2019 Predictions: M&A, Big Tech, and the Fate of ACOs
The Meaningful Use gravy train finally came to an end in 2018. As the strongest EHR vendors struggle to define new revenue streams, weaker ones faded from view through acquisitions or leveraged buy-out. Meanwhile, funding for ‘digital health’ start-ups continued to increase, though it likely hit the high water mark in 2018. And lest we forget, Amazon, Apple and Google continue their forays into the healthcare sector as the market is simply too big to ignore.
So what’s in store for 2019?
We brought together our analysts’ brain trust and came up with the following baker’s dozen of 2019 predictions. Over the near decade of making these annual predictions, our batting average has consistently been well above .500, so don’t ever say we didn’t give you an advanced warning on the following:
Revenue cycle management M&A activity will continue to pick up with the most notable acquisition by Optum as it doubles down on its Optum 360 managed revenue cycle business and acquires Conifer Health Solutions from Tenet.
Despite the hype and media attention around alternative primary care clinics (e.g. Oak Street Health, Chen Med, One Medical), the actual number of physical locations serving patients will remain paltry at less than ten percent of the number of retail health clinic locations.
Walgreens will likely make the first move to acquire Humana in 2019, but Walmart will outbid Walgreens to win Humana over.
The number of FDA approvals for algorithms in 2018 was impressive and shows no signs of abating. Additionally, 2020 will see a further tripling of regulatory approvals for AI.
Consumers’ use of telehealth will continue to see rapid growth and rising competition leading to significant consolidation among the plethora of vendors. By year-end, a major non-healthcare-specific consumer brand will join the mix, and the market will be down to five direct-to-consumer (DTC) nationwide brands.
By the end of 2019, every major healthcare analytics vendor will provide a cloud-hosted offering with optional data science and report development services.
Cloud offerings have become far more robust, concurrent with HCOs’ struggles to recruit IT talent and control costs. Amazon’s AWS and Microsoft’s Azure will be clear winners while Google’s own cloud infrastructure services will remain a distant third in 2019.
Laws and regulations to-date have not compelled providers to freely share data with patients. ONC’s information blocking rule, which will be released before the end of 2018, will make it easier to transfer data to other organizations but will do little to open the data floodgates for patients, clinicians, and developers.
Despite loud protests, the vast majority of provider-led MSSP ACOs will take on downside-risk as CMS shows flexibility in waivers. However, hospital-led ACOs, who continue to struggle with standing up a profitable MSSP ACO, will exit the program in 2019.
Continued changes in post-acute care reimbursement, especially from CMS, combined with the migration to home-based services, puts further economic strain on these facilities. Nearly twenty percent of post-acute care facilities will shutter or merge in 2019.
The warning signs are there over the last couple of months that the stock market has become skittish. This will extend well into 2019 (if not lead to a mild recession). It will hardly be an ideal time to do an IPO, and those planned by Change Healthcare, Health Catalyst and others will wait another year.
Elon Musk will have a nervous breakdown leading him to reinvent the healthcare system from his bed during his two-week recovery at Cedars-Sinai.
Matt Guldin · 2 years ago
Chilmark Team · 1 month ago
Chilmark Team · 2 months ago
Brian Edwards · 2 weeks ago
Revisiting Our 2018 Predictions
As is our custom here, we like to look back on our predictions for the closing year and see just how well we did. Some years we do amazingly well, others we over-reach and miss on quite a few. For 2018, we got seven of our 13 predictions spot-on, two were mixed results and four predictions failed to materialize. If we were a batter in the MLB we would have gotten the MVP award with a .538 batting average. But we are not and have to accept that some years our prediction average may hover just above the midpoint as it did this year.
Stay tuned, 2019 predictions will be released in about one week and it is our hope that they will inspire both rumination and conversation.
(Note: the bigger and plain text are the original predictions we made in 2017, while the italic text is our review of 2018).
Major mergers and acquisitions that mark the end of 2017 (CVS-Aetna, Dignity Health-CHI and rumored Ascension-Providence) will spill over into 2018. Both Humana and Cigna will be in play, and one of them will be acquired or merged in 2018.
MISS – neither happened. However, Cigna did pick-up PBM service Express Scripts and rumors continue to swirl about a possible Humana-Walmart deal or more recently, even a Walgreens-Humana deal.
Hot on the health heels of CVS’ acquisition of Aetna, growth in retail health reignites, albeit off a low overall footprint. By end of 2018, retail health clinic locations will exceed 3,000 and account for ~5% of all primary care encounters; up from 1,800 and ~2%, respectively, in 2015.
MISS – Modest growth in 2018 for retail health clinics with an estimate of around ~2,100 by year’s end. Telehealth, which is seeing rapid growth and on-site clinics may be partially to blame.
In a bid to one-up Samsung’s partnership with American Well, and in a bid to establish itself as the first tech giant to disrupt healthcare delivery, Apple will acquire a DTC telehealth vendor in 2018.
MISS – Apple continues to work on the periphery of care with a focus on driving adoption of its Health Records service in the near-term with a long-term goal of patient-directed and curated longitudinal health records.
Despite investments in population health management (PHM) solutions, payers still struggle with legacy back-end systems that hinder timely delivery of actionable claims data to provider organizations. The best intentions for value-based care will flounder and 60% of ACOs will struggle to break even. ACO formation will continue to grow, albeit more slowly, to mid-single digits in 2018 to just under 1,100 nationwide (up from 923 as of March 2017).
HIT – MSSP performance data showed only 34% earned shared savings in 2017 (up from 31% in 2016) and by year’s end it is estimated there will be ~1,025 ACOs in operation.
While some of the major EHR vendors have announced support for write access sometime this year and will definitely deliver this support to their most sophisticated customers, broad-based use of write APIs will happen after 2018. HCOs will be wary about willy-nilly changes to the patient record until they see how the pioneers fare.
HIT – FHIR-based read APIs are available from all of the major EHR vendors. Write APIs are still hard to find. To be fair, HCOs as a group are not loudly demanding write APIs.
True cloud-based deployments from name brand vendors such as AWS and Azure are in the minority today. But their price-performance advantages are undeniable to HIT vendors. Cerner will begin to incent its HealtheIntent customers to cloud host on AWS. Even Epic will dip its toes in the public cloud sometime in 2018, probably with some combination of Healthy Planet, Caboodle, and/or Kit.
HIT – adoption of cloud computing platforms is accelerating quickly across the healthcare landscape for virtually all applications. Cloud-hosted analytics is seeing particularly robust growth.
Providers will continue to lag behind payers and self-insured employers in adopting condition management solutions. There are two key reasons why: In particular, CMS’s reluctance to reimburse virtual Diabetes Prevention Programs, and in general, the less than 5% uptake for the CMS chronic care management billing code. In doing so, providers risk further isolation from value-based efforts to improve outcomes while controlling costs.
HIT – Awareness of the CCM billing code (CPT code 99490) remains moderate among providers and adoption is still estimated at a paltry less than 15%.
Mobile accessibility is critical for dynamic care management, especially across the ambulatory sector. More than 75% of provider-focused care management vendors will have an integrated, proprietary mobile application for patients and caregivers by end of 2018. These mobile-enabled solutions will also facilitate collection of patient-reported outcome measures, with 50% of solutions offering this capability in 2018.
MIXED – While the majority of provider-focused care management vendors do have an integrated mobile application (proprietary or partnership), collecting PROMs is still a functionality that remains limited through an integrated mobile solution.
A wide range of engagement, PHM, EHR, and care management solutions will make progress on documenting social determinants of health, but no more than 15% of solutions in 2018 will be able to automatically alter care plan interventions based on SDoH in 2018.
HIT – despite all the hoopla in the market about the need to address SDoH in care delivery, little has been done to date to directly affect dynamic care plans.
The hard, iron core of this issue is uncertainty about its real impact. No one knows what percentage of patients or encounters are impacted when available data is rendered unavailable – intentionally or unintentionally. Data blocking definitely happens but most HCOs will rightly wonder about the federal government’s willingness to go after the blockers. The Office of the National Coordinator might actually make some rules, but there will be zero enforcement in 2018.
MIXED – Last December we said, “The hard iron core of this issue is uncertainty about its real impact.” Still true. Supposedly, rulemaking on information blocking is complete but held up in the OMB. The current administration does not believe in regulation. So “data blocking” may be defined but there was and will be no enforcement or fines this year.
Providers will pull back on aggressive plans to broadly adopt and deploy PHM solution suites, leading to lackluster growth in the PHM market of 5% to 7% in 2018. Instead, the focus will be on more narrow, specific, business-driven use cases, such as standing up an ACO. In response, provider-centric vendors will pivot to the payer market, which has a ready appetite for PHM solutions, especially those with robust clinical data management capabilities.
HIT – PHM remains a challenging market from both payment (at-risk value-based care still represents less than 5% of payments nationwide) and value (lack of clear metrics for return on investment) perspectives. All PHM vendors are now pursuing opportunities in the payer market, including EHR vendors.
This is a case where the threat of alert fatigue is preferable to the reality of report fatigue. Gaps are important, and most clinicians want to address them, but not at the cost of voluminous dashboards or reports. A single care gap that is obvious to the clinician opening a chart is worth a thousand reports or dashboards. By the end of 2018, reports and dashboards will no longer be delivered to front-line clinicians except upon request.
MISS – Reports and dashboards are alive and well across the industry and remain the primary way to inform front-line clinicians about care gaps.
Arterys, Quantitative Insights, Butterfly Network, Zebra Medical Vision, EnsoData, and iCAD all received FDA approval for their AI-based solutions in 2017. This is just the start of AI’s future impact in radiology. Pioneer approvals in 2017 — such as Quantitative Insights’ QuantX Advanced breast CADx software and Arterys’s medical imaging platform — will be joined by many more in 2018 as vendors look to leverage the powerful abilities of AI/ML to reduce labor costs and improve outcomes dependent on digital image analysis.
HIT – With about a month left in 2018 the count of FDA approved algorithms year to date is approaching 30 and could potentially hit three dozen by year end. This is a significant ramp up in the regulatory pipeline, but more is needed in the way of clear guidance on how they plan to review continuously learning systems and best practices for leveraging real-world evidence in algorithm training and validation.
What do you think of 2018 for health IT?
Last week, CMS released its proposed rule (beware – in good government fashion it’s a whooping 607 pages) for the Medicare Shared Savings Program (MSSP) Accountable Care Organization (ACO) program. CMS is taking a big leap forward with this rule on the path to value-based care. The big leap? Moving existing MSSP ACOs from all upside contracts (no risk), to taking on an ever-increasing portion of risk (downside, e.g. reimburse CMS if targets not met). This is a real wake-up call for providers, especially hospital-led ACOs, who have by and large failed to meet targets in current MSSP ACO contracts.
The advent of ACOs is a byproduct of the Affordable Care Act (ACA), wherein the Obama administration was seeking new payment models to shift Medicare spending from fee-for-service to value-based care (VBC). To get providers comfortable with the concept, various ACO models were deployed with MSSP the most popular – currently 86% of all Medicare ACOs.
Within the MSSP ACO a provider organization could choose one of three tracks, but only Track 1 carried no downside risk. Logically, nearly all providers chose Track 1 initially and today 82% of MSSP ACOs are still in this track. Unfortunately, in 2016 this track was a money-losing proposition for CMS, as hospital-led MSSP ACOs racked up losses for CMS that were higher than the savings from physician-led ACOs.
Provider readiness to take on true risk has always been the rub…With these proposed rules, CMS is going beyond meeting providerswhere they are but pushing them forward on the path to value.
At the recent Leavitt Partners conference, attendees were briefed on the political climate in Washington. Despite all the political rhetoric, there are three core healthcare principles that are non-partisan:
This event also emphasized that the federal government must take the lead in pushing the industry to VBC, again for a couple of simple reasons:
The MSSP ACO proposed rules are just another step, of what will likely be many, which CMS will have to take in its attempt to bend the cost curve. Rather than wait for providers to voluntarily accept and migrate to true risk – something we saw little of in the former MSSP ACO rules – the proposed rules foist that risk upon providers. Granted, providers are given one to two years in a “glide path to risk” in the new rules, but risk is definitely in their future; by contract year five, an MSSP ACO will take on enough downside risk to qualify as an Advanced Alternative Payment Model (APM) under MACRA.
In summary, CMS proposes ending the current Tracks 1 and 2 replacing them with a new 5-level BASIC track. The first two levels of the BASIC track begin with no risk to providers but annual auto-advancement to higher risk-reward layers will advance providers into risk sharing. Former Track 3 will become the ENHANCED track. The current 3-year agreement period changes to 5-years minimum and national inflation metrics will be replaced with regional metrics.
Somewhat depressingly, the total calculated projected 10-year savings for the new MSSP rules is a paltry $2.2B.
The proposed rules are likely causing a lot of angst in the executive offices of many a hospital, but these rules will have winners as well.
Table 1: Winners and Losers in Proposed MSSP ACO Rules*
From our vantage point, provider readiness to take on true risk has always been the rub. The recent NAACOS survey found that 71 percent of Track 1 MSSP ACOs scheduled for renewal this year were unlikely to do so if they had to assume risk. This is likely an inflated number – when push comes to shove, far more will renew – but this is a barometer of provider sentiment and overall readiness even among those with some experience with the program.
Across the country, healthcare is anything but consistent. As Gary Loveman, former executive vice president of Aetna, pointed out at our Convergence conference last year, one has to meet providers where they are. With these proposed rules, CMS is going beyond meeting providers – but pushing them forward on the path to value. For most providers who take this path, it will be challenging, and trusted partners with previous experience in risk-bearing ACO enablement will be essential.
Without a doubt, something has to be done to bend the cost curve – and, to its credit, CMS is taking action. However, will the action that CMS is taking here with the MSSP ACO program be enough to fend off its critics, especially if projected savings are so minuscule? We’re really unsure, but one thing we are certain of is that CMS is the only entity in this market that has the ability to do something on a nationwide scale. If not CMS, then who?
* Reducing the Risk – Vendors Enabling the ACO, Chilmark Research Market Scan Report, March 2017
The Most “Disruptive” Development of 2017 Goes to…Taxes!
Physicians in the Cross Hairs: As states with business-friendly tax codes become a physician’s mecca, those of us in high-tax states may find a dwindling number of practitioners in the next decade.
As we take stock of the winners and losers of tax reform heading into 2018, let’s reflect on the details. First, as promised, change is certainly present for large C-corps (healthcare and non-healthcare). They will get fat and happy thanks to their 21% tax rate (decreased from the previous rate of 35%), particularly since there is no requirement to allocate any percentage of income to research and development, rank and file employee training, increased wages, or new hires, although several have committed to do so.
As states with business-friendly tax codes become a physician’s mecca, those of us in high-tax states may find a dwindling number of practitioners in the next decade.
For healthcare corporations, this no-strings-attached approach will result in greater piles of cash to spur stock buybacks, increased dividends and acquisitions, all of which offers some relief from the shackles thrown on healthcare in the past few years. No industry has found itself more at the mercy of a fluctuating political agenda as healthcare has—the new tax code and the industry’s new-found purchasing power frees it from being dictated by a variable it can’t control. HCO mergers will give the combined larger entity greater bargaining power with payers. Cross-industry mergers and acquisitions provide diversity in healthcare to better manage risk for all organizations in its ecosystem while complementing one another’s core competencies and bottom lines (e.g., CVS’ Aetna, and Cigna’s Brighter, just the beginning of a massive trend).
Additionally, it seems only a matter of time before larger organizations will be granted the same relief from ACA requirements that the current administration granted their small business counterparts, freeing them to restore businesses’ and insurers’ offerings and giving consumers increased affordability and choice. Seems rosy, right?
Not So Fast. Hospital systems still face many financial challenges. More than 55% of hospitals operate at a loss. Further, Medicare reimbursement has remained flat at 90% of patient expenses, a losing equation from the start. The repeal of the individual mandate means health facilities will treat more patients without reasonable expectation of payment, forcing many into the debt-collection business and further eroding the support of sicker, more costly patients. A lack of payer-provider convergence with respect to financing patient care triggers frequent and costly contract negotiations.
More than 45% of physicians are partnerships, and as service providers they are exempt from benefiting from the new lower S-corp. tax rate of 25% for pass-through businesses. Instead, they face individual tax rates of 35% for Single Filers earning over $200,000. Anjali Jayakumar, CPA of FIT Advisors, examines the real estate of her physician practice clients and the feasibility of establishing it as a separate entity. This permits separation of the medical practice (the service side of the business) from the real estate operation, which is eligible for the lower tax rate. However, Jayakumar cautions her clients to look to 2019 for IRS rules and regulations to be issued in response to this year’s filings.
Similar to the highly capitalized companies above, expect mergers and acquisitions of smaller scale (e.g., physicians joining or merging practices, or purchasing a standalone pharmacy). An argument could be made for even acquiring the local cooking school, gym or corner bodega, reasoning that those businesses are integral to social determinants of health, a priority of CMS; although there is a lack of guidance on how the IRS would view this.
Physician compensation accounts for an average of 10% of a community hospital’s operating budget. Many hospitals are overstaffed as patients are referred to skilled nursing facilities, outpatient surgical facilities and home care, leaving more beds unoccupied and the trend continues. In response, there is an increase in unaffiliated physicians, with privileges at several facilities. Yet, as referenced above, the new tax rate benefits filers with incomes under $200K, and married couples with incomes under $400,000. With the average medical student graduating with $200,000 in debt, the elimination of the federal deduction for state income tax and a cap on deducting property taxes above $10,000, earnings below those levels decrease the viability and sustainability of such practices and practitioners in high-tax states.
As business-friendly states become a physician’s mecca, high-tax states will find a dwindling number of practitioners in the next decade, largely through attrition. As medical school applications increase in states without income taxes and lower property taxes (e.g., Texas, Florida and Nevada) and graduates seek residencies there, most will build careers in those regions without incentives to settle elsewhere. Much as states have wooed Amazon, they may find themselves bending over backwards with concessions to reverse the coming trend of fewer physicians in high-tax states, or perhaps insurers will be pressured into larger reimbursements. Absent that tipping point, we may be at the beginning of a professional migration, not seen since the Gold Rush, when the pick and shovel salesmen found the quickest way to riches. Likewise, your local business and medical supply retailer stands ready to outfit your new Midwestern office.
Back to the Crystal Ball: Our 2018 Healthcare IT Market Predictions
Our favorite post of the year is this one. As analysts, we come together with our propeller hats on to collectively look ahead at the key trends in the year to come in the healthcare sector. While there are any number of predictions one might make for this dynamic market, we will stick to what we know best: Healthcare IT and the broader issues that influence this sector.
Following is our annual Baker’s Dozen. As always, love getting your feedback in the comment section. Let the dialog begin.
Merger & acquisition activity continues; Humana or Cigna acquired.
Major mergers and acquisitions that mark the end of 2017 (CVS-Aetna, Dignity Health-CHI and rumored Ascension-Providence) will spill over into 2018. Both Humana and Cigna will be in play, and one of them will be acquired or merged in 2018.
Retail health clinics grow rapidly, accounting for 5 percent of primary care encounters.
Hot on the health heels of CVS’ acquisition of Aetna, growth in retail health reignites, albeit off a low overall footprint. By end of 2018, retail health clinic locations will exceed 3,000 and account for ~5% of all primary care encounters; up from 1,800 and ~2%, respectively, in 2015.
Apple buys a telehealth vendor.
In a bid to one-up Samsung’s partnership with American Well, and in a bid to establish itself as the first tech giant to disrupt healthcare delivery, Apple will acquire a DTC telehealth vendor in 2018.
Sixty percent of ACOs struggle to break even.
Despite investments in population health management (PHM) solutions, payers still struggle with legacy back-end systems that hinder timely delivery of actionable claims data to provider organizations. The best intentions for value-based care will flounder, and 60% of ACOs will struggle to break even. ACO formation will continue to grow, albeit more slowly, to mid-single digits in 2018 to just under 1,100 nationwide (up from 923 as of March 2017).
Every major EHR vendor delivers some level of FHIR support, but write access has to wait until 2019.
While some of the major EHR vendors have announced support for write access sometime this year and will definitely deliver this support to their most sophisticated customers, broad-based use of write APIs will happen after 2018. HCOs will be wary about willy-nilly changes to the patient record until they see how the pioneers fare.
Cloud deployment chips away at on-premises and vendor-hosted analytics.
True cloud-based deployments from name brand vendors such as AWS and Azure are in the minority today. But their price-performance advantages are undeniable to HIT vendors. Cerner will begin to incent its HealtheIntent customers to cloud host on AWS. Even Epic will dip its toes in the public cloud sometime in 2018, probably with some combination of Healthy Planet, Caboodle, and/or Kit.
True condition management remains outside providers’ orbit.
Providers will continue to lag behind payers and self-insured employers in adopting condition management solutions. There are two key reasons why: In particular, CMS reluctance to reimburse virtual Diabetes Prevention Programs, and in general, the less than 5% uptake for the CMS chronic care management billing code. In doing so, providers risk further isolation from value-based efforts to improve outcomes while controlling costs.
Mobile-first becomes dominant platform for over 75% of care management solutions.
Mobile accessibility is critical for dynamic care management, especially across the ambulatory sector. More than 75% of provider-focused care management vendors will have an integrated, proprietary mobile application for patients and caregivers by end of 2018. These mobile-enabled solutions will also facilitate collection of patient-reported outcome measures, with 50% of solutions offering this capability in 2018.
Solutions continue to document SDoH but don’t yet account for them.
A wide range of engagement, PHM, EHR, and care management solutions will make progress on documenting social determinants of health, but no more than 15% of solutions in 2018 will be able to automatically alter care plan interventions based on SDoH in 2018.
ONC defines enforcement rules for “data blocking,” but potential fines do little to change business dynamics that inhibit data liquidity.
The hard iron core of this issue is uncertainty about its real impact. No one know what percentage of patients or encounters are impacted when available data is rendered unavailable – intentionally or unintentionally. Data blocking definitely happen,s but most HCOs will rightly wonder about feds willingness to go after the blockers. The Office of the National Coordinator might actually make some rules, but there will be zero enforcement in 2018.
PHM solution market see modest growth of 5-7%.
Providers will pull back on aggressive plans to broadly adopt and deploy PHM solution suites, leading to lackluster growth in the PHM market of 5%to 7% in 2018. Instead, the focus will be on more narrow, specific, business-driven use cases, such as standing up an ACO. In response, provider-centric vendors will pivot to the payer market, which has a ready appetite for PHM solutions, especially those with robust clinical data management capabilities.
In-workflow care gap reminders replace reports and dashboards as the primary way to help clinicians meet quality and utilization goals.
This is a case where the threat of alert fatigue is preferable to the reality of report fatigue. Gaps are important, and most clinicians want to address them, but not at the cost of voluminous dashboards or reports. A single care gap that is obvious to the clinician opening a chart is worth a thousand reports or dashboards. By the end of 2018, reports and dashboards will no longer be delivered to front-line clinicians except upon request.
At least two dozen companies gain FDA-approval of products using Machine Learning in clinical decision support, up from half a dozen in 2017.
Arterys, Quantitative Insights, Butterfly Network, Zebra Medical Vision, EnsoData, and iCAD all received FDA approval for their AI-based solutions in 2017. This is just the start of AI’s future impact in radiology. Pioneer approvals in 2017 — such as Quantitative Insights’ QuantX Advanced breast CADx software and Arterys’s medical imaging platform — will be joined by many more in 2018 as vendors look to leverage the powerful abilities of AI/ML to reduce labor costs and improve outcomes dependent on digital image analysis.
What are your healthcare market predictions for 2018?
Plainly Speaking: A hitchhiker’s guide to the [Healthcare IT] galaxy
I am always struck by how industries evolve language for the benefit of, and use by, its members. But membership has its privileges and its drawbacks. While simplifying ways for insiders to communicate, it excludes, or at least distances itself from, those not part of its club.
Such is the state of healthcare IT, breeding an entire cottage industry of acronyms worthy of their own syllabus. Health IT is one link in the healthcare supply chain of interoperable links, and its value lies in its ability to push and receive information to and from its fellow linked parties. Perhaps if challenges and achievements in health IT were discussed in plain English, it would be easier for physicians, employers and the consumer public to digest. Our representatives in DC could also better understand how legislation helps or hinders patient care; the repeal of Net Neutrality is a timely example of the health industry failing to persuasively advocate.
Perhaps if challenges and achievements in health IT were discussed in plain English, it would be easier for physicians, employers, [our DC representatives] and the consumer public to digest.
Being somewhat versed in this code, when my physician couldn’t locate my patient record, I asked him when he subscribed to his current vendor. As the lightbulb went off in his head, he quickly navigated to a “separate patient records portal prior to EMR” subscription and found me, explaining the 30-minute delay. Further conversation revealed my practitioner was unfamiliar with much of the acronyms health IT relies on (e.g., HIE for Health Information Exchange, HISP for Health Information Service Provider), and reported he is frustrated that his EMR vendor can not integrate his practice’s earlier patient records, nor does it provide follow-on training to him and his predominantly new staff. He added that his vendor offers no means of direct communication nor does his Accountable Care Organization have a channel or procedure for him to report deficiencies. Consequently, his pain points remain, as does a lack of guidance to his to his staff on its usage. I can’t verify the accuracy of his statements, but the fact that he believed them to be true indicates little chance of resolving his needs, his office turnover declining, or preventing more of his patients from needlessly waiting while donned in paper gowns.
Like much of the population, I am cramming in my family members’ visits before year-end to use up my HSA dollars. As a new member of the Chilmark team, I have a few questions, in addition to my usual, of the doctors I visit. So far, the same experience noted above was reported by two other physicians. A couple more on my schedule before the year is out and I may wind up with a straight flush!
The EMR vendor’s relationship is with the larger ACO entity, but patient care is in the individual practices by the professionals administering care, and the few I spoke with reportedly felt their workflow issues remained unaddressed. All were surprised and genuinely appreciative that I sought their opinions and experiences in accessing the data they require. We should be mindful that by creating our vernacular for health IT professionals, we do not omit other stakeholders in the conversation whose participation is required for improved and engaged patient care.
Author’s Caveat: This is just my casual survey from a suburb outside NYC but I am eager for others to conduct and comment on their own.
EHRs Deliver the Goods, or at Least the Quality
There have been a number of research studies published that question the value of Electronic Health Records (EHRs), particularly as it pertains to improving quality of care and ultimately outcomes. Chilmark has always viewed these reports with a certain amount of skepticism. Simple logic leads us to conclude that a properly installed (including attention to workflow and thorough training) of an enterprise software system such as an EHR will lead to a certain level of standardization in overall process flow, contribute to efficiencies and quality in care delivery and ultimately lead to better outcomes. But to date, there has been a dearth of evidence to support this logic, that is until this week.
Yesterday evening the New England Journal of Medicine published the research paper: Electronic Health Records and Quality of Diabetes Care, which provides clear evidence, albeit a little fuzzy around the edges, that physician use of an EHR significantly improves quality metrics over physicians who rely on paper-based medical record keeping processes.
The research effort took place in Cleveland as part of Better Health Greater Cleveland from July 2009 till June 2010 and included 46 practices representing some 569 providers and over 27K adults with diabetes who visited their physician at least twice during the study period. Several common quality and outcome measures were used to assess and compare EHR-based care to paper-based. On composite standards of quality, EHR-based practices performed a whooping 35% better than their paper-based counterparts. On outcome measures, which are arguably more difficult for physicians as patients’ actions or lack thereof are more integral to final outcomes, EHR-based practices still outperformed their paper-based peers by some 15%. The Table below gives a more detailed breakout.
While the authors claim that insurance coverage has little bearing on the final analysis (i.e., Medicare, commercial and Medicaid patient metrics are similar) there is a surprisingly high percentage of patients in paper-based practices who do not have any insurance which makes one wonder: Will future Health Insurance Exchanges (HIX) and the individual mandate, should it survive the Supreme Court, have some bearing on what physician a patient may chose in the future? Will patients migrate to those doctors that use more advanced technologies (EHRs)? Also, there was an abnormally high percentage of patients in paper-based practices that were “Nonwhite” which raises another question: Could those practices that still rely on paper-based processes be in more disadvantaged neighborhoods? If that is indeed the case, will HITECH and its incentives trickle down to this strata of the healthcare sector? All in all though, these are relatively minor points in relation to the broader implications of this paper.
Implications:
This research paper could become a seminal piece in support of the current administration’s efforts to reform the healthcare sector as it not only supports efforts to digitize the healthcare sector via EHR adoption, but may also provide an added incentive that goes beyond HITECH Act incentive payments.
Throughout the healthcare sector reimbursement models are changing from fee for service to value-based contracts. Such value-based contracts, be they ACOs, PCMHs, P4P, or whatever other acronym you want to throw at it, are accelerating coming not only from the government but also commercial payers. A key component of these value-based contracts is achieving certain quality metrics and moving from episodic care to continuous care models. This research paper is one of the first and most comprehensive that has come across our desks here at Chilmark Research that clearly shows the use of an EHR has a significant impact on key quality measures, in this case diabetes care. While virtually all hospitals are on the HITECH bandwagon, it is less clear just how many private physician practices are jumping in and adopting EHRs for their practices. For many such practices, the HITECH incentive payments may not be enough of a reward for the numerous Meaningful Use hurdles that a physician needs to jump through. But if you hit these physicians directly in their wallet with value-based contracts and they see that EHRs provided demonstrably better quality care metrics, then we may see broader EHR adoption in the ambulatory sector. Bit of a crystal ball forecast, but the logic is there.
Ultimately, what we are seeing happen in the healthcare sector is not dissimilar to what we saw occur in the manufacturing sector. In manufacturing the lag between adoption of enterprise software systems and subsequent increases in productivity has a special term: the “Productivity Paradox,” wherein it was some ten years after wide spread adoption and deployment of these enterprise systems that improvements in productivity metrics could be measured.
Might the healthcare sector have its own paradox? We think so and from this point forward will refer to it as the Quality Paradox.
Letting the Data Flow; Part One
This first post will focus on the HIE/REC event as it was quite distinct from the other events: smaller audience, more staid, dominated by government officials and tied at the hip, for good and bad, to the existing healthcare system infrastructure.
The HIE/REC conference was an odd event with attendance hovering around 200 or so attendees. The event was focused almost entirely on what the States are doing with the federal funds coming their way to establish Regional Extension Centers (RECs) whose main objective is to get priority primary care physicians (PPCPs) to adopt and meaningfully use a certified EHR. Now, having been to this event and heard many of the State REC initiatives that are now underway via this program, sad to say that my original opinion has not changed. Rather than picking preferred EHRs and assisting with deployment, these RECs may be better off just helping to these PPCPs understand exactly what the HITECH Act is, what are their options, what questions to ask of a vendor or service provider and leave it to EHR consultants and vendors to take it from there.
On the HIE front, there was the usual talk of building the HIE (this time on a Statewide level), soliciting community involvement and last but certainly not least, building a model for sustainability. When one listens to these presentations from what are typically non-profit organizations, one can not help but be struck by the acute lack of just basic business sense with far too many messages that go along the lines of…
Think like a business, what is the value to end user and charge appropriately.
Yikes, if that is the best they can come up with, we’re in trouble.
In listening to the multitude of presentations over the course of those two days, one thing became abundantly clear, CMS and more broadly the feds want access to clinical data and they see HIEs as playing a critical role in getting that data to flow. Tony Rodgers, Deputy Administrator at CMS said as much in his talk which outlined the current CMS strategy:
These are fine ideals but how we get there is another story altogether.
The biggest concern may be the nearly complete and total lack of those from the business side of the healthcare spectrum present at this event. Sure, there were your sponsors, the usual mish-mash of HIT vendors, but nowhere did I see or hear presentations from organizations that have already established private, enterprise HIEs in their communities. This takes me back to a conversation I had with a large IDN in the midwest that had already worked with competing IDNs and community hospitals to establish a local, albeit private, HIE. She had absolutely no desire to be a part of a statewide initiative that planned to charge her organization ~$50K/yr for something they already had (and likely far better than the one the State was planning).
And therein lies the rub: The need for data liquidity is apparent but if we do not address the core needs and issues at the community level and engaged healthcare business in the discussion, meetings such as this will be a lot of talk, but talk that is disconnected from the business of healthcare and thus of little relevance.
