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November 7, 2011

Hospital M&A Getting Tough (But Misguided) Scrutiny From Lawmakers

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As us in “the biz” know, the pace of hospital M&A isn’t going to slow down anytime soon. Hospitals are huddling together to scale up for countless reasons.

The reasons for hospital consolidation are just about unstoppable, of course, as they include  a) well-founded fears regarding reform, b) trouble carrying the capital capital costs involved in scaling up health IT infrastructure, c) long-term trends squeezing hospital margins and d) the need to participate effectively  in ACOs, HIEs and other alphabet soup organizations.

Unless the government takes over the entire healthcare system and spends these factors away, they’ll push execs into the arms of their peers regardless of what federal policies roll out.  Yes, the FTC can put mergers on hold, and notably, has gone medieval on a few mergers just to prove it can, but let’s not pretend it has the resources to slow hospital consolidation dealflow much either.

So, I must say I was sort of amused to learn that members of the  House Ways and Means Subcommittee on Health took a  stern look at hospital dealmaking and consolidation last month.  You know, to me it’s like standing in a flooded basement in a rainstorm and focusing on a few cracks in the wall — but I digress.

At the hearing, an economics and health policy professor named Martin Gaynor testified that consolidation was picking up speed. He also asserted that studies show hospital prices going up meaningfully whenever hospital markets consolidate.

Geez, Professor Gaynor, you say that like it’s a bad thing! Doesn’t classical economics allow for the supply side folks to work together too, without breaking the system? Whoops, I digress again.

The hearing, which took place in September, also included data from a Rand Corp. study noting that health plans were consolidating dramatically, and that these mergers were giving health plans too much power.  (Wow, imagine that — health plans having too much power?)

Oh, Lord, why does all of this seem beside the point?  Well, probably because it’s not going to help anyone.  Sure, knowing  what impact hospital M&A is having is part of a well-informed Health Subcommittee’s job description.  And I appreciate that the Subcommittee is trying to look at the bigger picture, one which includes both health insurers and hospitals.

But hearings like this, which assume that pricing indicators are the best way to decide whether the public good is being served, strike me as painfully uninformed. While I’m no economist, I have seen a few deals come and go, and some ill-considered attempts to control dealflow too. After following the health market for decades, I’m convinced that playing Whack-A-Mole and slapping down those “bad guys” who are overcharging/underpaying gets us nowhere.

 

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August 29, 2011

FTC: This Merger Looks So Good, It Has To Be Illegal

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If you’re as cynical as I am, it’s not hard to take a certain amusement in the goings-on in Toledo over the merger between an aggressive for-profit hospital chain and a suburban not-for-profit.

Over the past few months, the Federal Trade Commission seems to have developed a passionate interest in the merger between a formerly Lutheran-owned non-profit, St. Luke’s Hospital of Maumee, OH and ProMedica Health System of Toledo. ProMedica, which owns 11 hospitals in Ohio and Michigan — including four in the Toledo metro — is a swaggering giant with $1.7 billion in annual revenue.

What a sweet deal it was for ProMedica. According to Moody’s, the facility had very little debt ($8.3 million) and 412 percent cash-to-debt coverage as of November 30, 2009 (recently enough to matter).

Sure, as of early 2010 St. Luke’s had an operating cash flow deficiency of -2.0 percent and -9.8 percent operating margin, and at least according to Moody’s, had cut some cut-rate contracts with payors accounting for 22 percent of its operating revenues.

On the other hand, its miserably weak competitive market position which, as Moody’s noted in its downgrade report, included clashes with ProMedica, went away with the stroke of a pen when the two consummated their agreement. ProMedica sweeps in with its Aa3-rated borrowing capacity, invests a relatively slim $35 million and picks up the 10 percent market share SLH held at the time. I don’t know what 10 percent of the market is worth, but that has to be a fire sale.

Dig this if you can, cats and kittens:  According to the FTC,  the deal increases ProMedica’s market share in Toledo to 58 percent of inpatient services and (get this) 80 percent of high-margin inpatient OB services. Wow… Small wonder the FTC smells a rat.

Of course, in the sort of excess of confidence you always see in these deals, ProMedica’s executives are pretending the deal was good for the public and stuff.  I don’t know about you, but I find the following comment (made by ProMedica CEO Randy Oostra to the New York Times) to be preposterous:

“We could coordinate care,” Mr. Oostra said. “We could improve quality at St. Luke’s by adopting electronic health records and using clinical protocols to standardize the delivery of care. But the F.T.C. has stopped us in our tracks.” 

OK, let me get this straight, Mr. Oostra. You could only connect with St. Luke’s by buying it and forcing your EHR down its throat (after all, we know you’re not going to put St. Luke’s on Cerner if you use Epic)? You’re buying a hospital with tremendous upside largely because you think you can standardize care — because that will, of course, increase effectiveness and lower prices?  Oh, and as far as sharing data and coordinating care: have you ever heard of a health information network? Or an Accountable Care Organization?

Really, sir, if you want to impress the FTC with the public benefits of your transaction, you’re going to have to try a little harder. If you’re already phoning it in, to the Times no less, you’re not just arrogant, you’re stupid.

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June 4, 2011

Hospital EMR actually works

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As some of you may know — if you read the EMRandEHR.com blog — I recently had an experience which set a fine example as to how much health IT can help hospitals when deployed well and supported by smart training. In short, a family member just had an effective, focused trip through a hugely busy ED, largely due, I believe to the technology it uses.

The hospital has deployed the Picis electronic document management system, along, seemingly, with traffic control modules, to strip much of the fat away from a patient’s trip through the ED.

With staff clicking away happily, patients moving in and out promptly and physicians having easy access to patient histories, med lists test results and more in one easy-to-access place, I saw a pretty neat ballet in place.

The truth is, however, that this seems to be an exception rather than the rule. Far more  hospitals I’ve visited seem to have taken a heavy-handed, training-light approach to introducing their EMR.  (One facility had installed screensavers on staff desktops that read “Cerner is coming.” I can’t imagine this gave any employees a big thrill, or helped them get prepared.)

Actually, when I passed through the same facility later, I saw flustered-looking nurses trying desperately to get simple transactions done, forming an insecure cluster together as they tried to help a colleague enter some observations. Thaaaat didn’t give me a nice, secure feeling about the hospital’s odds of making clinical mistakes.

I hate to say this, but I think the odds of a hospital IT department changing its culture enough to truly support EMR users is pretty darned small. My guess is that it will take several years before hospitals have a clue as to how to handle the big, huge change management process their EMR produces. Good luck, guys.

 

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November 21, 2010

So many blank spots on the clinical data map!

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Emergency medical technicians evacuating an in...

Image via Wikipedia

EMTs collect a lot of data on their trip to the emergency department — and usually, data treating ED physicians will want pretty badly when they see the patient. But in virtually every case, most of that critical info transfer takes place on paper or in a hurried conversation amidst much noise and distraction.

Community medical centers collect as much data on patients as private primary care practices do,  but how often are they connected with hospitals — even those that have done a big ambulatory EMR rollout?

And what about blood banks?   Independent clinical labs like LabCorp.?  School medical offices?  Is anyone paying attention to their data, or is it just being ignored?

Look, I don’t mean to be a dunce here. It’s not as though hospitals and medical practices are sitting around buffing their nails and waiting for something to happen, data-connection wise.

But it’s worth remembering, despite the labor involved in hooking up hospitals and primary care practices, that there are data leakage everywhere.  Until we look the flow of data more wholistically, whole workflows will be designed as though such relationships didn’t even exist — and that’s a Bad Thing.

I say, start with the EMT data, as it’s the closest to the point of care, but regardless of how you expand your clinical data source map, expand it. Otherwise, you’ll be left with a nasty information design problem and finding a workaround will be a nighmare.  Think about it.

(This editorial’s content draws on a speech given by Vivian Funkhouser of  Motorola at a trade show held last week by Everything Channel.)

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November 19, 2010

Meaningful Use: What is it good for? A lot of smoke and mirrors

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EHR Adoption Framework_AD

Image by andyde via Flickr

Meaningful Use?  Whoa! Good God y’all! What is it good for?  Very, very little. Sing it again…

OK, maybe it’s the greatest idea in the history of health IT, or maybe it’s a good idea gone terribly, terribly wrong (my theory), but it it’s not going to move hospitals along any faster than they are already toward smart, sophisticated IT use that saves lives.  There are efforts out there that do stand a chance of improving IT use (take your pick from dozens, which I’ll get to in another post), but has anyone provided clinical, social science or other data suggesting that going to MU first was the best way to spend all of this time and money?

After my months-long absence from the blog that I love (<grin>) I’m freshly charged up with looks to me like another major distraction from improving quality.

Here’s my logic: check me  out here and see if you agree. The harder the government comes down on hospitals, the more dust will get swept under the rug.  And when that “dust” is inefficient processes that stand a chance of killing people,we’re not talking any kind of joke here.

Want an idea of why I’m so skeptical?  Here’s a few (why not a  couple of bonuses):

*  Just got off the phone this week with a children’s hospital CEO, who’s found that 20 percent or less of his colleagues are ready for meaningful use.   And check out an Information Week article below, which reports that just 40 percent of hospitals  meet 5 MU criteria. Wow.

*  Why has it suddenly become a priority, in recent years, to automate processes at the bedside before the processes themselves have been perfected?  When Your Editor attended a conference this week on healthcare IT topics, the bedside came up a lot, but not much talk on whether we’ll be running into a GIGO problem.

* Medical groups and hospitals are under great pressure to form Accountable Care Organizations, a new entity for which there are some precedents (decades of capitation) but no clear-cut model.  With doctors and hospitals struggling to create the most basic levels of partnerships, is now a good time to pressure them to form their work habits around their IT investments? Yeah, yeah, they’re suppposed to fund and find EMRs and HIEs that meet their needs but really, how often will that happen?

If you’re a big MU fan, well, I’m sorry if I offended you.  But I’d much rather you flame the heck out of me here so we can have a nice dialogue on the subject. This is important stuff, people.

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August 21, 2010

Data from the Kaiser rollout – better than expected?

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As promised…

OK, before I get rolling, let’s back up a bit. To those that didn’t see my earlier feature, I’ve been dredging up the days when Kaiser caught a lot of heat for what was reputed to be a $3 billion EMR installation. Today, after four more years,  Kaiser’s EMR rollout is old news. But even though it hit full stride in 2006 or so,  it was such big news that the echoes still remain. So here you have what may be some data from those tumultuous times.

Below, consider the first set of data from (what appears to be) a Kaiser report on its Epic EMR performance. This coincides with the period during the period when whistleblower Justen Deal took his complaints about its performance. Of course, a little bird gave it to me, and as noted previously, I’m fairly sure it wasn’t Justen.

This report, which spans August through November of 2006, looks at a bunch of measurements of network and application performance.  I’m not a technical expert, so I can only guess, but truthfully, it looks like the organization did pretty well, especially since nobody, more or less, knew how to scale an EMR for such as large installation.

Not only that, it seems to me that if only 580,000 user hours were blacked out during those four months, vs. almost 63 million potential hours, it’s pretty good performance.

My main question here, having seen this doc, is whether these are cherry-picked network stats. Personally, I’d like to know more about how the application performed on the ground, what latency/response times were, whether the interface took eleventy-odd months of training to use, whether Kaiser did a good job of integrating other data silos, and perhaps most critically, whether clinical care took a disproportionate hit.

What data would you have wanted to see if you were running the show?  Check below and tell me what you think.

P.S.  By the way, if you want to lighten things up, feel free to check out this video of George Halvorson looking august and scholarly. But I digress…back to the data.
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Topline Data from August through early November 2006 for KP HealthConnect

Usage Based User Availability: 99.09%
This represents (Potential User Hours- User Impact Hours)/Potential User

Unique Incident reports: 429
These are incidents which affected the deployment, regional or national totals.

Average Concurrent Users: 8,481
Average number of users on the system during a given month

Potential User Hours:  62,895, 096
Average concurrent users * the total hours in the month

User Impact Hours:
572,241
Calculated for every incident by multiplying the actual number of users affected by the duration of the incident.  

 
 

 

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August 10, 2010

Kaiser, the whistleblower and the $3 billion EMR

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Back in 2003, Kaiser Permanente CEO George Halvorson made a decision which would change the direction of the company.  Though few of his peers had taken the plunge, Halvorson bought an electronic medical records system from EMR vendor Epic and set plans to bring all of his clinicians online.

While there’s nothing so surprising about that — other than the fact that Kaiser was well ahead of the curve, time-wise  — the project’s trajectory was a bit unusual. The EMR installation, which stumbled at more than one point, sprawled over several years and cost a reported $3 billion dollars. Yes, I meant “billion,” in case you fear your eyes are failing you.

Of course, Kaiser is a $30-odd billion company, so if anyone can afford a billion-dollar EMR, it can, but that’s still a whopping health IT investment by any standard.

Not long after the deal got done, Kaiser and its leadership began taking a tremendous amount of flack over the system, which apparently ran into every obstacle an IT project can face. Apparently, doctors were complaining that the EMR was slow and buggy, and worse, that the system was down more than up. But Lord knows, Kaiser had no intention of breaking its 10-year contract with Epic, a vendor whose lock on big deals continues to amaze me.

Then, in 2006, all hell broke loose when a 25-year-old Kaiser employee named Justen Deal managed to get an e-mail message out to all of Kaiser’s 180,000 employees.  Deal argued that the new system, dubbed HealthConnect, was rife with technical problems and couldn’t scale to meet the demands of the organization. The trade press went nuts. Halvorson was forced to defend the installation to the press and even write a letter to the extremely junior employee who’d blown his cover. Hard to tell whether anyone bought Halvorson’s defense, but the bad press died down within six months or so.

OK, fast forward to today.  HealthConnect is fully deployed, and if Kaiser’s Internet folks aren’t shining me on, the system is working pretty well.  Not only is HealthConnect servicing 431 clinics and 35 medical centers, it’s also supporting a personal health record which serves 3 million of Kaiser’s members.

That, at least, was the news from Jan Oldenburg, senior practice leader with the Kaiser Permanente Internet Services Group, whom I spoke with a few months ago.  Patients use the PHR to fill half a million prescriptions, check out 1.2 million test results and make more than 100,000 clinic appointments each month, Oldenburg says.  (Note that she didn’t address how effective the EMR system has been for clinicians — that may mean nothing, but I was a bit curious about the omission.)

Now, my friends, here’s the pop quiz. If you had to guess, do you think that the $3 billion spend was ultimately a good investment?  Do you believe that the Kaiser HealthConnect system will be a greater success with patients than clinicians?  And if clinicians are still using it at gunpoint, should Kaiser shift gears entirely and focus on patient access?

Looking forward to your ideas…this is a tricky one.

June 19, 2010

Doctors rebelling against EMRs

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This portable version looks nicer than many I've seen.

 If your hospital hopes  to seduce, coerce or pay off doctors to use its EMR, think again.  Increasingly, doctors aren’t just resisting EMR use, they’re actually in the midst of a rebellion, suggests one healthcare IT executive.

The truth is, EMRs are inflexible, costly and force doctors to change the way they work — with little if any benefit to them, argues Shahid Shah, CEO of Netspective Communications.  So they’re starting to push back, hard.

Hospitals  have been in denial about this for quite some time. While doctors have been shouting their EMR issues for years, to date few hospital executives or public policy planners have been listening.  (In fact, I  saw an exec from Kaiser publicly insist that doctors love the new EMR.)

Shah’s bottom line?  “[EMRs] are really created to improve the hospital administrators’ lives, get data to government agencies looking for comparative medicine, push paperwork through to insurance companies so that they can process claims faster, and many other “features” that don’t really do much for the doctor.” I couldn’t agree with him more. Sing it, brother!

Now, the really scary question: With billions of private and federal dollars committed to EMR spending, is it too late for the nation to back out?

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June 15, 2010

CIO: Let's kill the EHR certification process

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Here’s a very interesting post on EHRs written by a straight-shooting hospital CIO.

Will Weider, CIO of Ministry Healthcare and Affinity Health System, is based in Wisconsin and oversees IT operations for about 14 hospitals. His blog, “The Candid CIO,” often shares contrarian views on health IT topics, including the advance of EHRs. In the following post, he’s challenging the basic assumptions the government has made on how to roll out EHRs.

Before we explain Weider’s views, here’s some background for non-techies. For about 14 months, a goverment agency known as ONCHIT (the Office of the National Coordinator for Health Information Technology) has worked to develop a standard for EHRs which would give buyers some assurance that they weren’t getting a junky system.  Providers who meet the government’s “meaningful use” standard — using EHRs in a more-than-superficial way — will get a substatial bonus.

But now things are topsy-turvy. ONCHIT’s certification development process seems to be stalled; now, it’s suggesting that providers go ahead with rolling out their EHR without worrying about getting a meaningful use certifications.

As Weider sees it, this should seal the fate of ONCHIT, which in his opinion has blown its mandate. To him, the time has come to give ONCHIT a mercy killing — along with meaningful use standards, perhaps — and move on.  Weider’s final word:  “Certification is blocking EHR progress.  There is one rational solution: BANG.”

What do you think, readers?

June 11, 2010

Do EHRs kill people? Maybe so.

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Here’s some cautionary words  on the adoption of electronic health records, in an essay from the rich archives of wonderfully snarky and insightful site thehealthcareblog.com.

Since IANAT (I Am Not A Techie), I can only offer an analyst’s take on the matter, but I believe author Margalit Gur-Arie’s argument makes great sense.  Anytime a technology goes beyond being a tool to driving decisions, humans have to adapt — and that breaks their stride. And off-balance care can lead to patient deaths. As she notes:

If EHRs become as pervasive in everyday medicine as ONC is proposing, every patient will eventually be touched by an EHR. It is very likely that some errors will be prevented by the sheer existence of an EHR but new and unfamiliar errors will also be introduced as side effects.

I continue to hope we can find a way to make EMR use simple, natural and fluid, but honestly, I’m still pretty skeptical it will happen.  So thanks to Gur-Arie for reminding people that EMRs, EHRs, PHRs and all other related tools are far from a panacea.

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