Even before the health IT world could react (with surprise) to the choice of a Cerner EHR (through its lead partner, Leidos Health Solutions Group) by the Department of Defense, rumors have it that Cerner beat out Epic through the perception that it is more open and committed to interoperability. The first roll-out they’ll do at the DoD is certain to be based on HL7 version 2 and more recent version 3 standards (such as the C-CDA) that are in common use today. But the bright shining gems of health exchange–SMART and FHIR–are anticipated for the DoD’s future.
Allscripts has announced plans to move more of its software development and operations to India, while cutting 250 jobs in the U.S., or about 3.5% of its 7,200-member workforce. While this is significant enough as it is, it’s an even more important leading indicator of how Allscripts may perform going forward. Here’s how I think things will net out.
Making a “rebalancing”: The company has called the changes a “rebalancing” of staff which will allow it to respond more effectively and efficiently to shifts in its software design and product dev plans.
But the decision didn’t happen in a vacuum, either. Allscripts recently reported taking a $10.1 million loss for the first quarter ending March 31. That’s down from a loss of $20.7 million for Q1 2014, but the company still appears to be struggling. Allscripts’ overall revenue dropped 2% to $334.6 million for the quarter ending March 31, compared with Q1 of 2014.
What’s next? What should providers draw from these numbers, and Allscripts’ plan to shift more development work offshore? Let’s consider some highlights from the vendor’s recent past:
* Despite some recent sales gains, the vendor occupies a difficult place in the EMR vendor market — neither powerful enough to take on enterprise leaders like Epic and Cerner directly, nor agile enough to compete in the flexibility-focused ambulatory space against relentless competitors like athenahealth.
* According to an analysis of Meaningful Use data by Modern Healthcare, Allscripts is second only to Epic when it comes to vendors of complete EMRs whose customers have qualified for incentives. This suggests that Allscripts is capable of being an effective provider business partner.
* On the other hand, some providers still distrust Allscripts since the company discontinued sales of and support for its MyWay EMR in 2012. What’s more, a current class action lawsuit is underway against Allscripts, alleging that MyWay was defective and that using it harmed providers’ business.
* Partnering with HP and Computer Sciences Corp., Allscripts is competing to be chosen as the new EMR for the U.S. Department of Defense’s Military Health System, and is still in the running for the $11 billion contract. But so are Epic and Cerner.
The bottom line: Taken together, these data points suggest that Allscripts is at a critical point in its history.
For one thing, cutting domestic staff and shifting dev operations to India is probably a make or break decision; if the change doesn’t work out, Allscripts probably won’t have time to pull back and successfully reorient its development team to current trends.
Allscripts is also at a key point when it comes to growing place in the brutal ambulatory EMR market. With players like athenahealth nipping at its heels from behind, and Epic and Cerner more or less controlling the enterprise market, Allscripts has to be very sure who it wants to be — and I’m not sure it is.
Then when I consider that Allscripts is still in the red after a year of effort, despite being at a peak level for sales, that tears it. I’m forced to conclude that the awkwardly-positioned vendor will have to make more changes over the next year or two if it hopes to be agile enough to stay afloat. I believe Allscripts can do it, but it will take a lot of political will to make it happen. We’ll just have to see if it has that will.
Sometimes things are so ill-advised, in hindsight, that you wonder what people were thinking. That includes HHS’ willingness to give out $30 billion to date in Meaningful Use incentives without demanding that vendors offer some kind of interoperability. A staggering amount of money has been paid out under HITECH to incentivize providers to make EMR progress, but we still have countless situations where one EMR can’t talk to another one right across town.
When you ponder the wasted opportunity, it’s truly painful. While the Meaningful Use program may have been a good idea, it failed to bring the interoperability hammer down on vendors, and now that ship has sailed. While HHS might have been able to force the issue back in the day, demanding that vendors step up or be ineligible for certification, I doubt vendors could backward-engineer the necessary communications formats into their current systems, even if there was a straightforward standard to implement — at least not at a price anyone’s willing to pay.
Now, don’t get me wrong, I realize that “interoperability” is an elastic concept, and that the feds couldn’t just demand that vendors bolt on some kind of module and be done with it. Without a doubt, making EMRs universally interoperable is a grand challenge, perhaps on the order of getting the first plane to fly.
But you can bet your last dollars that vendors, especially giants like Cerner and Epic, would have found their Wilbur and Orville Wright if that was what it took to fill their buckets with incentive money. It’s amazing how technical problems get solved when powerful executives decide that it will get done.
But now, as things stand, all the government can do is throw its hands up in the air and complain. At a Senate hearing held in March, speakers emphasized the crying need for interoperability between providers, but none of the experts seemed to have any methods in their hip pocket for fixing the problem. And being legislators, not IT execs, the Senators probably didn’t grasp half of the technical stuff.
As the speakers noted, what it comes down to is that vendors have every reason to create silos and keep customers locked into their product. So unless Congress passes legislation making it illegal to create a walled garden — something that would be nearly impossible unless we had a consensus definition of interoperability — EMR vendors will continue to merrily make hay on closed systems. It’s not a pretty picture.
EMRs can be customized to some extent today, but not that much. Providers can create interfaces between their EMR and other platforms, such as PACS or laboratory information systems, but you can’t really take the guts of the thing apart. The reality is that the EMR vendor’s configuration shapes how providers do business, not the other way around.
This has been the state of affairs for so long that you don’t hear too much complaining about it, but health IT execs should really be raising a ruckus. While some hospitals might prefer to have all of their EMR’s major functions locked down before it gets integrated with other systems, others would surely prefer to build out their own EMR from widgetized components on a generic platform.
Actually, a friend recently introduced me to a company which is taking just this approach. Ocean Informatics, which has built an eHealth base on the openEHR platform, offers end users the chance to build not only an EMR application, but also use clinical modules including infection control, care support, decision support and advanced care management, and a mobile platform. It also offers compatible knowledge-based management modules, including clinical modeling tools and a clinical modeling manager.
It’s telling that the New South Wales, Australia-based open source vendor sells directly to governments, including Brazil, Norway and Slovenia. True, U.S. government is obviously responsible for VistA, the VA’s universally beloved open source EMR, but the Department of Defense is currently in the process of picking between Epic and Cerner to implement its $11B EMR update. Even VistA’s backers have thrown it under the bus, in other words.
Given the long-established propensity of commercial vendors to sell a hard-welded product, it seems unlikely that they’re going to switch to a modular design anytime soon. Epic and Cerner largely sell completely-built cars with a few expensive options. Open source offers a chassis, doors, wheels, a custom interior you can style with alligator skin if you’d like, and plenty of free options, at a price you more or less choose. But it would apparently be too sensible to expect EMR vendors to provide the flexible, affordable option.
That being said, as health systems are increasingly forced to be all things to all people — managers of population health, risk-bearing ACOs, trackers of mobile health data, providers of virtual medicine and more — they’ll be forced to throw their weight behind a more flexible architecture. Buying an EMR “out of the box” simply won’t make sense.
When commercial vendors finally concede to the inevitable and turn out modular eHealth data tools, providers will finally be in a position to handle their new roles efficiently. It’s about time Epic and Cerner vendors got it done!
For most of the time I’ve spent covering health IT — going back to the early 90s — vendor and provider technology development hung out in separate silos. Sure, the smarter vendors at least took time to talk with customers about their needs, but most pushed products and features developed in a vacuum.
While that’s still the case today for many vendors, I believe the paradigm has begun to shift. These days, health IT vendors are increasingly working with providers to create products for rapidly-emerging arenas like population health and tools to support ACO management.
One great example of this trend is a deal recently struck between Cerner and Kansas City, MO-based Advocate Health Care, along with Advocate Physician Partners (announced, not too surprisingly, the Friday before the glory that is HIMSS). While this deal is extending an existing long-term partnership, not kicking off a new project, it’s still gives us a nice look at how vendor/provider partnerships are evolving.
To be sure, Cerner is still playing the traditional vendor role to some extent. For example, Advocate has invested in Cerner’s HealtheCare, a community-based care management solution, as well as having the vendor keep hosting Advocate’s Cerner EMR through 2024. But that’s just the tip of the iceberg.
The heart of the deal is the development partnership, which if all goes well should give both parties a leg up in creating technologies that aren’t just shovelware. With the Advocate folks will bring their on-the-ground population health and process smarts to the table, and Cerner will share its population health and EMR technology.
Over the next seven years, the Physician Partners group will help Cerner develop a sophisticated set of population health tools. Meanwhile, Physician Partners gets access to HealtheRegistries, a tool which aggregates clinical, financial and operational data to offer a broad look at patient activity.
While this may seem like dressed-up vendor sales win puffery, my instinct is that it’s more than that. After all, both Cerner and Advocate stand to benefit substantially if they truly work together. Advocate gets the first look at EMR and population health tools that could shape their patient care strategy for decades, and Cerner gets vital provider input on a line of business which could prove to absorb EMR technologies in its wake.
And that, my friends, is why a vendor the size of Cerner — which could probably force its internally-designed products down the throat of health systems for quite a while — is developing real partnerships with its customers. In the emerging world of health IT, providers may very well filter their care management and documentation in ways that relegate the EMR to back-end status.
If other vendors are smart enough to see that the “we make it, you buy it” model of health IT dev isn’t aging well, the great engines that power care are likely to be robust, relevant and productive. If not, well, what’s the harm if Cerner turns a bigger profit over the next several years?
I was reading over something on HIStalk the other day that talked about how many major healthcare IT and EHR companies have come out of small cities. In fact, when you think about the EHR world, there are only a handful of EHR companies that have come out of the tech hub of the world, Silicon Valley, and they’ve all been started within the past 10 years.
In the article HIStalk mentioned the town Malvern, Pennsylvania. I hadn’t even heard of the town, but a look at Wikipedia has Siemens Healthcare, Ricoh Americas, and Cerner as among the companies based in Malvern. I think the Cerner mention in the list must be because Cerner just purchases Siemens Healthcare, so they are now claiming them. However, Cerner is definitely a Kansas City based company. Either way though, Kansas City is not a HUGE city either and certainly hasn’t been the hub of technology (although, I know they have some cool tech things happening now, like most cities).
The healthcare IT behemoth, Epic was founded in Madison, Wisconsin and now has headquarters in Verona, Wisconsin. If you aren’t in healthcare IT, my guess is that you’ve probably never even heard of Verona.
Those are just a few examples and I’m sure there are many more. Why is it that so many of the large healthcare IT companies have come from small cities? Will that trend continue or will large cities like San Francisco, Boston, New York, and LA start to dominate?
I’m a bit of a young buck in this regard. So, I don’t have the answer. Hopefully some of my readers do. I look forward to hearing your thoughts. Is there an advantage to being from a small town when going into healthcare? It’s exciting to me that healthcare innovation can come from anywhere. I hope that trend continues.
When you think of Epic, you hardly imagine a company which is running out of customers to exploit. But according to Frost & Sullivan’s connected health analyst, Shruthi Parakkal, Epic has reached the point where its target market is almost completely saturated.
Sure, Epic may have only (!) 15% to 20% market share in both hospital and ambulatory enterprise EMR sector, it can’t go much further operating as-is. After all, there’s only so many large hospital systems and academic medical centers out there that can afford its extremely pricey product.
That’s almost certainly why Epic has just announced that it was launching a cloud-based offering, after refusing to go there for quite some time. If it makes a cloud offering available, note analysts like Parakkal, Epic suddenly becomes an option for smaller hospitals with less than 200 beds. Also, offering cloud services may also net Epic a few large hospitals that want to create a hybrid cloud model with some of its application infrastructure on site and some in the cloud.
But unlike in its core market, where Epic has enjoyed incredible success, it’s not a lock that the EMR giant will lead the pack just for showing up. For one thing, it’s late to the party, with cloud competitors including Cerner, Allscripts, MEDITECH, CPSI, and many more already well established in the smaller hospital space. Moreover, these are well-funded competitors, not tiny startups it can brush away with a flyswatter.
Another issue is price. While Epic’s cloud offering may be far less expensive than its on-site option, my guess is that it will be more expensive than other comparable offerings. (Of course, one could get into an argument over what “comparable” really means, but that’s another story.)
And then there’s the problem of trust. I’d hate to have to depend completely on a powerful company that generally gets what it wants to have access to such a mission-critical application. Trust is always an issue when relying on a SaaS-based vendor, of course, but it’s a particularly significant issue here.
Why? Realistically, the smaller hospitals that are likely to consider an Epic cloud product are just dots on the map to a company Epic’s size. Such hospitals don’t have much practical leverage if things don’t go their way.
And while I’m not suggesting that Epic would deliberately target smaller hospitals for indifferent service, giant institutions are likely to be its bread and butter for quite some time. It’s inevitable that when push comes to shove, Epic will have to prioritize companies that have spent hundreds of millions of dollars on its on-site product. Any vendor would.
All that being said, smaller hospitals are likely to overlook some of these problems if they can get their hands on such a popular EMR. Also, as rockstar CIO John Halamka, MD of Beth Israel Deaconess Medical Center notes, Epic seems to be able to provide a product that gets clinicians to buy in. That alone will be worth the price of admission for many.
Certainly, vendors like MEDITECH and Cerner aren’t going to cede this market gracefully. But even as a Johnny-come-lately, I expect Epic’s cloud product do well in 2015.
This is the topic of a really interesting LinkedIn discussion: Will EHR Vendors Become Service and Consulting Companies?
I think this is a really great question and one that’s worthy of serious consideration. I think we’ve seen this happen time and time again in the IT industry. Some of the best examples are IBM, HP, and Dell. As their IT hardware and software becomes a “commodity” then they leverage their relationships and domain expertise to change into a service and consulting company. Usually this also involves them spending their extra cash to acquire the leading consulting company (or companies) in the industry as well.
In some ways we’re already seeing this happen. Epic announced a consulting division of their company in order to retain their senior staff. Cerner’s always made a good chunk of their money from consulting services.
Of course, thanks to meaningful use incentive money and some still massive upgrade costs, EHR vendors haven’t needed to shift their business model to a service and consulting model yet. There’s still plenty of money to be made just selling the software, training, etc.
What will also be interesting to watch is whether the large service and consulting companies like Accenture, IBM, HP, Dell, etc. will eat up the market share so that the EHR companies don’t have as much of an opportunity to grow a service and consulting business. No doubt it will be a big dog fight. Not to mention many of the current EHR consulting companies (although, you could see many of these getting acquired by the EHR vendors).
I guess my short answer to this question is: In the short term, we’re not likely to see a massive shift towards services and consulting, but long term it’s very likely to happen. What are your thoughts?
The poor state of interoperability between EHRs–target of fulminations and curses from health care activists over the years–is starting to grind its way forward. Dr. Kenneth Mandl, a leader of the SMART Platform and professor at the Boston Children’s Hospital Informatics Program, found that out when his team, including lead architect Josh Mandel, went to HIMSS this year to support Cerner’s implementation of his standard, and discovered three other vendors running it.
That’s the beauty of open source and standards. Put them out there and anyone can use them without a by-your-leave. Standards can diffuse in ways the original developers never anticipated.
A bit of background. The SMART platform, which I covered a few years ago, was developed by Mandl’s team at Harvard Medical School and Children’s Hospital to solve the festering problem of inaccessibility in EHRs and other health care software. SMART fulfilled the long-time vision of open source advocates to provide a common platform for every vendor that chose to support it, and that would allow third-party developers to create useful applications.
Without a standard, third-party developers were in limbo. They had to write special code to support each EHR they want to run on. Worse still, they may have to ask the EHR vendor for permission to connect. This has been stunting the market for apps expanding the use of patient data by clinicians as well as the patients themselves.
SMART’s prospects have been energized by the creation of a modern interoperability resource called FHIR. It breaks with the traditional health care standards by being lean, extendible in controllable ways, and in tune with modern development standards such as REST and JSON.
It helps that SMART was supported by funds from the ONC, and that FHIR was adopted by the leading health care standards group, HL7. HL7’s backing of FHIR in particular lent these standards authority among the vendor and health care provider community. Now the chocolate and peanut butter favored by health IT advocates have come together in the SMART on FHIR project, which I wrote about earlier this year.
Mandl explains that SMART allows innovators to get access to the point of care. As more organizations and products adopt the SMART on FHIR, API, a SMART app written once will run anywhere.
Vendors have been coming to FHIR meetings and expressing approval in the abstract for these standards. But it was still a pleasant surprise for Mandl to hear of SMART implementations demo’d at HIMSS by Intermountain, Hewlett-Packard, and Harris as well as Cerner.
The SMART project has just released guidlines for health care providers who want to issue RFPs soliciting vendors for SMART implementations. This will help ensure that providers get what they ask and pay for: an API that reliably runs any app written for SMART.
It’s wise to be cautious and very specific when soliciting products based on standards. The notion of “openness” is often misunderstood and taken to places it wasn’t meant to go. In health care, one major vendor can trumpet its “openness” while picking and choosing which vendors to allow use of its API, and charging money for every document transferred.
The slipperiness of the “open” concept is not limited to health IT. For years, Microsoft promulgated an “open source” initiative while keeping to the old proprietary practices of exerting patent rights and restricting who had access to code. Currently they have made great progress and are a major contributor to Linux and other projects, including tools used with their HealthVault PHR.
Google, too, although a major supporter of open source projects, plays games with its Android platform. The code is nominally under an open license–and is being exploited by numerous embedded systems developers that way–but is developed in anything but an open manner at Google, and is hedged by so many requirements that it’s hard to release a product with the Android moniker unless one partners closely with Google.
After talking to Mandl, I had a phone interview with Stan Huff, Chief Informatics Officer for Intermountain. Huff is an expert in interoperability and active in HL7. About a year ago he led an effort at Intermountain to improve interoperability. The motivation was not some ethereal vision of openness but the realization that Intermountain couldn’t do everything it needed to be competitive on its own–it would have to seek out the contributions of outsiders.
When Intermountain partnered with Cerner, senior management had by that time received a good education in the value of a standard API. Cerner was also committed to it, luckily, and the two companies collaborated on FHIR and SMART. Cerner’s task was to wrap their services in a FHIR-compliant API and to make sure to use standard technology, such as in codes for lab data.
Intermountain also participated in launching a not-for-profit corporation, the Healthcare Services Platform Consortium, that promotes SMART-on-FHIR and other standards. A lot of vendors have joined up, and Huff encourages other vendors to give up their fears that standardization is a catheter siphoning away business and to try the consortium out.
Intermountain currently is offering several applications that run in web browsers (and therefore should be widely usable on different platforms). Although currently in the prototype stage, the applications should be available later this year. Besides an application developed by Intermountain to monitor hemolytic disease among neonates and suggest paths for doctors to take, they support several demonstration apps produced by the SMART project, including a growth chart app, a blood pressure management app, and a cardiovascular app.
Huff reports that apps are easy to build on SMART. In at least one case, it took just two weeks for the coding.
Attendees at HIMSS were very excited about Intermountain’s support for SMART. The health care providers want more flexible and innovative software with good user interfaces, and see SMART providing that. Many vendors look to replicate what Intermountain has done (although some hold back). Understanding that progress is possible can empower doctors and advocates to call for more.
The ALS ice bucket challenge has finally made its way to heatlhcare IT companies. I’m sure at some point I’ll get tired of seeing these videos, but it hasn’t happened yet. There’s something really enjoyable about watching someone get a bucket of ice water dumped on them. Especially people you wouldn’t expect to do it.
Here are two of the latest Health IT people to take part in the challenge.
Neal Patterson, CEO of Cerner accepts the ALS Ice Bucket Challenge
Neal challenges John Glaser, CEO of Siemens Health Services, and he accepted
John Glaser has nominated the whole Simens Health Services employees to take the challenge. So, there are more videos to come. What could bring a company together more than all dumping a bucket of ice on each other?
What an amazing effort for ALS too. The ALS site just noted that donations have reached $53 million. I want to see Judy Faulkner take part.