At HIMSS I had a quick chat with Scott Shreeve, the Chief Medical Officer at Medsphere. Medsphere’s product OpenVista, as you all know, is built on the VA Vista product — which is the main “open source” EMR code out there. To get it ready for the commercial market they had to remove the VA- centric features, rewrite the user interface and re-architect the middleware layer using open source technology. For commercial hopsitals they had to enhance the charge capture features for patient billing. They also had to enhance features in the ancillary department systems, and leverage and extend the current data base (which is written in MUMPS).

Their first client, Midland Memorial Texas, has 425 beds in 3 sites. They were facing approximately a $20m price tag for to upgrade their McKesson clinical system. Going with Medsphere is 1/3 the price of a new system but Medsphere had to interface with the McKesson billing system to get the gig.

Are they able to compete with Medtiech in the smaller hospital world? The business model is that they get paid for services and an ongoing subscription for managing it. So they have to provide the open source code, but ideally they want to get the subscription to manage it and so need to do a good job there. Aside from hospitals, they are going to stay in the bigger (i.e. medium-sized) ambulatory clinic market, but do have groups of small physician practices coming together to buy the system — so they do have some opportunity in other parts of the market. They think that they can do move that process down to small hospitals.

What are they doing to address that? They’re developing deployment models that work very quickly setting up systems. They’ve done it with pharmacy, lab & radiology and have have some tools to extend the system. But the software is thin-client but not web-based so there is stuff they have to do in terms of services and installs, and it’s hard to see them moving to a very small hospital market or ASP solution just yet. (They are, after all, waiting to show their first hospital client site fully live!)

And that "open sourceness"? They are changing some of the code and adding some of the new code set back to GPL, but they are keeping some of the code proprietarily for the interfaces and the GUI that they’ve built. So the open source purists may not think that Medsphere is pure open source, but the rest of health care IT will be watching with a great deal of interest to see if they can make a real business selling "free" software and undercutting the bigger guys.

BTW MrHISTalk had a nice interview with Scott a while back

Writing in his blog from PC Forum, Esther Dyson’s technology conference that Dave Winer says is apparently is back “in” these days, here are some parts of what Michael Miller had to say.

Esther Dyson talking about how the health care industry showed extreme versions of many of the issues discussed earlier in the day: more information than ever, with users having to make more decisions themselves.

Scott Cook talked about the difficulty of tracking medical expenses and figuring out how much an individual owes.    He talked about Intuit’s Quicken Medical Expense Manager, and how institutions are wanting to get more data into it.  There are lots of issues about understanding the information, who owns the information etc. 

Jeffrey Rideout of Cisco talked about the problem of trying to get his employees information about their medical plans, expenses and other information.  We have a lot of problems to solve with the health care system, he said.  He said Cisco is looking on how to use its influence as major employer to help its employees navigate the system and get better care.

J.D. Kleinke of Omnimedix Institute talked about how looking at data is improving health care, and how it was important to gather more information about the health care process.  His company wants to give people personal health care records.  They want information that is private and portable.  He also operates Healthgrades – a site for getting the grades of your doctor and hospital. (Matthew’s note—not sure how JD ended up Vice Chairman there but he has been since the dark days of 2002!)

Gina Glantz from Service Employees International Union talked about how many of their members don’t have good health coverage; and how health care costs are an increasingly large issue in negotiations with employers.

The discussion talked about the need to deliver the technology in lots of places, perhaps by mobile phone.  But all seem to agree that technology has a way to help the system.

Scott Cook said “we don’t have time to wait” for a complex solution.  More people die because of medical errors caused by bad systems than from Diabetes or car accidents. We need to go after the root causes of the complex work systems and use best practices to improve this. We can’t wait for an all-encompassing technology solution, he said.

Rideout thought the personal health record was the first and easiest way to make an improvement; by getting a core set of information to people.We don’t spend enough money on IT for health care, he said. (Matthew’s retort—Well at least they’ve taught him something about marketing IT since he went to Cisco!)

People in the audience seemed particularly interested in the concept of a personal health record that you could carry around with you electronically. Both Intuit and Omnimedix said they were working on the problem.  Rideout said many doctors don’t trust this information though. Kleinke said the problem was not primarily technological, but instead was getting political agreement

I’ve remarked before how it’s incredible that really bright people from outside the industry just have no comprehension of how this business works. I can forgive Esther (and I was relatively nice about her before). Cook is selling a software program, and so if he can create a consumer market for PHRs, good luck to him — although I hope it’s a whole lot more transparent that the baffling TurboTax.But if this is reported accurately JD and Jeff Rideout, who both know plenty more about health care than the rest of the people in that room, need a good paddling if they seriously believe that portable PHRs are the best we can do as a solution for anyone apart from Quicken’s shareholders.

The only person who even appeared to be in the ball-park of defining what was wrong is the rep from the SEIU who’s noticed that health care costs are going up too fast and have been for years. No one (unless JD was transcribed wrongly about what was political) seems to have mentioned the overall access/cost/quality/practice variation problem.  Couldn’t they have got tech guru Len Schaeffer in there? At least he understands that part of the problem.

Of course as has been discussed many times by the crowd over here on THCB who do know something about this business, the broad problems with health care are a) the insurance market, b) the structure of the delivery system, c) the quality of the care delivered by that system and very lastly d) customer service. Well the portable PHR might solve some of the last issue, but that’s eventually being dealt with by the plans and providers starting to use decent CRM. So by glomming onto the portable PHR as a solution because it looks like a piece of technology that they vaguely understand, the PC Forum crowd is imitating the drunk looking for his keys under the street lamp because it was dark where he dropped them.

And unless the major issues of the health system are changed by some type of reform, all the technology and information in the world won’t make much difference.

OK. I have two requests for people in slightly different parts of health care IT. Both are based on the west coast.

One is for a senior level marketing Director at a large technology company to build a health care marketing group. Needs 10+ years experience knowing health care, technology and marketing.

The other is a 9 month full-time contract as an IDX implementation consultant/manager for their enterprise wide scheduling system. If you don’t know what that means, it’s not for you!

Please email me with your details (resume/bio/experience) if you think that it might be you. And as I’ve said before feel free to write if you’re just looking but not for these in particular as I get asked a lot. Obviously everything is treated in total confidence,

Score one for the little guy. RIM the maker of the Blackberry caved in its patent dispute — even though things were going its way at the patent office.

Research In Motion Ltd., the maker of the BlackBerry e-mail device, Friday announced it has settled its long-running patent dispute with a small Virginia-based firm, averting a possible court-ordered shutdown of the BlackBerry system. RIM has paid NTP $612.5 million in a "full and final settlement of all claims," the companies said..The settlement ends a period of anxiety for BlackBerry users. At a hearing last week, NTP had asked a federal court in Richmond, Va., for an injunction blocking the continued use of key technologies underpinning BlackBerry’s wireless e-mail service. RIM, which is based in Waterloo, Ontario, had put away $450 million in escrow for a settlement. It will record the additional $162.5 million in its fourth-quarter results, it said.

So was NTP just a patent troll. Perhaps. There’s no question that the patent system should be fundamentally reformed, or even straight-out abolished for software.

And there are plenty of straight trolls out there who buy up old patents, or worse create nebulous ones and never ever make an attempt to make a business out of them other than suing companies who do succeed. The worst example was Jerome Lemelson who basically gouged US businesses for billions of dollars by patenting ideas he never intended to make into actual products, and then used legal subterfuge to hide the patents until someone else did actually invent the device/technology in question and then forced them to pay him off. This essentially went on till after his death in 1997, when in 2004 the courts ruled against patents he’d created in the 1950s as being valid for products invented in the 1990s. But equally worthless patent cases happen with the big guys fighting over licensing revenue, such as the long running case between Intel and TI over the integrated circuit when it was clearly a case of two independent inventors having the same idea at the same time. Although they finally settled it by cross-licensing the technology.

But there are a couple of differences here.

The first is the this was a real David v Goliath situation in which David (NTP’s late founder Tom Campana) actually did invent a product to go with his patent, and tried (but failed) to make a commercial go of it — being screwed over by AT&T in the process.  In this case it seems that RIM didn’t actually filch anything from him but, unlike Lemelson, Campana did create his version of the product and tried but failed to market it successfully. He had a real company and bad luck/business judgment kept him from being there first successfully. Only after that did he create NTP. And it was only after RIM emerged using what he thought was his technology that he tried to get some real money from his invention, as the rest of his life fell to pieces including an eventually terminal illness. RIM’s predecessor product to the Blackberry was a direct competitor to the SkyTel service that AT&T went with after junking its putative deal with Campana’s company. So even while the technology may not have been identical, the business and the solution that they were aiming at — wireless messaging over paging networks — was clearly visible.

NTP wrote to RIM which did have the opportunity to buy it off cheaply in the early days, an just blew it off. But that wasn’t the real problem with the RIM case. For a start they were happy to use a patent they’d acquired to go after a competitor and keep their monopoly status. So calling NTP a patent troll just because RIM succeeded and Campana’s business failed is a little pot and kettle. Secondly, when NTP came after them seriously, RIM dragged this out in the courts while they hoped that the patents would be disallowed (as they steadily are being, in part to their political influence in DC) again not taking the sensible business decision of settling for a smaller sum. But their real error was that they cheated in court and were busted. (The link is to a long and excellent article summarizing the whole case).

RIM’s case hinged on proving that Mr. Campana’s patents were not valid because other people had already invented wireless e-mail by the time he applied for his patents in 1991. One of RIM’s key witnesses was David Keeney, whose company TeckNow had mastered an e-mail process called System for Automated Messages, or SAM, in 1987. To prove his point, RIM’s lawyers had Mr. Keeney perform a dramatic demonstration for the jury. Using two old laptop computers and a pager, he explained how he could send a text message using SAM. Then he typed "Tommy, the deal is closed" which quickly appeared on the pager. The demonstration was crucial for RIM because it proved that Mr. Keeney’s work had predated Mr. Campana’s by at least four years and it made his 1991 patents invalid.

The only problem was that to get the demonstration to work, TeckNow and RIM had secretly swapped in newer software. NTP’s lawyer spotted the discrepancy and cornered Mr. Keeney and RIM officials during cross-examination. After a few more minutes of struggling to explain how the newer version was installed, Judge Spencer cut Mr. Keeney off and told the jury to leave the room. "I’ll count to 10. I don’t want to yell at you," the judge said, admonishing RIM’s legal team for the deception.

So after that the threats of shutdown and failed settlements got bigger and bigger and started to really threaten RIM’s business, as competitors like Microsoft and Palm jockey to get into the “wireless push email” space. Until today, when apparently the case is really over. A huge business error by RIM has cost them $612.5m plus a whole bunch more. But having said that, and even though his team was damn stupid to try to cheat in court, what RIM’s CEO Mike Lazaridis said is true.

"There’s a tremendous amount of innovation and hard work that goes into taking an idea and realizing it and then making it into a product," Mr. Lazaridis says defiantly. "There are 16 million lines of code in BlackBerry. Sixteen million. It’s hard to imagine 16 million lines of code. They all have to work in harmony and perfection to make this thing do its job. Are you trying to tell me that one little concept is more important than another little concept, and that it didn’t take man-years and man-years of effort to make all that stuff work?"

So eventually the patent system needs reform or abolition. And of course one industry that means a great deal to is biotech and pharma, where similar patent wars are waged everyday. But until then some common sense is still required.

I spent Monday morning at a press conference where Louis Burns, the head of Intel’s health initiative, talked about what Intel is up to in health care, and Robert Pearl, the CEO of TPMG (the Kaiser doctor group), talked about their move to EMRs.

Kaiser is clearly making some progress—for instance they’ve now got messaging between physicians and patients running in N. California. Pearl repeats the line, which I buy, that the medical groups which have electronic clinical records and manage chronic care for their patients automatically will produce superior quality patient care. Unfortunately, there are two major problems. First, getting people to move to a Kaiser (or equivalent) from the disaggregated FFS doctors that 90% of Americans now use will require Kaiser to be cheaper than competitive plans (which it’s not any more) and to get employers to force their employees to move to those integrated systems. Something that has been really tricky for employers to do. Second, when I asked Pearl about it he said, speaking personally, that employers (and America as a whole) were going the wrong way by moving towards high-deductible health plans because it was a short-term way of cutting costs, and reduced the sensible use of preventative care.

Intel’s health group wants to move towards more preventative care (and less reliance on intensive acute care). They are pushing technology to create smart homes, and easier communications between patients, caregivers, and clinicians. They’ve spent a ton of effort researching all of this on an ethnographic layer, and in ergonomic use cases.

The problem is that not much seems to changed since Andy Grove’s 1996 Fortune article. Health care sucked then. Intel spent a fortune over a decade trying to change it. Health care sucks now.

So what’s Intel really doing? Well it’s helping on standards (that’s original, huh!). It’s doing lots of (free?) consulting with hospitals. And it has a new tool that looks like a more advanced version of Health Hero’s health buddy with video, and a new prototype for a portable tablet that’s designed for health care. And some snappy videos showing how it might work out. But 6 years with 200 people working away? Is that all Intel has come up with? I’m afraid it appears so.

But in some ways it’s worse; as I wrote in Spot-on a couple of weeks ago, on the benefits side it’s changing its health plan into the style that actually is pushing individuals away from integrated health plans like Kaiser. So to some extent, while they’re featuring Pearl and Kaiser, they’re not really corporately pushing the solution that would increase the adoption of the technologies they think will improve health care.

So what’s the real problem? The real problem is that America’s system is so screwed up, that just saying that “every other industry has changed and health care will” as I heard many times at the conference, is not realistic in the cottage industry that they also kept saying it was. And we’ve spent a decade of massive dislocation staying a cottage industry. And the change in the payment system required to move this is a long way away in time.

Meanwhile, Intel (as with Cisco) will continue to do fine so long as health care keeps buying new IT. But I remain confused as to what their health care initiative is going to actually do to improve their bottom line any time soon. I don’t really think that educating tech journalists about health care (which was what yesterday seemed to have been about) advances the agenda too much. And the industry-wide problems that they are recounting are well beyond Intel’s control.

I hope that I’m missing something here. As their hearts are clearly (both logically and emotionally) in the right place.

MrHISTalk this morning gives a reminder to the world that health care IT ain’t a place of hot innovation

Computerworld correctly identifies a lack of hospital funds as a barrier to the interoperability lovefests going on, but then says this: "Because many hospitals run on 20-year-old IT systems, smaller institutions are often left behind, while leading ones forge ahead." Well, I know lots of big, leading hospitals and most of them run clinical software at least 20 years old. In fact, most of the shiny displays on the HIMSS floor were selling software that’s at least 20 years old. Old stuff: GE/IDX, QuadraMed, MEDITECH, Misys, most of McKesson and Siemens. Relatively new (10 years or so): Cerner, Eclipsys, Epic. Architected and developed in this millennium: zero.

Yup it was called Cerner “Millennium” for a reason—it was supposed to come out then! (Like many other I fondly remember the good old days of 2000 and in some alternate universe I’m retired on a 1,000 acre country estate from my i-Beacon stock options)! Nothing essentially wrong with old reliable systems, but Web2.0 this is not. Plus MrHISTalk didn’t mention health plan systems, most of which may be even older….

Milt Freudenhiem gets to chat with Marty Wygod, and what he wants to talk about is how WebMD Health “Wants to Go Beyond Information”. WebMD is the old consumer web businesses of WebMD plus the private-labeled consumer sites they run for health plans and employers. Now while you could have (or maybe did) read all about WebMD Health’s strategy on THCB last year (hey the Times is only 6 months late so we’ll be charitable), the weird thing is why it’s being featured.

After all EmDeon, which is the old WebMD’s businesses that comprises the old Envoy claims transaction system and the older Medical Manager practice management system, and the Porex plastics company that was Wygod’s original holding company, still owns most of WebMD Health. Plus it’s vastly bigger. The web business brought in $4 million profit on $45m in revenue last quarter (or an annual run rate of $200m). Pretty decent growth from a $120m business in FY 2004, but not exactly Google-type margins. Meanwhile the real revenue (some $1.2 bn annual run rate) is in the old transaction services and practice management systems. Although the margins there are of course much lower (under 4% compared to 10% on the web side).

Now they say they want to sell off the transaction business and the practice management part. Which leaves them the WebMD Health web business and the plastics company. This is full circle. WebMD was originally a fake web-company. It couldn’t make its core web services work (either technically or as a business), so it took the logical approach of converting its incredible bubble stock price into the acquisition of MedEAmerica, Envoy, Medical Manager and a few other companies that had actual businesses. Now with Web2.0 emerging, and health plans finally deciding that they do give a rats arse about their customers’ online experience, it’s going back to being a web company.

The key issue though is that it’s doing it as an ASP, and it’ll be putting its client health plans’ members’ data on its own servers. That potentially gives it lots of power, which is whey health plans were afraid of it back in the late 1990s and created a fake competitor to it called….(forgot the name, answers on a post card please) Medunite (thanks!) which they later disbanded. Theoretically WebMD could be moving clients between plans as they own the relationship. So it’s an interesting concept, and they have enough tools that they could get it — the consumer eHealth experience — right eventually.

But all the same, 10 years to build a web business that’s $200m in revenue.  Given the amount of cash Marty Wygod already had, it barely seems that all this chopping and changing to come out with a small web company justitfies the brain damage of the last decade. And furthermore, is it really worthy of a NYT exclusive profile?

Even though I saw him and I was wearing “his” badge, so his whining is a little out of order….MrHISTalk’s write up of HIMSS is fantastic. He must have had a long flight home with a power converter. He’s wasted at whatever his day job is, and they should give him the mini-cooper.

I had a dead battery and a short hop, so I will be dribbling back and forth with more from the 15 interviews I did at HIMSS over the next few days when I convert my “notes” into something resembling English….