January 14, 2008

1. Cerner Announces Millennium for Xbox

Facts and Background

Cerner and Spectrum Health (MI) announced on Monday that they have worked with Microsoft to develop the Cerner Care Console, on display at last week's Consumer Electronics Show. The system includes patient tools for education, caregiver introduction, schedules, hospital information, and surveys. It also provides live TV, movies, music, and an Xbox 360 for in-bed gaming.

Opinion

This has been done unsuccessfully many times before.

Musings

• Online gamer sites loved this announcement, with one headlining it "Pwn Therapy" ("Pwn" is gamerspeak for "own", which means you beat someone in a game) and expressing hope that it would have the "puke green" finish of the Halo 3 edition of the Xbox 360.
• This doesn't necessarily imply a close working relationship between Cerner and Microsoft, for all you acquisition sniffers. It's really just Windows Media plus an Xbox serving as a dumbed down PC for displaying limited Millennium data, I suspect.
• Issues previous would-be vendors couldn't master: wipedown problems, people stealing the components, antiquated TVs, available space in patient rooms, lack of UL certification, lack of in-house support, unwillingness of patients to pay extra for first-run movies, issues with using the systems in non-private patient rooms, collecting patient payments, lack of patient interest to run educational videos and take surveys, and cabling issues in getting power and network connectivity into crammed rooms. None of those have gone away.
• This would be great for sick children. Otherwise, people well enough to play Xbox games probably aren't going to be inpatients.
• Cerner needs new sources of revenue to feed the growth engine. With this product and its drug dispensing system, it's starting to look like Cardinal Health minus the drug distribution.
• Patient probably want much of what this offering provides, but don't underestimate the resistance of hospitals to provide it to them given the extra support, cost, and infrastructure required. All they get out of it is potential improved patient satisfaction scores and, rhetoric aside, insurance companies drive hospital choice more than the satisfaction of their enrollees. Significant improvements in hospital housekeeping and food service will be a leading indicator that hospitals really care about patient satisfaction.
• Early adopters of similar technologies learned that you don't add the entertainment charges to the patient's bill since they don't usually pay that anyway and are equally likely to stiff the hospital for a movie as they are for lifesaving medical services.

2. McKesson Gets A Big Clinical Systems Sale (Or Re-Sale)

Facts and Background

McKesson announced Monday that Community Health Systems, which operates 125 hospitals, will deploy McKesson's physician portal, electronic medical records, and performance analysis in many of its hospitals.

Opinion

This is a surprising win for McKesson, which usually loses this size of a deal to Epic or Cerner. But, McKesson's 2006 deal with the former Triad Hospitals may have covered some or most of these hospitals already since Community acquired Triad in 2007. The announcement does not address that fact.

Musings

• McKesson signed a deal with Triad Hospitals and Perot Systems two years ago in which Horizon Clinicals would be installed in Triad's 49 hospitals. The $1.2 billion, 10-year deal included $120 million for McKesson's software and services. Triad was acquired this year by Community Health Systems, so it's not clear if these are the same hospitals that had already committed under previous ownership, whether the previous agreement was cancelled with Triad's acquisition, or whether the new agreement covers more facilities, products, or revenue than the old one.
• The Triad acquisition hurt Perot Systems in October, when the company blamed the termination of that agreement on an earnings shortfall, restructuring, and layoffs. Perot wasn't mentioned in the Community announcement despite being in line for the lion's share of the $1.2 billion from the 2006 agreement.
• Some parts of the Horizon line are much less ready for prime time than others, so it will be interesting to see how much of it is actually brought live.

3. New Owner Picks AcerMed's Bones

Facts and Background

The assets of bankrupt physician systems vendor AcerMed Inc. of Irvine, CA were sold to Ophthalmic Imaging Systems Inc. of Sacramento, CA, the company announced Wednesday. A new OIS subsidiary called Abraxas Medical Solutions Inc. was formed to manage the business. OIS says it will fund its operation with $2 million and has brought back several former AcerMed executives, including its former CEO.

Opinion

Perhaps there's a ray of hope for AcerMed customers who were left holding the bag when the company shut down without warning last year after legal problems and claimed illness of one of its principals. Still, there's no guarantee that the new company will honor any of those agreements since it's presumably buying only the intellectual property.

Musings

• AcerMed's products were CCHIT-certified and generally well regarded.
• The former company's problems serve as a reminder that being CCHIT-certified doesn't give buyers much protection against business failure. It's not like a bank's being FDIC insured.
• AcerMed may have been the first of several EMR companies with impressive stories, but underlying problems. Consolidation in that segment isn't over by a long shot. 

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