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Who Will be the Salesforce.com of Healthcare IT?

by John Moore | September 07, 2011

Last week was the massive Salesforce.com user conference Dreamforce (massive in that there were more attendees at Dreamforce then this year’s HIMSS!). We’ve been reviewing more than a few articles and writings written by those who attended the event. In the few short years of its existence (~13yrs) Salesforce.com has become one of the leading Customer Relationship Management (CRM) vendors in the market and basically pushed the previous leader Siebel to the brink and into the arms of Oracle. Salesforce is arguably the leader in the Software as a Service (SaaS) market and thus someone to pay close attention to on all things “Cloud Computing.”

So what makes Salesforce.com so compelling and what are some parallels to the healthcare sector?

Similar Market Demographics: From the beginning Salesforce has always been structured as a SaaS and targeted the hard to reach and highly distributed sales forces of companies of all sizes. Actually, they first targeted the small to medium business (SMB) market and once successful there, went after Siebel in big enterprises. In healthcare, the vast majority of care is provided by small, 1-3 physician practices that are highly distributed across the country – perfect target for a hosted SaaS offering.

Deliver Value, Not Pain: Since most sales people get a large portion of their salary via commissions, the last thing they want to do is hassle with software that is cumbersome to use. Salesforce.com’s user interface (UI) is very intuitive and surprisingly customizable (within limits) for an SaaS offering. This allows a sales person to configure the the solution to their specific needs. We hear time and again from physicians that the EHR they are being forced to use doesn’t fit their workflow and is often painful to use. (Having been demo’d more than our fair share of EHR solutions, it still shocks us just how awful the UI is for these solutions.) Like their sales brethren, physicians need solutions that fit their processes and do not slow them down.

Fold in Rich Communication Tools: At this year’s Dreamforce, Salesforce.com CEO Marc Beniof spend a substantial amount of time focusing on the rich communication tools that Salesforce is embedding to tap the move to social networks. Right now, the US Government is dumping over a half billion dollars to stand-up HIEs in every State and enterprises are easily spending double that amount to facilitate information exchange in support of referrals, lab distribution, orders, etc. What if a Salesforce for healthcare arrived on the scene allowing physicians to securely exchange information in the same manner that those on Salesforce.com use that platform for secure ad hoc communication with internal and external partners to meet customer needs?

Provide Robust Security – No Leakage: Sales leads are a sales person’s bread and butter and they guard them with their lives for it truly is their livelihood. Thus, Salesforce had to build a system that ensured a sales person’s leads were their own with no possibility of a breach (leakage) to a competitor. If Salesforce can meet this strict requirement, is it such a stretch to preserve the integrity of personal health information (PHI) on such a system?

Focus on the Data & Deliver Simple Yet Useful Analytics: Sales is often a numbers game. This requires superior, robust data management and ultimately the ability to create a wide variety of pre-configured and customizable reports. As we move towards value-based contracts, providers of all sizes will be asked to provide reports as well (typically on quality metrics) to those paying the bills (CMS, payers, etc.).

Provide an Ecosystem: Salesforce has a vision to provide an ecosystem of third party apps on top of their platform but to date, like most companies, they have struggled to make much headway here. But in time, as more and more IT functions move to the “Cloud” to support an increasingly mobile device centric world, an ecosystem is inevitable. In healthcare, where one might successfully argue that physicians are one of the most mobile of professions, accessing apps via mobile devices is quickly becoming standard practice. Increasingly, the healthcare market and in particularly those far-flung physician practices, will look to ecosystems of apps delivered over the Web to their mobile device (touch-screen tablet) to support their practices.

Adhere to KISS Principle: Like sales professionals and for that matter just about any other professional worth their salt, physicians in private practices are extremely busy and the last thing they need is to fuss around with software maintenance and upgrades. Subscribing to a SaaS takes that big upgrade headache and slams it with a double dose of Excedrin.

This got us to thinking…

Who in the Healthcare IT (HIT) market might become the Salesforce.com of HIT?

EHR Vendors:
We can’t think of a single vendor in the EHR market that has the foresight, the vision, the chutzpa to pull off a Salesforce.com move. Sure, one can point to PracticeFusion (who happens to have received backing from Salesforce) but we don’t see the vision there. What about athenahealth you might ask? Yes, they like to portray themselves as such, but honestly, their bread n’butter solution is not a SaaS play but more of a straight services play delivered via the Internet and a lot of old school back office processing in a warehouse in Maine. All the other EHR vendors? Either they’re too small to matter or chained to their legacy business models that they can not break free of to deliver the scale and gravitas of a Salesforce.com like solution for healthcare.

HIE Vendors:
Increasingly, HIE vendors are providing simple EHRs targeting ambulatory practices, they certainly have the information exchange piece covered (to highly varying degrees) are beginning to fold in analytics (big reason why UHG acquired Axolotl) and some are looking to provide an ecosystem play such as Medicity with its iNexx platform, Covisint with its AppCloud or even Microsoft’s somewhat aborted attempt with Amalga. Yet, despite these efforts, we do not see any one HIE company really grasping the reigns and running away with the prize. Each of the aforementioned vendors have their own reasons why they haven’t quite captured the imagination of the healthcare sector and we are not holding our breath waiting for someone to breakout.

Emdeon has a huge presence in the market as a clearinghouse for claims processing and having just been taken private by private equity firm Blackstone, they may try to make such a play. At the most recent HIMSS sat down with Emdeon for a briefing where they hinted to a desire to move more directly into clinicals, but to date, we’ve seen nothing materialize and it is unlikely to happen anytime soon. Emdeon also has the very real issue of their existing business model (did you no their number one capital expense is postage stamps?) that will keep them on the sidelines.

NaviNet is similar to Emdeon in that they already have a direct connection into the physician’s office with some one million plus healthcare providers using their service. NaviNet has the links but it does not appear that they want to get into the nitty gritty of providing a host of other services and offerings on top of their existing platform. It appears that NaviNet will add small incremental services to their platform rather than go for the whole enchilada keeping the platform simple and streamlined.

Surescripts is making a play in the HIE market with its Kryptiq partnership offering the Clinical Interoperability platform. While still early in its development. the Surescripts play is the closest thing we have seen to date to match the existing Salesforce juggernaut and the one to watch.

Now we certainly do not claim to have all the answers, never have. That is why we have a comments section below. So dear readers, we’ve given you are analysis and now it’ your turn. Who do you think is in the best position to become the Salesforce.com of the HIT market?

27 responses to “Who Will be the Salesforce.com of Healthcare IT?”

  1. I usually hear “Practice Management Systems”, not Patient Management Systems. Either way, that’s a calendar and billing for the back-office/front-desk. But then again, decode CRM. It contains the word management too.

  2. Great summary & right on the mark John!
    My gut tells me that the SF.com for healthcare is not likely to have arrived on the market yet.
    VC $ for such a HUGE vision would be in short supply due to the lack of short term ROI.
    Almost all current stakeholders are not interested/able to go the transformational innovation route due to current business erosion.
    So maybe it will be SF.com that comes to the rescue!

    • Dan Munro says:

      Great point – and interesting that SF took an investment position in PracticeFusion – but that PF didn’t wind up on force.com.

      VC’s for early stage healthcare investing are tougher to find. A seed or Series A deal in other verticals – winds up looking a lot like a Series B in HIT.
      One metric I’ve seen from earlier this summer highlights that disparity too. While healthcare represents over 18% of GDP – it’s only 3% of early stage investing. The top 5 categories for early stage investing (Social, Discount, Gaming, Storage and Media/Advertising) account for a combined 55%.

      • John Moore says:

        And another metric to keep in mind Dan is that healthcare organizations are notorious for under-investing in HIT with an investment typically in the range of 2% of revenue. In manufacturing, it is closer to 4% and its even higher in financial services. The VC & private equity firms know this and thus have justifiable reluctance to make larger investments in this market.

    • John Moore says:

      Agree Paulo, plenty of reasons for VCs and private equity firms to not pony up the investment to pull off an SFDC move in healthcare. Maybe Beniof will get religion, see the opportunity and the good will they could provide and make a move into HIT though I’m not holding my breath.

      • Dan Munro says:

        John – not understanding your view of the correlation between organizational under-investing – and the investment thesis of VC’s / Private Equity firms. There may be some minor influence – but that doesn’t happen at the earliest stages – which is exactly where the vision/innovation actually happens.

        Footnote – Larry Ellison was one of 3 seed-stage investors in Salesforce ($4M – 1999). At least in other sectors – direct competitors aren’t afraid of innovation – they often fund it.

  3. Dan Munro says:

    Great question. Net/net? No one yet, but there isn’t a pitch deck or product brochure out of any of the HIT vendors (startup, medium or large) that doesn’t espouse being THE “platform.”

    It’s also erroneous to think that Salesforce is the only hosted (off-premise) CRM solution – it isn’t. There are well over 40+ vendors loosely connected to the CRM space – and some of them are still big CRM only players (SAP, Sage and even open-source like SugarCRM).

    Security is still a big issue – and not quite the same as needing to keep sales leads secure. The OCR just reported to Congress over 30,000 data breaches affecting over 7.9M people since the notification requirement took effect (2009). This actually argues in favor of stronger electronic controls (and accountability), but banks are often breached too. Citigroup and BofA had a few high-profile breaches just last month,

    Bigger still is the 3-party system in healthcare – which is more of an exception for CRM software – not the rule. Add to this bouillabaisse all of the strict government mandates, regulations and pending accountability – and I’m just not seeing a single solution like Salesforce on the horizon for healthcare. At least not yet – so IMHO – just too early to tell.

    • John Moore says:

      Dan, sure there are other CRM companies, loads of them but not a single one has captured the imagination like SFDC has done. Oracle with Siebel may still be numero uno in this market, but do you think Oracle attracts 40K plus attendees to its CRM user conference? And yes, security is an issue but do you think your records are safer at your local PCP with nephew of PCP being the on premises solo IT guru. The security issue while important is way overplayed in healthcare and could by and large be addressed by just good SOPs.

      No, there is plenty of opportunity for an SFDC-like play in HIT, just exceedingly few with the vision to pull it off.

      • Dan Munro says:

        FYI only. There were 41K attendees at Oracle World 2010 – a record. http://bit.ly/mVaNcU

        Also, Dreamforce is a lot more than just a CRM user conference. It now combines both Salesforce.com (CRM) – and Force.com – their PaaS solution that makes it possible for developers to build and deploy non-CRM related cloud-based solutions. Salesforce/Benioff invested in PracticeFusion initially – with the idea to help propel Salesforce/Force.com into healthcare. Don’t know the details there – but I don’t think it worked as well as needed technically – but PF is still a cloud solution.

        Over time – I suspect that like Amazon, IBM, Rackspace (and others), the PaaS part of Salesforce will likely eclipse the standalone CRM side – if it hasn’t already. Being the cloud infrastructure for all stripes and verticals is a much bigger market globally than just mid-market CRM.

  4. […] Chilmark Research: Who Will be the Salesforce.com of Healthcare IT? « Chilmark Research […]

  5. John Lynn says:

    Great analysis as always John. I’ve been thinking a lot about this subject lately too. In fact, it goes really well with this post I did about the cost of EHR and the value of a healthcare platform versus an EHR software: http://www.emrandhipaa.com/emr-and-hipaa/2011/09/07/free-ehr-model-has-bent-the-ehr-cost-curve/ Plus, as a bonus I link to a writeup I did about a company called CareCloud which I think is the closest I’ve seen to a healthcare platform as I’ve seen. Check them out. I’d love to hear your thoughts on it.

    I do think that regardless of who it ends up being, someone is going to win the race to become the healthcare platform. The interesting thing is that Epic is probably in the best position to do such a thing, but they’re current business model has done so well that I’m sure they’re not really thinking about it.

    • John Moore says:

      Hey John, which came first, your post or ours, seeing as they were both published on the same day!

      Anyway, I’ll take a look at CareCloud. First looked at them when they were just coming out of the gates, was not impressed. Then again, I was not impressed with PracticeFusion when they first came out. Either way, there are a lot of macro forces at work here, including the need to connect and share PHI with other docs say as part of a referral process or with the patient and a platform that not only provides the EHR but the broader infrastructure to support info exchange and other discrete modular apps could be quite successful in this market for the reasons I outlined. As another commenter mentioned though, that takes some serious cash and most investors are unwilling to go deep in one vertical, especially one as challenging as healthcare.

      • Dan Munro says:

        John – welcome the chance to debate this with you – maybe beers at the Hilton in SFO @ H20 ?

        I don’t disagree with the opportunity – but I also see several early stage companies working this aggressively (CareCloud, PracticeFusion, drChrono to name 3). The point is – we’re at the earliest stages of the cloud revolution in healthcare – and it really only serves to highlight how immature the healthcare market is for early stage innovation. That begs the larger question – why?

        I don’t see it as a lack of vision with those of us trying to innovate in healthcare – but rather with VC’s that are “loathe” to fund anything early stage in this sector. Healthcare represents 18% of GDP – and 3% of early stage investing. The top 4 categories for early stage investing are Social, Advertising, Games and Storage. Combined they equal 55% of the early stage funding market. http://bit.ly/qo8TH1 That further translates into the fierce competition for the exact talent necessary to build the innovation.

        This is changing – and just this year we’ve seen 3 incubators focused exclusively on healthcare (Rock Health, Blueprint Health and Healthbox). Great news – but they’re all just starting. Y-Combinator, Tech Stars and other successful incubators have been around for years – and are now franchising.

        The cloud revolution is coming to healthcare – it’s just investor delayed.

        Welcome the chance to link up in SFO. Let me know on the beer 😉

      • John Lynn says:

        Hey John,
        Not exactly sure. Seems like we might have been posting at the same time. I checked the time stamp on my post and it says 11:16 PST. I didn’t see your post until the next day though.

        I’ll be interested to hear your thoughts about Carecloud now. It’s interesting, because the info I have says Carecloud might have what you suggest: serious cash. Although, to me that has to be combined with a CEO that’s not looking for the short win. I don’t know all of Albert’s background, but being his second or third company helps him go for the home run as opposed to the easy EHR revenue stream.

        Of course, Carecloud might not be the one that wins the healthcare platform war, but as you said there are macro forces at work that someone will be able to satisfy and do very well.

  6. John, just curious, what are your thoughts of eCW as a candidate to replicate the SF.com model? I have only worked with them twice now but it seems to plausible given their size and architecture.

    • John Moore says:

      Andrew, I know eCW well and just don’t think they have the chutzpah to pull off an SFDC like move in healthcare. Part of the problem at eCW is the UI, part of the problem is the lack of a strong and sexy go to market message that captures the imagination of the market. Beniof is very gifted at marketing and no one that I’ve met to date at eCW comes close. Now Jonathan Bush at athenahealth, he has the chops & chutzpah, but not sure if that platform is completely there yet and they don’t have the market share to command.

      • John Lynn says:

        I agree with John that I couldn’t see eCW doing the SF.com model. To me it seems that eCW’s core has been making the large enterprise like sales. Part of their problem is the lack of culture, UI , etc that John mentions, but the other part is the distraction of significant EHR revenue. Hard to overcome that revenue distraction to focus on a different revenue model.

  7. John, thanks as always for your insightful perspective on our industry. We agree that it is crucial that healthIT solutions provide an integrated ecosystem that fits well with existing provider workflows, allows for secure messaging and information exchange, and provides robust data management. At NaviNet, we are committed to serving our provider network with solutions that enable a unified approach to patient information management (unifiedPIM.com). For more information on the solutions we offer to providers, please contact us or visit our provider information (http://www.navinet.net/provider-physician-solutions).

  8. Jim Bartolotta says:

    Hi John – Is what you are describing something along the lines that HealthyCircles is trying to do?

  9. Lehr says:

    Hey John – great piece. My bet would be on HIE hybrid companies that can figure out a sustainability/business model and can provide EHR functionality.

    New and old EHR companies (Practice Fusion, AthenaHealth, NextGens etc) have succeeded in digitizing data but haven’t really helped with the “sharing” of data to improve care/outcomes.

    EHR hybrids (Mitochon Systems, CareCloud, etc) could also be game changers but it is too early to tell. Legacy systems with a new paint job and change management are our biggest speed bumps to progress.

  10. Observer says:

    What about AdvancedMD; they were just acquired by ADP which might provide the deep pockets necessary for such a move. Thoughts?

  11. Enrique Estrada says:

    This was a good post. I was at the Dreamforce last month, and as always, I was impressed with Marc Benioff’s keynote. The question isn’t so much about which healthcare vendor will pull off the SaaS model better, but what company will be the visionary to take the bold step on building an HIE, EHR, EMR, Practice Management products on a collaboration and social medial platform.

    I walked out of that morning session brainstorming on this notion. It’s time for the revolution to take place in healthcare! I honestly don’t think it will be the market leaders that do this, but rather the smaller companies or start-ups that have a clean slate to start off with.

  12. […] Provide Robust Security – No Leakage: Sales leads are a sales person’s bread and butter and they guard them with their lives for it truly is their livelihood. Thus, Salesforce had to build a system that ensured a sales person’s leads were their own with no possibility of a breach (leakage) to a competitor. If Salesforce can meet this strict requirement, is it such a stretch to preserve the integrity of personal health information (PHI) on such a system? Focus on the Data & Deliver Simple Yet Useful Analytics: Sales is often a numbers game. This requires superior, robust data management and ultimately the ability to create a wide variety of pre-configured and customizable reports. As we move towards value-based contracts, providers of all sizes will be asked to provide reports as well (typically on quality metrics) to those paying the bills (CMS, payers, etc.). Who Will be the Salesforce.com of Healthcare IT? « Chilmark Research […]

  13. TPacileo says:

    There is certainly some great discussion here, however I was surprised to see 3 vendors not even mentioned in all the comments and they are, eVariant’s MyHealthConnect solution built on the force.com platform, CPM.com and the former Reach3 (now part of MedSeek). All three of these up and comers have CRM, PRM, data management and content management components. MyHealthConnect was also named a“Top 5” Finalist by Salesforce.com in AppQuest 2010. Since that time they have been on a rapid expansion plan and have also received outside funding from Health Enterprise Partners (HEP), a New York based Growth Equity firm that invests exclusively in health care services and technology businesses.

    Both CPM and Medseek are competitors each with a slightly different focus and are build on more priority type platforms.

    In my opinoin, MyHealthConnect is on track to become the salesforce.com of healthcare IT

  14. Don Baag, MD says:

    Hello, any updates on this thread? Came across this topic due to my search for CRM and EHR. What I find missing in EHR/EMR is the ability to function as a true contact/project managing CRM. As an earlier contributor stated, most vendors provide practice management as opposed to patient management. The closest I found was Bestnotes, but haven’t yet explored them in detail. I’m using Practice Fusion now but it is woefully impossible. eCW was my previous EMR and that was worse than PF and definitely not a true web-based SAAS platform. You guys seem to miss that one.

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