Guest Post: Onion Headline? "Government Should Slow Down Race to Implement Electronic Health Records"

Healthcare has been a technology paradox for a long time. There have been few places further out on the cutting edge of technology than biotech and medical devices. In contrast, healthIT has been in a time warp (see Why It’s Good News HealthIT is So Bad). While next year is the 20th anniversary of the Web, the dominant healthIT vendors have thrived on a business model and technology architecture that harkens back to when Wang and DEC were cutting edge. That is, most healthIT still has the same vendor provide technology for both back-end systems as well as consumer-facing systems.

The Web ushered in a new era. Until recently, healthcare moved at such a glacial pace that it didn’t follow the pattern nearly every other industry followed. Zina Moukheiber wrote a piece recently with a headline that looks like it’s written by The Onion — Government Should Slow Down Race to Implement Electronic Health Records. I can’t remember a time when a technology company complained about things moving too fast — especially in healthcare where decision processes can be excruciatingly long. In fact, that extreme length of decision-making is at the heart of why I have long said “healthcare is where tech startups go to die” — super long decision processes naturally favor legacy vendors who are milking products that may be 10 or more years old.

Fortunately, for a new wave of technology innovators, those shaping the next era of healthcare require solutions now. Meanwhile they are being told by legacy vendors to wait 2 years or more for the elusive next version that magically addresses the new requirements. [HealthIT buyer tip: Ask vendors for a guarantee on those dates with teeth if they miss their promise. See the tap dancing begin.] The earlier piece, Healthcare’s Age of Agility Will Shuffle Market Leadership, spoke to how old product cycles of two years and long implementations must change in light of new requirements.  Providers in the ascending accountable models are very direct that they feel it’s critical to support a new generation of technology companies due to the new requirements being put upon them. They are also keen to free themselves of the vendor lock-in that remains a persistent complaint.

Necessity is the Mother of Invention

I don’t know if it’s explicitly the government’s plan or not, but their push to the healthIT industry is considered a blessing by those looking to foster more heterogeneity and openness between systems. Further, for those of us running startups, healthcare has finally become a dynamic arena that will begin to embrace new technologies/companies to address contemporary challenges that providers have. It’s unrealistic to think that even the most capable vendor can address every need a provider has as healthcare goes through changes. If the vendor thinks it has to address every requirement themselves, they naturally will complain about the fast pace of change. If  they are unable to keep pace, they will seek out partnerships to fill gaps which is ultimately good for the provider community.

No technology company is more successful than Apple at the moment with iPhone sales alone topping Microsoft‘s entire revenue, yet they are benefiting from a more open ecosystem. Few would argue that one of the two critical success factors in iPhone’s success is the support from 3rd party developers. Does anyone remember how abysmal the AT&T and Verizon app stores were?  The carriers’ app stores had similar restrictions to what many EHR vendors have today. Though abject failures in the app store business, it’s instructive for EHR vendors that AT&T and Verizon have profited handsomely when a 3rd party ecosystem thrived. Think back five years and it would have been hard to fathom the array of amazing mobile apps that we’ve come to depend on.

I would argue that the scale of change from land-lines to mobile phones pales in comparison to the shift in healthcare from fee-for-service to fee-for-value. Just as there are new categories of software we couldn’t have dreamed of five years ago on smartphones, the same will be true for healthcare apps. Without that wave of new apps, healthcare providers will be doomed to address the tsunami of new requirements facing them and risk missing the opportunities those present. One example from my own company was when the government released the requirements of Stage 2 of Meaningful Use. Because we had gone deep in an area ignored by most EHRs, the Stage 2 requirements were trivial — we’d addressed them in less than a month from the announcement. No doubt, others like us had a similar experience. For any EHR-agnostic patient portal, this created a natural opportunity where the EHR vendors stay focused on their bread and butter — where they have a huge set of new requirements — and they could fill their gaps via a partnership or two. This saves the EHR vendor at a time when their engineering resources are stretched thin and dramatically speeds up their time to market. Better yet, they can leapfrog their more proprietary, slow-moving competition.

Healthtech Investing Exploding

The widespread use of the web disconnected the front-end, user-experience technology supplier from the back-end. Whether it’s travel apps or package tracking, consumers are able to tap into back-end systems without knowledge of what mainframe or client-server system may be running those systems. The spike in digital health investment reported by Rock Health’s 2012 Funding Report echoes what I heard from hospital executives at two recent healthtech-related conferences – Health 2.0 and the Digital Health Conference. That is, for the first time in my experience, these executives recognize that they have a flood of new requirements and and zero expectation that their legacy healthIT suppliers will meet those needs in the next 2-3 years.

This expectation is due to legacy vendors being overloaded with their core business (e.g. installing electronic health records) and also having long product cycles. Healthcare executives explicitly talk about how they want EHR-agnostic tools that will work with their EHRs. Increasingly, providers recognize that while they have complained about vendor lock-in strategy reminiscent of the Wang era, the risk of lock-in increases exponentially if they also adopt consumer/patient-facing tools from their legacy vendors. It’s one thing to disrupt your staff with switching EHRs, it’s quite another to ask patients to switch tools as well. Smart providers are disconnecting those two decisions like virtually every other industry already has. This dynamic is the core reason for the New York Digital Health Accelerator (NYDHA). See Zina Moukheiber’s piece entitled New York Digital Health Accelerator Is A Model To Emulate on why the NYDHA was formed and has 22 large healthcare providers engaging with startups at a level that is unprecedented in healthcare. [Disclosure: My company, Avado, is one of the eight companies selected for this program.]

This slide deck from Rock Health highlights key findings such as an increase in dollars invested by VCs of 46 percent and 56 percent more deals over a year earlier:

[slideshare id=15847595&doc=2012yearendfundingreport-130103205936-phpapp01]

It’s also not limited to traditional VCs as we saw in Hospital-based Strategic Venture Funds To Spark Innovation.

Legacy HealthIT Build for the Last Battle

Healthcare providers are realizing that what they thought was going to be their 100 percent solution is really best optimized for just 25 percent of where healthcare dollars are spent (hospital-based care). In reality, 75 percent of healthcare spend is directed toward chronic disease. Legacy healthIT has its strength in automating internal workflows of hospitals and other clinical settings. In those high-intensity settings, healthcare providers make the decisions that drive the patient health outcomes. However, with chronic disease, it’s an entirely different story. The decisions that individuals (or their families) make drive health outcomes. For example, does the patient fill a prescription and take it properly? Or do they make the necessary lifestyle choices to optimize their health?

This dynamic isn’t lost on thought leaders in healthcare. One of the leading thinkers in healthIT, Shahid Shah (aka The Health IT Guy), laid out why legacy EHRs are ill-prepared for the era of accountability that is rapidly transforming healthcare:

The EHR systems and IT required for MU (Meaningful Use) is a quite different from what will be required for ACOs,” Shah continued. “It will be nowhere as easy for existing legacy EHRs to simply retool their current platforms, like they did for MU.”

With that said, Shah outlines nine ways future EHRs need to support ACOs:

1. Sophisticated patient relationship management (PRM). According to Shah, today’s EHRs are more document management systems, rather than sophisticated, customer/patient relationship management systems. “For them to be really useful in ACO environments, they will need to support outreach, communication, patient engagement, and similar features we’re more accustomed to seeing, from marketing automation systems than transactional systems.”

Read full article here.

Health Systems Making Newspaper Industry Mistakes

Despite a clear recognition of the radical transformation that is happening, it is striking that the path many healthcare providers are taking parallels that of newspaper companies (another local oligopoly/monopoly that had barriers to entry that were no longer unassailable). See Healthcare CEO’s Guide to Avoiding Newspaper Industry Mistakes. In contrast, providers such as those in the NYDHA are taking a different path.

Healthcare providers recognize they are entering a deflationary period that parallels what happened to newspapers. In the above piece, newspaper executive John Paton had a three-point prescription for reinvention that led to a 5x revenue increase and halving of capital expenses.  This resulted in his organization going from bankruptcy to $41 million in profit in two years. There were three keys to his approach that can be applied by healthcare leaders:

1. Speed to market: One new product launched per week (See Related Article: Healthcare’s Age of Agility Will Shuffle Market Leadership)
2. Scaling opportunity: Sourced centrally, implemented locally. Ideas can come from all over. Identify the best ideas/people from all over.
3. Leverage partners: Feed the firehose of ideas from outside. This is at the heart of why astute healthcare executives in New York have actively engaged in an accelerator that is without precedent.

Unfortunately, most newspapers didn’t adhere to that prescription. It’s a cautionary tale for hospitals, in particular. In other countries when the shift happened from a reactive “sick care” system to a proactive health-focused system, over half of the hospitals closed. Naturally, forward-looking hospitals and health systems are making moves to not only survive, but also to thrive.

New York is a Harbinger of Things to Come in Healthcare

If you want to see the future of healthcare, New York is a great place to start. Nirav Shah, MD, MPH is theNew York State Commissioner of Health for the State Department of Health. Dr. Shah talks about fundamentally rebuilding the healthcare system. The stakes are high to make that happen. Dr. Shah oversees a budget of over $50 billion that has 5 million Medicaid recipients. Like all states, they see healthcare’s hyperinflation is devastating state budgets and education budgets, in particular (see Bill Gates TED Talk for more).

“The old system, acute care focused in the hospital. That was the past. Tomorrow is chronic disease focused in an outpatient setting. That is what the Health Home program promises and that is what the Medicaid program is investing in. That is what the NYDHA is all about.”

The pace of decisions by NYDHA providers is dramatically faster than procurement models of the past. I’ve already seen one major accountable model program (and the hospital that is running it) evaluate and make a selection in less than two months. For those of us familiar with the excruciating year-plus decision processes of the past that has crushed many a startup, this is exciting.

At the kick-off event for the NYDHA, Intel veteran and current Executive Director of the New York eHealth Collaborative (NYeC), David Whitlinger discussed that the health information exchange his organization operates (the State Health Information Network of New York – aka the “SHINY”) will allow software developers to facilitate the information exchange critical to reinventing healthcare delivery. The missing link has been having tools that sit on top of the SHINY. The NYDHA startups will get first access to their APIs and then it will be opened more broadly.

In order to achieve those goals, it’s critical to have the right resources and players at the table. Maria Gotsch, president and CEO for the Partnership for New York City Fund, is building off of the tremendous success of the FinTech Innovation Lab that her organization orchestrated for healthcare. The NYDHA is intended to foster innovation and economic development. In tandem with the NYeC, Gotsch’s organization got commitments from 22 large healthcare providers and seven investment funds to deeply engage with the program.

At a recent presentation given by Leonard Achan, RN, MA, ANP and chief communication officer for the prestigious NY-based Mount Sinai, described how they have changed how they worked in the past and contrasted this to what they are doing now. He said that that they are far more open to working with startups. I wrote about one example of this. Just a year ago, who would have thought mainstream healthcare organizations would be releasing “app stores” of their own. This is why VCs are voting with their pocketbooks on healthcare’ reinvention fueled by breakthrough startups leaving the Wang era behind.

Dave Chase is the CEO of Patient Relationship Management company, Avado, is the 1st cloud-based EHR-agnostic patient portal built for healthcare providers in accountable models such as medical/health homes, accountable organizations, etc. Avado was selected by 22 pioneering healthcare providers in NY state for a statewide program pioneering accountable models. Chase has been invited to the White House, presented before the head of Medicare and the Pioneer ACOs. Chase is co-editor and writer of a book commissioned by HIMSS on Patient Engagement.

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This post originally appeared on Forbes.com. Distributed with permission of the author