Covisint Leverages Mfg Infrastructure for Healthcare

Covisint is one of those companies that shows up in a market, seemingly from nowhere, strikes a couple of partnerships many wonder, where did they come from?

In February 2008, Covisint had a co-announcement with AT&T on being selected by the State of Tennessee to be the infrastructure backbone for the state’s eHealth initiative (Vanderbilt professor Mark Frisse did a good write-up on this announcement). Covisint also announced in that same month a partnership with Microsoft’s HealthVault. Finally in late June, a joint announcement was made by AT&T, Covisint and HealthVault. It was this last announcement that prodded me to dig deeper into Covisint

First-off, having been an analyst for several years in the manufacturing space and for a time addressing supply chain/e-procurement, Covisint was no stranger to me.

• Covisint was formed in 1999 to address supply chain/e-procurement for the big three auto companies.
• Ran into all sorts of challenges as e-procurement was far from ready for prime-time.
• Almost went bankrupt, was shopped around, Compuware picked them up in 2004.
• Platform was delivering some value to auto industry, particularly for supply chain collaboration. Such collaboration required strict identity mgmt & secure messaging. Covisint also built out a portal solution allowing users to create personalized portals with Web Service calls to numerous apps across the automotive supply chain.

Had a call last week with their VP of Healthcare, Brett Furst, who told me the following:

• Covisint began targeting this market 3 yrs ago. Research points to the healthcare portal they developed and released in 2005 with first customer being BCBS of MI.
• Currently they offer 3 key services on an SaaS (Software as a Service) model; identity management, secure messaging and a portal framework. All 3 services were originally developed for auto industry supply chain requirements.
• Growth to date has been ~170%/yr. In 2007, 30% of Covisint’s annual revenue (~$40M) came from the healthcare sector. In 2008, over 50% of Covisint’s revenue is projected to come from healthcare.
• There are 18,000 physicians using the Covisint platform today. (I estimate 35-40% are based in MI).
• Flat fee set-up with annual subscription cost (cost depends on how much you want to do and can vary from $3/month to nearly $100/month). There is a transaction fee layered on top of that, again cost of transaction dependent on complexity.
• Focus on Payer/health plan market and to lesser extent mid-size physician practices. Current customers include 9 Medicaid plans and 180 health plans.
• Positioning themselves as “The Comcast of Healthcare” being completely agnostic to both applications and platforms. They want to provide the backbone upon which other apps will ride, like an HBO or Showtime channel. Thus, they do not see HIT vendors as competitors but as “channels” riding on top of their backbone service. For the Personal Health System (PHS) platform plays (Dossia, Google and HealthVault) same story.
• Value prop: provide secure digital backbone to allow physicians and extended care practices to interact (have some 200 APIs to various HIT apps). For health plans, its all about simplifying workflow and payment processing.

Within the context of a PHS, Covisint will play an important role for HealthVault on a several fronts.

• First, Covisint’s secure messaging capabilities will allow physicians to readily move a customer’s clinical files to a HealthVault account. A physician could even initiate the creation of a HealthVault account for a customer (auto register). Likewise, secure messaging will allow a consumer to push files to a physician who is on the Covisint platform.
• Conversely, Covisint’s numerous APIs to various HIT apps as well as support of multiple HIT standards will allow data from a consumer’s HealthVault record to auot-populate their physician’s EMR platform. Also, biometric data from the 40 some odd devices now compatible with HealthVault could also be automatically fed into the physician’s EMR for tracking health status, thus enabling remote telehealth practices.
• If the physician does not want thi data going directly into their EMR, they could instead use the Covisint portal technology to create specific consumer portlets that may facilitate tracking of care, though this may be more pain than its worth.
• The secure messaging service could morph into enabling HealthVault account owners to request eRx refills, schedule appointments and even e-Consults.
• With 18,000 physicians currently using the Covisint service, HealthVault has the potential to readily tap into these physicians and receive clinical records to populate consumers’ HealthVault accounts.
• There is also the possibility that combining Covisint capabilities with the HealthVault data repository and the AT&T VPN a physician could theoretically create an inexpensive EMR, though data access and control will be governed by the consumer and not the physician. That could get tricky!

Stepping back and putting on the tough cynic hat of an analyst, here is where I see some problems or at least incongruities:

• For a small practice, using Covisint isn’t exactly cheap. Those monthly fees coupled with transaction fees will certainly add-up. Thus, it is unlikely that providers themselves will run out and adopt the platform without some major incentives, as in the case of Tennessee, or financial support from health plans.
• I have a hard time reconciling Covisint’s claims to being application agnostic, particularly as it pertains to messaging. Most EMR companies have secure messaging services, (e.g., Epic has a peer-to-peer messaging platform, albeit only with other Epic systems), Medem and RelayHealth offer messaging as well and are agnostic to an underlying EMR. Will Covisint’s messaging service eliminate the need for one of these other services? Also, the Covisint portal technology competes with similar solutions already in the market.
• For a company that is making a major push into the healthcare sector, their website has not kept pace. There are several pages dedicated to specific healthcare stakeholder groups (e.g., RHIOs, Hospitals, Payers, etc.) some case studies and PRs, but when one goes to dig into the actual services/applications that Covisint provides all messaging is written for the automotive supply chain sector. Makes me question what Covisint’s level of commitment is to healthcare if they can’t go down to a deeper level of articulation on what their platform provides the healthcare sector.
• Beyond getting the messaging right, Covisint has few true partners in the healthcare sector. Sure, they have partnerships with Initiate Systems, AT&T and HealthVault, but beyond that no other partnerships are to be found.

Bottom-line:

Covisint does have a robust platform that has proven itself in the automotive sector and could potentially provide an extremely valuable service to the healthcare sector. Many talk of privacy and security in healthcare, which is critical, but if you want to see privacy and security in action, take a look at what Covisint had to do in the automotive sector to insure that competing interests did not peer into one another’s supply chains. Now that is privacy! Covisint put a lot of time and effort into solving that problem for the automotive sector and their move into healthcare should be a welcomed one. In addition, operating on an SaaS model is also a good fit for the healthcare sector as few healthcare practices do HIT very well, so why not hand over such infrastructure tasks to Covisint.

Covisint is not without challenges, however, chief among them is getting their pricing model right for broader adoption and demonstrating that they are serious about healthcare by cleaning up their messaging and expanding their partnerships.

And don’t be too surprised to see Covisint announce a similar partnership with Dossia.  After all, AT&T is one of the founding consortium members of Dossia.