(Editor’s Note: Based on the comments of JD, who rightly points out that eClinicalWorks will be responsible for implementation & training, we have modified the post slightly to reflect this critical point. We respond to other comments by JD in the comments section.)
In the gold rush to capitalize on the HITECH Act, Wal-Mart is one of the first, non-traditional HIT vendors staking a claim. As reported in the NY Times today, Wal-Mart is bundling EMR and PM software from eClinicalWorks as a SaaS offering (Wal-Mart started working with eCW over year ago on a major roll-out of eCW across its retail clinics) with Dell computers and implementation and training services to sell to small physician practices. The package will be sold through their Sam’s Clubs with a bundled price of $25k for first physician in a practice and $10k for each additional physician. Annual software maintenance fees will be $4k to $6.5K. Clearly, the bargain upfront costs are compensated by high maintenance annual fees as the norm is usually around 20-22% of license cost.
What is fascinating here though is the simple fact that a company known for low prices on commodity products now perceives a commodity market in HIT. Appears delusional for a few of reasons:
First, we do not believe that EMR software has yet become a commodity product. EMR solutions still have complexities involved and intricacies that must be accounted for when folding them into a physician’s practices and in particular physician workflow.
Second, Wal-Mart sells products, not solutions. Wal-mart’s core competencies lie in aggressively managing a supply chain to consistently deliver low cost commodities products. What knowledge do they have in solution selling? This is not something you can just slap a standard SKU on, though that is most likely Wal-Mart’s view. Sure, they may rely on Dell for the computer install and eCW to do implementation and training, but we are of the belief that the buyer, one representing a small physician practice will need more hand-holding in the purchasing decision process than a typical Sam’s Club employee can provide. Who will provide that solution selling capability? Is Wal-Mart depending on physicians to do their own research prior to purchase, or is this a role that eCW will play with their own sales reps in the store (much like Apple sales reps in Best Buy)? Solution selling is not easy and the recent HITECH Act does not make it any easier. Even the most learned folks we know in the industry are still unclear as to what is meant by the term “meaningful use of certified EHR”. Will Sam’s Club employees be able to do a better job explaining this to physicians? Unlikely.
Third, Wal-Mart/Sam’s Club has no credibility, no brand, no nothing in the technology solutions market. Hell, they don’t even have a Geek Squad. (Yes, we know, they are looking to Dell and eCW to be the doctor’s Geek Squad). Sure, their EMR solution prices may appear low, at least the initial cost, but is that enough to attract a savvy buyer who notices that Wal-Mart is back-end loading the fee structure hoping to capitalize on a steep annual maintenance fee? Wal-Mart can certainly go out and buy the IT expertise needed to install the software on-site and perform training (not so sure if they’ll easily find those trained in clinical), but if it were our money, we would go with an HIT specific solution provider who has a few years under their belt installing, training and servicing fellow physicians. Wal-Mart brings none of that to the HITECH gold rush.
Wal-Mart will not be alone, by any stretch of the imagination, in looking to tap that $20B+ slated to flow into the HIT market. There is a gold rush here folks and everyone is looking to cash-in. This will lead to significantly more confusion in this market for the next couple of years as vendors of all shapes and sizes jump into this market. Be wary, very wary if you are in the market for such a solution.
In all fairness to eCW…
eClinicalWorks, by itself, has done some excellent work in the market and quite savvy in landing some big deals, one with the Mass. eHealth Collaborative and another with the NYC Dept of Health. The significant size of these two wins caused some growing pains for eCW which lead to a lot of grumblings in the market on slow response times, delayed implementations, poor customer service, etc. This is not unusual for a small, fast growing software company and should not be held against them long-term, if they quickly resolve the issues. From what we have heard more recently, eCW has addressed most of these issues and customers are happier.
And it is important to note, that out of the box, eCW has just about all the features necessary to virtually insure reimbursement under the HITECH Act. The eCW solution has:
- CCHIT ’08 certification – likely meet requirement for “certified EHR”.
- Has ability to report quality metrics.
- Supports clinical notes sharing for care coordination.
- Supports eRx.
Impact to the broader EMR Market
Roughly 90% of small physician practices (1-3 physicians) today do not have an EMR and developing a cost effective channel to reach that market has been a challenge for many an EMR company. That does not mean there are not effective ways to penetrate smaller accounts.
In other industry sectors such as manufacturing where there is also a multitude of small, independent entities, successful Independent Software Vendors (ISVs) have been most successful using a Value-Added Reseller (VAR) channel. Microsoft is arguably one of the best at effectively using its VAR channel to take business software to market. AutoCad, a supplier of CAD software to manufacturing and building trades industries has also been extremely successful using a VAR channel. The reason VARs are so successful is that they operate at the local level working their local contacts and do the installs and often provide the first line of customer support. There are many EMR companies using a VAR model, including eCW and it is our belief that the EMR market is still not at level of maturity to be sold through a Big Box retailer.
Therefore, the Wal-Mart, eCW partnership/go to market strategy will be effective in gaining extra publicity for eCW, but unlikely to result in many direct sales through Wal-Mart’s Sam’s Club Stores.
Our advice:
Avoid those who do not have a clear track record in the HIT market with solid, reference customers.
Do not be easily swayed by low upfront costs – do total cost of ownership calculations over the projected lifespan of the solution’s use in your practice.
Yes, there will be $$$ forthcoming and yes, you will need to demonstrate “meaningful use” to get reimbursement and there is an advantage to getting started early. But that modest advantage is not a reason to make a hasty decision. You and your practice will be living with this solution for the next several years, so take your time and buy something you can live with (not just the product either, but the service partner as well).
Lastly, when thinking about the implementation, bring your group together to think not about what individual tasks to automate through the use of your spankin’ new EMR, but what processes you wish to enable. Time and again, those who have extracted the greatest value from their EMR, regardless of practice size, focused on processes, not tasks.
And one more point, do the training before you are siting in a room with a consumer/patient. Nothing is more frustrating to both than seeing one struggling with an EMR due to poor training up-front.
Addendum:
For a slightly more humorous take on this announcement, encourage you to check out Dr. Rob’s post, a physician with some wit.
Mr. HIStalk also did a post on the announcement and is one of the fortunate few who was able to catch-up with eCW’s CEO to get the inside scoop. In addition to the interview, the comments by readers are insightful.
I’ve been reading you for roughly a year, and I think I have never disagreed as strongly with one of your posts.
In response to both your first and second points, EMRs do not have to be a pure commodity product for this to work and Wal-Mart does not need any extensive expertise in physician practice workflow, etc. The reason is that Wal-Mart isn’t installing these EMRs, eClinicalWorks is.
From the Times: “Dell will be responsible for installation of the computers, while eClinicalWorks will handle software installation, training and maintenance.”
eClinicalWorks has, as you know, extensive experience installing EMRs in small physician offices. In fact, I’ll bet that no vendor in the country has more experience in the last 5 years. Two of the largest mass-implementations of small office EMRs in the nation used largely (in MA) or entirely (in NYC) eCW EMRs. They know what they’re doing in small offices as well as anyone.
The response to your third point is related: When a physician buys this EMR package, they aren’t buying it because of the Wal-Mart name. They are buying it because of the eClinicalWorks name and the Wal-Mart price.
If it weren’t for the huge federal EMR funding programs I would expect uptake to be slow because small offices simply aren’t well set up to do a complicated implementation like this. But with those funds, the right price point and experienced hand-holding through the process, we’ll see a far more rapid uptake than before, I’ll predict. I think we can jump from 2-3% small office EMR penetration to 10% in 3 years. This deal puts Wal-Mart at the center of that growth.
Thanks JD for taking the time to reply. Did do some follow-on research based on your comments and modified the post to reflect your comment, particulary as it relates to point number two. On your other points, however, we disagree.
First, the EMR market has not yet reached a level of maturity that would argue for a Big Box retailer channel to market. Thus, we do not believe that Wal-Mart is a suitable channel to market for EMR software and favor a VAR channel model.
Second, we refined pint number two to reflect what was our main point here: Wal-Mart sells products it can slap a SKU on. Its core competency is aggressively managing a supply chain to drive costs out of the chain and deliver consistently low prices. This works for many products, say a pallet of toilet paper, but we do not believe it works for selling solutions. The eCW/Dell offering is a solution.
Third, of course they are not buying a private label Wal-Mart brand product, they are buying eCW and Dell, both well-respected products in their respective markets. The key point here is that Wal-Mart is not as well-known for electronics sales, it does not have that reputation. Secondly, in this third point we highlight that the pricing is not all that aggressive. Today, one can buy direct from eCW a hosted EMR-PM solution for $500/month ($6K/yr). Granted, it does not include implementation and training as well as that Dell computer, but still, are those last three worth an extra $19K? Also, many a physician’s office already has a PM and a computer, so one could go to eCW and pick-up just the EMR, again hosted, for $3K/yr. Bottom-line, Wal-Mart has no brand in this sector and Wal-Mart’s reputation for low prices does not appear to bear fruit here.
Lastly, jump from 2-3% adoption to 10% adoption in three years, boy tose are some pessimistic growth projections there JD, though admit, current views from DC that throwing a lot of $$$ at the problem will solve it are mis-informed.
JD, you are right on the money- except you will see much penetration than you think over the next three years. Most physicians are looking at this with purely a customer’s perspective, and that’s tp be expected. What do you see when you step back and look at the big picture though?
You see a global marketing giant with an enormous physician customer base, a global leader in IT products and remote IT support, and a credible EMR/PM vendor with a working product and a nimble and cutting edge software company (unlike, say a GE). The marking component (Wal-Mart) is also rolling out it’s own emergency clinics in all of it’s locations that will be using this product and technology, and by the way, they also already have a major piece of the prescription pie.
When I look at this at the macro level, (forgetting even for a moment the so called “stimulus money, which will be like throwing gasoline on a fire) I see a potential health care juggernaut that will quickly have the potential to influence national policy at the de-facto- if not legislative levels.
People (individual physicians) don’t have to like it. Frankly, it doesn’t even have to be a great product offering. (Everyone forgets how bad Microsoft was when it started out, and how they actually became the O/S and Application standard it is today.) All it has to do is work. And it will work. This will be a uniquely disruptive event in the marketplace with far reaching consequences for all industry stakeholders.
It’s quite obvious that jd works for ecw, and is in their sales/marketing dept, his comments are so cheesy he’s probably jw too! oh wait…jw is in the cube next to him!!
Walmart selling EMR solutions, what a joke. They saw the $20B for EMR’s and want to get their greedy hands on it.
Believe me the price tag for any EMR is going to reflect what the government reimbursement is, isn’t that going to be about $50k over 5 years…gee what a coincidence thats what Walmart is pricing it at over 5 yrs.
I hope all Dr.’s boycott all those companies on principle alone, they are obviously not in this for the betterment of patient care its all about the $$$$.
eCW may not be the cheapest one. Wait until EHR taken out from Veteran Affairs (VA) becoming more popular with either virtual machine or Web-base. I wonder how eCW will compete with a 30-years Vista platform from the VA who invested billion dollars and now provided as an open source EHR. That means, no cost for software. Just server and implementation cost.
In the past 9 years, I have used all EHR including eCW, AHLTA, PICIS, Cerner, Epics, and others. None has a platform that can compare to Vista in term of scalability, data transfer from one EHR to another, and configurability to fit your own clinic’s process. After thoroughly analyzed our strategy, our IT team has adopted the Vista software and implementing it through our own house-call network in next 3 months. John, you may want to look into this. LCN.
KG, you might want to adjust your “obviousness” detector. I don’t work for eCW, nor do I know anyone who does or have any investment with them. Nor am I in the EMR business, but rather I work for a health plan.
I have been involved tangentially with the Primary Care Information Project (PCIP), which is where I first got to know about eCW. I’m impressed by what PCIP has done with eCW in the area of enhancing the decision support, public health and quality reporting. PCIP has helped eCW to be more than a claims-driven EMR, and I do think it has become one of the better products on the market as a result of that collaboration, for what it’s worth.
My main point in the first post, however, was not to hype eCW. My point was that it doesn’t matter so much whether Wal-Mart knew a lot about physician office workflow design or EMR implementation and support, because Wal-Mart wouldn’t be doing those things.
John, thanks for the update. All sound observations, I think.
General Response to KD and others
Couple of points clarified:
A)
“Walmart selling EMR solutions, what a joke. They saw the $20B for EMR’s and want to get their greedy hands on it.”
First of all the way I read this is they are not selling solutions, they are MARKETING a solution by Dell and ECW, two respected names in their industries (no matter what you personally think of their products). That is a huge difference. Huge. You are comparing apples to oranges. If you have studied Wal-Mart at all, and know how the company works, you would know their business strategies are legendary, and are dissected in detail in business courses across the world.
B)
“I hope all Dr.’s boycott all those companies on principle alone, they are obviously not in this for the betterment of patient care its all about the $$$$.”
LOL, and I hope all physicians that are in medicine for the $$$$ retire tomorrow. This is still a capitalist country (well, maybe not for long after Obama and Pelosi push through their agendas) but right now it is. And if a company is not in business for the $$$$, then they are either called a “non-profit” organization or General Motors.
C)
For the record, I am not JD or an employee of Dell, ECW or Wal-Mart. But I know a lot about business, a little about health care, and quite a bit about hi-tech as well.
I notice that too many people take the myopic viewpoint as a user of these products, and make broad sweeping statements about which EMR is “best” and which company is “best”, and what the price should be, etc.
First off – those opinions are ALL highly dependent on the individual physician and their background, their specialty, their staff’s expertise and motivation and the training and implementation they received. Those factors, plus training and implementation are much more important to EMR success than which EMR you choose. Sorry if that offends any EMR vendors, but that’s been proven over and over, (as long as you stick with the top 20 or so EMR’s). To make matters more complicated, your implementation and training might be completely different from your associate who purchased the same EMR, unless the same implementation team did both sites.
Secondly – The price is irrelevant. Like ANY investment, it’s not how much it costs, it’s how much return you get from it. What is your personal ROI, made up of time savings, greater efficiency, better coding etc etc. Let’s not forget that ALL studies on the subject have shown that a good EMR FORCES you to practice better and more consistent medicine, and what that means to your patients (unless you’re just in it for the $$$$ – LOL).
The dirty secret of ANY software infrastructure investment is that the smaller the company (or practice) is the more dependent the ROI becomes on the actions of the physician (boss) and his staff (employees). This is universally true across all industries. What is also true is that you often see the business owner (physician) take on very little accountability for their own success or failure.
Conversely, (and some would also say perversely 🙂 , the larger any organization, the better any IT infrastructure investment’s ROI can be quantified and transferred to other similar sized organizations because measurable accountability mechanisms can be put in place – IF MANAGEMENT IS COMPETENT. (I put that is bold, because that is not always the case). – You see examples of that everyday, maybe even where you work now.
The perverse part of this equation is, while it is EASIER to implement accountability in a smaller organization, it occurs far less often. Why? The psychologists will probably say it’s due to the fact there are more people to spread the blame around to in a large organization, so failure is not as personal as it is with a small organization. And we humans like to avoid failure and disappoint at all costs.
I apologize, I did not mean to veer so far off topic here, It’s just that business, marketing and change management are all key interests of mine, and to me they can be quite fascinating. Which is why I am extremely intrigued with this joint venture between three very different compnies, and what it may mean for each one, as well as what impact it might have on the overall market that they are trying to jointly penetrate.