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Barbarians at the Gate

By ADRIAN GROPPER, MD

US healthcare is exceptional among rich economies. Exceptional in cost. Exceptional in disparities. Exceptional in the political power hospitals and other incumbents have amassed over decades of runaway healthcare exceptionalism. 

The latest front in healthcare exceptionalism is over who profits from patient records. Parallel articles in the NYTimes and THCB frame the issue as “barbarians at the gate” when the real issue is an obsolete health IT infrastructure and how ill-suited it is for the coming age of BigData and machine learning. Just check out the breathless announcement of “frictionless exchange” by Microsoft, AWS, Google, IBM, Salesforce and Oracle. Facebook already offers frictionless exchange. Frictionless exchange has come to mean that one data broker, like Facebook, adds value by aggregating personal data from many sources and then uses machine learning to find a customer, like Cambridge Analytica, that will use the predictive model to manipulate your behavior. How will the six data brokers in the announcement be different from Facebook?

The NYTimes article and the THCB post imply that we will know the barbarians when we see them and then rush to talk about the solutions. Aside from calls for new laws in Washington (weaken behavioral health privacy protections, preempt state privacy laws, reduce surprise medical bills, allow a national patient ID, treat data brokers as HIPAA covered entities, and maybe more) our leaders have to work with regulations (OCR, information blocking, etc…), standards (FHIR, OAuth, UMA), and best practices (Argonaut, SMART, CARIN Alliance, Patient Privacy Rights, etc…). I’m not going to discuss new laws in this post and will focus on practices under existing law.

Patient-directed access to health data is the future. This was made clear at the recent ONC Interoperability Forum as opened by Don Rucker and closed with a panel about the future. CARIN Alliance and Patient Privacy Rights are working to define patient-directed access in what might or might not be different ways. CARIN and PPR have no obvious differences when it comes to the data models and semantics associated with a patient-directed interface (API). PPR appreciates HL7 and CARIN efforts on the data models and semantics for both clinics and payers.

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Apple, Cerner, Microsoft, and Salesforce

… all rumored to be in the mix to acquire athenahealth.

Nope.

Why not?

a) Apple doesn’t do “verticals.” It’s that easy. Apple sells products that anyone could buy. A teacher, a doctor, my mom. Sure – they have sold high-end workstations that video editors can use, but so could a hobbyist filmmaker. Likelihood of Apple buying athenahealth? ~ .01%

b) Cerner? Nah. While (yes) they have an aging client-server ambulatory EHR that needs to be replaced by a multi-tenant SaaS product (like the one athenahealth cas built), they have too much on their plate right now with DoD and VA and the (incomplete) integration of Siemens customers. Likelihood of Cerner buying athenahealth?  ~ 1%

c) Microsoft. Like Apple, it’s uncommon for MSFT to go “vertical.” They have tried it. (Who remembers the Health Solutions Group?) But the tension between a strong product-focused company that meets the needs of many market segments, and a company that deeply understands the business problems of health (and health care) is too great. The driving force of MSFT, like Apple, is to sell infrastructure to care delivery organizations. Owning a product that competes with their key channel partners would alienate the partners – driving them to AMZN, GOOG and APPL. Likelihood of Microsoft buying athenahealth?  ~ 2%

d) Salesforce. I’d love to see this. But it’s still unlikely. athenahealth has built a product, and they (now) have defined a path to pivot the product into a platform. This is the right thing to do. Salesforce “gets” platform better than everyone (aside from, perhaps, Amazon). But Salesforce has struggled with health care. They’ve declared times in recent years that they are “in” to really disrupt health care, and with the evolution of Health Cloud, and their acquisition of MuleSoft, they have clearly made some investments here, but the EHR is not the “ERP of healthcare” as they think it is. (Salesforce’s success in other markets has been that they dovetail with – rather than replace – the ERP systems to create value and improve efficiencies.) The way that Salesforce interacts with the market is unfamiliar (and uncomfortable) to most care delivery organizations. So if Salesforce “gets” platform, and athenahealth wants to be a platform when it matures, could these two combine? It’s the most likely of the three, but I still see the cultures of the two companies (I know them both well) as very different, and not quite compatible. Likelihood of Salesforce buying athenahealth?  ~ 10%

e) IBM. yup. I forgot that one. Many recent acquisitions. This would fit. I don’t think it would work very well, but it could happen. ~6%

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Why go to Health Datapalooza? Ask Bruce Greenstein, CTO of HHS

Health Datapalooza is coming up quick at the end of April, so I sat down with Bruce Greenstein, CTO of HHS about why all of THCB’s health tech friends should attend. Plus, we get into what’s happening with the open data movement and how Bruce’s past-life at Microsoft is going to shape how he and HHS work with those consumer tech companies that are pushing harder and harder into healthcare.

What Healthcare Could Learn From a Technology Company

Screen Shot 2014-08-11 at 9.43.45 AMHealthcare is very different from most other industries. It is fragmented, conservative, highly regulated, and hierarchical. It doesn’t follow most of the usual business rules around supply and demand or consumerism. An important aspect of my role at Microsoft is helping my colleagues at the company understand the many ways that healthcare is different from other “businesses”.

Having said that, there are a lot of things that healthcare could learn from a company like Microsoft or other technology companies. When someone asks me what it’s like to work at Microsoft, I often say what someone told me when I started at the company 13 years ago. Microsoft is like a global colony of ants, working independently and yet together but always “neurally” connected by enabling technologies. At any given moment, I can be connected to any one of my 100,000 fellow workers or tens of thousands of partners with just a couple of clicks or taps on a screen. I have tools that show me who’s available, what they do, what they know, and where they are. I can engage in synchronous or asynchronous communication and collaboration activities with a single member or multiple members of my team using messaging, email, voice, video or multi-party web conferencing. We can use business analytics tools, exchange information, review documents, co-author presentations, and collaborate with our customers and partners anywhere in the world from anywhere we might be. Our business moves, and changes, at the speed of light. It is the rhythm of the industry.

I sometimes wake up in the morning and think, “If only my clinical colleagues could avail themselves of similar tools and technologies how different could healthcare be?” I’ve been using information communications technologies in my daily work for so long that I almost take for granted that this is the way work is done. But I also know that in the real world of healthcare the journey is still quite different. That hit home again last week when I asked my mother’s family doctor for a copy of a report on an imaging study he had ordered. It took five phone calls to make something happen and my only choice was to receive the report via fax machine. Fax machine, really?

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Microsoft Ventures Tel Aviv Is Looking For Startups

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In the past century, medicine has gone from a largely unscientific trade where noxious drugs were given to patients to purge them of unknown toxins to a science where we have the technology to decode the human genome and peer into the deepest recesses of our anatomy non-invasively.  We have learned so much and generated massive amounts of data relevant to the understanding and care of the human body.

Globally, we spend enormous sums on healthcare, but we are not necessarily getting any healthier.  In 2012, U.S. healthcare spending was $2.8 trillion, or roughly 18% of GDP[1].  Compare this with the global average of 10.2%, the EU at 10.1% or The Netherlands, the developed country with the second highest per capita spending of 12.4%. Despite the scientific advances and extraordinary spending, access to the best, most effective care is far from ubiquitous.

Healthcare, like any other industry, is driven by motivators. While government and regulatory pressures drive many behaviors in medicine, financial considerations are also important drivers  When healthcare reimbursement works on a fee-for-service system in which providers are compensated for each service they provide, the incentives do not necessarily  promote the most efficient and cost-effective options. Rather, the incentives encourage the delivery of “more” healthcare. But we don’t necessarily need “more” – we need “smarter.” More adds costs. Smarter solves problems.

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Is Technology Making Us Fat?

As we look back over the past year and some of the amazing medical breakthroughs like wearable robotic devices, genomic sequencing and treatments like renal denervation that are improving people’s lives, it bears reflection on what else we could be doing better. Our world has changed more in the past century than in thousands of years of human history. We not only know more about our biology than ever before, but science and technology are unlocking the secrets of the very building blocks of our health. Somehow, in the midst of this incredible innovation, we’ve gotten fat, and not just a little. The result? Alarming rates of obesity and related chronic disease that threaten to crush us physically and financially.

But is it technology’s fault that we’ve become fat? A recent study by the Milken Institute that tied the amount an industrialized country spends on information and communication technologies directly to the obesity rates of its populations thinks so.

Most of us are guilty of a little overindulgence around the holidays but for many, overindulgence is a normal way of life. As economies transition to more sedentary, the physical movement that burned calories and kept us fit simply does not occur. Our lifestyles compound the issue — dual-income homes rely on the convenience of packaged meals, and our leisure activities have shifted to heavy “screen time” with movies, games and social media.

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Digital Health: Almost a Real, Live Business

While the evolution of the digital health ecosystem has seemed at times almost painfully contrived, it now appears to have reached the point where it requires but a few sprinkles of magic fairy dust to be truly alive.

The basic idea behind digital health is pretty clear: we can (and must) do health better, and technology should be able to help,

There’s also an ever-increasing amount of support for early-stage innovators in this space. A remarkably large number of digital health incubators have sprung up around the country, as Lisa Suennen captured with characteristic verve in a recent Venture Valkyrie post.

On top of this, a slew of corporate VCs have now emerged – many from payors, but some from communication companies, and even a few from big pharmas such as Merck – all keen to invest strategically in the digital health space.

Deliberately, many of these large corporations also represent likely buyers for the products or services that will be produced, so it really does seem like an example of the savvy external sourcing of innovation.

So we’re good, then – right?

Well, not so fast.

It turns out that many high profile VCs continue to eschew this space, other than perhaps an occasional investment or two. The reason? As one extremely well-regarded VC – with extensive healthcare experience – told me yesterday, “I haven’t seen a viable business model yet.”

Translation: how do you make (serious) money here? Where’s the revenue?

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Making Good Health Care Companies Great

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Who am I? Why am I here?  Does it really matter anyway?  Bestselling business author and corporate historian Jim Collins(“From Good to Great”, “Built to Last: Successful Habits of Visionary Companies ”) has made a career by asking executives unused to such introspective philosophical questions to stop and think about the fundamental assumptions at work in their businesses.  Collins has found that the most successful companies (think GoogleAppleMicrosoft, probably notFacebook) learn to ask the key questions that keep them focused on what they’re supposed to be doing and teach them to avoid making the mistakes that cause lesser, more mortal companies to trip up over their own feet.  Not long ago THCB was on hand to catch Collins and bestselling author (“Getting Things Done”) David Allen speak at an exclusive invitation-only healthcare forum hosted by the Denver-based Breakaway group. In this interview, Breakaway group CEO Charles Fred talks with THCB founder Matthew Holt about his organization’s innovative and very successful approach to teaching healthcare professionals to work with new technologies.

The Creative Destruction of the News Business and Other Weird Stories

Health system CEOs would be well advised to study what newspaper industry leaders did (or perhaps more appropriately, didn’t do) when faced with a dramatic industry change. Turn back the clock 15 years and the following dynamics were present:

  • Newspaper leaders knew full well that dramatic change was underway and even made some tactical investments. However they didn’t fundamentally rethink their model.
  • Newspapers were comfortable as monopoly or oligopoly businesses allowing for plodding decisions. Their IT infrastructure mirrored the plodding pace with expensive and rigid technology architectures.
  • Newspaper companies bought up other newspaper chains and took on huge debt.
  • Owning printing presses was a de facto barrier to entry allowing newspapers unfettered dominance.
  • Depending on one’s perspective, it was the best of times or the worst of times to be a leader of local media enterprise.

Before they knew it, owning massive capital assets and the accompanying crushing debt became unsustainable. The capital barrier to entry transformed into a boat anchor while nimble competition dismissed as ankle-biters created a death-by-a-thousand-paper-cuts dynamic. Competitively, newspaper companies worried only about other media companies or even Microsoft, but their undoing was driven by a combination of craigslist, monster.com, cars.com, eBay, and countless other marketing substitutes for their advertisers. In addition, there were easier ways to get news than newspapers. Generally, the newspaper’s digital groups were either marginalized or unbearably shackled so that the encumbered digital leaders left to join more aggressive competitors. The enabling technology to reinvent local media didn’t come from legacy IT vendors who’d long sold to newspaper companies, but from “no name” technologies such as WordPress, Drupal and the like.

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Microsoft Bows Out of the Clinical Market

Today, GE and Microsoft announced a joint venture (JV) that will lead to the formation of a new company (NewCo) targeting the clinical healthcare market sector. The NewCo will be located near Microsoft HQ in Redmond, WA, start with roughly 700 employees and combine the remaining Microsoft clinical products, Amalga UIS and the former Sentillion products Vergence and expreSSO with GE’s eHealth and Qualibria suite. NewCo’s new CEO will be GE’s Michael Simpson, who has been heading up the combined Qualibria-eHealth group since earlier this year after a re-org at GE. Along with this announcement, Microsoft’s Health Solutions Group (HSG) leader, Peter Neupert stated that he’ll be retiring.

Combine the above announcement with Microsoft’s long anticipated sale of Amalga HIS, which went to Orion Health in October, and you are left with Microsoft completely pulling out of the clinical market. Sure, they’ll claim to be still in healthcare by directly selling their horizontal products (e.g., SharePoint, MS Office, various server products, etc.) into this sector and having a stake in this JV, but it is also exceedingly clear that Microsoft will no longer have any direct involvement in this market, that will be left to GE. That being said, Microsoft did state that they’ll hang onto HealthVault, but even here, that is more likely a by-product of no one wanting to take on HealthVault rather than Microsoft’s strong desire to continue to try and build a viable, revenue generating entity out of it. Do not be too surprised if, in a year’s time, HealthVault falls to the wayside much like Google Health did this year.

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