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Would Cerner DoD Loss Seal Its Fate As An Also-Ran?

Posted on July 29, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

As everyone knows, Epic has attained a near-unbeatable place in the race for U.S. hospital market share. By one important criterion, Meaningful Use attestations, Epic has the lead hands down, with about 186,000 attestations as of March 2015 compared with 120,331 attestations on Cerner systems.

That being said, Cerner is hardly an insignificant force in the hospital EMR marketplace. It’s a multibillion-dollar powerhouse which still holds a strong #2 position and, if a casual survey of Web and social media commentary is to be believed, has done far less to alienate its customers with high-handed tactics. And while Cerner systems are far from cheap, you don’t regularly see headlines citing a Cerner investment as pivotal in a hospital’s credit rating taking a pratfall. Also, Cerner has the most contracts with MU-eligible hospitals, holding contracts with about 20% of them.

Nonetheless, there’s an event looming which could tip the scales substantially further in Epic’s direction. As many readers know, Epic is part of a team competing for the Department of Defense’s $11B Healthcare Management Systems Modernization contract (Word on the street is that we could hear the winner of the DoD EHR bid this week). I’d argue that if Epic wins this deal, it might have the leverage to push Cerner’s head under water once and for all.  Cerner, too, is fighting for the deal, but if it wins that probably won’t be enough to close the gap with Epic, as it’s harder to play catch up than to zoom ahead in a space you already control.

Now my colleague John argues that winning the DoD contract might actually be bad for Epic. As he sees it, losing the DoD deal wouldn’t do much damage to its reputation, as most hospital leaders would understand that military healthcare bears little resemblance to commercial healthcare delivery. In fact, he contends that if Epic wins the contract, it could be bad for its customers, as the Verona, Wisc.-based giant may be forced to divert significant resources away from hospital projects. His reasoning makes sense.

But losing the DoD contract would almost certainly have a negative impact on Cerner. While Epic might not suffer much of an image loss if it loses the contest, Cerner might. After all, it doesn’t have quite the marquee list of customers that Epic does (such as the Cleveland Clinic, Massachusetts General Hospital, Mayo Clinic and the Johns Hopkins Hospital). And if Cerner’s rep suffers, look out. As a surgeon writing for investor site Seeking Alpha notes, the comparatively low cost of switching TO Cerner can just as easily be used as a reason to switch AWAY FROM Cerner.

What’s more, while Cerner’s acquisition of Siemens’ health IT business — adding the Soarian product to its stable — is likely to help the company differentiate itself further going forward, but that’s going to take a while.  If Cerner loses the DoD bid, the financial and PR hit could dampen the impact of the acquisition.

Net-net, I doubt that Cerner is going to lie down and play dead under any circumstances, nor should it. Epic may have a substantial advantage but there’s certainly room for Cerner to keep trucking. Still, if Cerner loses the DoD bid it could have a big impact on its business. Now is the time for Cerner to reassure current and potential customers that it’s not planning to scale back if Epic wins.

Why Not “Meaningful Interoperability” For EMR Vendors?

Posted on July 28, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

At this point, arguably, Meaningful Use has done virtually all of the work that it was designed to do. But as we all know, vendors are behind the curve. If they aren’t forced to guarantee interoperability — or at least meet a standard that satisfies most interconnectivity demands — they’re simply not going to bother.

While there’s obviously a certification process in place for EMR vendors which requires them to meet certain standards, interoperability seemingly didn’t make the cut. And while there’s many ways vendors could have shown they’re on board, none have done anything that really unifies the industry.

PR-driven efforts like the CommonWell Alliance don’t impress me much, as I’m skeptical that they’ll get anywhere. And the only example I can think of where a vendor  is doing something to improve interoperability, Epic’s Care Everywhere, is intended only to connect between Epic implementations. It’s not exactly an efficient solution.

A case in point: One of own my Epic-based providers logged on to Care Everywhere a couple of weeks ago to request my chart from another institution, but as of yet, no chart has arrived. That’s not exactly an effective way to coordinate care! (Of course, Epic in particular only recently dropped its fees for clinical data sharing, which weren’t exactly care coordination-friendly either.)

Increasingly, I’ve begun to think that the next stage of EMR maturation will come from some kind of “Meaningful Interoperability” incentive paid to vendors who really go the extra mile. Yes, this is iffy financially, but I believe it has to be done. As time and experience have shown, EMR vendors have approximately zero compelling reasons to foster universal interoperability, and perhaps a zillion to keep their systems closed.

Of course, the problem with rewarding interoperability is to decide which standards would be the accepted ones. Mandating interoperability would also force regulators to decide whether variations from the core standard were acceptable, and how to define what “acceptable” interoperability was. None of this is trivial.

The feds would also have to decide how to phase in vendor interoperability requirements, a process which would have to run on its own tracks, as provider Meaningful Use concerns itself with entirely different issues. And while ONC might be the first choice that comes to mind in supervising this process, it’s possible a separate entity would be better given the differences in what needs to be accomplished here.

I realize that some readers might believe that I’m dreaming if I believe this will ever happen. After all, given the many billions spent coaxing (or hammering) providers to comply with Meaningful Use, the Congress may prefer to lean on the stick rather than the carrot. Also, vendors aren’t dependent on CMS, whose involvement made it important for providers to get on board. And it may seem more sensible to rejigger certification programs — but if that worked they’d have done it already.

But regardless of how it goes down, the federal government is likely to take action at some point on this issue. The ongoing lack of interoperability between EMRs has become a sore spot with at least some members of Congress, for good reasons. After all, the lack of free and easy sharing of clinical data has arguably limited the return on the $30B spent on Meaningful Use. But throwing the book at vendors isn’t going to cut it, in my view. As reluctant as Congressional leaders may be to throw more money at the problem, it may be the only way to convince recalcitrant EMR vendors to invest significant development resources in creating interoperable systems.

Key Big Data Challenges Providers Must Face

Posted on July 17, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Everybody likes to talk about the promise of big data, but managing it is another story. Taming big data will take new strategies and new IT skills, neither of which are a no-brainer, according to new research by the BPI Network.

While BPI Network has identified seven big data pain points, I’d argue that they boil down to just a few key issues:

* Data storage and management:  While providers may prefer to host their massive data stores in-house, this approach is beginning to wear out, at least as the only strategy in town. Over time, hospitals have begun moving to cloud-based solutions, at least in hybrid models offloading some of their data. As they cautiously explore outsourcing some of their data management and storage, meanwhile, they have to make sure that they have security locked down well enough to comply with HIPAA and repel hackers.

Staffing:  Health IT leaders may need to look for a new breed of IT hire, as the skills associated with running datacenters have shifted to the application level rather than data transmission and security levels. And this has changed hiring patterns in many IT shops. When BPI queried IT leaders, 41% said they’d be looking for application development pros, compared with 24% seeking security skills. Ultimately, health IT departments will need staffers with a different mindset than those who maintained datasets over the long term, as these days providers need IT teams that solve emerging problems.

Data and application availability: Health IT execs may finally be comfortable moving at least some of their data into the cloud, probably because they’ve come to believe that their cloud vendor offers good enough security to meet regulatory requirements. But that’s only a part of what they need to consider. Whether their data is based in the cloud or in a data center, health IT departments need to be sure they can offer high data availability, even if a datacenter is destroyed. What’s more, they also need to offer very high availability to EMRs and other clinical data-wrangling apps, something that gets even more complicated if the app is hosted in the cloud.

Now, the reality is that these problems aren’t big issues for every provider just yet. In fact, according to an analysis by KPMG, only 10% of providers are currently using big data to its fullest potential. The 271 healthcare professionals surveyed by KPMG said that there were several major barriers to leveraging big data in their organization, including having unstandardized data in silos (37%), lacking the right technology infrastructure (17%) and failing to have data and analytics experts on board (15%).  Perhaps due to these roadblocks, a full 21% of healthcare respondents had no data analytics initiatives in place yet, though they were at the planning stages.

Still, it’s good to look at the obstacles health IT departments will face when they do take on more advanced data management and analytics efforts. After all, while ensuring high data and app availability, stocking the IT department with the right skillsets and implementing a wise data management strategy aren’t trivial, they’re doable for CIOs that plan ahead. And it’s not as if health leaders have a choice. Going from maintaining an enterprise data warehouse to leveraging health data analytics may be challenging, but it’s critical to make it happen.

Interoperability Becoming Important To Consumers

Posted on June 26, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

The other day, I was talking with my mother about her recent primary care visit — and she was pretty po’d. “I can’t understand why my cardiologist didn’t just send the information to my family doctor,” she said. “Can’t they do that online these days? Why isn’t my doctor part of it?”

Now, to understand why this matters you need to know that my mother, who’s extremely bright, is nonetheless such a technophobe that she literally won’t touch my father’s desktop PC. She’s never opened a brower and has sent perhaps two or three e-mails in her life. She doesn’t even know how to use the text function on her basic “dumb” phone.

But she understands what interoperability is — even if the term would be foreign — and has little patience for care providers that don’t have it in place.

If this was just about my 74-year-old mom, who’s never really cared for technology generally, it would just be a blip. But research suggests that she’s far from alone.

In fact, a study recently released by the Society for Participatory Medicine and conducted by ORC International suggests that most U.S. residents are in my mother’s camp. Nearly 75% of Americans surveyed by SPM said that it was very important that critical health information be shared between hospitals, doctors and other providers.

What’s more, respondents expect these transfers to be free. Eighty seven percent were dead-set against any fees being charged to either providers or patients for health data transfers. That flies in the face of current business practices, in which doctors may pay between $5,000 to $50,000 to connect with laboratories, HIEs or government, sometimes also paying fees each time they send or receive data.

There’s many things to think about here, but a couple stand out in my mind.

For one thing, providers should definitely be on notice that consumers have lost patience with cumbersome paper record transfers in the digital era. If my mom is demanding frictionless data sharing, then I can only imagine what Millenials are thinking. Doctors and hospitals may actually gain a marketing advantage by advertising how connected they are!

One other important issue to consider is that interoperability, arguably a fevered dream for many providers today, may eventually become the standard of care. You don’t want to be the hospital that stands out as having set patients adrift without adequate data sharing, and I’d argue that the day is coming sooner rather than later when that will mean electronic data sharing.

Admittedly, some consumers may remain exercised only as long as health data sharing is discussed on Good Morning America. But others have got it in their head that they deserve to have their doctors on the same page, with no hassles, and I can’t say the blame them. As we all know, it’s about time.

Bosch’s Telemedicine Shutdown Suggests New Models Are Needed

Posted on June 25, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

While many new telehealth plays are rapidly gaining ground, the previous generation may be outliving its usefulness. That may be the message one can take from one giant German conglomerate’s decision to shut down its U.S. telemedicine division.

Robert Bosch GmbH recently announced that it would shut down its U.S. telehealth unit, Robert Bosch Healthcare Systems, which makes business-to-business telemedicine systems. Its offerings include patient interfaces, software and platforms.

You may never have heard of this healthcare company, nor of its massive corporate parent Robert Bosch GmbH, but it’s part of a very large conglomerate with virtually infinite resources.

As it turns out, Bosch is a massive firm which competes with market leaders like GE and Siemens. Robert Bosch GmbH, which has existed since 1886, has more than 350 subsidiaries across about 60 countries and employs about 306,000 people. (I could share more, but I’m sure you get the idea.)

While the failure of one company’s telemedicine strategy doesn’t necessarily mean death for all similar plays, it does suggest that the nimble smaller firms may have more of an advantage than it appears.

Bosch Healthcare was actually way ahead of the market with its offerings, which included remote monitoring tools such as a touch-screen device for home use after hospital discharge and a family of mHealth tools aimed at chronic care management.But they appear to have been held back by proprietary technologies in a market that demands cheap and easy.

Ultimately, the end came when the parent company wasn’t happy with how the telehealth division was performing financially, and decided to cut and run. A statement from the company said that Bosch plans to shift its medical focus to sensor technologies to support improved diagnostics.

It’s hardly surprising that a company Bosch’s size would fail to keep up with the marketplace, given its size. No matter how smart the division’s 125 employees were, they were probably saddled with big company politics which prevented them from making big changes. Not to mention low priced tablets appeared and created a low cost competitor.

The question is, will other large players follow Bosch’s lead? It will be worth noting whether other large companies cede the telehealth market to small and emerging entrants as well. It’s not a no-brainer that this will happen; after all, there’s billions to be made here. But they may actually be wise enough to know when they’re ill-equipped to proceed.

I’ll be particularly interested to see what strategies existing health IT players adopt toward telehealth. It’s unclear how they’ll react to rising consumer and professional interest in telehealth technology, but whatever they do it will probably be worth analyzing.

That being said, with smaller companies out there breaking new ground with next-gen telemedicine apps and tools, they’re probably going to be in the unusual position of playing catch up. And in this case, slow and steady may not win the race.

Lessons To Consider When Weathering M&A Transitions

Posted on June 24, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

These days, the need for sophisticated IT infrastructure and the shift to risk-bearing insurance contracts are increasingly favoring large, muscular players. Not surprisingly, healthcare industry M&A is reaching a new peak.  Just about any substantial healthcare organization is facing the question of whether to acquire outside players and bulk up, merge with a bigger healthcare player or risk going it alone.

Particularly if you’re doing the acquiring, however, achieving critical mass is just the first in a long, difficult series of steps necessary to success. Health systems, in particular, face difficult management challenges when they try to integrate all of the moving parts necessary to survive as a next-gen organization.

A new study commissioned by West Monroe Partners, however, may shed some light on how to think about M&A integration issues. The study, which focuses on mid-market deals (between $300M and $2B) looks at post-merger integration across several industries, but I’d argue that its lessons still make sense for hospitals. Their tips for managing post-merger transitions include the following:

  • Start planning early:  West Monroe researchers found that companies which considered integration strategies as they began targeting and negotiating with merger partners were more successful in integration. Specifically, these companies were able to integrate more deeply than firms that didn’t began planning till pre-merger preparations were already under way.
  • Pay close attention to cultures: Here’s an eye-opening stat: more than half of companies surveyed by researchers said that merger value was lost due to lack of attention to differences in corporate cultures. Clearly, giving lip service to this issue but failing to address it intelligently can be costly.
  • Poor change management impacts future dealmaking:  In a clear case of “sadder but wiser,” a whopping 94% of survey respondents said that they would place more emphasis on change management next time they managed post-merger integration efforts. The study doesn’t spell out why but it seems likely that their past efforts blew up on them. Given that many health systems won’t stop at one deal in this climate, this is an important point.
  • Communicating change well is essential: About three-quarters of mid-market execs said that communicating change to their staff was one of the hardest parts of integration, and 62% said that communicating to outsiders was a major challenge. Many seem unhappy with the results of the past efforts, as 57% said this was a key area for improvement.

Some of these suggestions may be discouraging for hospital leaders. After all, required and important changes like the ICD-10 transition and ongoing EMR changes may already have staffers near burnout, and they may react badly to coping with added cultural changes.

That being said, the survey results also suggest that many of the integration challenges healthcare organizations face can be headed off somewhat by smart planning.  At least there’s something execs can do to cushion the blow.

Even Without Meaningful Use Dollars, EMRs Still Selling

Posted on June 10, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

I don’t know about you, readers, but I found the following data to be rather surprising. According to a couple of new market research reports summarized by Healthcare IT News, U.S. providers continue to be eager EMR buyers, despite the decreasing flow of Meaningful Use incentive dollars.

On the surface, it looks like the U.S. EMR market is pretty saturated. In fact, a recent CMS survey found that more than 80% of U.S. doctors have used EMRs, spurred almost entirely by the carrot of incentive payments and coming penalties. CMS had made $30 billion in MU incentive payments as of March 2015. (Whether they truly got what they paid for is another story.)

But according to Kalorama Information, there’s still enough business to support more than 400 vendors. Though the research house expects to see vendor M&A shrink the list, analysts contend that there’s still room for new entrants in the EMR space. (Though they rightfully note that smaller vendors may not have the capital to clear the hurdles to certification, which could be a growth-killer.)

Kalorama found that EMR sales grew 10% between 2012 and 2014, driven by medical groups doing system upgrades and hospitals and physician groups buying new systems, and predicts that the U.S. EMR market will climb to $35.2 billion by 2019. Hospital EMR upgrades should move more quickly than physician practice EMR upgrades, Kalorama suggests.

Another research report suggests that the reason providers are still buying EMRs may be a preference for a different technical model. Eighty-three percent of 5,700 small and solo-practitioner medical practices reported that they are fond of cloud-based EMRs, according to Black Book Rankings.

In fact, practices seem to have fallen in love with Web-based EMRs, with 81% of practices telling Black Book that they were happy with implementation, updates, usability and ability to customize their system, according to the Q2 2015 survey. Only 13% of doctor felt their EMRs met or exceeded expectations in 2012, when cloud-based EMRs were less common.

Now, neither research firm seems to have spelled out how practices and hospitals are going to pay for all of this next-generation EMR hotness, so we might look back at the current wave of investment as the time providers got in over their head again. Even a well-capitalized, profitable health system can be brought to its knees by the cost of a major EMR upgrade, after all.

But particularly if you’re a hospital EMR vendor, it looks like news from the demand front is better than you might have expected.

Behold The Arrival of The Chief Mobile Healthcare Officer

Posted on June 9, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Managing fleets of mobile devices is an increasingly important part of a healthcare IT executive’s job. Not only must IT execs figure out how to provide basic OS and application support – and whether to permit staffers and clinicians to do the job with their own devices – they need to decide when and if they’re ready to begin integrating these devices into their overall lines of service. And to date, there’s still no standard model using mobile devices to further hospital or medical practice goals, so a lot of creativity and guesswork is involved.

But over time, it seems likely that health systems and medical practices will go from tacking mobile services onto their infrastructure to leading their infrastructure with mobile services. Mobile devices won’t just be a bonus – an extra way for clinicians to access EMR data or consumers to check lab results on a portal – but the true edge of the network. Mobile applications will be as much a front door to key applications as laptop and desktop computers are today.

This will require a new breed of healthcare IT executive to emerge: the mobile healthcare IT leader. It’s not that today’s IT leaders aren’t capable of supervising large mobile device deployments and integration projects that will emerge as mHealth matures. But it does seem likely that even the smartest institutional HIT leader won’t be able to keep up with the pace of change underway in the mHealth market today.

After all, new approaches to deploying mHealth are emerging almost daily, from advances in wearables to apps offering increasingly sophisticated ways of tracking patient health to new approaches to care coordination among patients, caregivers and friends. And given how fast the frontier of mHealth is evolving, it’s likely that healthcare organizations will want to develop their own hybrid approaches that suit their unique needs.

This new “chief mobile healthcare officer” position should begin to appear even as you read this article. Just as chief medical information officers began to be appointed as healthcare began to turn on digital information, CMHOs will be put in place to make sense of, and plan a coherent future for, the daily use of mobile technology in delivering care. The CMHO probably won’t be a telephony expert per se  (though health systems may scoop up leaders from the health divisions of say, Qualcomm or Samsung) but they’ll bring a broad understanding of the uses of and potential for mobile healthcare. And the work they do could transform the entire institution they serve.

FDA-Approved Digital Health Should Save $100B+ Over Next Four Years

Posted on June 8, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Here’s some research which suggests that a lack of “medical grade” digital health tools is perhaps the final obstacle holding healthcare back adopting them full scale — and reaping the benefits.

Accenture released a study last week concluding that FDA-regulated digital health solutions should save the U.S. healthcare system more than $100 billion between now and the next four years.

The scant number of digital health solutions the FDA has already approved has already had a meaningful impact, generating $6 billion in cost savings last year courtesy of improved med adherence, fewer ED visits and digitally-supported behavior changes, Accenture reports.

But that’s just a drop in the bucket, if Accenture is right. The consulting firm expects our health system to save $10 billion this year thanks to use of such devices. And then, as the FDA approves more digital health technology, the savings figure should make dramatic jumps over the next few years, hitting $18 billion in ’16, $30 billion in ’17 and $50 billion in ’18.

What’s intriguing about these numbers is that they assume each FDA approval will seemingly generate not only more savings, but also a cumulative “whole is greater than the sum of its parts” effect.

After all, in raw numbers, the number of devices Accenture is relying on to achieve this effect is small, from 33 approved last year to 100 by the end of 2018. In other words, 67 devices will help to generate an additional $44 billion in savings.

That being said, what makes Accenture so sure that the ever-so-slow FDA will approve even 70-odd devices over the next few years?

* Provider demand:  At present, about one-quarter of U.S. doctors “routinely” use tele-monitoring devices for chronic disease management, researchers found. As hospitals and medical practices look to integrate such solutions with their core EMR infrastructure, they’ll look to please providers who want digital health tech they can trust.

Reimbursement shifts:  Accenture argues that as value-based reimbursement becomes more the norm, health leaders will increasingly see digital health solutions as a means of meeting their goals. And medical device providers will be only to happy to provide them.

Regulatory conditions: With FDA guidelines in place specifying when wellness tools like heart rate monitors become health devices, it will be easier for the FDA to speed up the process of digital health technologies, Accenture predicts. This should support 30% annual growth of such solutions through 2018, the study found.

Consumer health tracking:  Consumer demand for health tracking devices, especially wearables, should continue its rapid expansion, with the number of consumers owning a wearable fitness device to double from 22% this year to 43% by 2020, according to the consulting firm.

While Accenture doesn’t address the impact of digital health tech that doesn’t get FDA approval, there’s little doubt that it too will have a significant impact on both health outcomes and cost savings. Ultimately, though, it could be that it will take an FDA seal of approval to get widespread adoption of such technologies.

Hospitals Favor IT Investments Over Cash on Hand

Posted on June 5, 2015 I Written By

Anne Zieger is veteran healthcare editor and analyst with 25 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Today I was reading a piece in Healthcare Finance News concluding that now more than ever, hospitals are being judged by financial analysts by the number of days’ cash they had on hand. At the same time, the story noted that hospitals are facing some of the biggest financial stresses they’ve faced in decades, with high patient deductibles and copays leading to drops in collections, switches to risk-based compensation cutting margins and the ever-present need for EMR and other IT investment looming.

When you boil all of this down to the essentials, you’ve got a pitched battle going between the need for current liquidity and the need for future liquidity. While having cash on hand shored up for a rainy day makes analysts like Moody’s happy, failing to spend on the right IT infrastructure undercuts the chances of making it work a few years in the future.

After all, if you don’t have a current revenue cycle management system in place, payments can slip through your hands that could have been collected.  Without spending the right amount in (on the right product, at least) on tools that help manage risk-based contracts, health systems and ACOs can end up losing big money on these contracts.

And even hospitals that aren’t in robust shape are betting their financial future on big EMR investments because they clearly consider it necessary to do so. For example, as I noted in a post earlier this year, Chattanooga, TN-based Erlanger Health System just committed to a 10-year, $100 million deal to put Epic in place despite its only recently having recovered from serious financial challenges.

So the question becomes whether hospitals can risk being cash-poor for now — at least by one measure — in an effort to keep the IT tools they need at hand. Obviously, there’s no one-size-fits-all answer, but industry strategies seem to offer a hint.

The reality seems to be that many health systems and hospitals feel they need to invest in IT upgrades and new technologies whether the traditional metrics fall into line or not. As scary as the regulatory issues (such as the ICD-10 upgrade) and changes in compensation are, health organizations like Erlanger are making the bet that even if it makes them uncomfortable now, having the right IT in place is a must-do.

While I’m no financial genius, my guess is that this means hospitals are going to voluntarily let key metrics like DCOH slip in favor of building for a solid future. I suppose we’ll know in five years or so whether taking such a risk pushed a bunch of hospitals over the cliff.