August 27, 2007

1. Congress Gives the VA Big EMR Money

Facts and Background

Congress is prepared to give the Veterans Affairs Department even more money than it asked for in FY2008: $109 billion, of which $65 billion would be discretionary. $1.9 billion would be set aside for information systems, about 50% more than 2007, much of that intended to link patient data between the VA's electronic medical records systems and those of the Department of Defense.

Opinion

That's a lot of money for a domestic health system (other than the civilian one, that is). Congress is feeling guilty over publicized poor care of veterans, so it's assuming higher funding will fix the problems. Trying to patch the good VA EMR system (VistA) to the not so good DoD one (AHLTA) is expensive, but that's not surprising given the high-priced government contractors both organizations nearly always use (its' ironic that VistA was developed for nearly nothing by dedicated VA staffers working secretly, while AHLTA churned through billions for what many say is a poorly designed VistA imitation).

Musings

• What happened to the VA's dumb idea to rewrite VistA, arguably the only EMR system in the country that's universally deployed and delivers what it promises?
• AHLTA's 2006 budget alone was supposedly $392 million. DoD spent $4 billion in taxpayer money to create it (much of that going to perennial government contractor SAIC).
• AHLTA went offline in 2004 because of performance problems.
• AHLTA was originally announced as a brand new, state of the art system, but generals finally admitted that they had just renamed the old CHCS II product because it had earned a bad reputation.
• The military was unhappy with the internal developer of the Joint Patient Tracking Application and Veterans Tracking Application systems, which cost about $1 million to create and are delivering real value on the battlefield. The military was said to have transferred its Army CIO developer because he criticized DoD's territorialism over AHLTA.
   

2. Healthcare is Network Vendor Cisco's Fastest-Growing Market

Facts and Background

Networking giant Cisco announced that its highest growth segment is healthcare, with that business now producing revenue of over $1 billion per year.

Opinion

Infrastructure is hot again, especially in an age of medical grade networks, wireless computing, and a never-ending appetite for bandwidth. The good news is that hospitals are paying attention to the computer plumbing. The bad news is that networking doesn't always produce ROI, especially for those hospitals fresh off buying now-obsolete wireless networks just a handful of years ago. It's a big investment that could end up being a non-strategic higher cost of doing business unless hospitals take advantage of the new opportunities it may offer.

Musings

• Cisco is a giant, but some healthcare experts claim that wireless products from Aruba and Meru are superior when it comes to reliability and innovation.
• Cisco expects wireless connectivity to diagnostic devices to be a big growth area.
• Another big growth area is voice over IP communication, i.e. using the wireless network to conduct voice conversations, either between "computer phones" or to traditional telephones. Nurse call systems are rapidly heading this way and device integration, especially for patient alarms, is another growth area.
• Cisco sponsors its own user group within HIMSS. That involvement has drawn significant criticism of whether HIMSS should be in the business of helping specific vendors market to its own members.
• If healthcare is really important to Cisco and smaller competitors are threatening that revenue stream, Cisco will most likely simply buy them.

3. Two Companies Vie for Once-Suitorless iSoft's Attention

Facts and Background

UK hospital software vendor iSoft is the subject of takeover attempts by two non-UK companies, Australia's IBA Health and Germany's CompuGroup. The company says it will put itself up for auction if the offers continue.

Opinion

Just a few months ago, iSoft was the biggest disaster in healthcare software. Its executives had bailed out just ahead of disastrous financial statements and accounting restatements, Accenture begged out of its mammoth UK NPfIT contracts because of what it said were iSoft's failures as a subcontractor and the company warned that it could go out of business if its emergency financing fell through. Now, it's a hot property. Whoever buys it gets a huge UK contract, but also huge responsibilities to deliver under the watchful eye of CSC.

Musings

• The company is like a cat - it should have been gone for good several lives ago.
• Main contractor CSC holds puppet strings over iSoft. Its contract with iSoft gives it veto authority on any takeover.
• It's still a surprise that CSC didn't buy the company itself since it's paying big money to iSoft as a subcontractor. If it's not interested given what it knows, that can't be good.
• Is part of the bet on iSoft's eventual success the hope that the successor to NPfIT head Richard Granger won't be so adamant that underperforming vendors be held accountable?
• iSoft beat a lot of big companies to get the UK business, but couldn't deliver.
• IBA will be the biggest non-US healthcare software vendor in the world if it wins iSoft's hand.
• Private investor General Atlantic still has a stake in the company and also in its suitor, CompuGroup. It also has holdings in US software companies MedAvant, Healthvision, and Eclipsys.
• iSoft was looking to enter the US hospital software market a couple of years ago. That never happened.
   

4. Siemens Named Again in Hospital Bid-Rigging

Facts and Background

Siemens, plagued by charges of high-level corporate corruption and bribery, was named in two countries as being suspected of rigging bids for hospital technology. An employee of Siemens Indonesia will face trial after a hospital dropped competing bidders and left Siemens as the sole bidder, after which it was claimed to have submitted inflated charges. In the Czech Republic, three hospitals are accused of rigging medical equipment bidding to favor Siemens.

Opinion

Siemens has been named in several of these cases, most notably in Chicago-area Stroger Hospital. In that case, Siemens paid $2.5 million to settle charges of bid rigging after setting up a phony minority partnership that helped it earn a $49 million PACS contract. GE Healthcare complained that its bid was lower and courts agreed, taking the contract away from Siemens and giving it to GE. Numerous other charges, including obstruction of justice, were dropped as part of the plea, although two former Siemens executives pled guilty to perjury and obstruction of justice charges and are due to be sentenced in September.

Musings

• The company's SIENET PACS product is dead last -- by a mile -- in KLAS.
• Siemens has a seriously bad world image as being corrupt, to the point that even members of its corporate anti-corruption department were arrested for money-laundering. The company was accused of paying up to $260 million in bribes to get business. The scandal cost the CEO his job this past April.

5. Epic Systems Will Open Epic Building Next Month

Facts and Background

The new learning center of software vendor Epic Systems will open at its Verona, WI headquarters next month. The $100 million building features an auditorium that seats 5,300 and will host the company's September user group meeting.

Opinion

This is what God would build if He had the money, although He would no doubt have CEO Judy Faulkner's quirks (like painting a $100 million building red so it resembles a barn sitting in a field).

Musings

• The article mentioned that Epic had $422 million in revenue last year and 2,800 employees (ten years ago, it had 200 employees).
• Campus construction now totals an estimated $400 million in buildings alone.
• The "conference room on stilts", aka treehouse, isn't finished yet.
• Thank Kaiser Permanente's $2 billion HealthConnect investment for making Epic what it is today.
  
  

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