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Predictions 2012: Not What You Think

January 11, 2012 by John

Admittedly, our predictions for 2011 were modest. Most of those predictions were logical and did not take a whole lot of imagination to envision thus our success rate, 7 “hits”, 2 “toss-ups” and 2 “misses was quite high. And though are biggest accomplishment, predicting Blumenthal’s departure just a few short weeks before he actually announced such intentions is laudable, by and large these predictions just didn’t go far enough. So for 2012, rather than make simplistic predictions such as “analytics will be a high growth area” or “mHealth will create greater security concerns” or even “ACOs will begin to take hold” as none of these are all that thought provoking, we’ll go out on a limb with many of our predictions. Hopefully that limb won’t crack sending us crashing to the ground.

Without further adieu, here are our predictions:

Consumer/Patient Engagement – Not What it Seems
Despite the best efforts of the team at ONC to beat the consumer/patient engagement drum, providers by and large are still struggling with such basic issues of taking live their certified EHRs, making the transition to ICD-10, meeting physician demands to have everything served up on their new iPad and of course mapping out future strategies in anticipation of payment reform. Thus, we foresee consumer engagement remaining a tertiary issue in 2012. Just too many other pressing priorities at the moment. WebMD’s implosion on Jan. 10th may portend that this is not such a bad move – at least in the near term.

Bloom is Off the Rose, EHR Market Plateaus
Going out on a limb, we see 2012 as the year when we start talking of the post EHR-era. Yes, there will be plenty more EHR sales in the year to come but over 2012 we will also see EHR sales growth begin to plateau and level off by end of Q4’12. You heard it here first folks, it is time to collect your EHR winnings and seek new places to invest.

Finally, We’ll See Some Fairly Competent Tablet Apps from Legacy Vendors
Though physicians continue to adopt iPads at a rapid rate, they struggle to effectively use them in the hospitals to which they are affiliated simply because most hospital HIS cannot serve up an application effectively on an iPad. Sure, many have tried using Citrix as a stop-gap measure but this is just isn’t cutting it. In speaking to one CIO of a major IDN recently, he was so frustrated with his core EHR vendor’s slow pace of development that he is about ready to self-fund the development of an App for his physicians. Fear not CIOs and frustrated physicians, we have had the opportunity to see several alpha versions of iPad Apps that major EHR vendors are developing and they actually look pretty good. Look to Q2-Q3 ’12 for general availability release of these touch-screen native (mostly iPad-centric) Apps.

At Gunpoint, Direct Project Gains Traction
In 2011, the message came down from on high, or at least from the feds, that all State HIEs must include the use of Direct in their strategic plan. Pretty clear that this was politically motivated as to date, for the $500M plus we, as taxpayers are spending on these public HIEs, there is very little to show for it and we are now running headlong into an election year and this administration needs to show something, anything, in the way of success as it pertains to health information exchange. Sure Direct facilitates health information exchange (the verb), but so does a fax machine and frankly, Direct is only a modest step beyond faxing. Therefore, Direct will gain traction in these “forced” instances but we do not see it extending its reach into the much larger market of private, enterprise HIEs (does not sufficiently support care coordination, population health and analytics) and thus Direct’s overall impact in the market will be small and fade to nothing in three years time.

First CPT Codes for mHealth Apps Issued
mHealth Apps for care provisioning have not seen any significant adoption beyond pilot studies, studies which typically show some efficacy in their use. The big hang-up is a simple one, the risk to reward ratio for physicians to adopt and use mHealth Apps as part of the care process is too low. What might change that risk-reward ratio though is a CPT code whereby a physician actually gets paid to use, or have a patient use an App as part of the care process. WellDoc is one of the few mHealth App companies that is quite aggressive in moving the ball forward and we would not be too surprised if WellDoc did industry ground-breaking work to secure the first CPT codes for their diabetes management App.

Train has Left the Station as Supreme Court Rules on ACA
Though the Supreme Court will hear arguments for and against the constitutionality of the Affordable Care Act (ACA), it is unlikely that their subsequent ruling will throw out all of ACA (they may prune it). More importantly, the move to value-based reimbursement models is already in full swing, which is something that will not be reversed. Whatever the Supreme Court rules, its impact will be minimal and the numerous changes we are seeing take place today (move to accountable care models, patient centered medical home, etc.) will continue as the train has already left the station.

Changing of the Guard as Dynamic Duo Departs
Last year we predicted the departure of ONC head, Dr. David Blumenthal. This year is an election year and it is expected that there will be a significant changing of the guard across the administration. We predict that the dynamic duo that is Aneesh Chopra, White House CTO and Todd Park, HHS CTO will both be leaving their posts by end of the year.

M&A Continues, but at far more Reasonable Valuations
Okay, yes we have had this prediction for three years running, but we just can’t help ourselves as we see far too many vendors in this market (some 300+ EHR vendors alone!) and some rationalization must enter at some point. We are seeing rationalization on valuations (e.g., no one was willing to pay what Thomson Reuters wanted for their healthcare business unit despite there being a sizable number of bidders) and this will create an opportunity for acceleration in M&A activity in 2012.

Floundering HITECH Initiatives Attract Political Spotlight
Yes, we are seeing some modest success and adoption of EHRs as a result of the HITECH Act but the preponderance of such success is at hospitals that first have had some form of EHR already in place and also have a lot to lose if proposed reimbursement cuts from CMS come to fruition at the end this multi-year march to certified EHR adoption and meaningful use. Yet, under the covers we are still not seeing wide-spread EHR adoption at the ambulatory level, especially among smaller practices, State HIE initiatives struggle to define what they’ll actually be when the grow-up, the Beacon programs have not reached the promise land, and the RECs, well we were never a big fan of these for obvious reasons we outlined previously. As this is an election year, healthcare and anything with the stamp of the Obama administration on it, will become fair game and dragged into the limelight. Get ready for healthcare to become the political piñata of 2012

HIE Vendors Stumble
By the end of 2012, the final awards for State HIEs will conclude and with it the evaporation of the $500M plus honey-pot that attracted so many vendors into this space. What’s next for these vendors? Some will stumble out of the market with little to show for their efforts. Others will work with their public clients to stand-up these public HIEs in order that they provide value to their respective communities, which will not be easy and lead to more stumbling. And of course HIE vendors who have traditionally been focused on public markets will reposition themselves for the private, enterprise market. Some of these vendors are now stumbling in this transition to the enterprise market (requires different sales resources and tactics, technology requirements, etc.). This will result in yet another shakeout in this niche industry sector. (Our forthcoming HIE Market Report will provide further details)

The funny thing about doing these predictions is that as one actually goes through the process of thinking about this market, which is currently going through nearly unprecedented change, one ponders so many other predictions that just end up on the cutting room floor. Some of those include:

Payers continue to struggle with exactly what they’ll offer on the State Health Insurance Exchange.

Pharma companies look to insert themselves directly into physician workflow, via HIT.

Despite rising cost share, consumers still struggle to make intelligent, informed decisions.

Telehealth gets some wind under its wings as big telecoms start aggressive lobbying efforts.

You get the idea, plenty of turmoil, no lack of potential trajectories in technology adoption and use within the healthcare sector and we here at Chilmark Research look forward to continuing to provide thoughtful insight on this ever evolving market in 2012.

So now it’s your turn. Are we on the mark with our predictions? Did we reach too far? Is there a particular prediction that you have which we totally missed? It is you, the community of readers that make this site far richer than we ever could do on our own and we look forward to your feedback.

Posted in ACO, Analytics, CCD, CDA, Cloud Computing, consumer health, EHR, EMR, HIE, mHealth, Security, standards | 6 Comments »

Looking Back on 2011 – What A Strange Year It’s Been

December 23, 2011 by John

It is almost becoming the norm to say that it has been another tumultuous year in the healthcare IT market. Market consolidation, pushback on timelines, growing chorus from IT departments that enough is enough against the backdrop of the political circus in Washington and across the land as we prepare for the 2012 election year. If 2011, was a bit bumpy, believe we will see craters in the road to HIT enlightenment in 2012. But we’ll save that discussion for our future predictions for 2012 post, which we hope to get to next week. (Editor’s Note: Don’t hold your breath though, if the snow flakes are flying, we’ll be on the slopes next week.)

Today’s post takes a look back on 2011 by reviewing our predictions earlier in the year and assessing where we hit the mark, where we missed and if there is such a thing, where we came close. So without further adieu…

1. MU Initiatives Move to Tactical 
Hit This did come true as meaningful use, while still top of mind for the CIO, is not top of mind for others in the executive suite who are now looking at how to compete in the future as reimbursement models shift from fee-for-service to value-based contracts.

2. C-Suite Strategy Focuses on New Payment Models 
Hit An admittedly “softball” prediction, this was a natural fall-out of prediction numero uno. And yes, the consultants are making out like bandits as we predicted they would helping senior execs figure out their future competitive strategy.

3. RCM & Charge Capture Systems Require Overhaul 
Miss By and large, most vendors in this sector have not done a whole lot yet as they await to see how the market develops. With most healthcare organizations struggling to get the basics done (e.g., meet MU requirements, ICD-9 -> ICD-10, apply analytics, etc.) we are not seeing big demand from customers and subsequently, not a big push by vendors.

4. Mergers & Acquisitions Continue Unabated
Hit Another “gimme” of sorts for we had this prediction in 2010 and it was a “hit” and need only look at this market with its some odd 300+ EHRs to choose from, everyone wanting to call themselves at HIE vendor (last we checked, HIMSS listed some 189 HIE vendors alone), countless other HIT solutions to see that this market is far from mature. But arguably the biggest news in 2011 was Microsoft’s capitulation that despite the billion dollar plus investment, it wasn’t cut out or the clinical market and dumping its HIT assets into a new joint venture with GE. What we are also seeing is some rationality return as valuations have moderated. This may have led to Thomson Reuters’ recent decision to not sell-off its healthcare division – no one was willing to pay the high price tag they had on this property.

5. Federally Funded State Initiatives Struggle
Toss-up There has been some progress and there are those that would vehemently argue that Beacon Communities, RECs and state HIEs are moving ahead briskly. But then again, we do get some disturbing reports that all is not progressing as once envisioned, one might even go so far as to say some of these programs are beyond just struggling, but clearly going off the tracks. We’ll reserve judgment until we see clear evidence of such pending disasters, which will likely be prevalent, but highly distributed.

6. Changing of the Guard at ONC
Hit Not long after we posted our 2011 predictions, Blumenthal announced his resignation from ONC. We could not have been more prophetic if we tried.

7. Physicians will continue to go Ga-Ga over the iPad and the fast-following touchscreen tablets much to the chagrin of CIOs.
Hit Enabling physicians access to health information systems via their hand-held mobile devices, including touch-screen tablets is still a struggle for most organizations. At first, IT departments turned to Citrix as stop-gap measure, but the UX was far from ideal. In our recent research we found many an IT department still struggling to address this issue. mobile enablement of physicians is a top priority.

8. Apps Proliferate: Consumer-facing First, Private Practice Second, Enterprises Dead Last
Hit In hindsight, another admittedly easy prediction to make. What may be a more interesting prediction is when will mHealth Apps really become a truly viable market? Does the profitable exit of iTriage/Healthagen, which was picked up by Aetna portend such? By our standards, no. Go back to our recent post from the mHealth Summit for more in-depth analysis.

9. The Poor Man’s (doctor’s) HIE Takes Hold
Miss We thought that the Direct Project would quickly take hold and see rapid adoption among smaller physician practices and those organizations looking to “connect the last mile” to small affiliated practices in their network. Not happening yet though the current administration is doing its best to push this technology by requiring all state designated entities that are standing up statewide HIEs to include Direct in the strategic operating plan.

10. Analytics & Business Intelligence Perceived as Nirvana 
Hit, kind of… In retrospect, not even sure this was really a prediction but simply more of a statement as to where healthcare organizations are headed with their HIT investments. We have a long ways to go, though there is certainly no lack of vendors that now are touting some form of analytics capabilities. Our advice, tread carefully as most solutions today are half-baked.

11) The Buzz at HIMSS’11? Everything ACO! 
Miss While some vendors were discussing ACO enablement at the 2011 HIMSS, the vast majority were not with the key focus continuing to be meeting Meaningful Use requirements. As mentioned in previous prediction, we see MU as a tactical issue with the strategic issue being: How do we leverage IT infrastructure to support communities of care? Maybe at HIMSS’12 we’ll see more discussion of this issue, but we’re not holding our breath.

This may have been our best year yet with our predictions having only 3 clear misses out of 11 predictions made. Granted, some of those predictions were not exactly the most profound or shall we say big stretches, but we do take some satisfaction in really nailing a few.

And while we intend to provide our own 2012 predictions, no time like the present to begin the process. So we ask you dear reader, what is your 2-3 top predictions for 2012? Will Todd Park stay on at HHS? Will forced budget cuts decimate HITECH? Will the Supreme Court’s ruling on ACA have any impact on HIT spend by either payers or providers? Will mHealth Apps such as WellDoc’s for diabetic care finally receive a CBT code thereby accelerating adoption of such tools?  We look forward to your input.

And of course we wish everyone a Joyous holiday season and wish you and yours continued good health in the new year to come.

Home for Christmas by Thomas Kinkade

Posted in ACO, Acquisition, Analytics, Cloud Computing, consumer health, EHR, EMR, Health Cloud, health portals, HealthVault, HIE, mHealth, Microsoft, PHR, policy, RHIO, SaaS, standards, telehealth | Tagged , , , | 4 Comments »

mHealth: Seemingly Stuck in Neutral

December 9, 2011 by John

As many readers know, Chilmark Research has been a strong proponent of mHealth for several years. Despite this enthusiasm, we sometimes come away from a conference, such as this week’s mHealth Summit, with the feeling that the only ones making a living with mHealth are conference organizers. Maybe it was the format of this particular conference – too many presentations that were not well vetted for relevance and content. Maybe it was the lack of exhibitors – where is the rest of the legacy HIT market who are all claiming to be bringing mHealth solutions to market? Maybe it was hearing too many mHealth vendors with weak value propositions asking the Feds to step in and jump start this market. Or maybe it was the over reliance on government presentations and an ill-fated alliance with HIMSS, who sponsored less than visionary sessions. Hard to point to any single thing that contributed to this ho hum feeling, so let’s just chalk it up to all the above.

That being said, however, the mHealth Summit, now in its third year, is the best conference one can attend in the US if one wants to get the global pulse on all things mHealth.

From its humble beginnings where the first conference was quickly over-subscribed and held in a small DC amphitheater, this year’s event drew over 3,000 attendees to the massive Gaylord Resort outside of Washington DC for three days of countless sessions running concurrently covering every aspect of mHealth one could imagine. While most sessions were structured as panels with several short presentations, one was thankful that presentations were indeed short for few had substance. But nearly every session had one stellar presentation that kept one hopeful. Those were the gems of this event and like any event, the networking that occurs in the halls.

And then there were those sessions that took a close look at mHealth adoption in developing countries. This is the current market for mHealth (albeit almost all nonprofit) for these countries have real health needs having to deliver healthcare to a highly distributed and often rural population with too few doctors and lack a robust land-line network (no Internet cafes here folks). But what they do have are cell phones – lots of them and they are not tied to legacy systems and associated processes. Even among some of the poorest countries, the rapid adoption of cellphones by the populace is staggering (e.g., India alone now represents 20% of all cellphones in use worldwide). Combine the need with very little in the way of legacy HIT infrastructure and the ubiquitous nature of cellphones and you have a ripe opportunity to redefine care delivery models. Look overseas to these developing countries for the real future of mHealth for this is where best practices in mHealth-enabled care delivery will likely develop and later be adopted in more developed countries, US included.

That is not to say they are no advances occurring here in the US. One of the keynote speakers, cardiologist Eric Topol, gave several live demos during his talk of the mHealth tools he is already using including stating that he has not used a stethoscope in two years, instead preferring to use mobisante’s ultrasound wand and iPhone App.  Then there was our conversation with WellDoc’s CTO who informed us that they are currently being deployed at a number of institutions and hope to have a host of CPT codes that doctors can bill against in late 2012. And there was the small start-up we spoke with who has done the hard work of first identifying what the value proposition is for all stakeholders in a community (payers, providers and consumers) and then developed an extremely compelling solution (think analytics & automated quality reporting, tied to reimbursement, tied to consumer engagement) that has a lot of promise in a market where physicians’ pay will increasingly be based on outcomes and ability to meet pre-defined quality metrics

Therein lies arguably the biggest take-away from the mHealth Summit. As one individual put it, ‘There was a bit of whining about getting the government to force large corporations to form strategic partnerships with smaller organizations.” But what these start-ups really need is to simply focus on addressing the age old question: ‘What’s in it for me?’ These companies need to stop the whining and do their homework defining the value proposition for not just the consumer, or just the doctor, but think more broadly of the impact their solution may have on the delivery of care, and how each stakeholder may benefit. Unfortunately, as these conference clearly showed, the mHealth market is still heavy on hype and little on substance.

Addendum:
For a slightly different take, check out the post by VC firm Psilos’ Managing Partner Lisa Suennen’s. Well worth the read. And more recently, Charles Huang, formerly of Spark Capital, provides his own view of the mHealth Summit, including a a call that once and for all, we need to kill the term mHealth.

Also, the image used for this story was taken by Joel Selanikio, CEO & co-founder of DataDyne.org an organization focusing on mobile data collection, particularly, the App EpiSurveyor. Thanks Joel. 

Posted in Cloud Computing, consumer health, mHealth, telehealth, telemedicine | Tagged , , | 16 Comments »

Microsoft Bows Out of the Clinical Market

December 8, 2011 by John

Today, GE and Microsoft announced a joint venture (JV) that will lead to the formation of a new company (NewCo) targeting the clinical healthcare market sector. The NewCo will be located near Microsoft HQ in Redmond, WA, start with roughly 700 employees and combine the remaining Microsoft clinical products, Amalga UIS and the former Sentillion products Vergence and expreSSO with GE’s eHealth and Qualibria suite. NewCo’s new CEO will be GE’s Michael Simpson, who has been heading up the combined Qualibria-eHealth group since earlier this year after a re-org at GE. Along with this announcement, Microsoft’s Health Solutions Group (HSG) leader, Peter Neupert stated that he’ll be retiring.

Combine the above announcement with Microsoft’s long anticipated sale of Amalga HIS, which went to Orion Health in October, and you are left with Microsoft completely pulling out of the clinical market. Sure, they’ll claim to be still in healthcare by directly selling their horizontal products (e.g., SharePoint, MS Office, various server products, etc.) into this sector and having a stake in this JV, but it is also exceedingly clear that Microsoft will no longer have any direct involvement in this market, that will be left to GE. That being said, Microsoft did state that they’ll hang onto HealthVault, but even here, that is more likely a by-product of no one wanting to take on HealthVault rather than Microsoft’s strong desire to continue to try and build a viable, revenue generating entity out of it. Do not be too surprised if, in a year’s time, HealthVault falls to the wayside much like Google Health did this year.

During our briefing call with Microsoft and GE we learned the following:

Core to NewCo’s objectives is to leverage the joint assets of Microsoft and GE to build out an entirely new platform that will focus on four key areas to begin with:

  • Clinical surveillance to identify such things as infection outbreaks within an acute care facility before they run rampent.
  • Population health management to facilitate care management processes, which is a productization of work GE has been doing with Geisinger as part of the Keystone Beacon program.
  • Reduce hospital readmissions by leveraging analytics to identify patients at risk and initiate appropriate interventions.
  • Facilitate transitions in care, which like reducing hospital readmissions, is something that is on the mind of every senior healthcare executive we talk to.

These four target areas are nothing new or inspirational as just about every vendor we talk to has some program in place or under development to address these four areas as well. The product roadmap does not have much hitting the market until 2014.

Financial terms were not disclosed but our guess is that Microsoft contributed IP and the development team behind these products. In return, they will receive some sort of royalty stake in future sales. GE will lead the new organization, contribute its Qualibria/eHealth IP and GE sales and marketing will take the product(s) to market. Thus, most sales and marketing folks and other support staff in Microsoft’s former Health Solutions Group are being shown the door, which is unfortunate as we head into the holidays.

A couple of things come across as a bit ironic. First, Microsoft executives time and again stated that they knew what they were getting into when they entered this vertical and that it would take patience to build a viable presence. So much for patience. Second, Microsoft sold off the Amalga HIS product as many a potential HIT partner was wary of partnering with Microsoft as long as Microsoft had under ownership an EHR. Now what does Microsoft do, it joins in partnership with a struggling HIT vendor in the acute care market. Will any of the other major or even second tier HIT vendors partner up with the GE/MSFT NewCo – don’t bet on it.

The announcement also raises more than a few questions such as:

What becomes of Microsoft’s existing HIE contracts, particularly the one they pulled all the stops out to win, the Chicago HIE which is now under development?

What becomes of Microsoft’s recently announced relationship with Orion Health? Will Orion now be partnering with NewCo, which is essentially GE?  GE, with its own HIE solutions targeting enterprise accounts, is a direct competitor to Orion.

What becomes of HealthVault Community Connect, which combined Amalga with HealthVault and SharePoint? Is this now a dead product or will NewCo simply use the Centricity patient portal?

As you can probably tell by the tenor of this piece, we’re not a big fan of this announcement and are disappointed that Microsoft has decided to fold-up its tent and retreat. Unlike the legacy HIT vendors in this market, Microsoft could lay the claim to some neutrality and potentially build-out an Amalga-based ecosystem platform. But business is often not kind to those that have an altruistic bent and in this case Microsoft simply made a clear-cut business decision to unleash an asset that was not meeting internal metrics despite what some believe may have been an investment in excess of $1B in the last 5 years to build-out HSG.

Once again, another company with grandiose plans to change healthcare has quietly walked away leaving this market to the incumbent HIT vendors. We also do not see strong prospects for the future build-out of a robust ecosystem of partners on the combined Amalga-Qualibria platform that NewCo proposes as there are too many competitive issues that just get in the way. We could be wrong on this one, but our guess is that NewCo is likely to struggle as much as Microsoft has in the past for relevance in this fractious HIT market.

Addendum:
Sean Nolan, chief architect for Microsoft HealthVault, provides his own view on this JV announcement. While his view differs from ours on the implications and future of this JV and HealthVault, one thing we do hope that Sean proves us wrong on, is the future success of HealthVault. We would love nothing more than to see it succeed but at this juncture, we remain pessimistic. 

Posted in ACO, consumer health, EHR, HealthVault, HIE, Microsoft, PHR | Tagged , , , | 20 Comments »

Giving Thanks, Albeit Belatedly

November 28, 2011 by John

While it would be much better to give thanks prior to our (the US’s) big Thanksgiving holiday, sometimes things just get in the way as has been the case this fall. In fact, many things have gotten in the way – all good things, very good things, but gotten in the way nonetheless leaving you dear reader, far less to actually read from Chilmark Research. Truly wish that this was not the case , but alas, as a small but growing analyst firm, we are seeing our own challenges in scaling up Chilmark Research to meet demand. And yes, we are seriously looking into revamping some of our own internal processes to insure that we continue to deliver timely, relevant and cogent posts on HIT market trends.

Which brings us to our first pause to give thanks.

This fall has seen an explosion of activity for us, activity that has us juggling so many balls and somehow managing to keep them all in the air. That explosion of activity has come in the form of numerous client engagements that has provided Chilmark Research with an opportunity to further delve deeper into a number of healthcare sub-sectors including:

mHealth adoption of patient-provider engagement Apps. A larger report for the general market will be released in February.

Concierge Care: market drivers, key players and future forecast.

Aging-in-Place telehealth and remote sensing market opportunity assessment.

Strategy workshops with several clients helping them map out their HIT strategy.

Deep dive research on current and future state of imaging exchange to promote collaborative care processes, which has also resulted in our first time trip to RSNA.

For all of these clients and those we may have the opportunity to serve in the future, we wish to give thanks for these opportunities always teach us something new. At Chilmark Research we have an insatiable appetite for learning.

We also wish to give thanks to you, our readership for first inspiring us to write these posts through your comments, your inputs, your private emails to us. When first starting Chilmark Research, these posts were used for marketing, to build credibility in a market we knew little about. The process of writing these posts built readership, but more importantly, it forced us to do good research. You can’t build credibility with lame posts that are no more than a rehash of some press release or fail to take to task questionable moves by policy makers or vendors.

But now writing these posts is not so much about marketing for Chilmark Research. From those humble beginnings several years ago, we have built a substantial readership that includes quite a few extremely senior and influential HIT market movers and shakers. Also, based on the volume of inquiries we now receive for future engagements, it appears that Chilmark Research has indeed established a reputable brand in the HIT market. Therefore, we want our posts to be seen more as our way of contributing to the discussion, a discussion that will help others better adopt, deploy and use HIT to not only deliver better care, but to create a health system that is more responsive to and inclusive of the needs of patients and their loved ones.

Lastly, we wish to thank all of those who have helped us along the way. From the numerous clients who early on had faith in Chilmark Research and hired us on to provide specific research services to the countless educational mentors in the healthcare market who have taken us under their wing providing us sage advice along the way on the structure of what appears to be is a convoluted market. There are far too many to list here but they know who they are. Thank you once again for all of your assistance along this journey, we would have never gotten this far without you.

Posted in Cloud Computing, EHR, HIE, mHealth, PACS, radiology, telehealth, telemedicine | 1 Comment »

Siemens Jumps into HIE Waters

November 4, 2011 by John

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.

Posted in Acquisition, Analytics, HIE, HIT, Microsoft | Tagged , , , , , , , , , , , , , , , , , | 16 Comments »

Orion Strengthens Portfolio & MSFT Gains HIE Partner

October 19, 2011 by John

On Monday, New Zealand based Orion Health announced that it would acquire the mothballed Health Information Services (HIS) assets of Microsoft, Amalga HIS. In the same announcement, Orion and Microsoft also announced a partnership for Microsoft’s healthcare analytics solution Amalga UIS.

Microsoft, during its HIT buying binge days a few years back had picked up the Thai-based HIS company, Global Care Solutions. Global Care Solutions was credited with building the HIS for medical tourism destination Bumrungad hospital in Thailand. While Microsoft tried to quell EHR vendor fears in the US that this HIS solution suite, later rebranded as Amalga HIS, would only be sold overseas and not it the US, most EHR partners chose to put some distance between themselves and Microsoft. Needless to say, this created far more challenges for Microsoft and its still budding healthcare sector initiatives and the company decided to discontinue further investment in Amalga HIS in July 2010, effectively putting it on the market.

Now, over a year later, Microsoft has finally found a buyer for this asset in Orion Health, who, like Microsoft, has stated that it does not intend to sell this solution suite in the US but instead focus on the Australian and Asian markets. Would not be at all surprising if Orion further extended that reach to all Commonwealth countries, which has been the company’s Go-to-Market (GTM) strategy to date. In speaking with Orion yesterday, they reiterated their intentions to not sell this solution suite in the US market.

Seeing as it took Microsoft over a year to unload Amalga HIS, one has to wonder: Was this solution suite poorly architected or was Microsoft asking far more for it than what others were willing to pay? Having been demo’d the solution on a couple of occasions, likely the latter. Which then makes one wonder, so what kind of deal was actually struck? Our guess is that it had a lot to do with the second portion of this press release, that was overlooked by most in the press, the future partnership surrounding Amalga UIS.

Our latest research on the HIE market is pointing to a significant increase in interest in combining the basics of an HIE (getting clinical data flowing) with analytics to deliver better, more informed care and equally important, optimize the operations of a healthcare organization. As the healthcare sector moves from a transaction-based reimbursement model (fee for service) to one based on outcomes (value-based contracts), analytics will play an increasingly critical role. Thus, we are seeing a number of moves in the market, both acquisitions and partnerships, that look to more closely tie what have been two disparate offerings into one cohesive package.

Orion Health does not have a robust analytics solution. Microsoft does not have a robust HIE solution. Bringing the two together could create a powerful offering and potentially put Orion on equal footing with other HIE market leaders that are currently a step ahead of them with regards to analytics, including OptumInsight (former Axolotl + Ingenix), Thomson Reuters and Care Evolution and their HIEBus platform and IBM, who acquired Initiate in 2010. For Microsoft, this also could be a significant win for to date, they have struggled to find a strong Tier One HIE partner – with Orion, they have found such a partner that could juice sales for Amalga UIS.

But this is far from a done deal for as with any partnership, the devil is always in the details. Based on our conversations with both companies, they do appear to be cognizant of the challenges that lay before them. The biggest challenge will be getting Amalga into a form factor that accelerates time to value for those who adopt this solution. To date, the Amalga solution has seen more than its fair share of challenges in the field in this regard. Couple that with the Orion customer base, which is weighted towards public HIEs, and one can foresee some significant GTM challenges for these two companies in the future. Allscripts faced a similar challenge with HIE partner dbMotion. Orion and Microsoft would be wise to look closely at how Allscripts successfully addressed this challenge for their target market.

 

Posted in ACO, Acquisition, EHR, HIE, HIT, Microsoft | Tagged , , , , , , | 21 Comments »

Dr. Watson I Presume

October 18, 2011 by John

Little over a month ago, IBM and WellPoint announced an agreement wherein WellPoint will deploy IBM’s latest and greatest super computer and artificial intelligence mega-mind Watson. Watson’s claim to fame was its ability to beat the human Jeopardy champions much like Big Blue beat reigning chess champion Garry Kasparov in 1997. Since that Jeopardy match, IBM has been quite vocal about its desire to apply Watson in the medical arena, we’ve been buried in press releases and briefings, but the WellPoint announcement is the first one of any real consequence. Having interviewed both IBM and WellPoint, following is our review and assessment.

Background:
Watson is a relatively new form of artificial intelligence, based to some extent on neural networks. What is unique about Watson is that it has been developed (trained) to understand the nuances of language. It is a question & answer system that uses among other techniques, natural language processing, to extract meaning out of unstructured data. In developing Watson for the Jeopardy challenge, one of the key design parameters was for Watson to answer a question in under three seconds – plenty fast enough in a diagnosis/treatment decision scenario. This is a key reason why Watson may have enormous utility in the healthcare sector where so much data is unstructured, the pace of change is so high and the ability to chose the optimum treatment patient plan for a given diagnosis is less than ideal today.

WellPoint is the largest payer in the US with some 34.2M members and 14 Blues across the country. Despite this impressive size (or maybe because of it), WellPoint has been far less aggressive than others in the HIT realm, especially for those systems used by providers. In signing this deal with IBM, WellPoint is signaling to the market, and likely those on Wall Street, that they intend not to be left behind. In asking WellPoint about their HIT strategy, WellPoint CIO Andrew J. Lang told Chilmark that WellPoint’s intent is not to create a new line of business (as is the case with UHG and Aetna) but to improve the quality of health delivered to their members by providing physicians the best tools possible. Certainly a noble goal, but only time will tell as to how closely they adhere to such a goal.

What it is:
While IBM is pursuing a number of potential vertical markets for Watson, including financial services, this is the first actual “Win” for IBM’s Watson. Money is changing hands with WellPoint paying an undisclosed amount to deploy Watson.

Watson will be deployed as a “cloud-based” service. Actual pricing for accessing this service has yet to be determined but as WellPoint put it to us, they do not want to create barriers to physician use. Thus, don’t be too surprised if it is offered virtually free to in-network providers, clinics and hospitals.

The Watson intelligence service will focus first on three oncology domains (breast, lung and colon cancer) that WellPoint’s internal clinical staff have determined most promising. These three were chosen for they are areas where WellPoint’s claims data shows high variability in treatment; there are significant, on-going advances in research and treatment; and a high likelihood for demonstrating the utility of a system such as Watson.

WellPoint does not intend to displace physician decision making, but augment it. WellPoint states that physicians will still be able to ultimately make their own decision as to the best course of action (treatment) for a given patient. As CIO Lang stated:

Watson is intended to be a doctor’s assistant, the doctor is still in the driver’s seat.

Watson is currently undergoing “training” with reams of data (research, claims data, etc.) in the three oncology domains being fed into it, questions being posed, answers evaluated against real clinical evidence to bring Watson up to a significant “confidence level.” The Watson service will be released in the first quarter of 2012.

Implications:
Among the multitude of announcements that pass across our computer screen on a daily basis, this is one that really piques our interest. Like any exceedingly powerful technology, Watson has the potential for good and likewise the potential for harm. If WellPoint follows its stated intent of deploying Watson as a service, as an assistant to the practicing physician, facilitating the care process with more rapid and accurate first time diagnosis and suggesting a treatment plan that is most relevant to that specific patient, then Wow, this could be truly game changing and far in excess of what other payers have done to date in the HIT realm. If, however, WellPoint’s deployment of Watson becomes prescriptive wherein physicians are no longer in the driver’s seat, then “Houston, we have a problem.”

Having personally seen what can happen when someone is misdiagnosed, when appropriate treatment is delayed, particularly for an aggressive form of cancer, the anguish and subsequent anger is nearly unfathomable. If Watson can indeed short-circuit the diagnosis and guide physicians to the most appropriate treatment in an expeditious manner, well then hat’s off to IBM for developing Watson and WellPoint for taking the risk to be the first to deploy Watson in the healthcare sector.

Dr. Watson, do you accept house calls?

Posted in ACO, Analytics, Cloud Computing, Health Cloud, HIT, telemedicine | Tagged , , | 4 Comments »

A Tribute

October 6, 2011 by John

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

Posted in Uncategorized | Tagged , , | 4 Comments »

Trickle Down Health or Health 2.0 Impressions

September 30, 2011 by John

Another year, another Health 2.0 under the belt. This being the fourth time attending it is interesting to see how this event and its participants have evolved. Like many things in life, some things at Health 2.0 have changed, some have not, most for the better, but there remain some troubling aspects to this event that cannot be ignored.

When thinking back on the demos of countless vendors of years’ past, this year’s Health 2.0 had two distinguishing characteristics:

Demos are cleaner, with better user interfaces (UI). The companies demoing at Health 2.0 are spending a lot more time and resources on creating inviting, clean and engaging interfaces that are a welcome change from the cluttered messes of demos past. As with Mark Twain’s famous quote: “I would have written you a shorter letter if I had the time.” reducing an application to its core elements takes time. Clearly, the majority of Health 2.0 vendors this year have spent the time and resources necessary to create a simple and engaging environment for the end user.

Business models are more sophisticated. At the first Health 2.0 event, just about every single vendor there stated that their business model was going to be based on some mix of Freemium and advertising revenue. Needless to say, just about every Health 2.0 start-up from that conference has either gone out of business, is among the walking dead (takes a lot to completely kill a company – trust me, I’ve been there) or has changed their model to survive. This year, the business models presented are more creative and for some, likely to see success in the market.

The contributing factor to these two changes is the amount of money now flowing into the health IT sector. Investors smell opportunity and are placing some pretty big bets as represented by the investments in Castlight (~$80M), ZocDoc ($50M) and CareCloud, who announced a $20M round at the event. That’s some serious cash and with all the investors that were present at this event, quite sure there are more investments in the wings.

Snap-shot impressions of demos:

  • Mobile remains hot but no one seems to have figured out a way to rise above the noise.
  • Big data is the new hot phrase but few understand its implications. Most demos simply demonstrated even more fractionation of data into distinct silos with no clear path towards aggregation.
  • Many see the key to success as becoming the facebook of healthcare with a Zynga Farmville thrown in for good measure. By the end of two days, just about ready to strangle the next demo that started with some reference to facebook and/or gamification.
  • Pricing transparency is a big area of focus for many but seriously doubt most will get past their first round of angel funding as this is already a competitive market. Speaking of which, almost as frustrating as short vacuous demos is the lack of clear arguments by those giving these demos as to why they’ll succeed.
  • Demos never get into details, thus rarely instructive.
  • Many platform plays, ala PaaS, but like big data, few truly understand what that means and how to get there.

While Health 2.0 can get overwhelming with the number of rapid fire, albeit  shallow demos from the multitudes of vendors who are all trying to make their mark in a market that has experienced a significant amount of churn, the event is invigorating for the passion that is shown. Sure, everyone is hoping to make a living on their next greatest innovation, but unlike virtually any other health IT related conference, those at Health 2.0 have passion. They are on a mission. They want to truly change healthcare. They want to make a difference. That passion is contagious. Unfortunately, that passion appears to be confined to the digerati.

Looking around at the Health 2.0 audience one sees a sea of almost exclusively upper, middle class professionals that are tapping away on their iPad, smartphone or laptop. When one sits back and thinks about the many demos seen, virtually all of them seem to be designed for this audience. Maybe the most disturbing part of the event was the on-stage interview with a mother of eight kids (she was white, middle age and clearly upper middle class) showing how her family is tapped into the quantified self movement with the various Apps they use to track their health and fitness. This is not representative of the broad swath of the American populace who are the ones that will drive our healthcare system off the proverbial cliff. It is that grandmother in Indiana who is caring for her diabetic, overweight husband, two grandchildren, a daughter suffering from an addiction and a son-in-law who is unemployed and has no health insurance that we need to talk to, have up on stage to tell us what they need to better manage their health and interaction with the healthcare system. And we need not go to that extreme, how about just having someone from a safety-net clinic talk about their needs? Sadly, no such representatives were to be found at Health 2.0.

It is this detachment that has Chilmark most concern with this passionate movement. Yes, virtually all Health 2.0 participants are passionate about helping all healthcare stakeholders but if we do not start talking to a broader cross-section of the populace, this movement may be much like the barricade scene in Les Miserables wherein the students leading the call for a revolution end up dead and with little to show for they had not engaged the populace-at-large. Some may argue that like this technology will indeed trickle down to the masses in much the same way that smartphones are now replacing feature phones in the mobile market. This “trickle-down theory may indeed come to pass but then again, we could just as easily end up with something very similar toPresident Reagan’s trickle-down theory for wealth distribution and we all know what the end result of that has been.

 

 

Posted in Cloud Computing, consumer health, Dossia, EHR, Health Cloud, mHealth, policy, SaaS | Tagged , | 19 Comments »

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