SECA 9: Competitors in Health IT

There are approximately 414 EHR products in market today. The choice amongst EHR solutions varies just as greatly as the vendors offering them. The field includes dedicated players such as Cerner, McKesson, multi-product specialists like GE, as well as startups with innovative offerings.

Top Vendors in Health IT:

1) Cerner Corporation (Cerner) is a supplier of healthcare information technology (HIT) solutions, healthcare devices and related services. These solutions are licensed by approximately 9,000 facilities globally. The Company operates in two segments: domestic and global. The domestic segment includes revenue contributions and expenditures associated with business activity in the United States. The global segment includes revenue contributions and expenditures linked to business activity in Aruba, Australia, Austria, Belgium, Canada, Cayman Islands, Chile, the People’s Republic of China, Egypt, England, France, Germany, India, Ireland, Malaysia, Puerto Rico, Saudi Arabia, Singapore, Spain, Sweden, Switzerland and the United Arab Emirates. The Company designs and develops software solutions on the unified Cerner Millennium architecture, a person-centric computing framework, which combines clinical, financial and management information systems.

The Company offers a longitudinal, person-centric EHR, which gives clinicians electronic access to the right information at the right time and place to achieve optimal health outcomes. Its Cerner ITWorks is a suite of services, which creates an alignment between Cerner and its clients. Its Cerner RevWorks includes solutions and services to help healthcare organizations improve their revenue cycle functions. It offers clinic, pharmacy and wellness services directly to employers. The Company has created the uCern platform, a collaboration and social networking platform, which gives clients a place where they can collaborate with peers or Cerner associates about topics ranging from healthcare reform to solution enhancements to project status updates. Approximately 95% of its core Cerner Millennium clients engage on this platform. Its uDevelop solution is a collaborative ecosystem that supports audience of engineers, including both its associates and external developers, and the uCern Store, which offers clients quick access to innovations developed by Cerner, as well as outside organizations and individuals.

2) Allscripts Healthcare Solutions, Inc., formerly Allscripts-Misys Healthcare Solutions, Inc. (Allscripts), is a provider of clinical software, services, information and connectivity solutions that are used by physicians and other healthcare providers to improve the quality of healthcare. It provides various software applications and services, including electronic health records (EHR), practice management, revenue cycle management, clearinghouse services, electronic prescribing, emergency department information system (EDIS), hospital care management and discharge management solutions, document imaging solutions, referral management and a variety of other solutions for home care and other post-acute facilities. Allscripts operates in two segments: clinical solutions and health solutions.

Clinical Solutions: The Company’s clinical solutions segment includes both its Enterprise business for large physician practices and Integrated Delivery Networks, and its Professional business for smaller or independent physician practices, providing such practices with clinical and practice management software solutions and related services. Its EHR solutions are designed to enhance physician productivity using tablet PCs, wireless handheld devices or desktop workstations for the purpose of automating the most common physician activities, including prescribing, dictating, ordering lab tests and viewing results, documenting clinical encounters and capturing charges, among others. Its practice management solutions combine scheduling and revenue cycle management tools in a single package with functionality including rules-based appointment scheduling, multi-resource and recurring appointment features, referral and eligibility indicators, and appointment and claims management. Its electronic prescribing solutions include a Web-based stand-alone solution offered free-of-charge to any licensed prescriber, and solutions that are integrated into each of its EHRs. Its Web-based suite of revenue cycle management and clearinghouse services solutions, available on a stand-alone basis or integrated into its practice management solutions address every step in the reimbursement cycle for healthcare organizations, clearinghouses and payers.

Health System Solutions: Allscripts health system solutions segment provides offerings for hospitals that are seeking Emergency Department Information System (EDIS) and care management solutions, as well as post-acute facilities, such as home health providers, hospices and skilled nursing facilities. Allscripts ED is an EDIS that electronically streamlines processes for large hospital Emergency Departments, including tracking, triage, nurse and physician charting, disposition and reporting. EmSTAT, a EDIS product, offers similar functionality for streamlining the Emergency Department care process in small hospitals.

3) ProxyMed, Inc., doing business as MedAvant Healthcare Solutions, incorporated in 1989, is an information technology (IT) company that facilitates the exchange of healthcare information so that payers, providers and patients benefit equally from the sharing of health data. The Company also enables the electronic transmission of laboratory results. The Company processed electronic prescription orders until it sold its pharmacy business in April 2007. It operates in one business segment: Transaction Services.

Transaction Services and Products: The Company’s Transaction Services segment consists of its claims processing business, and preferred provider organization and prescription services, both of which it has divested. ProxyMed serves the provider and payer communities with products and services that simplify the exchange of healthcare information. Customers use the Company's services to process healthcare transactions, including claims, ERA, eligibility, claims status, referral authorization and encounters. The Company's processing capacity is supplemented by myProxyMed, a real-time Web portal, powered by the Phoenix platform. It offers both standard and premium services and other features, such as verifying a patient’s insurance, enrolling with payers, tracking a claim’s progress with the payer and retrieving reports from payers. The Company receives a transaction fee from the payers it has implemented for workers compensation. Through its partners, Bloodhound and The Sentinel Group, the Company provides a service to insurance companies that certify that a claim is clean before it enters the insurance company’s system to be adjudicated.

Summary: Nearly every vendor considered MU certification a low hurdle to surpass. Many of these vendors had achieved certification within a few months of guidelines being published. There are plenty of EHR scorecards and comparison tools, just not many scores. The vendors’ sites do a poor job of differentiating themselves from their competitors. Vendors use superlatives and qualifiers in an attempt to differentiate themselves. Their goal was to meet criteria requirements as quickly as possible to boost their marketing efforts. This translated into certification achievement without delicately mapping criteria to physician needs and workflows. Users are usually lost in the many sub-menus that they will have to navigate in order to meeting many meaningful use criteria, the upgrade requirements. Also there are many hours of costly training and support that providers will need to undergo to be prepared to use the certified version of the EHR. One key feature that is lacking is a simple, intuitive means by which to track and understand providers’ progress in achieving Meaningful Use. Most vendors responded to this question in one of three ways: they didn’t know how this information would be tracked, providers could print a report, or they had created a dashboard. Providers would need significant training to use the certified version of their product and that live support is not free or immediately available. There are a few sites that offer user assessments across a range of functions, but those have at most three opinions—not enough to consider statically significant.

No vendor highlights major clinical or business problems that their solution solves that another vendor does not solve. Instead, they state they do something better, easier, more flexibly—none of which can be measured by prospective clients. One vendor may have a better medical dictionary than another, yet that same vendor will lack rigor in decision support. No single vendor seems to have their customers doing back flips in their testimonials. Some score high in their ability to deliver a complete inpatient solution and fail in their ability to integrate with other vendors. Others hurt themselves during the implementation, user support, response time, and the amount of navigation required to input data.

SECA 8: Shared Health Clinical Xchange Salient Features

Shared Health’s EHR product named Clinical Xchange with Clinical Decision Support has many salient features:

1) Interoperability Services connect stakeholders to Shared Health network using a standards-based approach. Standards include HL7, ANSI X12, NCPDP Script and XML feeds. It supports system integration capabilities including SAML federation, Single Sign On, web services and APIs. When a contributor is not able to use the standards, Shared Health will analyze the format for conversion. The standard secure protocols supported include SSL, SSH, SMIME, and SFTP. Directly supported formats include the widely recognized industry standards including HL7, NCPDP, and CCD. However, Shared Health is able to parse and translate other message formats into one of the supported formats without impacting the core system.

2) Shared Health’s EMPI (Enterprise Master Patient Index) solution provides customers with a comprehensive Master Data Management platform that can adapt easily to changing and expanding business requirements. This software overcomes duplicate and fragmented records, multiple identifications, transpositions, misspellings, nicknames, aliases, address inconsistencies, and identity misrepresentations to instantly find and accurately link all the records about a person across disparate systems and data sources.

3) Terminology Mediation service ensures that valid codified values for all required elements of each transaction are present within each message through appropriate data normalization. The Normalization Service is responsible for transforming data from multiple formats into a common format that is electronically consumable. Semantic interoperability or terminology mediation includes vocabulary normalization such as converting from a proprietary lab vocabulary to Logical Observation Identifiers Names and Codes (LOINC) or from private allergy codes to Systematized Nomenclature of Medicine (SNOMED).

4) Clinical Intelligence Engine uses the clinical data repository information to process the data and provide actionable information to the physician at the point of care. Clinical decision support tools include patient Problem Lists and Care Opportunities to identify and intervene in patient health issues. Also included are advanced analytic tools such as Clinical Insight and Condition Tracker that not only help manage chronic conditions but also identify key indicators to longitudinally view and assess patient progress over time. These Clinical Decision Support tools put the information the clinician needs at their fingertips, at the point of care, allowing them to take control of chronic disease management for their patients.

Shared Health has a proven ROI. Working with an independent actuarial firm, Shared Health released a report detailing a series of case studies that demonstrated improved compliance with Evidence Based Medicine, an increase in child wellness exams, reduced emergency room admissions and services, and lower average prescription costs when clinicians used our system. Shared Health validated those findings in 2009 by conducting an internal study on clinicians who used Clinical Xchange. This study yielded the following results:

· Avoidable emergency room visits decreased by 12%

· Colon cancer screenings increased by 15%

· Flu vaccination rates increased by 31%

· Pneumonia vaccination rates for patients over 65 years of age increased by 35%

· 17% diminution in episode of care costs

Rapid deployment, low cost of entry and a tangible Return on Investment (ROI) for stakeholders will accelerate the adoption of the Shared Health solution.

SECA 3: Demand for Health IT Services (EHR)

If a government policy increases the demand for a service, the price of that service tends to rise. If the government provides incentives to adopt a service then the demand for the service skyrockets. That’s exactly the case with Health Care IT. Hospitals, medical clinics, doctor's offices and other health care organizations are facing government-mandated deadlines in a host of areas such as electronic medical records (EMR), clinical systems and new privacy and medical-coding standards. The U.S. government's HITECH act under ARRA 2009 requires that health care organizations show "meaningful use" of certified health care IT products. As an incentive the government is providing financial subsidies to organizations willing to adopt these products by a specific deadline. Suddenly health care organizations across the country are increasing their technology budgets. HIMSS conducted a survey in 2010 among 398 of its members and 42% of respondents had identified meeting meaningful use criteria as their single IT priority during the next 2 years.

Here is a list of reasons driving the demand for Health IT services:
1. Meaningful use (MU) incentives and future reimbursement penalties for not meeting those guidelines.
2. MU, as defined for the EHR incentive program, eliminates ambiguity about what comprises an inpatient EHR, and provides guidance for implementation.
3. Vendor products are getting better, finally incorporating all required functionality, with improved ease of use.
4. Organizations are embracing the need to implement this technology and are committing resources to it.
5. Costs have always been a major barrier, and although the financial incentives of MU are tied to achievement rather than intentions, they are generous enough to cover part of the cost involved in implementing EHRs.
6. There are now enough success stories in U.S. hospitals and health systems to show that what is called for in MU can be done with current EHR technology.
7. Competition among provider organizations is forcing adoption; there is awareness among patients of the technology and they are demanding it.
8. Hospitals will need to share information with patients and with unaffiliated providers who are participating in the care of patients. In addition, there are mandates to report on required measures of performance as a byproduct of EHR use.
9. Physicians, nurses and other providers are less reluctant users of the EHR. Once past the learning curve and duplicative processes of paper and electronic record, productivity improvements may occur, which could help with shortages of primary care physicians and nurses.
10. Improved patient safety, quality of care, improved clinical outcomes, and reductions in LOS and readmissions.

SECA 4: What is Meaningful Use?

On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act (ARRA). Title XIII of ARRA, called the Health IT for Economic and Clinical Health Act (HITECH), has provisions to allocate $19.2 billion toward health IT. With various provisions and regulations, the Act provides assistance, tools, and resources to providers to allow for implementation and utilization of electronic health records. The HITECH authorized incentive payments through Medicare and Medicaid to clinicians and hospitals when they use EHRs privately and securely to achieve specified improvements in care delivery. To support the adoption and use of EHRs, HITECH will make available incentive payments totaling up to $27 billion over 10 years, or as much as $44,000 (through Medicare) and $63,750 (through Medicaid) per clinician. Equally important, HITECH’s goal is not adoption alone but "meaningful use" of EHRs - that is, their use by providers to achieve significant improvements in care. The legislation ties payments specifically to the achievement of advances in health care processes and outcomes.

The most important part of this regulation is what it says hospitals and clinicians must do with EHRs to be considered meaningful users in 2011 and 2012. The final regulation is divided into two groups: a set of core objectives that constitute an essential starting point for meaningful use of EHRs and a separate menu of additional important activities from which providers will choose several to implement in the first 2 years (see table).



Core objectives comprise basic functions that enable EHRs to support improved health care. As a start, these include the tasks essential to creating any medical record, including the entry of basic data: patients’ vital signs and demographics, active medications and allergies, up-to-date problem lists of current and active diagnoses, and smoking status. Other core objectives include using several software applications that begin to realize the true potential of EHRs to improve the safety, quality, and efficiency of care. These features help clinicians to make better clinical decisions and avoid preventable errors. To qualify for incentive payments, clinicians must start employing such clinical decision support tools. They must also start using the capability that undergirds much of the value of EHRs: using records to enter clinical orders and, in particular, medication prescriptions. Only when providers enter orders electronically can the computer help improve decisions by applying clinical logic to those choices in light of all the recorded patient data. And to begin extending the benefits of EHRs to patients themselves, the meaningful use requirements will include providing patients with electronic versions of their health information.

In addition to the core elements, the rule creates a second group: a menu of 10 additional tasks, from which providers can choose any 5 to implement in 2011-2012. This gives providers latitude to pick their own path toward full EHR implementation and meaningful use. For example, the menu includes capacities to perform drug-formulary checks, incorporate clinical laboratory results into EHRs, provide reminders to patients for needed care, identify and provide patient-specific health education resources, and employ EHRs to support the patient’s transitions between care settings or personnel. For most of the core and menu items, the regulation also specifies the rates at which providers will have to use particular functions to be considered meaningful users.

The HITECH legislation further requires that meaningful use include electronic reporting of data on the quality of care. Clinicians will have to report data on three core quality measures in 2011 and 2012: blood-pressure level, tobacco status, and adult weight screening and follow-up (or alternates if these do not apply). Clinicians must also choose three other measures from lists of metrics that are ready for incorporation into electronic records.

SECA 7: Shared Health Cost Structure

Shared Health is an EHR vendor which provides services such as electronic clinical record systems to providers, physicians and patients. Since there is no factory production process involved in the operation, there are two main input costs – capital and labor. Both capital and labor have fixed and variable components. Shared Health pricing is mostly driven by its vendors and suppliers because it is based on revenue sharing, for example if Shared Health receives $1.50 for each patient lookup then each of the vendors get a share of 10-15 cents.

Capital invested is divided into two major categories – a) Fixed costs incurred on infrastructure, software licensing, terminologies and knowledge management and b) Variable costs incurred on services purchased from vendors. A big chunk of these fixed costs is incurred on maintaining and operating data center services. Till this year we were leasing the Data Center from IBM and we had no scope to create savings from operational efficiency or cost reduction. However faced by budget constraints and increasing cost of services from IBM, the management decided to build its own data center. Beginning the 3rd quarter of this year we are expecting to create savings of around $300,000 per month by hosting our own data center on virtualized servers from VMWare. The other part of our capital investment is on purchasing auxiliary services from other vendors like AllScripts, Initiate, and Oracle etc. As described earlier these services are mostly contracted on a revenue sharing basis and hence vary with the number of patient lookups in our system per month.

Shared Health operates in a knowledge driven market and provides services based on clinical decision support systems. We have a big technology team for data integration, data load and extraction, portal development, system maintenance and so on. More than 50% of the staff on Shared Health payroll comprises of people in different technical roles. In addition to full time employees Shared Health contracts a lot of resources on time and material projects. Most of these contractors have been working for more than a couple of years and some of them have also been absorbed into permanent positions. To that end I would consider hiring these resources as pseudo-fixed labor costs. Shared Health also contracts big consulting firms for annual development projects. These projects are fixed-price projects with appropriate clauses for time and resource over-run penalties. These consultants are paid for meeting their delivery dates on schedule and so these expenses constitute another component of the variable labor costs.

There are other operating expenses like marketing, administration, advertisement and sales promotions. I would assume they are run on predetermined budgets and can be controlled or reduced if needed. The marginal revenue on capital investment is almost zero because the existing infrastructure was built to accommodate the current system architecture. However the company could throttle labor costs by hiring more resources during peak development cycles to reduce turnover time and increase efficiency. A good mix of permanent and temporary hires could help keep the labor costs variable and under control.

Shared Health uses historical budgets from past projects to bid for new RFEs. It also applies best practices and learning from previous experiences to reduce costs and bid with competitive pricing for newer clients.