Seeing as we are in the midst of pulling together a new HIE Rpt, we could not help but chime in to this discussion with the comment that follows:

Great discussion here, albeit at times there seems to be a mix of HIE the noun, HIE the verb, which sometimes even leaves me confused as to what someone is trying to say and I follow this market for a living!

Speaking of which, we/Chilmark Research is in the process of updating its HIE Market Trends Rpt which will be published in March. As part of our research, primary & secondary, countless interviews, etc., we’ve identified a third market, what one vendor referred to as the “micro-HIE”.

The First market, which has been discussed in detail here, is the public market (we group both RHIOs & SDE and their HIE initiatives into this pot). By and large these have been and will continue to be Exchanges (the noun) that will struggle to find relevance. Over time, we see these exchanges being tightly linked to other critical needs at the State level, chief among them, their Medicaid programs. Problem we see here though is that most states have woefully underinvested in IT for their Medicaid programs so will their HIE efforts suffer the same fate? We at Chilmark have never been big fans of these “public” HIEs for they are most often poorly managed, mired in political infighting and rarely have a clue on how to run a business (deliver value that is greater than risk) for their intended market/customers.

The second market is what we refer to as the enterprise market. Folks, this is where the action is and while last year’s report showed a significant number of vendors focusing on the “public” market, this year virtually all HIE vendors have turned their sights upon the enterprise market. It is here where we will see the greatest advances, the greatest innovations, as there is a clear and compelling case for organizations to use HIE (the verb) to facilitate care management processes across care settings in a future where reimbursement will be increasingly tied to outcomes.

The third market, the Micro-HIE, is one that unlike the previous two markets, does not have a central sponsor of the HIE. It is more ad hoc in nature, self-forming, self-organizing. This is a market where Direct will be prevalent and for those who want a tad more in the way of services, physicians may subscribe to the new Surescripts Clinical Interop solution or a similar offering, albeit coming from the claims side, NaviNet. Medicity is also making a play here with its still nascent Inexx platform. This market is still very much a work in process, but may be the ultimate solution to connect the last mile, if these solutions can deliver value.

And that, at the end of the day is really what it is all about, yes? Delivering value that exceeds risk to the end user whoever that end user happens to be is the fundamental precept of any successful program, initiative or business. That has been the operating principle for the U.S. pretty much since its founding, should it be any different for the HIE market.

So in answer to our original question in the title…

Yes, we do foresee lightweight, micro-HIEs that use Direct or something similar to provide physicians an easy mechanism to securely collaborate will threaten many a RHIO and even SDE-HIE. Here in the Commonwealth of MA, the HIE workgroup has from the beginning been looking at a “network-of-networks” model for delivering a statewide HIE. Those discussions are now increasingly focusing on using Direct as the key underlying technology to make that happen. Will it work? We shall see. But one thing is certain, the days of big and glorious public HIEs and the associated political fiefdoms to support them may be coming to an end as their value has rarely exceeded their risk..

]]> http://chilmarkresearch.com/2012/02/09/is-direct-undercutting-the-viability-of-rhios/feed/ 0 John rhionetwork http://chilmarkresearch.com/2012/02/02/free-february/ http://chilmarkresearch.com/2012/02/02/free-february/#comments Thu, 02 Feb 2012 22:45:05 +0000 John http://chilmarkresearch.com/?p=3458 ]]> Let you in on a little secret. February happens to be the month in which I was born. So to celebrate, I’m giving you dear readers a birthday gift. For the month of February you can get a free copy of the full report: iPHR Market Report Analysis & Trends. Be forewarned that this report is dated (yes, it does have a profile of Google Health), having been published in May 2008, but trust you’ll still find some worthy tidbits contained therein.

Happy reading!

In early 2011, Chilmark published what is arguably its most important, or certainly most popular body of research, a report on the Health Information Exchange (HIE) market. It was this report that clearly cemented Chilmark Research as a well-respected analyst firm providing unbiased, objective, and in-depth research on the domains it covers.

But there was a problem. By and large the vast majority of this work was done by one individual, myself, the founder of Chilmark Research. Over the course of 2011, particularly during the fall when a significant number of consulting assignments came in the door, I quickly came to the realization that I needed help. I was reaching burnout and the model needed to change.

What’s New:
In 2012, Chilmark Research is launching a subscription service called the Chilmark Advisory Service (CAS). This service will provide subscribers one of our annual market research reports (an updated HIE report is forthcoming, others in the works), a number of other content deliverables and direct access to Chilmark Research analysts for specific inquiries. More will be forthcoming regarding this service but encourage you to contact us directly (info @ chilmarkresearch dot com) if you wish to learn more immediately or schedule a meeting at HIMSS to discuss this service further.

Our research agenda for 2012 will look quite similar to our past work for we strongly believe these are the most important topics in healthcare IT today:

Patient & Consumer Engagement
Why it’s important: As the industry migrates to reimbursement models based on outcomes and providers take on more risk, it will become increasingly important to truly engage the patient and their loved ones as part of the care team. Also, in highly competitive markets, providers will be seeking new approaches to not only engage consumers, but build loyalty.

What we’ll be covering: Patient/consumer engagement and outreach strategies of both providers and payers including patient portals (Stage 2 meaningful use requirements are key market driver), telehealth, privacy & security (including consent management) and new models of care & outreach to not only improve consumer/patient satisfaction but improve outcomes.

mHealth
Why it’s important: No doubt about it, the growing ubiquity of smartphones and how they have become such an integral part of our lives (we store family pictures there, we record our expense reports on them, we answer emails, etc.) and an ever growing number of consumers are doing mobile searches to answer health-related questions. Couple this with near saturation of physician adoption of smartphones and the growing use of touchscreen tablets by providers, it is not too hard to imagine a future where mHealth becomes the touch-stone for provider-patient engagement.

What we’ll be covering: Primarily address consumer-centric and clinician-centric mHealth Apps, how the market is developing, what is being adopted and used and why, and lastly, what is the trajectory for this rapidly evolving, ever changing market.  Currently, we are in the midst of producing a report (ready by HIMSS’12) that takes a close look at mHealth Apps for provider-patient engagement.

Health Information Exchange
Why it’s important: The HIEs being put in place today are the fundamental infrastructure, “the pipes,” that will enable one, be it clinician or consumer, to create a true longitudinal, patient record which will lead to safer, more effective care (at least basic logic points to such). These pipes will also allow researchers, public health officials and others to perform advanced analytics on this clinical data that can lead to better, more effective and responsive care. Lastly, as we move to new outcomes-based reimbursement models, HIEs will become an absolute necessity for virtually all medium to large size healthcare organizations.

What we’ll be covering: As mentioned above, last year’s HIE Market Report put Chilmark Research firmly on the map as a firm providing unmatched coverage of this market. We have every intention of keeping that title. First off, we will be releasing an update of the HIE Market Report (target HIMSS’12 release date) with in-depth profiles of some 25 vendors. Second, we are launching a major research project in early February on end users’ experiences and future strategies for their HIE deployments. We have much more planned for this market, but that is a very good start!

How We’ll Do It:
As mentioned previously, I had some help, but not enough and certainly not enough to launch a major expansion of Chilmark Research. To address this issue I went out and found some incredibly bright young people (always believed in the adage, surround yourself with people smarter than you) to join Chilmark Research. They are:

The returning Cora Sharma who’s research use to be the mHealth domain but has now moved to Patient & Consumer Engagement Strategies & Tools.

The former Washingtonian who has returned to his New England roots, Naveen Rao. Naveen’s research focus will be HIE & analytics/BI domains.

And last but certainly not least, my son, John Moore III who in addition to leading an mHealth start-up of his own, will be focusing his research efforts at Chilmark on, you guessed it – mHealth.

Brief bios on these three stellar additions to the Chilmark Research team are over in the “About” section of this website.

I do not hire readily (learned my lessons there long ago) and have been very judicious in choosing only those who show significant promise. I have no doubt in my mind that with some mentoring, these three have the chops to become some of the finest analysts in the industry and the credibility that Chilmark has established in the market will continue to grow.

Speaking on behalf of the Chilmark Research team, we look forward to continuing to provide this vitally important industry that impacts us all with the critical research that is needed to help guide it forward in the successful adoption and use of IT to truly improve healthcare delivery. Each of us are very passionate about this issue, it is a mission for us and through our research we intend to make a positive impact.

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. 10^th 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.

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

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. 

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. 

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.

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.

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.