Where There is Change, There is Opportunity

As I was coming into Vegas, it occurred to me that never before in my 20 plus years of lab it experience have I seen so much change occurring in such a short period of time. We have ACOs coming at us, ICD9 to 10, there is the 4010 to 5010 conversion happening soon, the HITECH Act, stimulus funds, bending the healthcare curve, meaningful use for both ambulatory and acute, wild fires in Arizona and have I mentioned ACOs? We’re also seeing new and strange bedfellows coming around. Insurance companies are getting into the HIE and connectivity business, Quest has an ‘open connectivity strategy’ with Medplus and an EHR 360.

But on the other hand, I don’t think I’ve ever been so optimistic, too! All and all, the hospital and reference markets are doing very well.

If you look at the laboratory market in its entirety, 22% is the national, Lab Corp and Quest. They are organized. They seem to be everywhere telling their and your clients they can connect to an EHR in two weeks for practically free. But here is a surprising statistic; 54% of the lab market is hospitals, the rest is reference specialty labs and 5% POL. But the nationals at 22% are not nearly as big as what I would have guessed and, here is the kicker, they are not growing organically, it’s thru acquisition! Hospital labs are growing organically, so something is going right! Here is another statistic I picked up from an insurance company presentation. People in their 20s and 30s use on average two lab tests a year! People in their 50s, 60s and 70s use over eight! The sea is going to rise as all of us young baby boomers get a tad older.

But there is competition and change, and where there is change, there is opportunity. Let’s take the EHR market for a moment. It’s expected to grow from a 20-80% adoption rate in just a few years. Seventy percent of all EHR data is lab! Seventy to eighty of diagnosis are in part based on laboratory data! So what good is an EHR without the very valuable services the laboratory service market provides? Docs want the data in there, the EHRs want the data, insurance companies want the data and so does the government and, of course you know, it is in part tied to the subsidies.

So in our own analysis, we have determined that a physician on average trades with 2.8 laboratory service providers each and many have more than this. Physicians will want this data electronically, including orders and, if they don’t get it, they may decide to go elsewhere. So here is the opportunity and the threat. Without a strategy and connectivity, your clients might go elsewhere to get it, but with a strategy you can secure, clients who might otherwise leave and you may be able to expand you market share (organic growth) from those labs that are not so well prepared. As an aside, there are there are around 375 to 400 different EHRs out there and we haven’t seen a consolidation yet, we actually are meeting new ones still.

Okay, here is the crass commercial. At Halfpenny, we connect to EHRs, to approximately 128 different EHRs today. We provide this connectivity day in day out and are good at it. We are ‘the’ strategy for some organizations and others we augment or are a backup to existing IT initiatives. We also push results to hand held devices, now orders too, and provide LOINC mapping. Okay, I am done. Anyway, my encouragement is to develop a strategy if you don’t have one and or you might consider a backup position too … and if interested, we’d love to talk with you.

 

Back to the Past with a New Exploding Market

What is the most closed hospital information system (HIS) system available today? Who are open vendors? Sunquest, Cerner, McKesson. Do they have a proprietary integration engine? No, they partner with vendor neutral solutions. Will they coexist with competitors solutions, or allow the hospital to make best in class and best in service choices without penalty?

Historically, open systems architecture and service philosophy has been the topic of many tradeshow seminars, not to mention the promise of most vendors in the HIS market today. It wasn’t always that way. Why? Their constituency wanted the ability to choose specific solutions that best fit their departmental or enterprise needs without bias.

It is a rare hospital that buys all of its IT from a single supplier. Many will argue that a single supplier just does not exist that can competently supply all. Therefore, their clients want a fundamental ability to simply choose and an ability to interoperate without bias. Popular terminology then and now includes ‘best in class,’ ‘best in suite,’ ‘best in service’ or ‘open architecture.’ Can you imagine all the hundreds of vendors trying to work out how to integrate with each other? This is just one of the reason HL7 gained adoption.

Users wanted their systems to work together efficiently, with full functionality and without the penalty of high costs of proprietary integration. From this desire or requirement, open tools were developed to promote this concept of open systems, called integration engines. These engines currently sit in the middle between systems to transfer data allowing all systems equal access and could even conformed to specific formatting requirements. They work very well within this environment and nearly all hospitals have one. They are the clinical, administrative, and ADT information highway within a hospital, and they are open to all applications capable of connectivity.

These engine vendors, not surprisingly, were and are NOT owned by the major HIS vendors. Why? It would be a clear and loud conflict of interest. Would a major HIS vendor be incented to invest in connectivity to its competitors? Absolutely not! An engine vendor that is vendor neutral is very incented; in fact, that is how they make money. It is fundamental to their value. So, many forward-thinking HIS vendors partnered with engine vendors, like McKesson, who used ITC or DataGate for example.

So what is happening now? It is sort of ‘Back to the Past!’ There is a new exploding market, with nearly 400 different ambulatory EHR vendors and growing. Market adoption is going from 20 to 80% in the near term future, an astounding rush to connect with suppliers of clinical information. So the value and promise of an EHR is gained, not to mention stimulus money, but the vendor tactics are as old as the hills!

It seems every vendor with a bias, or ax to grind, wants to control/own the information highway. EHR vendors are developing HIEs that work well with their EHRs but not with others. Big surprise, insurance companies are buying HIE companies. Now this is scary and service providers for laboratory are also trying to own the highway to the physicians EHR. How open are they going to be if they allow another laboratory service provider to play on their highway they lose money? It is fundamental.

But who loses the most? The physician receives one choice free and clear, however, the other choices, if available at all, will come at a penalty, of time, money availability or choice. To trade with other service providers, they will be strapped with multiple point-to-point interfaces that, when evaluated individually, may be cost prohibitive or the expense of operating on multiple highways, which is actually a lot harder than it sounds.

Even though the service providers, out of the goodness of their hearts, are offering to put their proprietary infrastructure in place, it may not be worth it. It reminds me of a Trojans bearing gifts. Don’t be fooled. A service provider who is recommending an open solution is listening and taking a broader view of the market. Look for suppliers who are promoting open systems architecture and mean it.