November 19, 2007

1. FCC Announces $400 Million in Grants For Rural Healthcare Connectivity

Facts and Background

The Federal Communications commission announced Tuesday that it will fund a $400 million rural grant program intended to create broadband telehealth networks in rural and underserved areas. The grants would cover up to 85% of the cost.

Opinion

Finally, something useful comes from the universal service fee tacked onto every telephone bill.

Musings

• This is an interoperability project. Participation in or creation of a network is required.
• Grant recipients will be "strongly encouraged" to link their networks to CDC for outbreak response.

2. Initiate Systems Announces IPO Plans

Facts and Background

Patient indexing systems vendor Initiate Systems of Chicago, IL announced Tuesday that it has filed SEC paperwork for an initial public offering of its stock valued up to $75 million. Goldman, Sachs & Co. will be the sole book-runner.

Opinion

This is a good example of the value of doing one thing very well. The company rose to the top of the patient indexing niche. Now it has many options to leverage what it has learned into other industries.

Musings

• Healthcare person management is more complex than in any other industry.
• The company's Identity Hub is #1 in KLAS in the EMPI category.

3. Sutter Health's Epic EMR Costs: $500 Million for Six Hospitals

Facts and Background

A November 9 San Francisco Business Times article came to light last week in which the cost of Sutter Health's clinical systems project was estimated at an eventual $500 million, up from the original $150 million estimate. The first site, a 403-bed, two-hospital group, will go live in 2009 at an announced cost of $50 million.

Opinion

The Epic Systems implementation is costing the first site $125,000 per bed, not counting high ongoing maintenance costs. The article talks a lot about how they're changing process and work flows, but others who have preceded them in spending mind-boggling amounts of money on computer systems have never shown the dramatic improvement in quality or cost that an investment of that magnitude should deliver. Big IT investments are often right up there with building impressive edifices and magnifently compensating executives in failing to improve things for patients. Sutter, like everybody else, says they're doing it right, so the quality and cost numbers should speak for themselves starting very shortly.

Musings

• Epic Systems won't get the bulk of the money, but the company's products seem to be associated with some of the most expensive IT projects in the country, including $249 million at Allina and somewhere between $2 billion and $9 billion at Kaiser.
• Hospitals making big purchases always say they're transforming care. When does someone unveil the results? All the talk about transformation dies down before go-live. Nothing in cost or quality data suggests decisively that any hospital really improves substantially just by using software. The good ones get a little better, those not as good don't usually improve at all. Great paintbrushes don't make great artists.
• Bigger organizations don't just end up paying linearly more for IT. It's more like geometrically higher. Even with presumed economy of scale, a 200-bed hospital would spend $25 million on Sutter's Epic implementation, based in its per-bed cost. Actually, they wouldn't: without Sutter's deep pockets, no single hospital could afford it.

4. MedQuist's Struggles Continue

Facts and Background

Three independent directors of transcription company MedQuist, Inc. resigned from the company's board last week, it was announced on November 9. Their departure comes after a disagreement about their role in any sale of the company. Electronics manufacturer Philips recently announced its desire to sell its share of the company.

Opinion

I keep picturing Keystone Cops dressed in MedQuist suits running around in jerky, grainy black and white video, hitting each other over the head with nightsticks and falling into large heaps in the street. The company hasn't been able to recover since an alphabet soup of government agencies starting probing its accounting and billing practices.

Musings

• There's just nothing left to say about the company and little reason to say it, at least until Philips finally walks away, the dust from the implosion settles, and someone salvages what's is left and starts over.
• None of the company's problems involve its products or services, which have been well accepted by hospitals. If the corporate governance issues can be overcome through a change in ownership, there's every reason to think it will be successful.

5. Contractor Gets Big Government Project: Define Five Acronyms for $500,000

Facts and Background

The Office of the National Coordinator for Health IT announced on October 26 that it will fund a five-month project to define five commonly used terms: electronic health record (EHR), electronic medical record (EMR), personal health record (PHR), health information exchange (HIE), and regional health information organization (RHIO). BearingPoint will receive $500,000 for the engagement.

Opinion

How much would BearingPoint charge to define "stupid"? $100,000, at least based on the per-word tab that we taxpayers are covering for defining a handful of terms that, while not formally spelled out in a consultant's PowerPoint, in no way impede electronic health information progress as ONCHIT claims. ONCHIT says consumers won't understand these terms, leaving just 99.9995% of cryptic medical acronyms and synonyms for them to master once these five troublemakers are whipped into shape by BearingPoint.

Musings

• BearingPoint was paid something over $500 million for the VA's CoreFLS logistics, which was so cripplingly flawed that it had to be shelved even before initial testing was complete. Politicians claimed then that the company would get hard scrutiny before being issued more government contracts. That didn't seem to happen, of course.
• This ought to convince struggling software vendors to dump their inteoperability work and instead advise the government on what it means. That pays better.
• ONCHIT's Karen Bell was quoted as saying the situation involves "a plethora of competing and confusing definitions." Now we can quantify "plethora" without bothering BearingPoint to define it: it means five.
• BearingPoint's contribution was apparently limited to aligning consultant mouth with government teat. It immediately turfed off the actual work to the National Alliance for Health Information Technology, a non-profit (of which BearingPoint is a member and with board representation).
• It's a relief to know that the information technology floodgates will be thrust open once this insurmountable hurdle of ill-defined terms is finally vanquished.

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