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The Real Money is in the ACO, Not Meaningful Use

Posted on May 24, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

John Moore from Chilmark Research offers this great insight for those of us in the healthcare IT and EHR industry:

The MU requirements have become little more than a “spec-sheet” for vendors, consultants and IT shops and departments. These requirements have nothing to do with innovation and have little to do with the dramatic changes that will occur in this industry in the next decade. Quoting that oft-used phrase, “follow the money” one can quickly see that the billions in funding for incentivizing providers to adopt EHRs under the HITECH Act is relative chump change to the dramatic fortunes that may be won or lost under the new value-based payment models that are proliferating throughout the industry – payment models that commonly fall under the rubric of ACO or PCMH. In each of these models, EHRs are important to a degree, they are part of the basic infrastructure. But it is what one does with the data that matters (collect, communicate, collaborate, synthesize, analyze, measure and improve). Therefore, if you want to see innovation look beyond today and the tactical push to effectively adopt and meaningfully use EHRs and towards the future of how that data will be used to drive quality improvements, better outcomes and lowering risk exposure.

As the title says, I translate this to mean: The Real Money is in the ACO (Accountable Care Organizations), Not Meaningful Use

Of course, his description of the current healthcare IT landscape also reminds me of two posts I did previously: EHR is the Database of Healthcare and Is Revenue Cycle Management Sexy?

Both of those posts highlight many of the the observations that John Moore makes. First, if the EHR is nothing more than a repository of data, then it has value (Oracle did pretty well as a database) but it’s limited. Those who can take the data stored in EHR and other healthcare data sources and do something amazing with it are going to be the big winners in healthcare IT. Could an EHR vendor be the one to do this? Possibly, but looking at other industries, I think this is unlikely. That’s why I describe EHR’s similar to databases.

The answer to the question posed in the second post linked above is “Yes, if you like money.” Sure, healthcare isn’t all about money, but money can be a tremendous driving force for doing good as well. It turns out that dealing with revenue cycle problems provides tremendous value to a clinic. However, many people for some reason look past it since they think it’s not “sexy.”

The ACO model that is fast approaching is also going to make this even more important. It’s still too early to describe exactly how it’s all going to play out, but many who don’t have a handle on the business side of their practice are going to miss out.

I’ve heard some describe meaningful use as a high bar to achieve. I disagree. Meaningful use is prescriptive and simple for EHR software to achieve. Sure, it takes some time and effort, but any one with time and effort can achieve it. I don’t think we’ll be able to say the same for ACOs. That’s why the value of the ACO is going to be much higher than meaningful use. It’s the traditional higher risk leads to higher reward.

The Current Health IT and EHR Bubble

Posted on May 16, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I had a really great conversation with Shahid Shah, Jenny Laurello and John Moore at Health 2.0 about the bubble that we’re sitting in right now. John Moore’s response to my question, “When do you think the bubble will pop?” was priceless: “Which bubble?” Yes, we might be seeing multiple bubbles in healthcare IT: EHR, HIE, mobile health, etc.

For this blog, I’m most interested in the EHR bubble. Obviously, the bubble in this case is the creation of the $36 billion in EHR stimulus money that’s being handed out thanks to ARRA and the HITECH act. With over 600+ EHR vendors and a limited number of customers (I think there’s about 700,000 physicians in the US), there are going to be quite a few EHR vendors that won’t make it.

With that said, I don’t think the EHR bubble will pop like it has in other industries. In fact, I think the current IT industry bubble is going to be a much bigger problem. What’s amazing to me is how you can make a decent EHR business with only a few hundred doctors. Sure, a few hundred doctors won’t create 10 times return to investors, but those who take a conservative approach to building their EHR company could get by with what I believe is an astoundingly small customer base. Physicians are just that valuable.

Shahid Shah described EHR as a cottage industry and so cottage EHR companies will survive. I’m not exactly sure how he’d described cottage industry, but I think the regional nature of healthcare is definitely an influence on this. I’m sure many could argue that long term this strategy won’t work, but I believe at least for the forseeable future we’re not going to see the EHR bubble pop for a while.

As I think about the EHR companies I know, they all seem to have plenty of cash to make it through meaningful use stage 2 and likely all the way to meaningful use stage 3 at least. We’ll see how the smaller EHR companies do post meaningful use stage 2, but I don’t see any EHR vendors not making it to meaningful use stage 2. They’ll at least make it to MU stage 2. Then, based on their adoption results (or not) we may see a few EHR vendors run out of money.

What do you think? Are we in an EHR bubble? When will the EHR bubble pop? What other healthcare IT bubbles do you see?