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I’m here at the big JP Morgan conference in San Francisco where CMS administrator, Andy Slavitt dropped the bomb that the Meaningful Use (MU) program will discontinue in 2016. John Lynn did a nice summary of what Slavitt actually said, or at least tweeted out.

This really comes as no surprise, at least not to this analyst. 

Meaningful Use had accomplished its primary goal of getting providers to adopt EHRs and begin digitizing patient information. While we have not seen a tremendous amount of value out of this digitization effort yet, I am confident that it will come. 

But MU went astray in becoming far too prescriptive and innovation, at least in the EHR space, came to a standstill. Nearly all development resources at EHR vendors went to meeting the MU certification criteria. On the provider side, frustration arose in having to meet attestation requirements that had no apparent relevance in the delivery of quality care.

Now it is time to move on and in moving on, the death of the MU program will have three big implications to the market.

  1. We will see rapid consolidation in the ambulatory EHR market. The HITECH Act, which spawned MU created a false market and countless EHR vendors entered. No Ambulatory EHR vendor has more than 10% of the market. The market has also by and large plateaued in the US, which will put a strain on most EHR vendors. A company with deep pockets will begin rolling up the best of the bunch. Look to what Infor did in the ERP market to understand the overarching strategy – same will occur here in the healthcare sector. 
  2. Financially healthy EHR vendors will invest more on innovation. Now that EHR certification requirements are no more, or at least no more Stage 3, companies will have the extra resources to get back to providing true innovation in the market. Expect more innovative models for capturing and sharing PHI going forward and vendors doubling down on their PHM initiatives. P.S., certification organizations will fade into history.
  3. The move to MIPS creates some big opportunities for new solutions. Provider cheering of the demise of MU will be short-lived as CMS still has a big ask of providers tucked into MIPS. The upside and potential penalties folded into MIPS represent a 14% swing in potential CMS reimbursement. Providers big and small will seek-out solutions that mitigate the risk and optimize the upside. A lot of details tucked into MIPS that solution vendors will need to tease out and solve to serve their respective market(s). 

 A lot to digest here and while Slavitt’s comments were telling, they were also thin on the details. Chilmark Research will be digging deeper into this issue in the upcoming weeks. Stay tuned. 

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A Tribute

When I was at MIT, a postdoc heard I had just picked up a brand spanking new Compaq 386 with dual 5.25″ and 3.5″ floppy drives. He wanted my computer bad for he needed it to do some robotics programming. This being my brand new computer with all the bells and whistles, I was very reluctant, besides, I had my own work to do on the computer, what was I to use instead?  He assured me that he only needed my computer for a month and that I could use his brand spanking new Macintosh SE in the meantime. I relinquished, we made the trade and I fell in love. When he came back a month later to trade back computers, I told him no, I was going to keep his and he could have mine. This was 1987.

I never looked back.

Since then, I have always owned an Apple computing product. My reasons are many but the primary ones are:

Design aesthetics combined with functionality rule. I am extremely sensitive to design aesthetics, have always hung out with artists and one time pondered becoming an architect. When I visit a city and have some extra time, I go to the local galleries. Steve Jobs was also extremely sensitive to aesthetics and that extreme sensitivity led to what I believe have been the most beautifully designed devices that we have ever had the pleasure to behold. But they are not just beautiful, they also work beautifully with everything stripped out of them but the bear essentials. Certainly a lesson here for HIT vendors and their bloated, ugly, nearly unusable software.

Supporting a renegade. Apple has almost always been a bit of a renegade in the computing world bucking traditions. This renegade spirit which descends directly from Jobs is something I have always admired and was willing to support. Yes, Apple products sometimes cost a tad more but you are not buying just a product, you are supporting a movement. It is that renegade spirit I hope to bring to the HIT market in founding Chilmark Research. This industry is in serious need of some shock treatment, and through our research and analysis, we plan to be right there throwing the switch.

Systems rather than parts. While some may whine over the proprietary nature of Apple’s complete hardware/software systems design approach, one cannot argue against its ability to provide an unmatched user experience. Yes, I’m an IT analyst and yes, I can get my way around almost any OS but seriously folks, do I really want to or would I rather just open up my computer and get to work? Thinking back on those days with that Compaq and dealing with DOS and then using the Macintosh SE with its integrated system, is it any wonder I switched? It appears that many a provider thinks much the same way I do for just look at the rapid adoption and use of the iPad (adoption now over 35% of all providers) in the last year and a half since introduction.

Supporting innovation. Simply put, without Jobs, we all would probably still be dealing with FUGLY computers and a DOS operating system. Jobs and his company single handedly made computers actually fun to use and become not just a tool for business, but a consumer product.

Our country, our industry has lost the greatest visionary of our time in the consumer electronics market. He will be sorely missed but as he stated in his Stanford commencement address, death is a necessary part of life for without it, nothing would advance. Steve, I will miss your vision and hope that the many you have mentored over the years, including myself, will be able to carry your vision forward.

Lastly, one of my favorite quotes of his that I always try to keep front of mind and live by:

Growing old is mandatory.
Growing up is optional.

Stay hungry.
Stay foolish

– Steve Jobs

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Philips Electronics announced on Friday that it will acquire Respironics for $66/share or about $5.13 billion, a 24% premium.   This is the third and largest healthcare-centric acquisition that Philips has made in December.  The first was Emergin, a small company (~100 employees, estimated $18 million in 2007 sales) and provider of medical alarming systems for hospitals.  The second, Visicua a supplier of systems for remote monitoring of intensive care units, was acquired for $430 million.

All three acquisitions are the manifestation of Philips’ “Vision 2010” strategy, which was announced in early September. As part of this new vision for the company, divisions have been realigned into three distinct groups, lighting, consumer lifestyle and healthcare with planned investments to build these three into market leading organizations.

Within healthcare, Philips combined its separate Medical and Consumer Health divisions into one entity. While the first two acquisitions are in support of the former Medical group, the Respironics acquisition will provide solutions that span both the hospital/provider market and the home healthcare market.

The acquisition of Respironics, while appearing expensive at first blush, is a brilliant move and will, if executed properly, reap significant benefits for Philips for a number of reasons including:

  • Fills a gap in Philips current product portfolio allowing them to deliver to market a more complete solution suite.
  • Respironics is on a tear, with revenue growth in the mid-teens and margin growth of nearly 20% that shows no signs of slowing. They also appear to be a very well managed company and Philips has publicly (and wisely) stated they foresee no layoffs as a result of this acquisition.
  • Respironics, a US-based company has only recently made significant in-roads in overseas expansion, which represents roughly 31% of sales in FY06. Philips, with its broad international distribution network, could see some quick gains by broadening Respironics international presence.

Philips is positioning itself well for the inevitable move to deliver far more healthcare services, via telehealth, within the home rather than at a hospital or physician practice.  One of the nation’s largest, integrated healthcare providers, Kaiser-Permanente, for example is exploring new ways to deliver healthcare at the home to minimize the need for building more facilities.  Several studies have also been recently released that clearly demonstrate the efficacy of telehealth.

With the minor exception of the partnership between GE and Boston Scientific, Philips’ major competitors Siemens and GE have been relatively silent, leaving one to wonder if they lack the vision or have simply chosen to head down a different path.  My guess is that they are watching Philips’ moves with a wary eye and 2008 may well see a number of follow-on acquisitions by these companies to keep pace with Philips.

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I have changed the name of this site to Chilmark Research from the former name HITanalyst.  The reason for this is two-fold.  First, I wanted to create a site that had its own unique domain address which would allow me to both expand the services I will offer in the future and also provide an ability to establish email under this domain.  Secondly, I wanted to further clarify the areas that Chilmark Research will focus upon in the future.  You will find more information in that regard in the “About” section of this website.

Moving forward, you should still be able to access this site through the former WordPress-based domain name.  I have tested this myself and all appears to work fine.

If you have any questions or comments, you can leave them here or send an email to info@chilmarkresearch dot com

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Over on the eZine, Health Data Management there is a poll asking whether or not your software vendor was upfront about the hidden costs of implementing their software. Guess which way the poll is leaning?

Over two-thirds of respondents state that no, their software vendor was not upfront about hidden costs!

At first, one may be appalled at such a percentage, but it is not that surprising. First, it is not always apparent for anyone, vendor or customer, as to what the full costs will be to implement a given software solution. There are “hidden costs” related to customization of workflow for a given facility, there is training, there is that ever sticky issue of adoption and use, and there is the productivity drop while users familiarize themselves with the new software. I am sure others can list their own hidden costs that they have had to address as well. Thus, it may be unreasonable to put complete blame on the vendor as many parties are culpable.

Within the IT space and among industry analysts, it is fairly common knowledge that the total costs to implement any solution is typically about 10x the cost of the software itself. Yes, this can be a very big number but few would ever get the go ahead from management if they told them what would ultimately be the sunk costs to adopt a new software package.

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Quick 7min podcast of interview IT blogger Robert Scoble had with Stanford Childrens Hospital pediatrician Christopher Longhurst who also works within the IT dept of this hospital.

There is a much longer 47min version over on Scoble’s blog.

[podtech content=http://media1.podtech.net/media/2007/10/PID_012773/Podtech_StanfordDoctorEC.flv&postURL=http://www.podtech.net/scobleshow/technology/1644/editors-choice-stanford-it-doctor&totalTime=460000&breadcrumb=cb17ce880de94e919dc0c619eaf62294]

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The title had promise, Microsoft: Better software can prevent medical mishaps and the intro began with a discussion about MS’s work in the UK on a common user interface for the healthcare provider (nice idea but has a snowball’s chance in hell of being successful here in the States). Unfortunately, the article quickly devolves into a mumbo jumbo of MS’s activities in healthcare over the last 2+ years.

The best part about the whole article are the numerous comments from those who are horrified at the prospect of MS being active in healthcare. Maybe the “blue screen of death” will take on new meaning.

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