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Cerner Agrees To Pay $106M Over Allegedly Defective Software

After years of back and forth, Cerner has settled a dispute with a North Dakota hospital claiming that Cerner’s financial software was defective and didn’t deliver expected business benefits.

Back in April 2012, Trinity Health told the vendor that it was transitioning away from Cerner’s patient accounting software solution and certain IT services provided by Cerner. At the time, it alleged that the patient accounting solution didn’t work right.  Of course, Cerner disputed the allegations, according to its 10-K yearly report.

The two players began arbitration in December 2013, a move which allowed Cerner to collect some payments due from the hospital.  At the outset, Cerner was predicting liability you of up to $4 million, while Trinity anticipated damages totaling $240 million.

Ultimately, the two agreed upon a settlement under which Cerner would pay Trinity $106 million. Interestingly, Trinity is continuing as a client of Cerner for its clinical solutions, something you might not expect under the circumstances.

This is a particularly unusual outcome for a vendor/hospital dispute, because most vendor contracts contain clauses to eliminate “consequential damages,” which limit hospital’s ability to take legal action, notes Trinity attorney Michael Dagley. That being said, there are areas under state and common law provisions of consumer fraud statutes, under which manufacturers cannot misrepresent product capabilities and benefits.

Knowing how hard it is for a hospital to sue a vendor of IT services, it makes you wonder whether the growing number of hospitals dumping their current EMR are doing so because they’re not getting what they want but can’t sue to get their money back.  While it may be heinously expensive, buying a new EMR and installing it is certainly faster than going through years of court proceedings and then having to buy another EMR nonetheless.

March 12, 2014 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 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.

Large Health Systems May Miss Stage 2 Deadline

Usually, it’s the small institutions that are having fits when an IT program deadline is approaching. This time around, it’s the big boys that are struggling.

Intermountain Healthcare has announced that the organization will probably not attest to Stage 2 of the Meaningful Use program this year over concerns about patient safety, according to iHealthBeat

In an interview with HealthLeaders Media, CIO Marc Probst said that with the organization transitioning from its own EMR to EMR software from Cerner, all the software will not be running at all of the locations by the end of this year. This isn’t surprising after the relatively recent announcement that Intermountain would be switching to Cerner.

It’s not clear what it says about the success of the Meaningful Use Stage 2 program, other than that Intermountain has other priorities, but it does make you wonder what other large health systems will take a similar posture.

After all, ONC Chief Medical Officer Jacob Rieder (who also spoke with HealthLeaders) said that other large institutions are reporting similar situations. As amazing as it sounds considering the money involved, I won’t be surprised if we see more institutions following similar paths. There are a decent number of hospitals that haven’t even selected an EHR software.

According to Reider, it will be easier for small providers to meet Stage 2 requirements, given that they generally don’t have to plan as far into the future. But when it comes to large health systems, it seems that achieving this year’s Meaningful Use goal is a bridge too far.

March 4, 2014 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 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.

Hospitals Don’t Prepare For Full Costs of EMR Installs

A new study published in Medical News Today concludes that UK hospitals aren’t always taking into account the full costs of implementing new EMRs, and as a result, are not receiving the full benefits of these systems.

The study, which was published in the Journal of the American Medical Informatics Association, evaluated the implementation of three EMRs — iSOFT’s Lorenzo Regional Care, Cerner’s Millenium and CSE’s RIO — across 12 diverse healthcare organizations in three regions of the UK and at different stages of implementing the systems.

Researchers also conducted 41 semi structured interviews with 36 hospital staff, members of the respective implementation teams, and those spearheading the implementation at a national level.

The research team found four overarching cost categories associated with implementing EMR system: infrastructure, personnel, facilities and other (such as training materials).

As might be expected, the hospitals involved spent their EMR budget in significantly different ways. For example some hospitals spend big on testing the software, while others spent large sums training clinicians and administrative staff to use the new system.

The hospitals also made significantly different decisions when it came to hiring new staff to cover for those who were in training. One hospital spent over $1.1 million to provide covering staff, while another spent no money at all to cover from for staff and training.

When all was said and done, hospitals were most likely to cut back on training and implementation costs. Meanwhile, hospitals were also likely to under budget for factors such as the need to back fill staff to the lost productivity, and the need to test the system due to inadequate vendor testing.

February 17, 2014 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 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.

2013 Hospital EHR and Health IT Trends

There are a number of amazing milestones and trends happening with EHR and Healthcare IT. I think as we look back on 2013, we’ll remember it for a number of important changes that impact us for many years to come. Here are a few of the top trends and milestones that I’ll remember in 2013.

Epic and Cerner Separate Themselves – This has certainly been happening for a couple of years, but 2013 is the year I’ll remember that everyone agreed that for big hospitals it’s a two horse race between Cerner and Epic. There’s still an amazing battle brewing for the small hospital with no clear winner yet. However, in the large hospital race the battle between Cerner and Epic is on. Epic had been winning most of the deals, but Cerner just gave them a big left hook when Intermountain chose Cerner.

I expect we’re living in an Epic and Cerner world until at least a few years post meaningful use. The job listings on Healthcare IT Central illustrate Cerner and Epic dominance as well.

Near Universal EHR Adoption in Hospitals – I can’t find the latest EHR adoption (meaningful use) numbers from ONC, but the last ones I saw were in the high 80′s. That basically leaves a number of small rural hospitals that likely don’t have much tech infrastructure at all, let alone an EHR. Every major hospital institution now has an EHR. I guess we can now stop talking about hospital EHR adoption and start talking about hospital EHR use?

The Cracks in the Healthcare Interoperability Damn Appear – Interoperability has always been a hard nut to crack in healthcare. Everyone knew it was the right thing to do, but there were some real systemic reasons organizations didn’t go that direction. Not to mention, there was little financial motivation to do it (and often financial disincentive to do it).

With that background, I think in 2013 we’ve started to see the cracks in the damn that was holding up interoperability. They are still just cracks, but once water starts seeping through the crack the whole structure of the damn will break and the water will start flowing freely. Watch for the same with interoperability. Some of this year’s cracks were started with the announcement of CommonWell. I think in response to being left out of CommonWell, Epic has chosen to start being more interoperable as well.

Skinny Data Happens – I was first introduced to the concept of skinny data vs big data at HIMSS 2013 by Encore Health Resources. While I’m not sure if the skinny data branding will stick, the concept of doing a data project with a slice of data that has meaningful (excuse the use of the word) outcomes is the trend in data analytics and it’s going to dominate the conversations going forward.

As I posted on EMR and EHR, Big Data is Like Teenage Sex, but skinny data is very different. Skinny data is about doing something valuable with the data. Sadly, not enough people are doing skinny data, but they all will in 2014.

Hospitals Ignore Consumer Health Devices – Consumer health devices are popping up everywhere in healthcare. We’re quickly reaching the point that consumers can monitor all of their vital information at near hospital grade quality using their smartphone and sometimes an external device. This is a real revolution in medical devices. Many are still making their way through FDA approval, but some have passed and are starting to work on traction.

With all of this innovation, hospitals seemed to have mostly ignored what’s happening. Sure, the larger ones have a few pilot projects going. However, most hospitals have no idea what’s about to hit them upside the head. Gone will be the days of patients going to the hospital to be “monitored.” I don’t think most hospitals are ready for this shift.

December 31, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

Cerner Forced To Pay Out Large Settlement To Customer

Cerner has struck a settlement agreement with one of its customers which will force the giant IT vendor to take significant charge against its fourth-quarter earnings.

The client, Trinity Medical Center of Minot, N.D., claimed last year that the patient accounting software sold by Cerner in 2008 was defective and didn’t deliver on the promised business benefits.

In the suit, the medical center asked for $240 million in damages, while Cerner only estimated damages of $4 million.  To settle the matter, the two parties agreed to go into arbitration, according to a report in the Wall Street Journal.

While the amount of the settlement was not disclosed in court filings, Cerner clearly got its clock cleaned. The vendor issued a statement saying that it “strongly disagreed” with the amount the hospital was awarded.

As a result of the arbitration settlement, Cerner will take a charge of $0.18 to $0.19 per share for the quarter ending Dec. 23, 2013. Clearly, Cerner came out on the wrong side of the deal, and then some. And it’s not used to losing. The vendor’s statement also noted that this settlement was “the only material judgment against Cerner in its 34-year history.”

While both Cerner and Wall Street will get over this matter, it’s still something of a landmark in the IT vendor business. Most of the time, IT vendor contracts have customers so tied up in knots that they can’t even speak about their experiences with the product, much less take the vendor to court for for poor product performance.

December 17, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 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.

Raising HCAHPS Scores Through Automated Medication Teaching Workflow

In the current government regulation controlled environment we live in called healthcare, there’s little time or attention available to doing really cool innovative things. Yes, we’re doing really innovative things to meet meaningful use, but that’s not cool. However, I was pretty intrigued by this recent case study that looked at the integration of Cerner’s EHR with GetWellNetwork’s interactive TV system.

The integration looked to help automate the medication teaching workflow at Christiana Hospital. Here are the goals they listed for the project:

  • Provide efficient staff workflow
  • Increase medication education HCAHPS scores
  • Increase patient and staff satisfaction
  • Improve education consistency
  • Increase the number of patient that take part in education
  • Provider secure access to the patient’s medication list
  • Meet Christiana Care Health System and Join Commission standards for patient education

Is it really innovative to connect a hopsital’s HIS system with a patient beside TV? Anyone who’s worked on integrations knows this is a challenge. Plus, how many other hospital systems have achieved this level of integration? If innovation is the wrong word, then how about impactful?

The best illustration of the impact was the improvement in HCAHPS scores that the hospital saw after implementing this medication education workflow. In fact, let’s be honest. If I hadn’t mentioned that this improved HCAHPS scores, then you probably wouldn’t have been reading this post at all. There are only a few things that get the attention of hospital CIOs today. One of those is improved HCAHPS scores.

November 25, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

Billionaire Patrick Soon-Shiong Shares NantHealth Details

I’m really glad that I didn’t hear about the Forbes Healthcare Summit, because I would have wanted to attend and I’m already traveling too much as is. With that said, it’s great that Forbes has put all of the sessions from the Forbes Healthcare conference online. I’m interested in checking out more of the videos, but I was quite intrigued by the interview with billionaire, pharmaceutical inventor, and entrepreneur Patrick Soon-Shiong, Chairman and CEO, NantHealth.

One stat that’s really intriguing is it takes “47 seconds versus 60 days for a personalized genetic analysis.” One thing I love about billionaires is that they don’t know how to think small. They could certainly be wrong in their approach, but they always go after big goals.

Also, about 30 minutes in Patrick Soon-Shiong talks about whether NantHealth will replace the Epic and Cerner EHR.

Thanks to Pat Rioux for pointing out this video to me.

October 23, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

Virtualization, Speech Recognition App Use Growing Among Hospitals

Virtualization software and dictation with speech recognition are likely to see increased uptake among hospitals in coming years, according to data from HIMSS Analytics.

The data, which is drawn from its Essentials of the U.S. Hospital Market, Autumn 2013 report, suggests that virtualization and dictation with speech recognition are top areas for growth potential, ahead of most other apps profiled in the report.

According to a HIMSS statement, these findings are consistent with other research the organization has done in the past which has suggested growing adoption of voice recognition-based transcription technologies.

The HIMSS report also concludes that demand for ambulatory EMRs and ambulatory PACS seems to be growing, according to the press release.

My colleague John Lynn and I had a huddle to discuss these results and while I see the growth in demand for voice recognition, he’s a bit more skeptical.  In  his view, voice recognition hasn’t changed much over the last couple of years, so it’s not clear to him whey there’d be an upsurge in demand now. Did Siri-like technologies make us more comfortable with voice recognition?

The only exception to this, he suggested, may be some integration deals that Nuance did with Cerner and Epic that might cause an increase in voice recognition adoption. However, this will only be mostly those who wanted voice recognition already as opposed to converting new people to voice recognition.

On my end, I’m a bit more bullish on voice recognition technology, at least if EMRs are capable of parsing the narrative into fields in the EMR.  I’m aware of some EMR vendors and some independent software vendors that are doing this or headed in that direction.

As for virtualization, John is a bit more excited about the future. After all, as he notes, there’s some cost savings and redundancy, plus fail over, that are nice benefits of virtualization. He’s also a fan of its disaster recovery and business continuity capabilities, in that if one server dies, you can roll a whole virtual machine over to another seamlessly.

As for me, I’d argue that any technical trend you see here could be changed abruptly as the EMR market shifts. Let’s see how the next Meaningful Use phase, and the further consolidation of the EMR sector, affects what’s hot and what’s not.

October 21, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 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.

Should Hospital Associations Choose EMRs?

Today I read a press release trumpeting the new relationship between the Texas Hospital Association and Enterasys Networks, which is now the THA’s preferred provider for wired and wireless network infrastructure products.

When I read this I found myself thinking “wow, is it really that easy?” Will hospitals rely on intermediaries like the THA to do the due diligence and sort out what sort of networking gear they should buy?

To me, this is an intriguing concept which could easily and logically extend to EMRs. After all, state hospital associations could do an analysis of an EMR’s technical strength, usability, interoperability and features as well as a  health system or hospital could.

It would certainly upend the industry if hospital associations routinely got down and dirty with EMRs, went through a selection process and put their “recommended” stamp on a small handful of systems.

If nothing else, it would be a shock to vendors, who would have to create new channel relationships with the associations, quickly and well. Marketing to associations wouldn’t superceded marketing to individual hospitals completely, but it would add a new layer of effort.

It would also give some attention to lesser-known EMR vendors. I’d argue that in an honest process, it’s unlikely that all — or even most — of the hospital associations would only choose as “winners” the enterprise EMRs that dominate the market today.  This is not to say that giants like Epic and Cerner would never be selected; it’s just that as I imagine it, a thorough hospital association selection process would identify some underdogs that deserve hospitals’ business.

The truth is, though, that most hospital associations wouldn’t want to go down the road of officially putting their stamp of approval on a small collection of EMRs. The task is enormous, the political costs high if members don’t agree with their choices, and the downside is considerable if a recommended vendor completely flames out in some way.

No,  it seems to me that while the THA has put its credibility on the line for Enterasys, I don’t see it (or its peers in other states) sticking an oar in the EMR selection business. There’s just too much at stake. They’ll spend their last penny fighting regulatory battles — particularly as Meaningful Use steams along — but hospital trade groups are not going to become the EMR Fairy.

October 10, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 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.

EMR Upgrade Cycles are Painful – Are You Prepared for Them?

Everyone gets so excited and worked up about the initial EMR implementation, but so many discount the effort that’s required for every EMR update cycle as well. Dr. Jayne from HIStalk gave a great first person perspective on EMR update cycles:

I figure I’ve got about two weeks of the good life left and then I’m going to be back in an upgrade cycle with all the standing meetings that entails. I’ll be back in the trenches testing workflows and trying to find defects as quickly as possible so that our vendor can roll them into patches before we go live. Every time we upgrade it reminds me more and more of some kind of military assault. I’m not sure if it’s just the way we run them or a little bit of post-traumatic stress. Maybe it’s a little of both.

I’m also reminded of Heather Haugen’s comments about EHR upgrade cycles: “software upgrades erode adoption over time and so with every upgrade you need a commensurate effort to retrain adoption.” Far too often organizations underestimate the impact and challenge associated with EMR upgrades.

Over the next couple years, those upgrades will likely be tied to an organization’s meaningful use plan. So, those will likely go better than some nebulous EMR upgrade plan. However, those organizations who underestimate the impact of EMR upgrades on their organization will pay the price later.

I know that many believe that in the large hospital space it’s a two horse race between Cerner and Epic. However, when you consider the challenges and costs associated with upgrading those software, don’t be surprised if some smaller scrappy startup can exploit the EMR upgrade opportunity. I don’t think it will happen until after meaningful use and EHR incentive money run their course, but it will happen.

October 7, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.