2014 saw the analytics industry remain in flux and marked by a large degree of ambiguity & complexity. Four main themes stood out in 2014 that we will discuss in more detail below:
- Every vendor thinks of itself as a ‘Population Health Management (PHM) vendor’.
- Divisions between best-of-breed and enterprise-platform vendors are blurring.
- EHR vendors continue to make progress on their analytics capabilities and are winning accounts.
- HCOs continue to ‘dip their foot’ in value-based care and scale their investments in analytics solutions accordingly.
Every analytics vendor is now a ‘PHM vendor’
A wide and growing variety of vendors are now defining analytics and PHM according to their core capabilities and rebranding themselves with the uber-mantra of “PHM vendor.” We really don’t like this trend as there is no such thing as a PHM solution – only those that enable such. This is creating significant confusion in the market. Interesting competitive dynamics are emerging and lines are blurring between various types of vendors.
That being said, most analytics vendors that we are tracking are building out solution capabilities to tackle more of the PHM pie. This is being done for two reasons: First, it allows the vendor to sell more capabilities to their existing and future clients. Secondly, and likely just as important, it allows analytics vendors, especially independent, best-of-breed vendors, to gain a higher valuation as the purported PHM market is far larger than just analytics alone.
Divisions between best-of-breed and enterprise-platform vendors are blurring
There is currently a division between best-of-breed vendors and enterprise-wide platform vendors — although this division has been blurring in the past year, as plenty of best-of-breed vendors have aspirations to turn into enterprise-wide vendors. In addition, platform vendors tend to offer PHM apps as well.
Today’s best-of-breed solutions still better align with mass market needs. The market is highly concerned with quality measure compliance and readmissions, and is cobbling together several best-of-breed solutions at a time — in pockets where those specific capabilities are most needed. It is not uncommon for sophisticated healthcare organizations (HCOs) to house several different best-of-breed solutions for quality reporting & benchmarking, enterprise data warehouse (EDW), registries, care management workflow and claims-based risk management.
Finally, no one knows what the ideal platform of the future will really look like. Will it be built off an EDW or a clinical data repository? What will become of legacy EDW/analytics? Will they turn into just another app? While vendors may be looking to become the platform for PHM, with the vision of offering interchangeable apps, this remains a long-term strategy goal and few will succeed. For now, the enterprise platform aspirations remain just that.
EHR vendors continue to make progress
EHR vendors enjoy several advantages going forward, including a stronghold (stranglehold) on clinical workflow, clinical data and all the benefits that come from being already entrenched within the HCO. The level of this advantage, though, depends on the target HCO and its network strategy.
In tightly integrated clinical networks with a single dominant EHR across the enterprise (Cerner, Epic, McKesson), there remains a strong desire to inject analytics insight into clinical workflow — with overall reduced effort due to the dominant EHR. In these cases, buying analytics solutions from the dominant EHR vendor is a strong pull.
In HCOs with a highly heterogeneous EHR ecosystem, such solutions from a given EHR vendor are in less demand and EHR vendors will still struggle to compete in the near-term. A handful of EHR vendors readily acknowledge this and are developing and/or reengineering acquired solutions to better meet the needs of these particular HCOs.
EHR vendors still lag behind best-of-breed vendors for several reasons. Mainly it has been due to the necessity of having devoting significant resources to the ongoing requirements for various federal programs (e.g., Meaningful Use, ICD-10). A few EHR vendors, including Cerner and, to a lesser extent, Epic, have chosen to build instead of acquire and are starting to catch up. Specifically, Cerner has made significant progress on both the product and marketing fronts and is landing clients. However, there are still going to be areas such as care plans & clinical guidelines, predictive analytics and data visualization where even Cerner or Epic will have to either acquire and/or partner to develop additional capabilities necessary to support an HCO’s PHM strategy.
HCOs continue to ‘dip their foot’ in value-based care and scale their investments in analytics accordingly
Evaluating the pace and scale of HCO investment to enable PHM is challenging for several reasons including the broad range of IT solutions included under PHM, the lack of granular reporting by publicly-traded health IT vendors on their PHM sales, and the variable costs involved especially regarding data aggregation.
While overall HCO IT investments continues to grow, the pace of investment has moderated this year for a few reasons:
- HCOs continue to deal with unresolved issues including attempting to successfully attest for Stage 2 MU and remedying unresolved ICD-10 issues.
- Slower than anticipated role out of value-based care that has true, negative down-side risk to HCOs.
- Lack of additional funds in HCO IT budgets to fund additional large-scale investments to support PHM programs.
- Initial results from the Year 1 Medicare ACO programs has given HCOs who have not embarked in an ACO or ACO-like program reason for hesitation and thereby limiting their investments in analytics and other PHM enabling solutions.
Instead HCOs are focusing their efforts to reengineer clinical practices and workflows on an incremental basis to address specific business issues related to PHM instead of large-scale enterprise implementations.
It does not mean that HCOs are not purchasing analytics solutions to support their PHM programs but it is crucial that these vendors have a modular approach and compelling product roadmap which allows HCOs to scale their investments over time as the number of covered lives under value-based care initiatives increases. Health Catalyst has been particularly savvy in this regard.
2015: Incremental capability additions and optimization
2015 looks to hold much more of the same as 2014 did as HCOs are looking to optimize prior IT investments and add additional incremental capabilities to better address PHM. HCOs will continue to shift away from EHRs to solutions that enable PHM but the market will remain in the early stages with significant HCO spending still two years away. It will also remain a very crowded market with a number of competing vendors including an increasing presence of EHR vendors who are building their own proprietary solutions.
Analytics and care management offerings still need to show more commercial promise in enabling PHM to achieve widespread adoption. We plan on covering the care management area in greater detail in 2015 including a comprehensive market trends report similar to the just released CNM Market Trends report that profiles key vendors in this emerging market along with examining several key issues in this market.
Must respectfully disagree with your claim that “Every vendor thinks of itself as a ‘Population Health Management (PHM) vendor’.” ArborMetrix makes a point of positioning itself as an analytics solution for optimizing the cost and quality of acute care episodes. Our clients are achieving great ROI by reducing expensive complications of surgical care. Reducing the variation in the total cost of expensive procedures is often a more practical and achievable objective for providers than attempting to change long term behaviors of chronically ill patients. PHM has its place but it is not the only path to improving value in healthcare.
Paul, there is an exception to every rule and yes, Arbormetrix is one of the few that is “sticking to its knitting” and delivering very good value to its clients. We have a lot of respect for both what you are doing and your steadfast position not to get drawn into the PHM morass (maybe morass is too harsh a term, but sure seems that way sometimes).
Thanks for chiming in and please give my regards to Brett. Look forward to catching up with Arbormetrix at HIMSS, or better yet – before then.
Thanks for the feedback Paul. There are definitely vendors that don’t use the term ‘population health’ but it is something that in the past year seems to have become quite predominant.
I completely agree that attempting to reduce variation in expensive procedures and identify resources & procedures where there is no real quality or safety tradeoff is going to be at the forefront of HCO efforts to improve efficiency.
In terms of surgical procedures, do you think bundled payments are going to drive it more than ACO or ACO-type arrangements?