the old.
The best news for healthtech startups is that, by definition, legacy healthIT is optimized around the flawed reimbursement model of the past. The disruptive innovators instinctually know that they will either have to build their own software (if there isn’t off-the-shelf software) or they can work with software companies that allow them to be nimble. There is universal agreement that anything less than a fundamental redesign of healthcare will fall short in solving the most important problem the U.S. and the world faces — spiraling healthcare costs. Disruption innovation is enabled, in part, by modern technology that doesn’t have pricing models reminiscent of the 80′s.
Writing the Book on Patient Engagement
These changes aren’t lost on the trade associations for healthIT — HIMSS. Many are calling this the era of patient engagement. Reflecting this, HIMSS has commissioned a book on patient engagement that I’m honored to be co-editing and writing the chapter on patient-provider communication. A major theme of HIMSS’ 2013 conference will be patient engagement so the book anticipates that theme. It has been exciting to learn about the broad array of new companies and approaches emerging to meet the needs of healthcare providers.
More Good News
As I outlined in Mr. Obama, Tear(ing) Down This Wall, one of the rare areas of bipartisan agreement is the need to modernize the healthcare system by making more information available to patients and other providers. This is in stark contrast to the silo’ed systems of today that lead to duplicate effort and wasted money.
Not only is the public sector fostering a market expansion, private sector investors are pouring money into the healthtech sector. See Sleeping HealthIT Giant Awakens with Massive Venture Investment Growth for more.
Dave Chase is the CEO of Avado.com, a Patient Relationship Management company. Previously he was a management consultant for Accenture’s healthcare practice consulting to 25 hospitals and was the founder of Microsoft’s Health business. You can follow him on Twitter @chasedave.