Cerner Health Conference 2018: Interest in PHM Solutions Remain ‘Healthe’

By Matt Guldin and John Moore

Recently, we and 12,000+ others attended the Cerner Health Conference 2018, where the theme was “Smarter Care.” Overall, the event focused on building on top of the EHR, while much of the floor space and conversations focused on population health and revenue cycle.

Cerner Smarter Care CHC18

Key Takeaways

  • New CEO, Brent Shafer, is not the visionary that Neal Patterson was, but he is highly focused on customer success and operations. Expect Cerner to become more acquisitive (Lumeris) and pursue partnerships such as that with Salesforce.
  • Rising client interest in population health management (PHM) solutions – Cerner’s HealtheIntent platform – but uncertain timeframe as to when these solutions will truly scale across client base.
  • The event reinforced our view that Cerner is well positioned to capture a growing wallet share from its hospital & health system customers over time as well as adding new potential customers (e.g., payers, state Medicaid agencies, self-insured employers) via its HealtheIntent platform.

HealtheIntent platform

For several years now, Cerner has been focusing on moving beyond the EHR with its HealtheIntent PHM platform. At CHC18, Cerner was doubling down on this bet with the message “Smarter Care” with numerous sessions and a significant amount of exhibit space dedicated to this theme and platform. Today, Cerner has signed ~160 clients of which ~90 are currently live.

HealtheIntent is well positioned as an EHR agnostic solution that will give Cerner the ability to invest resources into developing solutions that think beyond the hyper-competitive zero-sum game of EHR contracts. Two major flagship HealtheIntent customers are also two major Epic customers (Advocate and Geisinger) and there is a clear opportunity to work with these customers to better integrate Cerner’s evolving platform with Epic’s similarly expanding universe of products.

A key challenge for any PHM vendor is developing strong services capabilities to assist clients in extracting the highest value from their PHM solution deployments. In August, Cerner made a significant investment in Lumeris, a company with a strong services offering that Cerner will leverage.

Integration with Salesforce provides Cerner with a strong competitive advantage

In line with the company’s shift toward consumer-focused healthcare, Cerner is partnering with Salesforce to offer providers an integrated patient engagement solution. Through this partnership, HealtheIntent data, which is collected from numerous sources, will feed directly into Salesforce’s Health Cloud.

Once the data is in Health Cloud, from within their EHR a clinician can quickly identify patient populations based on various criteria via a queried search. Once identified, a campaign can be initiated. Cerner plans to launch this product in 2019, and will be the only EHR company to have Salesforce directly embedded in its EHR and HealtheIntent workflows.

Revenue cycle still in flux

Cerner understands the importance of getting revenue cycle (billing) software right. Cerner has penetrated, to varying degrees, about 40% of its hospital clients with billing software, but those are mostly small facilities. Cerner’s software still appears visually outdated and lacking functionality, particularly for ambulatory practices.

One need only walk through the CHC18 exhibit area of third-party software vendors to see the demand for RCM solutions that work in the Cerner environment. Roughly 40 percent of all vendors were RCM vendors. Clearly, Cerner is missing out on fully capitalizing on this opportunity.

RevWorks interest robust, ITWorks continues to grow

Cerner is seeing strong demand for its RevWorks offering among smaller hospitals, and the firm is still hiring aggressively to support growth into 2019. Cerner has about 100 RevWorks clients, compared to 30-35 two years ago. One of the main reasons for Cerner’s early success in outsourced revenue cycle solutions is that the product comes with a demonstrable return on investment for clients with specific targets outlined before any deal is signed.

The ITWorks business is growing but acquiring clients at a slower pace than RevWorks.

DoD/VA

Now that MHS Genesis is up and running across the first wave of an initial 4 sites, the company took important lessons learned for future Department of Defense (DoD) rollouts as well as Veteran Affairs (VA) deployments. Cerner noted that the VA is not yet in the implementation phase as it is currently planning the largest install in the industry’s history.

Of these two massive installs, the one at the VA bears watching closely. A significant portion of veterans receive their care via Tricare (local healthcare providers under contract to VA). How Cerner drives interoperability across multiple venues of care nationwide, the potential role of HealtheIntent, the embedding of telehealth functionality and the list goes on will all be pressure-tested by the VA. The results of that pressure-testing will, in time, roll out to the broader Cerner client base.

“Where the company has truly led the EHR market is with HealtheIntent. Rather than a walled-garden approach, Cerner’s HealtheIntent is architected for a more open future and its capabilities continue to expand even though market has been tepid. Cerner accurately saw the future and invested early for the inevitable move to value based care.”

Looking Forward

Cerner has been an innovative company since its founding. While not all innovations have been a success (much to some clients’ chagrin), the company has nonetheless made progress and continues to push forward. Their ambulatory EHR is gaining significant traction with larger IDN clients, and RCMwhile not there yetis closing the gap with competing solutions.

Where the company has truly led the EHR market is with HealtheIntent. Rather than a walled-garden approach, Cerner’s HealtheIntent is architected for a more open future and its capabilities continue to expand even though the market has been tepid. Cerner accurately saw the future and invested early for the inevitable move to value-based care.

Visionary leadership made Cerner what it is today. Hopefully, the company’s new leadership fully appreciates this key attribute. Only time will tell if the future focus of Cerner is operational efficiency at the expense of vision. While operational improvements are common in a maturing market, our hope is that Cerner continues to look beyond the near term.

Stay up to the minute.

Did You Know?

The Nexus of Interoperability and Consumer Experience

original-photoThe annual Cerner Health Conference (CHC16) held last week in Kansas City provided an excellent opportunity to gauge current population health strategies, challenges, and implementation status of both Cerner and their clients. The conference was unexpectedly touching, as well.

Key Takeaways

  • Interoperability is an imperative that HIT business models simply must accommodate. Red flag warning to all healthcare IT vendors large and small—plan to data share to enable a connected ecosystem, or risk the erosion of market share and future demise.
  • Among traditional EHR vendors, Cerner is market-leading with their interoperability strategy. As such, they are being rewarded by the market with an exponential increase in sales, including three non-Cerner EHR clients for HealtheIntent so far, and a rich sales pipeline for their EHR-agnostic cloud-based HealtheIntent population health platform.
  • While there were many encouraging examples of operational improvements highlighted by ACO clients throughout the conference sessions, there was a noticeable absence of any emphasis on proven ROI at this stage of the HealtheIntent (PHM) product lifecycle.
  • Simply stated, Care Management technology across the industry could use an overhaul.
  • No one is taking a pause in their HIT investments as a result of the election.
  • Standing ovation for Cerner CEO Neal Patterson, for his surprise contribution to the keynote address!
  • Neal Patterson, for his surprise contribution to the keynote address!

More on the Interoperability Theme

Integration as a dependency to long term HIT viability cannot be overemphasized. We have reached the tipping point—to be vendor agnostic or not, participate in open data sharing or not, be a data integrator or not. Vote for interoperability. We learned of vivid examples of vendor solutions that chose not to fully integrate and consequently lost all previously strong adoption. Provider workflow and efficiency crumbles when they are forced to work across multiple interfaces.

As a sign of market evolution, we witnessed the success of empowered providers exerting influence over vendors in a push for greater interoperability. Let this serve as a call to providers to expect interoperability from your technology vendors as the optimal approach.   Don’t assume you need to “go it alone.” We talked with providers who attempted to build their own code to integrate disparate systems, only to eventually give up after years of sunk cost and lost productivity.   On the flip side, only when providers also share their data can the ecosystem function as truly open and optimized for value.

Cerner has certainly evolved their open platform strategy embarked upon several years ago when they partnered with then Certify Data Systems for HIE, and more recently being a founding member of Commonwell Health Alliance. In Q3 2016, Cerner officially opened HealtheIntent PHM and Millenium EHR to third party developers via the brand “code” – a development environment that includes a multitude of APIs. Cerner has also completed custom coded integration with competitor eClinicalWorks (eCW) for even more seamless interoperability of HealtheIntent modules in an eCW clinician’s workflow, an indicator of how client requirements are driving transformational vendor relationships in healthcare.

Cerner’s multi-pronged growth strategy consists not only of serving up an open ecosystem, but also includes planned expansion and refinement of HealtheIntent with new network functionality to better enable value-based arrangements.   New modules targeted for GA in 2017 include referral, contract, and network management, allowing a CIN or ACO to project their success in launching a risk-based arrangement, evaluating not just standard population clinical risk and opportunities, but also layering in network coverage determinations by geography.

Care Management: Certainly Adequate, But We Need To Do Better

We liked Cerner’s “value-based” pricing strategy for the HealtheCare care management module of the HealtheIntent platform. The user is exposed to the entire population registry and able to identify care management targets by filtering against varying criteria (diagnosis, open care gaps, risk score). However, software cost is accrued only for the volume of the population actually moved into Care Management programs, where the value realization potential exists.

HealtheCare sales have increased at a steady rate year over year since 2015 GA, as providers need a solution for Care Management that is more advanced than home-grown spreadsheets, SharePoint sites, or paper. HealtheCare delivers on those basic expectations, but we found the user interface fed by the underlying architecture to be dated. To be clear, it wasn’t that HealtheCare is missing any expected functionality; it was that it didn’t include anything exceptionally innovative.

This is an industry-wide issue wherein most of the Care Management solutions we have reviewed for our upcoming Market Trends Report all have a similar look and feel – a glorified spreadsheet with pick-lists. It’s time for an entirely new construct in Care Management technology, time to rethink Care Management as the community engagement tool that it is, to create a contemporary platform to truly engage all stakeholders including consumers, caregivers, and community.

A Poignant Reminder How Interoperability Improves the Consumer Experience

Why are we even doing all of this grueling work to revolutionize healthcare?   The keynote address brought it all home for the 15,000 attendees in the Kansas City Sprint Center. Caring. Consumer experience.

I witnessed hands down one of my most moving moments in 25 years in healthcare. First, Geisinger CEO Dr. David Feinberg walked us through a systematic approach for elevating the consumer experience. It simply couldn’t get more inspirational, then Cerner CEO Neal Patterson took the stage and delivered a surprise address despite–and because of–undergoing extensive treatment throughout much of 2016 for soft tissue cancer.  His gift is to now turn his own personal experience, profound and troubling as it was, into a drive for further system-wide improvement.

It doesn’t get any better than that, Neal.

Kindness and caring is not about reducing wait times; it’s about eliminating them. It’s about using data to anticipate a consumer’s health issues. It’s about ensuring consumers can readily participate in their care and access their consolidated medical record and care plan inclusive of input from all care providers on their team, absent annoying and exhausting technology or data sharing impediments.

As Neal concluded his address, “We’ve done much, but there is so much more to do.”

Cerner Part Deux: Much Progress, Many Miles Ahead

Editor’s note: This is the second of two posts on the recent Cerner PHM Summit. Why two? Well, first-off we sent two analysts with very different views on the market. This led to the first post addressing the increasing convergence between payer and provider solutions. This second one provides perspective on how quickly the market is evolving. -J.Moore

Last week, I attended the 3rd Population Health Summit hosted by Cerner in Kansas City. The event certainly has grown in size and maturity since I attended the inaugural event two summers ago. This time around there were 110 organizations, 33 states, and 5 countries represented among the attendees along with a larger venue to host a crowd which had more than doubled in size. Clearly, PHM has moved from the fringe to more center-stage.

IMG_0388

Cerner’s PHM-enabling platform, HealtheIntent, has matured, broadened and developed substantially over the last two or so years. Here are some of the main impressions that I took away from the event:

Increasing emphasis on social and behavioral factors but uncertainty abounds: More emphasis in being placed on capturing a broader set of non-clinical information on patients and how this might affect a patient’s risk level and care plan outcomes. This is a topic we covered in detail in our latest Insight Report: Total Active Risk Management.

The difficulty lies though in that there is no standardized set or methodology to capture, record, and exchange this information with other providers yet and subsequently gain insights that will optimize care processes. Besides using the PHQ-2 or PHQ-9 as a part of the health assessment to screen for depression or limited questions around the hospital discharge planning process, there still does not seem to be any significant activity occurring yet in this area, though there is strong interest.

Longitudinal care plans begins to take center stage: John Glaser, SVP of Population Health Management, gave his keynote address on Tuesday afternoon. Two of his key themes were: the medical record is transitioning to a plan and it is moving from a transaction-oriented record to one that is information-oriented. This is a fairly profound statement and one that all EHR vendors will struggle to address.

This new ‘information-oriented plan’ should among other things:

2016-07-29_1-05-31

The longitudinal care plan is something we wrote about extensively last year in our Insight Report on the topic. It was not surprising to hear Glaser highlight this topic as a key staple of provider-led care management but it was very interesting to see a leading EHR vendor put it front and center as a key core staple even if a fully-operationalized version is at least 3-4 years away.

Everybody has their own recipe: Cerner touted their partnership with xG Health Solutions as adding significant ‘off-the-shelf’ clinical content and rules for several applications on the HealtheIntent platform including HealtheCare and HealtheRegistries. This is an important issue especially for HCOs that want to get up and running quickly with their care management program.

Just as every Italian family (including mine) seemingly has their own twist on making tomato sauce, a number of HCOs mentioned how important it is to then take this pre-packaged content and tailor it though to achieve greater physician buy-in and adoption making it relevant to the populations they serve.

Wrapping services around the technology: Cerner already has several advisory service offerings available to their clients but has emphasized the need to wrap a much broader set of offerings around them in the near future.

Besides the possible revenue opportunities, this is a point we are increasingly seeing come up from vendors touting PHM-enabling solutions as they increasingly are talking about how they help their clients not only implement the solutions but how to optimize them most effectively to enable them to meet their broader organizational objectives. The question is: do these vendors provide the services directly or partner with others to deliver such services? Increasingly, it appears that vendors such as Cerner are picking the former with the desire to take a bigger piece of the services pie.

There is no ROI – Yet: If there was one question that was repeated time and time again at this event especially from the providers, it was how do you calculate and measure the ROI of the initial investments that providers are making in their care management organizations and efforts.

Almost every provider organization that presented or I talked to acknowledged that their care management program was running in the red. In some cases, it was quite significantly in the red especially if they had just got the program up-and-running over the past year including hiring a number of additional FTEs to staff it.

Providers apparently are not as focused on the bottom line right now with the assumption that if the care plan goals are being met in a timely fashion that there should be positive downstream effects at some point from a utilization, quality, and satisfaction (provider and patient) standpoint. While this does seem reasonable and the move to value-based care and bundled payments seems to support this thesis, it remains to be seen as to exactly when that ROI materializes. The few HCOs I spoke with seemed to hope that there would be a positive ROI within 3-5 years of launching their provider-led care management program but acknowledged it greatly depended upon how they calculated ROI.

Summary

Most HCOs at the Population Health Summit are in the early phases of deploying the HealtheIntent platform (e.g., HealtheRecord, HealtheRegistries, and HealtheCare) especially the care management module. As a result, they are still either getting up running or fine-tuning for their particular PHM initiatives. It is not surprising then that providers have yet to see a positive ROI from these early efforts, which are only utilized for a small percentage of their overall patient population.

The most interesting development to me though at this event was the acknowledgement of the longitudinal care plan as a core tenet of their PHM efforts by a leading EHR vendor. This has several important implications not only for the HealtheIntent platform itself, especially the HealtheRecord and HealtheCare modules, but more broader implications as the health IT market is shifting from the EMR to other solutions that will be utilized to coordinate care and activities for patients. The question is how will the longitudinal care plan be operationalized across various applications, settings, and the extended care team especially the patient and their caregivers.

Cerner’s HealtheIntent Gaining Significant Traction

Moving Forward

Cerner’s annual user conference (CHC) last week gave us an opportunity to speak with Cerner executives and customers to gain insight on their current and future initiatives.

Take-aways:
> HealtheIntent is gaining momentum and displacing or overlaying competitors.
> Strong pent-up demand for the HealtheIntent EDW.
> Sales are strategic and typically occur a level above CIO.

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Cerner Acquires Siemens: What can we Expect?

Chilmark Bight

On August 5, Cerner announced its intent to acquire Siemens Health Services (HS) for $1.3B in cash, slightly more than Siemens HS’s FY14 revenue of $1.2B. The deal brings to Cerner a large, relatively stable base of 600-700 hospital customers in the US for upsell opportunities. The acquisition also provides Cerner with a head start in many international markets – an area that will become increasingly important for US-based EHR vendors as the US acute care market is reaching maturity. This is a risky move by Cerner, a company not known for making large acquisitions and large IT-centric acquisitions in any vertical are fraught with risk. But if they are successful in migrating Siemens clients, overtime, to Cerner solutions, as well as capitalizing on near-term upselling of Siemens’ clients on Cerner’s more EHR agnostic solutions, e.g. HealtheIntent, Cerner will have made a very savvy move in this market that is poised for significant consolidation.

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Big Fish Swallows Another – Will it Choke?

fish2Rumors that have been floating around for months that Siemens planned to exit the health IT (HIT) market have come true. Earlier today, Cerner announced that it will acquire Siemens HIT business for a whopping $1.3B with expected close in Q1 2015. While we will be doing a more thorough breakdown of what this acquisition means to the two companies, the market and most importantly their customers in a research piece for clients, following is my back of the envelop analysis.

  • With this acquisition, Cerner now surpasses Epic in # of hospital clients, something I’m sure that makes Cerner’s CEO smile – Neal is a tough competitor.
  • Cerner will certainly support Siemens clients on Siemens clinicals, but there will be a time horizon on that support with Cerner’s ultimate goal of having Siemens clients ultimately switch to Cerner clinicals.
  • A weak spot for Cerner has been their financials. Siemens brings them a reasonably good financials solution that some existing Cerner Millennium clients are already using. The trick here will be to truly integrate the two systems (clinicals of Cerner with financials of Siemens) to be truly competitive in the market.
  • Acquisition gives Cerner a much stronger international presence, especially in Europe – a target growth area for most acute EHR vendors now that US acute care market is basically tapped out.

The price of $1.3B is quite high for what Cerner is getting, but Cerner is not a company known for wasting money. It is also VERY uncharacteristic of Cerner to make such a large acquisition. However, Cerner sees value here to leverage long-term, and they do look long-term.

Much of that future value is likely found in Cerner’s rapidly growing PHM activities (HealtheIntent). One of our analysts just came back from Cerner’s PHM Summit last week and was truly impressed with how aggressive Cerner is moving on this front. There is a huge untapped PHM market among existing Cerner clients and now Siemens clients – potentially huge up-sell opportunities if Cerner does it right.

This acquisition is also just the tip of the iceberg – we’ll see many more in the next 12-24 months as market is way overdue for consolidation.

Note: Our forthcoming 2014 Analytics for PHM Market Trends Report (to be released this month) provides a detailed look at this market including a detailed profile of Cerner and 18 other leading vendors. 

 

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