I wrote a brief editorial in THCB and also on FierceHealthcare last week, suggesting that the problem with IT in the US wasn’t so much a lack of interoperability as it was a lack of use of IT in the clinical workspace by physicians in small practices. My editorial was in part inspired by a comment emailed onto me from Girish Kumar, who’s President of eClinicalWorks–an EMR vendor aiming at that market. Given that I’m doing some work on the use of ePrescribing by doctors in that market anyway, I thought I’d imitate MrHISTalk and do a CEO interview to go down a layer or two about how that small practice segment of the market is playing out. So here’s my take on my discussion with Girish.
eClincial Works is based in Westborough Mass , and it’s a private company with no debt and no investors and no plans to go public — working in a similar philosophy to Meditech just down the road. Currently it has around 150 employees with some $20-25m in software revenues on an annualized basis. They are doubling in size each year with 1500+ customers representing 3300 providers (meaning nurse practitioners and doctors). Their business is focused on the small end of the market, which they define as practices with 1-15 physicians, although they have started going into mid (15- 50) and large (50 +) practices. And a couple of even bigger practices have signed on recently, although that’s not been their prime market.
What about the market in general?
Girish believes that EMR adoption in health care is a long term process — and that realistically we are still 5-7 years away from peak adoption rates and some time after that from total penetration. He was (he says somewhat mis)-quoted last week as suggesting that government help was needed to get that market to take off. He does think that the conversation emanating from Washington is creating a catalyst which is helping physicians move towards automating their practices. But this is a numbers problem. While there are only a few thousand hospitals and big practices, there are over 150,000 small practices. Their EMR adoption is low in percentage terms but quite a few have EMRs which makes a large total number. Girish says that as eClinicalWorks continues to see more and more business every quarter, that tells him that the market is moving forward rather than backwards or sideways. But, and this is the key issue, the numbers of doctors needing to make that move are so large that unless the government puts in place bigger incentives the market won’t go from 30% adoption to 80% without a catalyst any time soon.
Is there a distinct set of players for different practice size?
For practices with 50 + doctors there are a now a more or less dominant set of EMR vendors, such as NextGen, Epic, Allscripts & GE Centricity (Logician). When you go to the below 50 doctor market, it’s coming down to 6-8 companies too, but not the same as the larger ones. For example, Epic doesn’t sell into that market. There are many smaller vendors who used to be able to be much cheaper than the better known companies, but the challenge for those companies is that original price point of $15-20,000 per physician is now falling. So the difference between the small vendor and bigger, better-known players has come down. For example eClincalworks’ EMR is $7500 a seat (you need to add $2500 more for the practice management module).
This is being accompanied by some level of market confidence in the vendors. Girish claims that others are telling him that eClinicalWorks is becoming a brand name for EMR. In addition the vast majority of doctors who buy their EMR product are also picking up the practice management application, and are starting to replace the Medical Managers of the world. As in many other parts of the health care IT arena, the value of the pre-integrated product can exceed the reason for keeping a legacy practice management system, and he expects to see that trend continue. Incidentally, some of his competitors, don’t share that view–Allscripts for instance doesn’t have a practice management module and integrates with those legacy systems. But clearly if physician organizations can recognize a distinct set of vendors who will be around for a while, then it will help the market.
So what should the government do?
In Girish’s view government is recommending the standards for building the highway, (interoperability and RHIOs). There’s no question that you need that for nodes (or in his analogy, cars) to be able to able to connect with each other. But we need to focus on the nodes, and we have to build the on-ramp and off-ramp to the highway. The government needs to incentivize both the infrastructure creation and incentivize the plug-in at the doctor’s office. He’s not critiquing building the highway but we must realize that we need the cars too.
What should that look like at the node level?
The government should come up with a subsidy either via Medicare or a pay for performance package directly related to IT adoption. Then the government should mandate that vendors implement interoperability standards at no additional cost — customers shouldn’t be burdened with the extra costs of interoperability. We need to build an incentive to vendors to do that and that incentive for vendors should be a growing market. In other words, create a market so that the vendors make more money but force them to make interoperability part of the products features. In one example Girish cited a vendor who wanted $60K to integrate inpatient and outpatient information together for single practice. That’s not acceptable to him and the path to interoperability ought to be built into vendors’ standard product roadmaps.
Having said that, there is only a small demand from doctors for seeing the inpatient chart in the outpatient environment, although that varies by specialty. For example, no dermatologist cares, but an ObGyn or cardiology practice might care. The big deal in terms of interoperability is access to lab results. However, overall adoption will be easier if physicians know that the products they buy are interoperable and that they are both able to get information from other systems and able to walk with their data if they don’t like the system they have.
So why should the government subsidize the EMR?
Putting aside the fact that the government subsidizes lots of parts of the health care system already, I pushed him a little on the idea of subsidies. After all if adopting technology gives the physician efficiency (and several vendors show that in their studies) and it’s saving them money, why should there be an incentive from the taxpayer? Girish felt that the improvement in care EMRs would create would save Medicare and the government money in terms or reduced hospital admission, better drug compliance, etc — so in his view it would be an investment. But he was happy enough with a proposal that any subsidy should be budget neutral overall for physicians, but that Medicare or the government would essentially be paying them to adopt the EMR while they were paying them less for other activities in their practice.
While I agree and I think that the P4P movement is pushing this way, I can imagine the AMA might not agree quite so readily! Still, I’m with Girish in believing that the adoption of EMR tools in small practices is the most crucial aspect of IT in health care, and it’s good to hear that there is some activity in that arena. And that at least one vendor is talking a good game about how that market can be grown at benefit to all of us.