(Editor’s Note: Based on the comments of JD, who rightly points out that eClinicalWorks will be responsible for implementation & training, we have modified the post slightly to reflect this critical point. We respond to other comments by JD in the comments section.)
In the gold rush to capitalize on the HITECH Act, Wal-Mart is one of the first, non-traditional HIT vendors staking a claim. As reported in the NY Times today, Wal-Mart is bundling EMR and PM software from eClinicalWorks as a SaaS offering (Wal-Mart started working with eCW over year ago on a major roll-out of eCW across its retail clinics) with Dell computers and implementation and training services to sell to small physician practices. The package will be sold through their Sam’s Clubs with a bundled price of $25k for first physician in a practice and $10k for each additional physician. Annual software maintenance fees will be $4k to $6.5K. Clearly, the bargain upfront costs are compensated by high maintenance annual fees as the norm is usually around 20-22% of license cost.
What is fascinating here though is the simple fact that a company known for low prices on commodity products now perceives a commodity market in HIT. Appears delusional for a few of reasons:
First, we do not believe that EMR software has yet become a commodity product. EMR solutions still have complexities involved and intricacies that must be accounted for when folding them into a physician’s practices and in particular physician workflow.
Second, Wal-Mart sells products, not solutions. Wal-mart’s core competencies lie in aggressively managing a supply chain to consistently deliver low cost commodities products. What knowledge do they have in solution selling? This is not something you can just slap a standard SKU on, though that is most likely Wal-Mart’s view. Sure, they may rely on Dell for the computer install and eCW to do implementation and training, but we are of the belief that the buyer, one representing a small physician practice will need more hand-holding in the purchasing decision process than a typical Sam’s Club employee can provide. Who will provide that solution selling capability? Is Wal-Mart depending on physicians to do their own research prior to purchase, or is this a role that eCW will play with their own sales reps in the store (much like Apple sales reps in Best Buy)? Solution selling is not easy and the recent HITECH Act does not make it any easier. Even the most learned folks we know in the industry are still unclear as to what is meant by the term “meaningful use of certified EHR”. Will Sam’s Club employees be able to do a better job explaining this to physicians? Unlikely.
Third, Wal-Mart/Sam’s Club has no credibility, no brand, no nothing in the technology solutions market. Hell, they don’t even have a Geek Squad. (Yes, we know, they are looking to Dell and eCW to be the doctor’s Geek Squad). Sure, their EMR solution prices may appear low, at least the initial cost, but is that enough to attract a savvy buyer who notices that Wal-Mart is back-end loading the fee structure hoping to capitalize on a steep annual maintenance fee? Wal-Mart can certainly go out and buy the IT expertise needed to install the software on-site and perform training (not so sure if they’ll easily find those trained in clinical), but if it were our money, we would go with an HIT specific solution provider who has a few years under their belt installing, training and servicing fellow physicians. Wal-Mart brings none of that to the HITECH gold rush.
Wal-Mart will not be alone, by any stretch of the imagination, in looking to tap that $20B+ slated to flow into the HIT market. There is a gold rush here folks and everyone is looking to cash-in. This will lead to significantly more confusion in this market for the next couple of years as vendors of all shapes and sizes jump into this market. Be wary, very wary if you are in the market for such a solution.
In all fairness to eCW…
eClinicalWorks, by itself, has done some excellent work in the market and quite savvy in landing some big deals, one with the Mass. eHealth Collaborative and another with the NYC Dept of Health. The significant size of these two wins caused some growing pains for eCW which lead to a lot of grumblings in the market on slow response times, delayed implementations, poor customer service, etc. This is not unusual for a small, fast growing software company and should not be held against them long-term, if they quickly resolve the issues. From what we have heard more recently, eCW has addressed most of these issues and customers are happier.
And it is important to note, that out of the box, eCW has just about all the features necessary to virtually insure reimbursement under the HITECH Act. The eCW solution has:
- CCHIT ’08 certification – likely meet requirement for “certified EHR”.
- Has ability to report quality metrics.
- Supports clinical notes sharing for care coordination.
- Supports eRx.
Impact to the broader EMR Market
Roughly 90% of small physician practices (1-3 physicians) today do not have an EMR and developing a cost effective channel to reach that market has been a challenge for many an EMR company. That does not mean there are not effective ways to penetrate smaller accounts.
In other industry sectors such as manufacturing where there is also a multitude of small, independent entities, successful Independent Software Vendors (ISVs) have been most successful using a Value-Added Reseller (VAR) channel. Microsoft is arguably one of the best at effectively using its VAR channel to take business software to market. AutoCad, a supplier of CAD software to manufacturing and building trades industries has also been extremely successful using a VAR channel. The reason VARs are so successful is that they operate at the local level working their local contacts and do the installs and often provide the first line of customer support. There are many EMR companies using a VAR model, including eCW and it is our belief that the EMR market is still not at level of maturity to be sold through a Big Box retailer.
Therefore, the Wal-Mart, eCW partnership/go to market strategy will be effective in gaining extra publicity for eCW, but unlikely to result in many direct sales through Wal-Mart’s Sam’s Club Stores.
Avoid those who do not have a clear track record in the HIT market with solid, reference customers.
Do not be easily swayed by low upfront costs – do total cost of ownership calculations over the projected lifespan of the solution’s use in your practice.
Yes, there will be $$$ forthcoming and yes, you will need to demonstrate “meaningful use” to get reimbursement and there is an advantage to getting started early. But that modest advantage is not a reason to make a hasty decision. You and your practice will be living with this solution for the next several years, so take your time and buy something you can live with (not just the product either, but the service partner as well).
Lastly, when thinking about the implementation, bring your group together to think not about what individual tasks to automate through the use of your spankin’ new EMR, but what processes you wish to enable. Time and again, those who have extracted the greatest value from their EMR, regardless of practice size, focused on processes, not tasks.
And one more point, do the training before you are siting in a room with a consumer/patient. Nothing is more frustrating to both than seeing one struggling with an EMR due to poor training up-front.
For a slightly more humorous take on this announcement, encourage you to check out Dr. Rob’s post, a physician with some wit.
Mr. HIStalk also did a post on the announcement and is one of the fortunate few who was able to catch-up with eCW’s CEO to get the inside scoop. In addition to the interview, the comments by readers are insightful.