BBI Contributing Editor

NASHVILLE, Tennessee – The Medical Group Management Association’s (MGMA; Englewood, Colorado) annual conference is an important fall gathering attended by many large medical device companies as well as many of the smaller electronic health record (EHR) developers. It is a venue for product and alliance/acquisition announcements. This year’s MGMA meeting, held at Opryland, was one of the best-attended in recent years, with the conference having to turn away some vendors seeking booth space. However, overall attendance did not set historic records – perhaps physicians are watching expenses closely with coming EHR requirements.

A much-discussed topic at the meeting was the $1.2 billion acquisition by GE Healthcare (Waukesha, Wisconsin) of IDX Systems (South Burlington, Vermont), a major competitor and a shareholder in Allscripts Healthcare Solutions (Chicago). In doing so, GE is following its usual pattern of acquiring its major competitors as a means of growing its market share – a pattern it likely will follow until constrained by government regulators. Given the number of small competitors in the EHR segment, that will not occur soon. However, there already is a concern in the industry that the large vendors are not offering cost-effective solutions to smaller group practices, now increasingly being squeezed by government pay for performance plans and by policy to automate their practices. MGMA offers a Pay-for-Performance Toolkit, prepared by its Government Affairs office, to vendors and group practice business administrators interested in learning more about these incentives.

A recent study by MGMA, reported in the September/October issue of Health Affairs and released to the press at MGMA, indicates that only 11.1% of group practices are fully automated, and these are the larger ones. The average (mean) cost to these practices to date has been about $32,000 per physician, a figure that implies substantial risk to the survival of practices if the rollout is unsuccessful. Moreover, the same study reported that the average software maintenance costs were $14,400 per physician per year, which translates into $1,200 per physician per month.

This figure is so high precisely because the successful vendors so far are selling systems to larger practices, but doing so at prices that may be beyond the financial ability of the smaller practices that need to automate. The average is held down by the many smaller vendors that offer solutions to group practices at prices that range (for software) from $5,000 to $10,000 per physician and maintenance costs that range more like $14,000 per year total, not per physician.

As these smaller companies are acquired by their larger competitors, not only is competition reduced, but the average selling costs in an industry already unprepared to pay the current average price will rise as lower-priced alternatives are eliminated from the market. In addition, maintenance costs will rise and in a reimbursement climate where the Centers for Medicare & Medicaid Services (CMS; Baltimore) is announcing continued cuts in reimbursement (4% in 2006 alone), practices will face increased and uncertain risk that the return on investment will ultimately be there to justify such expensive infrastructure investments.

If it isn’t, or until it is, physicians will be taking this money out of their incomes directly as they borrow funds to finance the day-to-day operations of their practices. While this may be not be a great burden in specialty practices whose income per physician is still relatively large, for general practitioners – whose average income sits around $150,000 a year – the impact will be significant. Indeed, this may be one reason increasingly fewer medical school graduates are entering family practice, and why ultimately public policy and the unchecked growth policies of the big companies in the sector may contribute to the shortage of primary care physicians in the U.S.

When asked in a study of group practices conducted by Medical Strategic Planning (Lincroft, New Jersey), “If you had to purchase an EHR system today, which five vendors would you contact?,” only 10 vendors were mentioned by the 300-plus practices surveyed. That is 10 out of more than 200 EHR developers currently selling systems. This indicates that most of the smaller, more moderately priced EHR vendors have little to no brand identity, a factor that disadvantages them already compared to their larger, better-known competitors such as GE, Cerner (Kansas City, Missouri), McKesson (Alpharetta, Georgia) and others that tend to offer higher-cost alternatives. The current trends underscore the concerns of group practices considering automation that over the difficulty of choosing a stable partner given the consolidation frenzy. It also raises questions about what “success” is in this market when companies such as IDX, which has substantial market share, would rather be acquired than continue to grow independently. This tends to dampen what would otherwise be more rapid growth in an important market segment.

Research reported by MGMA indicated that only 11.1% of practices have so far installed full electronic health record systems, which isn’t a large number. If we assume there are about 35,000 such practices, then the potential for significant growth in the EHR market is clear, because almost 25% of these have indicated they will be installing some sort of EHR in the next two years. Since the average cost of these systems was found by the MGMA research to be around $32,000 per doctor for such systems, the market potential during the next two years is impressive. As the market takes off, it will put pressure on all EHR vendors. The smaller ones will be pressured to create a market identity so that they can participate in the market growth. The larger and more established vendors will be pressured to update their products, many of which are on less current or inexpensive platforms, so that they can reach the price points that will make their solutions attractive.

New EHR, CPM developers on scene

At MGMA there was no lack of new EHR developers or computer practice management (CPM) developers showing new EHR solutions or pieces thereof. Additional information was available on Vista, the now-public domain EHR that was supposedly the “free” version of the archaic system being used by the nation’s Department of Veterans Affairs hospitals. This system, of course, isn’t truly free, as licensing fees on some components and substantial ongoing software fees add up to real dollars. Moreover, the system incorporates some older components that are dated. Most of the consultants and practices we discussed the question with at MGMA said they were passing on this latest “free” offering from Uncle Sam.

Among new developers we found Practice Automation (Indianapolis), PCIS Gold (Provo, Utah) and Bizmatics (Cupertino, California). Others included Workflow.com (Westlake, Ohio), the latest incantation of Rhinoceros, Packy Hyland’s EHR vision or Galvanon (Maitland, Florida). The new computerized practice management and EHR companies were joined by existing suppliers large and small. New middleware or partial solutions offered by vendors included EHRScribe (Pittsburgh), a company that is a preferred provider to Dictaphone (Stratford, Connecticut) for transcription services, which has now introduced its own EHR software solution. This should be appealing to group practices that are looking for a “transcription migration” approach to introducing EHR functionality into their practices.

Many of the current suppliers also were showing new systems, at least to selected customers. Medinotes (West Des Moines, Iowa) hinted at some major enhancements to its current product that were in the works. Greenway Medical (Cary, North Carolina), continues to elaborate its relatively new integrated suite of CPM and EHR products and Emdeon (Columbia, Maryland) is the latest reorganization of WebMD’s offering in this arena. Several of these companies conducted helpful educational presentations on a variety of EHR, billing, credentialing and practice management topics during the conference.

While much of the focus was on new EHR developers, there also were new CPM systems being shown at MGMA. MDr Practice Manager from DST Health Solutions (Birmingham, Alabama) was one example. Another was MedicsElite, a new practice management solution offered by Advanced Data Systems (Maywood, New Jersey). The most interesting, however, was WinMed Professional, a product from Complete Medical Systems (Baton Rouge, Louisiana) that uses scanning to build cost information for each procedure a practice does. It starts with patient clinical data and covers the gamut to real-time charge coding and compliance monitoring. The product is one of many that started on platforms like Visual Basic, but is now being moved to run under Microsoft’s .net framework. The .net platform makes a “web-like” or true web-ASP interface possible, so that web-browser equipped computers can run the WinMed applications.

Many existing and new apps are being moved to platforms that allow an application service provider/hosted solution to both EHR and CPM implementations. These ASP applications are generally less expensive to license (software) and require less hardware (capital equipment expense) and are definitely easier to manage, than office-based applications. Companies that have been in the market a while, generally offer both types of solutions, while some newer ones, like PatientKeeper, have built their entire product line on accommodating mobile users and remote access.

ePrescribing among ‘hot topics’

Hot areas of interest at MGMA included news on electronic drug prescription (ePrescribing) standards and systems. This is one area that all of the EHR and CPM vendors, as well as important standalone physician suppliers such as PatientKeeper (Boston) and ePocrates (San Mateo, California) recognize as low-hanging fruit and are customizing their products to exploit. PatientKeeper was emphasizing its charge capture and ePrescribing capabilities, as well as its new partnership with GE Healthcare, in which PatientKeeper becomes GE Healthcare’s solution for the mobile healthcare provider. Many traditional EHR suppliers, such as ChartLogic (Salt Lake City), have added CPM capabilities to their EHR products in order to offer completely integrated EHR/CPM solutions built on one code set and one underlying database repository.

The Agency for Healthcare Research and Quality (AHRQ; Washington) will be providing grants totaling more than $6 million in 2006 to fund ePrescribing demonstration projects. Most EHR vendors we talked with at the MGMA meeting indicated that “printing” prescriptions directly to fax (and delivery electronically to the fax machines of pharmacies) were now capabilities of their products or shortly would be and that directly HIPAA-compliant fully electronic e-Rx would be implemented as soon as more of the nation’s pharmacy chains was prepared to accept such transmissions. This underscores both the promise and the current failure of HIPAA (the Health Insurance Portability and Accountability Act) to achieve healthcare simplification. The standard exists under HIPAA, but there always seems to be one of the critical partners in the actual process that isn’t quite ready to play by the standard. Therefore, EHR and CPM developers resist making the investments in implementing the standards on their end until a significant percentage of the pharmacies with whom they must communicate can accept such transmissions on the other end.

MGMA also provided some insight on the continued progress in harmonization of standards that will support true intercommunications under an open-standards approach. The recent announcement of the HL7 and IHE collaboration to make interoperability actual (rather than conceptual) was a promising development, as was the ASTM adoption of the continuity-of-care record (CCR) standard balloted by HL7. The first real fruits of this collaboration are likely to be seen at the February conference of the Health Information and Management Systems Society, always a venue for progress reports by both HL7 and IHE on practical interoperability. The new CCR standard is particularly helpful, as it now provides one standardized format for what was becoming a plethora of proprietary implementations of so-called “personal health records” and at the same time a format that is actually intended to document one encounter of care between a patient and healthcare provider.

The CCR as currently adopted specifies the format for about 80% of the information in the EHR, and therefore (when fully read-write implemented in EHR vendor systems over the next two years) will become an industry-standard hedge for group practices against EHR product obsolescence, as EHR records exported from one (say an acquired or discontinued) EHR system should be “importable” to any other EHR system that replaces it. This gives physician group practices an important assurance they can purchase from any CCR-compliant EHR vendors and have the option to migrate the data accumulated by that system to a future EHR product offered by an alternative vendor. This helps to reduce the risk of choosing the “wrong” EHR vendor to automate their practices around; something that will act as a market adoption accelerator. EHR vendors that are quick to support this significant standard and can successfully convey that to their PGP prospects are likely to see more rapid adoption of the EHR solutions.

Gingrich offers ‘sensible’ message

Former Speaker of the House Newt Gingrich appeared as a keynote speaker at MGMA, as he has at many medical conferences of late. In his current guise as head of the Center for Health Transformation (Washington), he remains the most articulate and sensible “political” spokesperson for healthcare of any of the politicians who make the conference rounds. He also has the most transparent and purest “agenda” for healthcare, which isn’t just a thinly disguised pitch for a single-payer, government-run system that Hillary Clinton, Ted Kennedy and others would support. His presentation was interrupted on several occasions by spontaneous applause, when he spoke about the predatory impact of litigation on malpractice insurance, administrative simplification and other hot-button topics. Indeed, Gingrich, more than any other politician or even U.S. healthcare IT czar David Brailer, makes it clear that a new, information-accessible system, makes a free-enterprise, open-market solution to healthcare practical and desirable. While the objectives of all the political spokesmen differ, they do agree strongly that disastrous situations like those created by hurricanes Katrina and Wilma demonstrate the need for both EHR at the individual provider level and RHIO networks at the regional level to provide timely and accurate healthcare information during times of disasters.

Gingrich pointed out that with today’s technology, a “virtual, electronic” public health network is possible and indeed essential, if the U.S. is to ever be prepared to deal with pandemic threats like a human variant of the current “bird flu” that is already active in Asia and Europe. The lack of such a network would mean that public health officials at the Centers for Disease Control and Prevention (Atlanta) would be faced with tracking the spread of the disease based on data that is weeks old under the current, non-electronic status quo, rather than hours or even minutes old under a future, EHR+RHIO national electronic health infrastructure. Gingrich for one sees that as a long-term, national defense issue, as well as a day-to-day health communications issue. He compares it to the 1960s development of the U.S. interstate highway system, seen as a national defense infrastructure to make possible evacuation of major cities (as occurred during Katrina and Wilma), which is daily used for standard civilian commercial purposes.

While all of this is true, the $25 billion question is, “Who will finance the infrastructure that everyone (except the physicians whose practices and productivity it would affect) agrees is needed?” No answers to that question emerged at MGMA. Should an answer suddenly emerge, the EHR market is poised to take off and the clear winners will be a few, large companies at the expense of the many smaller, more cost-effective, technologically-advanced EHR developers. At this point, any serious government “priming” of the EHR pump would result in a proliferation of expensive and in some cases outdated EHR solutions.

One factor that may help PGPs adopt EHR solutions is legislation now pending in Congress that would exempt group practices and hospitals from collaborating on EHR technology, opening the door for hospital IT staffs to help physicians with EHRs or to actually extend current hospital IT solutions out to individual physician group practices. Of course, this also would favor large EHR suppliers, as in many cases these are the same companies that are the infrastructure incumbents that currently provide IT solutions to the hospitals that would be extending their internal vendor solutions.

Another trend apparent at MGMA is that many group practices are looking not just to add EHRs to automate their practices, but rather to add an integrated, EHR-CPM system that both adds EHRs and replaces their current CPM component with one, integrated new system. This raises the stakes and the prices, while narrowing the field of viable EHR suppliers to those who can offer both components a practice may be looking for. Some EHR suppliers are arranging alliance or acquiring CPM companies (or vice-versa) to be able to offer a combined solution. The best solutions, however, are the ones developed from scratch to provide an integrated solution, such as that offered by Greenway Medical.

MGMA wasn’t solely about information systems; there were many other segments of the industry represented. Injuries to the wrist, hand and arm of people using computer terminals for many hours has become an emerging issue across all industries, including healthcare. At MGMA one company was showing several novel new hardware devices that integrate cursor movement (previously done by mice) into a second device that sits between a conventional keyboard and a computer user, and doubles as a wristrest when the operator is doing conventional typing. The company, Contour Design (Windham, New Hampshire), offers a Perfit Optical line of ergonomically designed mice for both left- and right-handers, as well as the unique keyboard accessory described above. These devices are substantially more expensive than their consumer-quality counterparts at Staples or Office Max, but actual studies of their use document reduced strain and injury by computer operators that spend many hours working on-line.