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Reckless REC Wrecking

The Health Information Technology Extension Program, created and funded by ONC, has completed funding for all 62 Regional Extension Centers (REC), with a grand total of well over half a billion dollars and, predictably, criticism of the program was immediately forthcoming. The RECs are supposedly an impediment to free EHR markets and doomed to failure from the start, which may seem a bit contradictory if you think about it. Anyway, before making further statements and assertions regarding the “recklessness” of the RECs, or the impeding “train wreck” they represent, it may be beneficiary to take a closer look at the program.

Overview

The HIT Extension Program consists of 62 RECs, at least one for each State and territory, and one national Research Center (RC). The stated goal of the program is “to provide outreach and support services to at least 100,000 priority primary care providers within two years”. The individual RECs are supposed to conduct outreach and education campaigns in their respective States and inform physicians on the latest HIT developments and available programs and incentives. The RECs are also chartered to offer support and guidance to physicians selecting and implementing EHRs, particularly Primary Care docs in small practices and in underserved areas. These are the doctors that were left out by the regular market process because they were hard to reach, too expensive to implement and too poor to bother with. While the individual RECs are locally oriented, with feet on the ground in each State and each County, the RC is basically a National forum for RECs to share information and exchange lessons learned.

Funding

Other than a small amount of seed money, RECs are not handed out all those hundreds of millions of dollars of grant funds. RECs are paid for performance. For each physician they touch and manage to recruit, the RECs are paid about $1500. If and when the provider implements an EHR, the RECs receive another equal payment. The last third of the money is handed to the REC if, and only if, the provider achieves Meaningful Use. This arrangement is only in effect for two years. All those who believe that RECs are bound to fail should be reassured by the fact that in that dire case most of the allocated funds will remain with ONC. The RECs are expected to use the ONC seed money and find a way to become sustainable businesses after ONC ceases to support them financially.

Effectively, ONC is funding the start-up of 62 Social Businesses. A Social Business is a business whose purpose is not to amass profits for its founders and shareholders, but instead to better society and solve one social problem; a profitable and sustainable business, not a charity. As any venture capitalist knows, funding a startup is risky business and most startups never make it to the finish line. But some do, and there are strategies that investors employ to both minimize their own risk and maximize the likelihood of success for the entire portfolio. By providing the RECs with centralized operational oversight and by instituting milestone funding, ONC is doing exactly what a careful investor, managing other people’s money, would do.

Timeline

The argument goes something like this: The RECs are running out of time and there is no way they can create thousands of Meaningful Users in a short two years, or what is left of those two years. The common wisdom is that it takes many months, sometimes over a year, to transition a practice from paper to EHR, let alone Meaningful Use. That may be true for your average 30 docs practice. The RECs are not dealing with large multi-specialty practices in suburbia. They are dealing with the solo doc in Booneville, Arkansas. It shouldn’t take longer than 3 to 4 months to get a solo primary care practice from paper charts to Meaningful Use, if the doctor is willing. Granted, the time left for collecting maximum Medicare incentives is rather short, but the RECs constituents are those administering health care to the poor and underserved, many of whom will be receiving incentives from Medicaid. There is plenty of time for Medicaid incentives. And if some RECs fail, as some inevitably will, and are unable to deliver Meaningful Users, they will forfeit most of their allocated grant money. Tax payers in this case will not foot the bill for failure.

Resources

We all know that the Meaningful Use gold rush is creating a shortage of qualified EHR implementation resources, so how are all those RECs going to staff their operations? They certainly cannot compete with private market salaries, since the ONC seed capital comes up very short. Strangely enough, most RECs managed to build their infrastructure already, but will there be enough funds to hire HIT experts and will anybody want to take a job which may prove to be very temporary indeed? It is very unlikely that RECs will attract experienced EHR implementers who are used to flying out to client sites, staying at nice hotels, renting cars and having all their expenses paid while on the road. RECs cannot afford these resources, and RECs do not need these types of resources either. RECs are not selling and implementing EHRs. They are there to see that the vendor does a good job and serve as the physician advocate during the process. Many RECs are University based and others were created by traditional Quality Improvement non-profits. None of them are starting from scratch and, like every startup, they will have to come up with innovative solutions. Some already have, others will learn from those examples and, as John Moore aptly predicts, the remainder will not be around after 2012.

Free Market

Here is my favorite gripe against the REC concept. The RECs are selecting a handful of preferred EHR vendors to recommend to their clients and therefore are interfering with the free market. Particularly since most RECs seem to select the same usual EHR suspects. Along the same lines it can be argued that every hospital Group Purchasing Organization (GPO) is interfering with the free market and so are Sam’s Club and Costco and any other discount for volume program. Why are the RECs consistently selecting EHRs from a small group of about a dozen products when we all “know” that there are 400 EHRs out there? Perhaps it is because there are not 400 viable EHRs out there. There never were. There very well may be 400, or more, companies selling, or trying to sell, EHR software, but very few of those companies ever made it into the main stream and even fewer have enough stability, or appeal, to be a viable choice for an informed consumer. It is worth noting that the EHRs the RECs are selecting are the same ones that physicians independently selected prior to the RECs creation, and thus the ones with the largest existing market share. Perhaps one size does not fit all, but certain sizes do fit most, and anyway, RECs are by definition committed to work with any EHR a physician chooses, whether recommended by the REC or not. When you compare this with the non-profit North Shore Long Island Jewish Health System spending $400 million to roll out one particular EHR to 7000 physicians, I don’t think the RECs are skewing the “free market” too much.

For anybody wondering about the existence of a dark side in the RECs EHR selection process, I would suggest reading the latest EHR selection press release from the Ohio REC. The selection criteria for Ohio seem pretty straight forward: adequate functionality, capacity to do the work, willingness to hire and train Ohio citizens, support provided exclusively in the U.S. and commitment to ongoing certification. Looks rather reasonable to me. By the way, the Ohio REC reported about 40 vendor applications, which makes one wonder where exactly are the other 350 EHR vendors hiding.

Innovation

How about “stifling innovation”? Are the RECs holding back the future of HIT by selecting old “legacy” EHRs? There is no question that the RECs are selecting what they, and most reasonable folks, consider safe products, products that have been around for a while, products with a sizeable install base and products backed by financially stable companies. Would you buy a car from Stimulus Motors, Inc., who’s been in business for 12 months, has 5 employees in the U.S. and 3 customers, just because they advertise usage of “latest technologies”? What are “latest technologies”? If you look at the “legacy” EHRs selected by the RECs, most boast .NET or the latest Java software, industry standard databases, browsers, rich thin clients and even Natural Language Processing engines. The assumption that all innovation must come from 2 guys in a garage is largely a fallacy. Besides, a truly valuable innovation should be able to make its way through any market, whether it is a completely new paradigm or the much exulted iPhone proprietary model. Personally, I hope we don’t devolve back to days when a particular software product was inextricably tied to a particular piece of hardware, and for lack of a better term, call it innovation, but this is better left for another day and another post.

Full Disclosure: I have a financial interest in EHRpathway, LLC which is currently providing consulting services to the Missouri State REC.

Margalit Gur-Arie blogs frequently at her website, On Healthcare Technology. She was COO at GenesysMD (Purkinje), an HIT company focusing on web based EHR/PMS and billing services for physicians. Prior to GenesysMD, Margalit was Director of Product Management at Essence/Purkinje and HIT Consultant for SSM Healthcare, a large non-profit hospital organization.

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http://mulberryvesker.avogel.orgRoseJohn@Chilmarklandlord servicesJohn Lynn Recent comment authors
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Rose
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Recommended vendors, preferred vendors, chosen vendors. There goes the free market. And even if more than the 40 vendors applied in Ohio would they even be chosen….

John@Chilmark
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Just came across this post Margalit and since you did reference and take a shot at my post, feel it necessary to respond in kind. Funding: I’ve been on the other side of the fence having worked within a Sea Grant program and know intimately how an extension program works. The funding going towards these RECs is likely to be by and large wasted, regardless of how they actually fund the RECs. I’ve seen it before and see nothing in this current program that changes that opinion. Timeline: RECs are targeting PPCP (priority primary care physicians) and many of these… Read more »

landlord services
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One of the aims of the strengths of electronic health records is to improve the monitoring of test data. In theory, using more sophisticated digital systems, doctors can better control the mountains of the results of the tests they face every day.

Margalit Gur-Arie
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John,
I will have to disagree with this statement:
“Too bad none of the RECs did this.”
I know for a fact that at least one REC did.
Also, the notion that docs are staying away from RECs is based on old July data. Many RECs are becoming operational now and a new survey should be taken towards the end of the year.
I don’t know how many RECs will be successful and to what degree, but I wouldn’t be so quick to write them all off. Time will tell, I guess.

John Lynn
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I couldn’t care less about keeping the free market system. Those comments are crazy. It’s still a free market. Doctors can choose to use the RECs or not. It seems like many of the docs are choosing not to do it. The problem with a preferred vendor list is that you have a REC creating a list of EHR vendors based upon a criteria that may or may not be relevant to the clinic. It’s an impossible task for a REC to create a preferred vendor list that will appropriately meet the needs and expectations of the thousands of doctors… Read more »

Margalit Gur-Arie
Guest

David, As far as I know, and I do not have much concrete information, there is no standardization in RECs operations. There is ONC oversight regarding reporting and milestones, but RECs are very different in how they go about achieving their goals. From what I saw some have preferred vendors, some have (or will have) long lists of vetted (screened) vendors and I think some are making no recommendations at all. As to certified technologies, we may end up with a large number of certified modules, but I somehow don’t see 300-400 certified complete EHRs. With all due respect to… Read more »

David Tao
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David Tao

Margalit, thanks for the interesting post. Do you know whether the RECs are highly variable in how they do things, or do they have a lot in common (spurred on perhaps by ONC guidance, or else by informal networking)? Can broad generalizations be made about them, or can we only really speak of “the Ohio REC, the Arizona REC, etc.” For example, do they ALL select “preferred vendors?” David K, I agree that there will be a good number of certified EHR technologies, judging by the rate at which they’re appearing already (4 from Drummond + 33 from CCHIT in… Read more »

Margalit Gur-Arie
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Thanks, David. I do agree with your assessment regarding the “steepness” of the learning curve. I hope many RECs make it to the top. It is in the best interest of small practices everywhere that they do, and I hope most docs come to understand that the RECs are basically “on their side” and they use the RECs in that manner.

David C. Kibbe, MD MBA
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David C. Kibbe, MD MBA

Margalit: Great post! Thank you for providing the facts, and for pointing out that the RECs might just learn, eventually, how to be helpful to docs and their practices. In my experience so far with the RECs, many are at the bottom of a steep learning curve. But they are increasingly “selecting” as many as 40-50 EHR technology products, and allowing the marketplace to dictate quality, price, value. It’s going to be a bit wild out there with 200-300 certified EHR technologies on the market in 2011 and 2012; but the new certifying program will level the playing field and… Read more »

Margalit Gur-Arie
Guest

pcp, Unfortunately, it does sound like bounty hunting. The one thing to remember though, is that RECs are first and foremost tasked to reach out to all those physicians who are practicing far away from the lime lights. Those who, historically have been neglected by everybody else, and those who serve equally neglected patients. Perhaps a few thousand dollars in consulting services are not a factor for more affluent folks, but could make a huge difference for a rural health clinic. I can tell you, from talking with several of these docs that the most important thing they get out… Read more »

Margalit Gur-Arie
Guest

Adam, I agree that if a small vendor truly has a dramatically better product, the REC system should not be a deterrent to their success. However, I would not buy that Stimulus Motors car, no matter how good the vendor says it is. I would prefer to wait and see what happens to the first several thousand brave souls, and wait at least a year or two. I don’t know if the thing has a problem that makes it blow up after 50,000 miles, or if the doors fall off after a few months, etc. I guess I am not… Read more »

pcp
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pcp

“For each physician they touch and manage to recruit, the RECs are paid about $1500. If and when the provider implements an EHR, the RECs receive another equal payment. The last third of the money is handed to the REC if, and only if, the provider achieves Meaningful Use.”
Sounds like bounty hunters being paid for each criminal they round up. These products must be real lemons if they require this many subsidies to get anyone to use them.

Adam Rothschild
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Adam Rothschild

You make an important point that “RECs are by definition committed to work with any EHR a physician chooses, whether recommended by the REC or not.” While it is certainly easier to be a preferred vendor, this little fact can keep startup or small vendors viable if they truly have a dramatically better product. That said, I take issue with your statement “Would you buy a car from Stimulus Motors, Inc., who’s been in business for 12 months, has 5 employees in the U.S. and 3 customers, just because they advertise usage of “latest technologies”?” I certainly would buy a… Read more »

David
Guest

I could not agree with you more strongly. When “preferred vendors” are selected, the free market system crumbles. Kinda like the government awarding contracts to friends of the Congress and Senate (or President), there is no free market in such an instance.