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Posts Tagged ‘Siemens’

Acquisition fever has set in and they’re dropping like flies, independent HIE vendors that is. Earlier today, Siemens announced its intent to acquire enterprise HIE vendor MobileMD. So in little over a year we have seen IBM snag Initiate, Axolotl fall into the hands of Ingenix/United Health Group (Ingenix is now known as OptumInsight), Medicity tie the knot with Aetna, Harris pick-up Dept of Defense clinician portal darling Carefx and Wellogic, a damsel in distress, being rescued by Alere. Elsevier also announce an intent to acquire dbMotion for a whooping $310M, but nothing came of that other than a substantiation of the rumor that dbMotion was being shopped.

That does not leave many small, independent HIE vendors that have some traction left in the market. Following is our list of such vendors and what might become of them:

4medica: A relative new comer to the HIE market, 4medica will be profiled for the first time in the upcoming HIE Market Trends Report which is scheduled for release in early 2012. 4medica is quite strong on lab information exchange. Future: 4medica still remains under the radar screen as it completes its platform to truly serve all HIE needs. Once that process is complete, the company is likely to gain increasing attention and will be acquired in 18-14 months.

Care Evolution: Privately owned and self-funded, founder has every intent to stay independent. As he has told us on more than one occasion, I’ve already made plenty of money and this is not about cashing out to the highest bidder. Future: Everyone has a price but this company may be one of the last to fall into the arms of another.

Certified Data Systems: Appliance (think small router with embedded HIE functionality) HIE vendor that has close, yet non-exclusive partnership with Cerner. Would not be surprised if they struck a similar deal with Epic as Epic struggles to connect to EHRs outside its system. Future: Fairly new to the HIE market but gaining traction. Will stay independent for next 12-18 months, after that, anyone’s guess.

dbMotion: One company already made a bid, but pulled back, thus pretty clear this company will be acquired, question is how much and we suspect it will be significantly less than what Elsevier was planning to pay. Future: If price is right, could be acquired at anytime.

HealthUnity: Small HIE vendor from the Pacific Northwest that made a big splash when with Microsoft (Amalga UIS) they won the big Chicago HIE contract. Future: With Microsoft cozying up close to Orion, HealthUnity will be looking hard for other partners and/or to be acquired. Will give them 12-18 months as an independent.

ICA: Another small HIE vendor that has had a few wins here and there but will come under increasing pressure from larger, better funded HIEs. Future: Likely to be acquired in next 6-12 months, maybe even earlier.

ICW: InterComponent Ware is a German HIT company and a sizable one at that with over 600 employees. To date, ICW has a very small presence in the US HIE market so an acquisition, if there were one, would have little impact.  Future: Their foreign ownership, size and interests in several health related markets make them an unlikely candidate for acquisition.

InterSystems: Arms dealer to all, InterSystems Cache and Ensemble are widely used in the market and the company has built upon these core technologies to get into HIE market. Future: Fiercely independent and senior team is basically the same since founding this company will remain independent.

Kryptiq: Having signed a strong partnership deal with Surescripts, Kryptiq is unlikely to be interested in any acquisitions talks. Future: Will remain independent for time being and if Surescripts’ Clinical Interoperability solution gains significant traction, Surescripts will likely acquire Kryptiq outright.

Orion Health: New Zealand-based, privately owned with good prospects in markets beyond America’s shores, this company will likely want to stay independent (future IPO) unless of course a very large software company (think IBM, Microsoft, Oracle etc.) gives them an offer they can’t refuse. Future: Will stay independent.

Getting back to the Siemens/MobileMD deal…

While we have not had an opportunity to talk with either Siemens or MobileMD (will provide follow-on update once we do) here are some quick take-aways:

Siemens has chosen to buy. This is unlike other EHR vendors who have either built their own HIE solution (athenahealth, eClinicalWorks, Epic, NextGen) or have partnered with others (Allscripts, Cerner, GE).

Existing partner doesn’t cut it. Siemens has an existing partnership with NextGen for ambulatory but NextGen’s HIE is a closed system. This prevented Siemens from being able to leverage this partnership to serve their client needs, which most often includes a multitude of EHRs in the ambulatory sector to interface with.

Lacked sufficient internal resources. By buying into the market, Siemens has signalled that it does not have the development resources to respond quickly enough to customer demand (not too surprising, Siemens has been struggling in the North American market for sometime). This also signals that they could not find the right partner outside of their NextGen relationship, which is a tad puzzling as we are quite sure they paid a premium for MobileMD.

Paid a premium. We estimated MobileMD sales in 2010 just shy of $8M in our 2011 HIE Market Report. HIE vendors are selling at a premium, even second tier ones such as MobileMD. Assuming industry average growth in 2011 (we peg it at 30%) that would give MobileMD sales of ~$10.5M for 2011. We put the final strike price for MobileMD at $95-110M.

Existing MobileMD customers relived. Unlike the acquisitions of Axolotl and Medicity, which both fell into the hands of payers, MobileMD is going to a fellow HIT vendor which must assuage the fears of more than a few MobileMD customers and prospects. Siemens intends to keep MobileMD whole, bringing on-board MobileMD’s president and founder, again contributing to continuity.

ADDENDUM: Please excuse our lack of posting on industry trends in a more frequent manner. Like many in the healthcare sector, Chilmark Research is struggling to keep up with demand and recruit top-notch resources. We seem to have hit our stride in this market, are receiving countless engagement inquiries and engaging in most of them. All good problems to have, but you dear reader are the one who ultimately suffers from our lack of posts. Thank you for your patience to date and know that we are doing our best to keep you informed with some of the best research and analysis of this critically important and meaningful market.

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Today, Siemens announced that it has struck a deal with Microsoft to create a German instance of the HealthVault platform to serve the citizens of Germany.  In a deal similar to the one that Microsoft struck with Canadian telecom, Telus, Siemens IT Solutions and Services (SIS) will re-purpose the base HealthVault platform to meet Germany’s legal framework for Personal Health Information (PHI) and seek German partners to create a rich ecosystem of data providers (insurers, providers) and apps/services to serve this market.

After a joint briefing with Microsoft and Siemens as well as interviews with three German software firms, SAP (one of the world’s largest enterprise software companies), ICW (healthcare IT infrastructure & PHR solutions) and careon (case/disease mgmt & PHR solutions), here is the scoop:

The Skinny:

Siemens SIS is 35,000 employees strong operating in 40 countries.  Siemens SIS serves a wide range of industries, from manufacturing, to finance and of course healthcare, which is one of its smaller markets, albeit showing strong growth.  In addition to a deep presence in Germany, Siemens SIS provides services to number of other countries’ national healthcare programs – leading one to conclude that Germany may be just the first foray/country that this partnership will seek to serve.

This is an exclusive license between Microsoft and Siemens to serve the German market and both companies stated that this is a very long-term contract as it will takes years to develop, deploy and gain traction.  Terms of agreement were not disclosed, but both companies will share in revenue generated.

Target market/business model is to sell the HealthVault service to potential sponsors that have a desire to improve care and disease management.  Likely candidates include payers and employers.  Hospitals are also a potential target market.

Service will go live in second half of 2010 and include the entire HealthVault platform, including Connection Center for biometric devices.  Existing HealthVault ecosystem partners with solutions pertinent to the German market will be included and Siemens is currently in discussions with many eHealth companies in Germany to on-board them as well upon formal launch of the platform later this year.

Agreement does not include Siemens’ healthcare software business (e.g. Soarian) or medical device (e.g., imaging systems).  This may come later, but nothing appears to be on the roadmap today.

This deal/opportunity is being driven by many of the same market changes occurring elsewhere (e.g., aging population, rising healthcare costs, etc.), and the migration from provider-centric care to consumer-centric care.

Impressions, Prospects, Challenges:

The German companies interviewed thought that Microsoft made a savvy move in partnering with Siemens as Siemens is a well-known and trusted brand in the German market, whereas they reported that there is some public distrust of the Microsoft.  Siemens, with its extensive experience in the German healthcare market, one interviewee put Siemens’ HIT market share at 33% of German hospital market, is also well-versed in the strict and highly regulated PHI privacy laws, which will assist in the creation of a secure, regulatory compliant platform to serve this market.  Siemens also has a reputation to uphold and will be quite cautious in insuring the privacy and security of citizens’ PHI.

The deal also comes at a time of much turmoil in the German healthcare sector, particularly at the highest levels of government with the recent appointment of a new Health Minister, Philipp Rosler, who in one of his first acts, placed a moratorium on the German roll-out of eHealth cards and the entire “Connector” program upon which these healthcards were to be based.  Siemens, a one-time participant in the Connector program announced it would withdraw from the Connector program in September 2009 (note: Siemens started talking to Microsoft one month prior to pulling out of Connector – coincidence? Unlikely.).

According to those interviewed in Germany, the Connector program, despite enormous sums spent (estimates put it at ~$2.25B) was doomed from the start as it was “politically not doable” due to its top-down strategy (sounds like the US’s own NHIN), inability to move rapidly in response to market changes and extreme reluctance of physicians to support open transparency and exchange of patient records across Connector.  Similar to the US and the challenges RHIOs face, German physicians fear data liquidity of PHI may lead to loss of control of the relationship (he/she who owns the data, owns the relationship) and subsequently, potential loss of business.  Physicians reportedly also did not want to be burdened with the cost of card readers and on-ramping to Connector

In Germany, all citizens have a right to obtain copies of their medical records and most payers provide incentives to physicians to encourage them to provide records to their patients.  In practice, however, the German software companies Chilmark interviewed universally stated that most consumers do not bother asking for their records and due to the aforementioned issues/concerns regarding transparency, few physicians encourage it.  Therefore, Germany also shares with the US a PHR market today that is very immature and requiring a significant amount of consumer education and physician adoption/engagement.  Siemens has a long road ahead.

Another challenge is Siemens’ lackluster track record in the consumer market.  Sure, they have made forays into consumer goods (e.g., phones) but by and large, this is a B2B company, not a B2C.  Granted, the intent of Siemens is to “sell” the HealthVault platform and its services to payers, employers and providers (a B2B model), but Siemens will need to think like a consumer to insure that this HealthVault instance serves the need(s) of the average German or risk failure.

Microsoft may also find Siemens difficult to work with as this is a very large, complex organization with a myriad of interests in countless markets.  For example, SAP and Siemens spent tens of millions of Euros on a failed effort to more closely integrate the Siemens Soarian platform to SAP’s ERP platform via SAP’s Web Services platform, NetWeaver.  Will Microsoft run into a similar problem?  There is always that chance, though in this case less likely as this is not about tying two disparate systems and data architectures together, but more about providing an open platform (data repository) for a citizen’s PHI.  In Germany, HL7, V2.x is widely used and will likely be the standard by which clinical data will be imported into HealthVault.

While SAP does not have a direct play in the consumer eHealth market, both careon and ICW do.  careon and ICW welcome the announcement for they see it bringing much greater visibility to the market for consumer control of PHI and the tools to do such.  In the case of ICW, which has had its own intentions to be the “platform of choice” to serve the German market (they have an extensive capability to directly import biometric data from numerous devices – directly competing with HealthVault’s Connection Center), they certainly see this as a competitive threat, but claim that much like the car rental market, consumers/businesses like having a choice and they intend to be that second option.  For careon, this move by Siemens is warmly welcomed and they hope to become one of the leading ecosystem partners.  Currently, careon, through its solution suite, provides case management services for some 1.2M German citizens.  careon sees many opportunities to further leverage and extend their service offerings through a platform such as HealthVault.

The Wrap:

Microsoft is clearly the leader in the Personal Health Platform (PHP) market with Google Health fading into the distance. (Note: hard to compare HealthVault to Dossia as they each have very distinctive and not readily comparable operating models).

That is not to say that Microsoft is handsomely and profitably capitalizing on these initiatives.  The market in the US has been extremely slow to take off, their Canadian partner Telus has yet to formally launch the Canadian instance of HealthVault, Telus Health Space and as outlined above, the roll-out in Germany will have its share of challenges.  Gaining traction to support such initiatives requires patient money and it appears that to date, the head honchos at Microsoft have been willing to give Microsoft’s Health Solutions Group (HSG) a fairly long leash and the necessary resources to build-out this business.

But to be truly successful, Microsoft and its partners will need to look more closely at what consumers actually wish to do with their PHI, how they wish to interact with the healthcare system of their respective country and what are the dominant, valued services consumers seek. If one looks to success stories like Kaiser-Permanente’s MyChart, US consumers want transactional services (see their labs, make appointments, have eConsults, etc.) and today, none of these are readily supported on any of these PHPs.  What other transactional services might consumers use? We’ll leave that to Microsoft and its partners to figure out as each country will have its own nuances.

And let us not forget the sponsors (payers, employers & providers) who may offer the HealthVault service to their respective constiuents.  These are the target markets for Siemens and Siemens’ ability to accurately price the service and demonstrate value to a sponsor is far from a done deal.  Proof points will be necessary and as we all know, proof points are extremely hard to come by in a new market/service offering requiring more an act of faith on the part of a sponsor than clear demonstrable metrics of return on investment.  In tight economic times such as these where companies are risk adverse, this is a bold leap by Siemens and Chilmark will watch this roll-out carefully.

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Snap Shots from HIMSS

Here at the big, dare I say massive, healthcare IT (HIT) conference for the next couple of days. It is late, I’m exhausted, and the prose may not be the best, but wanted to give a few impressions/snap shots from this first time attendee.

Did I say big? Indeed it is with some 900+ exhibitors this year and those exhibitors range from the big boys, like GE, Siemens and Philips to nano-sized, niche vendors selling odd widgets that not many people seem terribly interested in.

HIMSS is very insular and could use some outside perspective(s). Sessions I attended today had senior IT executives from providers and vendors all parroting themselves. A certain amount of this can be expected, but I find an unusually high level of it here.

The dominant view is that it is not a consumer, but a patient that everyone is ultimately serving. While I understand and appreciate where this perspective originated from, it is a perspective that is so 80’s. The times they are a changing and the CIO needs to begin looking outward to engage the consumer. I’m not seeing any originality here at HIMSS on how to make that happen. Too bad Deloitte isn’t here to give a keynote presentation on some of the findings from their recent consumer healthcare study, that might shake them up a bit.

Then again, maybe not.

A couple of CIOs I spoke with told me that they get very little consumer traffic on their hospital’s website and what little consumer traffic they do get is 80%+ focused on the job listings. Therefore, they are dedicating resources to other, more pressing activities.

With all the buzz about consumer health and a consumer’s purported desire to use Web-based tools (see recent Deloitte report), makes one wonder where is the disconnect. Is it just that these CIOs have made their websites so difficult to navigate that a consumer simply gives up, or is it just easy for someone being interviewed over the phone to say yes, sure I’d like to schedule an appointment over the Web with my physician, but when giving that capability, still reverts back to traditional methods. This is something that is going to require more digging to get to the bottom of.

Sat through a somewhat embarrassing media session hosted by HIMSS to present the findings of their annual CIO Leadership survey. Embarrassing for one savvy reporter pointed out some serious inconsistencies in the survey data exposing some equally serious flaws in methodology. And what I found particularly bizarre is what the survey left out. For example, no inquiry on pay for performance, even though this is a key business issue that will be heavily dependent on HIT in the future.

The most grandiose, over the top booth award goes to McKesson, who has a huge exhibit with the biggest light display I have ever seen at any conference. They certainly blew out their carbon footprint with that exhibit. Sure hope they don’t have any “Green” messaging in their booth.

The most understated booth award goes to our most recent entrant to the HIT market, Google, who had at best a 10’x20′ booth which was absolutely abuzz with people 4-5 deep, which basically crowded out the aisle as well. Luckily, I know one of the Google Product Managers and was able to get in quickly, get some questions answered and move on. Google is still very sensitive about their PHR, quickly shooing someone away when they tried to grab a quick pix with their cellphone.

The most effective booth display was EMR vendor Epic’s posting of their most recent KLAS rankings. Needless to say, they are blowing away their major competitors, Cerner, Eclipsys, McKesson, Siemens and GE. Simply amazing how far ahead Epic is ranked on a variety of key metrics in comparison to these competitors.

Best demo: RelayHealth PHR. I knew RealyHealth did consumer-physician communications, but I did not know that they had as much PHR capability as they demonstrated to me today. Really quite something, though I have some reservations about the solution as it is really targeted for the physician and actual patient control features appear to be weak. Will learn more tomorrow when I sit down with one of their executives.

At this point, I’ve been going for 17+ hours straight. Time to get some sleep and get ready for another long day tomorrow.

Note: For some reasons, quite possibly due to exhaustion, inadvertently hit the wrong button so this did not go up last night as planned. So, slightly late but still relevant.

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This morning, along with announcing very good 4th qtr growth at WebMD, a concurrent announcement was made that Healtheon and WebMD have agreed to merge, putting the value of the combined entity at about $2.3B. Due to the structure of the deal, WebMD will also end up with a hefty war chest estimated at $700M.

While I am no financial analyst, what I do know is that the past ownership structure of WebMD (84% owned by Healtheon) made WebMD a difficult acquisition target. Now that the two have combined WebMD may become much more attractive to a potential suitor.

WebMD is an attractive property for a number of reasons including:

Brand Recognition – They are the 800 pound gorilla in the personal health and wellness market, no one comes even close in numbers of page views and unique visitors.

Customers – WebMD has a long list of enterprise customers, both employers and health plans that is the envy of the industry.

Hot Market – Seems like everyone is clamoring for a piece of the action in the personal health and wellness space including the big boys Microsoft and Google.

Cash – A $700M war chest is nothing to sneeze at.

So who will come courting? Some likely suspects include:

RevolutionHealth could benefit with some added breadth and depth from WebMD and would love those WebMD customers. Also, WebMD had a relationship with AOL (discontinued last year) and RevolutionHealth is run by former AOL head, Steven Case. There will, however, be a lot of overlap that will need to be rationalized. Probability: High

Google may like the content and some of the tools WebMD would bring, but they are also pretty far along in their own plans/development and Brand, well Google has plenty of that. Probability: Low

Microsoft is much like Google, but has a greater propensity to make an acquisition to keep Google at bay. Microsoft might acquire WebMD as a defensive move. Also, Microsoft might like to have all those enterprise customers, not that they don’t have them already, but it could sure extend their presence in enterprise accounts. Probability: Medium

Intuit has taken a decidedly low profile approach to the PHR market. If they wanted to dramatically boost their visibility and further strengthen their product portfolio, this would be a good move for them. Unfortunately, it takes Intuit outside of its sweet spot/core competencies, thus they are unlikely to make a move. Probability: Low

Yahoo? Why not, though they seem to be ignoring the health & wellness market and have enough issues to deal with right now, primary among them the beast from Redmond. Probability: Low

Large insurers like WellPoint or Cigna could make a move similar to Aetna’s acquisition of ActiveHealth or UntiedHealth’s acquisition of HeathAtoZ and acquire WebMD. Thing is, the scale of a WebMD acquisition is massive in comparison and it could get quite messy as a lot of health plans (over 100) have some form of a relationship with WebMD and may bolt if WebMD goes to a competitor. Probability: Medium-low

Other HIT vendors such as McKesson, GE, Siemens, etc., are focused on business to business sales and in particular sales to hospitals. While WebMD gives them future paths for growth and could be leveraged in innovative ways (connecting clinicals to PHR and decision support tools), falls outside their current sales and distribution channels and is simply not in their DNA. Probability: Low

I’m sure their are other suitors out there, but this is just a quick hit list off the top of my head. And while I can give no definitive answer as to who the suitor will be, WebMD will have new ownership in 12-18 months. Probability: Very High

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Received an email this weekend from the organizers of the big healthcare IT conference, HIMSS, which will be held next week in Orlando. This is the BIG EVENT, where virtually all present and future players in the HIT market come to pontificate on HIT’s future (e.g., both Google’s and Revolution Health’s CEOs will be giving keynote presentations).

Now getting back to that email, which provided me a link to a “HIMSS Yellow Pages” online directory of exhibitors. Naturally clicked through to take a look at the directory and found a listing for PHR providers. Great, this will make my planning easier I thought and went to take a look at who will be exhibiting. Imagine my disappointment in finding just three companies listed (CareData, ICW and Greenway) none of which are significant players. Actually did a quick check on them, here’s what I found:

  • CareData is a small EMR supplier with a PHR called GlobalPatientRecord. Went to the PHR section and virtually all of the links associated with the tabs across the top (e.g., Company, Features, Testimonials, FAQ, etc.) are broken. Pretty clear that PHR is not a focal point for this company.
  • ICW is a PHR pure play with their solution Life Sensor. Life Sensor has seen some success in Germany, but after several years of trying to break into the North American market, they still have nothing to show for it. Give them an A for persistence but an F for execution.
  • Greenway Medical is another small EMR company who is pitching a PHR solution. This solution. however, is nothing more than a tethered portal to the Greenway EMR and not a true PHR.

Note, that Microsoft’s HealthVault was also listed, but as I have explained before, HealthVault is a Personal Health System, (PHS) and NOT a PHR.

So What’s Going On Here?

In my research on the PHR market, I have heard more than a few grumblings from PHR vendors that HIMSS is just giving lip-service to this sector, which seems quite evident based on what one sees here for this conference as well as what one may find on the HIMSS website (very little and dated) on PHRs. These PHR vendors have also reported that the HIMSS PHR task force has really gone nowhere, receiving little substantive support from HIMSS.

All of this is not that surprising seeing that HIMSS receives the vast majority of funding from those much larger hospital information system (HIS) providers such as Cerner, Eclipsys, Epic, GE Healthcare and Siemens to name a few. These HIS vendors have been anything but cooperative with PHR companies who are looking to develop APIs to these systems to facilitate interoperability and automate the updating of a consumer’s PHR. The HIS vendors have their own plans and would much rather have their customers (hospitals and larger physician practices) buy the patient portal solutions they are offering.  Could this lead to a jaundiced eye cast upon PHR vendors by HIMSS?

This leaves the independent PHR vendors out in the cold at an event such as HIMSS. But, this may change in time should the PHR market really begin to gain some traction. Question is though, where does one go to see that traction occurring? What even(s) will have a critical mass of PHR vendors where one can really begin to size up this market and its future? Unfortunately, no such event exists today that I am aware of.

In time, maybe (and that’s a big maybe), HIMSS will be the event. Then again, a number of PHR vendors will be at the big payers event, AHIP in June.

What is becoming clear is that today, the PHR market is splitting into three distinct markets, providers, payers and employers.  Therefore, if one is looking for such solutions, you’ll be looking at tethered EMR/PHR solutions from HIS vendors at HIMSS, payer-centric solutions that focus on disease management at AHIP and health & wellness with incentive management capabilities for those employer-centric PHR solutions.  Right now, most PHR vendors are using word-of-mouth for this last target opportunity.

Final Notes & FYI: 

What I can’t quite figure out is why, if HIMSS is giving so little visibility to PHRs, that the likes of CEO’s from Google, Microsoft and Revolution Health feel compelled to present at this event.  One can write-off Microsoft for they are targeting healthcare providers as well with Amalga, but the others?

Looking at the broader HIMSS agenda, one does finds a single session dedicated to PHRs titled PHR: An Industry Update from Various Perspectives to be held on Tuesday, Feb, 26th @ 1pm, room 203A for those interested.  I’ll be there, so please introduce yourself if you see me in the crowd.

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A common practice in the analyst community is to take a look back at what has occurred and project forward as to what we might see in the coming year. I won’t spend anytime on what has occurred as you can always drift back to previous posts.

Following are the Top Ten predictions for 2008. Note, these predictions are primarily focused on our core research competency – Personal Healthcare Technology. And if these top ten differ from yours, by all means give us a comment providing your list.

1.) Election Year Puts Many Initiatives in Neutral
2.) Telehealth Continues to Gain Momentum Driving Consolidation
3.) Consumer Electronic Manufacturers Jump on Telehealth Bandwagon
4.) Legacy HIT Vendors Copycat AthenaHealth with Their Own SaaS Offerings
5.) PHRs Still in Headlines, While Adoption Stumbles Along
6.) Attention Turns to PHSs, but Vision Remains Well Ahead of Reality
7.) PDF – Healthcare Hits the Streets, Retail Clinics Love it, Physicians Less So
8.) Personal Identifier Initiatives on the Hill are DOA in ‘08
9.) Employers Expand High Deductible Plan Offerings, Consumers Challenged
10.) HIEs Hold Steady, RHIOs Fade Away – Major Re-thinking of NHIN

Election Year Puts Many Initiatives in Neutral
As the Bush administration continues to see high-ranking officials leave office, no new healthcare-centric initiatives are launched and those, such as the ill-fated National Health Information Network (NHIN), are put on life-support. Even pay for performance (P4P) activities are pulled back until a new administration is in place (mid 2009).

Telehealth Continues to Gain Momentum Driving Consolidation
2007 saw several reports touting the efficacy of telehealth practices, from interacting with a physician over the Internet to the migration of outpatient care and monitoring to the home via health sensor networks and the Web. This will be one of the strongest areas of growth in healthcare technology in 2008 with annual percentage rate growth in the mid-teens. Growth will drive consolidation, as large established players such as Philips, GE and Siemens acquire smaller device manufacturers with either unique technology platforms or specific vertical market presence.

Consumer Electronic Manufacturers Jump on Telehealth Bandwagon
The growth in telehealth and simple demographics (this market will only get bigger) will attract other electronic manufacturers with strong Brand and established consumer distribution channels. Think Sony, Toshiba, LG. Still too early for Nokia and Apple, but they are coming. These companies will also look to acquire, or partner with established players in the personal health technology market to gain domain knowledge and market presence. The upcoming CES confab in Las Vegas may shed some light on who will make the first move.

Legacy HIT Vendors Copycat AthenaHealth with Their Own SaaS Offerings
The success of AthenaHealth in the market and on Wall Street (10th best performing IPO in 2007) is certainly not lost on the traditional Healthcare IT (HIT) vendors. Like the software firms in the enterprise market who have all tried to replicate Salesforce.com with their own SaaS CRM solution, expect the legacy HIT vendors to do the same in their attempts to replicate AthenaHealth. Expect the same lack of success. To date, none of the traditional enterprise software vendors have been able to catch Salesforce.com, which still shows remarkable momentum in the market.

PHRs Still in Headlines, While Adoption Stumbles Along
With the impending release of Google Health in the first half of 2008, we will continue to see a lot of press dedicated to Personal Health Records (PHRs). Despite the press and employers who continue to adopt these solutions for their employees to foster better healthcare practices, there remain many significant challenges that will prevent the PHR market from really breaking out. Expect 2008 to be a build-out year for PHR vendors, thus tracking large customer wins, partnerships and alliances of these vendors will be critical to assess long-term viablity.

Attention Turns to PHSs, but Vision Remains Well Ahead of Reality
Microsoft has HealthVault, employers have Dossia and Google will have Google Health (or some other Brand name) by mid-2008. All of these are Personal Health Systems (PHSs). They are not a PHR, but a data repository and ultimately a utility that other applications, including PHRs can tap to serve the consumer. Each of these PHSs have enormous resources behind them, but their vision is far ahead of what they will be able to deliver in 2008. There is a lot of heavy lifting (standards, tagging, document management, security, etc.) that these entities will need to address, consuming most of 2008. Look to mid-2009 for these systems to be at a level of functionality that is useful to the broad market.

PDF-Healthcare Hits the Streets, Retail Clinics Love it, Physicians Less So
The “Best Practices Guide” for the use of PDF-Healthcare is making its way through the formal review process with expected release in the next month or so. Currently being used by one of the largest retail clinics, PDF-Healthcare has demonstrated its utility for this retail clinic that is now exchanging over 10,000 unique PDF-Healthcare documents a day throughout its organization.

While this retail clinic has reaped a number of advantages through the use of PDF-Healthcare, and larger healthcare providers will do so as well, smaller physician practices will be challenged by this format as most are ill equipped to accept such digital documentation. Thus, PDF-Healthcare will become another forcing function for physician adoption of EMR, something that most have been loathed to do.

Personal Identifier Initiatives on the Hill are DOA in ‘08

Several proposals surfaced in 2007 calling for the establishment of a personal identifier for American citizens to better track/tag their medical records. This is becoming increasingly relevant as use of digital records accelerates. Despite a very real need for personal identifiers, this issue exacerbates existing fears of privacy and government intrusion. Thus, this will not see the legislative light of day in 2008. A new administration may take it up in 2009 if they receive a strong mandate from the public (i.e., a landslide victory).

Employers Expand High Deductible Plan Offerings, Consumers Challenged
Building upon the growing trend we saw in 2007 of employers seeking new ways to lower their exposure to double digit growth in medical benefit costs, consumer-driven health plans, most often with high deductibles, are now in vogue. Young, healthy employees sign-on to such plans, chronic care sufferers reject them and middle-age employees with families struggle to determine what is best for them. Unfortunately, for this latter group few resources are available to assist them with making the best choice. And as for those young, healthy and very often Internet-savvy employees, they look to the Web to help them pick a doctor and control expenses. But they to will come up empty handed as cost transparency will remain elusive in 2008.

HIEs Hold Steady, RHIOs Fade Away – Major Re-thinking of NHIN
The reports released at the end of 2007, the first on the relatively dismal state of Regional Health Information Organizations (RHIOs) and the second on the modest success of Health Information Exchanges (HIEs) were simply a harbinger for 2008. Expect 2008 to deliver more of the same for RHIOs as they continue to struggle to establish a value proposition that will overcome competing entities participation in a RHIO. And there is the nagging issue of a revenue model for RHIOs to make them self-sustaining long-term – to date, this issue has not been solved. Both of these problems will lead to nearly a third of the remaining RHIOs closing their doors by the end of 2008 and another third will be best characterized as the walking dead.

While RHIOs fade, HIEs will continue to operate and see modest growth. Unlike RHIOs, HIEs are formed by entities that have a strong desire to share information, not withhold it. But HIEs will not be the panacea to the need for a NHIN as their reach will be limited and highly localized. This will limit the overall growth of HIEs and subsequently, their impact to the market.

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