by David C. Kibbe MD, MBA
The remarkable report, “Initial Lessons From the First National Demonstration Project on Practice Transformation to a Patient-Centered Medical Home,” published in the May/June issue of Annals of Family Medicine, the Nutting Report, makes this point about the state of primary care IT offerings:
Technology needed in a PCMH is not “plug and play.” The hodge-podge of information technology marketed to primary care practices resembles more a pile of jigsaw pieces than components of an integrated and interoperable system.
Surprise! Well, actually, no surprise. We all recognize that health IT implementation in family practices, even under the best conditions and with the best of planning, is difficult and can be an ongoing challenge.
What is surprising to us, however, is that Dr. Nutting and co-authors make this comment in their recommendations section:
…[I]t is possible and sometimes preferable to implement e-prescribing, local hospital system connections, evidence at the point of care, disease registries, and interactive patient Web portals without an EMR.
This is real wisdom, borne of collective AAFP experience, here placed under the microscope, and is the key message that I (David Kibbe) have been delivering to audiences of physicians and administrators for the past year or so, in my talks entitled “Confessions of a Physician EMR Champion: A Conversation with Physicians About Health IT in the Age of Google Health and Microsoft HealthVault.”
But things change, and the above findings of the PCMH evaluation team that it is “possible and sometimes preferable” to implement components or modular applications instead of a comprehensive EHR from a single vendor is a brilliant recognition of how our changing business models in primary care intersect with a major shift in the health IT market of products and services aimed at primary care practices.
Conservation of Modularity
First of all, the shift from a firm-centric or vertical company-centric approach to technology, to one that is platform-centric and modular, is well known and has been described in length in the business and computing literature. Clay Christensen, the noted Harvard Business School professor and author of several books on innovation, describes this evolution in the computer industry at length, even coining a “law of the conservation of modularity” to help in the description.
What he tells us is the following: in some industries, when the products are relatively new and not very good in terms of performance, the early entrants must provide all of the parts of the product by themselves. For example, if you wanted to be in the computer industry in 1982, you needed to manufacture a computer’s operating system, the application software, the peripheral devices, the processors, etc….even the cases housing the various components came from a single producer and the product was integrated. IBM, Digital Equipment, Unisys, and Wang were all companies from whom customers had to buy the entire package, including consulting, from a single vendor.
But over time, as the performance of the products improves, vertically integrated and proprietary companies whose approach was strongest during the early phases of the industry’s development give way to a non-integrated and horizontally stratified population of companies whose products are capable of integrating, through standards, not by virtue of a single company owning all the components. Clay Christensen says this “looks like the industry got pushed through a bologna slicer.”
This happens because the basis of competition changes. Customers become less and less willing to reward further improvements in functionality (e.g. adding a registry on to an existing EMR that initially doesn’t have one) with premium prices. And companies that get better and better at conveniently giving customers exactly what they want (e.g. ePrescribing, or a registry) when they want it and at an affordable price, are able to earn attractive margins. And so they start to take business away from the vertically integrated firms.
Modularity, in effect, enables the dis-integration of the industry. Which is exactly what happened in the computer industry. By 2002, virtually every part of a PC was modular and substitutable. Dell doesn’t manufacture anything, it simply purchases all the components from companies in stratified groups — e.g. microprocessors, memory, hard disks, mother boards, OS, fans, etc. — and assembles them according to the wants and needs of the customer. By then, many of the leading, very top companies making computers in 1982….had gone out of business. DEC, Wang, Unisys.
So….this same phenomenon helps to explain what is happening in the EHR technology industry. The vertically integrated, top tier companies — GE Centricity, NextGen, Allscripts — would like to continue to sell their comprehensive EHRs to their best customers, who will pay their highest prices, and at the maximum profit margins. But they are really struggling to add value fast enough and at a price point that medical practices can afford. The proof of this is included throughout in the Nutting Report, and can be seen in countless practices and groups across the country, as they try to get these vertically integrated vendors to respond quickly to needed functionality, but find the workarounds and awkward installations maddeningly frustrating. They’re quite literally screaming for the features they need, but getting a lot they don’t need, at prices that seem like extortion.
In brief, doctors have arrived at a next stage of value addition for EHR technology, one at which faster response, greater agility, convenience, and lower pricing have become as or more important than a very long list of features and functions that are no longer as useful or desirable as they once were (or were perceived to be).
EHRs Ought to be Plug-and-Play
Let’s repeat the Nutting Report quote, seeing it now as a new value statement: “…[I]t is possible and sometimes preferable to implement e-prescribing, local hospital system connections, evidence at the point of care, disease registries, and interactive patient Web portals without an EMR.” This is an explicit recognition of a shift in demand, a sharpening of the focus of what capabilities are most important for primary care IT offerings to support, and at the same time a call for us all to recognize that circumstances have changed. The other important part of the new value statement is that these components ought to be “plug-and-play.” Makes perfect sense. Modularize and integrate through standard interfaces.
And yet as of right now, most of these components aren’t “plug-and-play.” That is, the market is in a state of transition away from one model, towards another, but not yet stable.
In fact, it’s worse than not stable. The established top tier vendors like Allscripts and GE Centricity are digging in, entrenching, and fighting back hard against the shift to plug-and-play modularity that is recognized as valuable in the Nutting Report. They’re doing this primarily through a campaign organized by HIMSS that is pouring money into lobbying efforts to lock in federal policy that will discriminate against new entrants into the EHR technology market. They want ONC to mandate that HITECH incentive payments can go only to CCHIT certified EHRs, that is, comprehensive applications from single vendors.
Robert O’Harrow Jr. writes in today’s Washington Post:
A Washington Post review last week showed that the group, known as HIMSS, worked closely with vendors, health-care researchers and others to create nonprofit advocacy groups and generate research data to convince policymakers that such a system could save tens of billions of dollars, and that the government needed to subsidize Medicare and Medicaid providers to buy the equipment.
It’s time for a more deliberate approach, one that recognizes the experience included in the Nutting Report, and which tries to accelerate the rate at which modular and component EHR technology becomes interoperable and substitutable, e.g. “plug-and-play.”
Your comments and questions are very welcome.
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Tags: business model, CCHIT, EHR, EMR, ePrescribing, Google Health, HealthVault, HIMSS, HITECH, hospital, medical home, Medicare, platform, primary care