In the Age of Health Reform, Healthcare IT to the Rescue?

5/4/11Follow @venturevalkyrie

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manage patients’ care upon discharge, since hospitals will be on the hook for many re-admissions that occur within 30 days of checkout. A 2009 study published in the New England Journal of Medicine found that 20 percent of all hospitalized Medicare beneficiaries make a return trip within 30 days, resulting in between $12 and $17 billion in avoidable costs. Hospital margins are already pretty thin. If they have to eat these costs they are going to need to really stock up on those little purple pills.

A plus: there has been a proliferation of companies willing to brave the newly boiling ocean to sell advanced technology solutions to the health insurance and hospital markets. Companies such as HealthEdge and Click4Care offer the kind of enterprise-wide administrative and clinical management systems that enable both operational efficiency and product innovation based on data analytics. Patient Safe Solutions provides hospitals with an iPod Touch-based system that dramatically reduces common medical errors, such as medication mistakes and the occurence of hospital-acquired infections, patient falls and bedsores. Extend Health, the nation’s largest private health insurance exchange, has proven that consumers can evaluate and select insurance plans that are highly tuned to their individual needs while saving money for both consumer and plan sponsor.

Even better: we private equity and venture capital people who make our living in healthcare information technology have recently taken on a certain cachet, allowing us to emerge from the dark, shady corners of our industry to share the tiniest bit of the limelight with our colleagues in the “real” technology world. Granted, games and social networking are far more sexy than claims processing innovation and clinical analytics. But with more than 20 percent of our economy being spent on healthcare costs, there are not enough Angry Birds in the world to fly us out of the pit of despair we will dwell in if we fail to capitalize on this opportunity to modernize our healthcare system.

Lisa Suennen is Managing Partner at Venture Valkyrie Consulting, a firm providing advisory services to companies, organizations, and private equity firms in the healthcare field, and the co-author of Tech Tonics: Can Passionate Entrepreneurs Heal Healthcare With Technology? Follow @venturevalkyrie

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  • http://ducknetweb.blogspot.com/ Barbara Duck

    Health IT will make a lot information system work better and make us smarter but we are reaching a certain saturation point with how much doctors can learn and about the investments of insurance companies in the data aggregation side who want to be in the consultant arena where the big bucks are now to make data communicate. If this does not work, it’s the next bubble as hospitals are having hard financial times and CIOS are burning out.

    http://ducknetweb.blogspot.com/2010/12/health-it-next-bubble-and-how-long-will.html

    Something is going to have to give…stressed CIOs..

    http://ducknetweb.blogspot.com/2011/04/survey-shows-cios-stressed-about.html

    Also experts still miss the boat on how to engage consumers with gluts of software nobody uses or wants, they just write it because they can so innovation without collaboration is fouling up the US healthcare system.

    http://ducknetweb.blogspot.com/2011/05/new-report-on-engaging-patientsstill.html

  • http://iMedExchange Tobin Arthur

    Lisa –

    Your article was both cleverly written and insightful. I look forward to reading through the full outlook report you made available.

    There is certainly growing momentum behind consumer directed health options…a trend that started a decade ago with the first concierge practices, HSAs, groups like Carol etc…perhaps we’ll see increasing momentum when PPACA kicks in. I am not immediately bullish on the free flow of data, more efficient medical banking etc given that there are deeply entrenched issues and groups like the Medical Banking Institute (now part of HIMSS) have been working to facilitate innovation in this space for years. Will the pressure on insurers central to reform force the issue downstream in a positive way? I am hopeful, but highly skeptical. Lots of churn is still in the cards.

    I am also hesitant to place any certainty about where the ACO model will ultimately end up given a long history of dead models (ex. RHIOS) that had similar life-cycles and objectives and died on the “good intention” grape-vine. Obviously there is movement in the space, but hitting a trifecta at Santa Anita Racetrack is a safer bet.

    As for providers, you point out a very interesting metric around hospital re-admissions. The well-worn stat that gets tossed around far too much in the industry is 100K unnecessary deaths per year. When you review the data underlying that number, it’s a very difficult number to affect, and its probably inflated to begin with. However, readmissions, as you point out, is a costly problem and one that has a myriad of areas poised for improvement and some nice wins ahead.

    That said, we work with providers nationwide in all practice settings and see their EHR and overall technology adoption first-hand on a daily basis. While they are eager to embrace technology that will provide demonstrable ROI, many of the systems on the market are legacy pigs upon which lipstick is being generously applied. Moreover, many of these systems, like the institutions that purchase them when applicable, may talk open standards, web services, free love etc etc…but the political and data silos are still real and still have to be addressed before serious innovation and solid business models can evolve out of the data.

    At a macro level, the coming decade of healthcare IT is going to look like the wild wild west. The large IT orgs will have to innovate at least in part through M&A. The Internet revolution that influenced the banking,supply chain and consumer markets over the past decade is poised to have a major influence on healthcare. There is a positive mix of willpower, capital, political support and increasingly innovative thinking. There will still be lots of well intended efforts that line the roads with their dead carcasses, but we’ll likely see some really solid wins to keep everyone excited enough to get out of bed and go after it again tomorrow.

  • http://venturevalkyrie.com Lisa Suennen

    Hi Tobin, thanks for the note. I think your skepticism on some of the current healthcare IT initiatives is warranted. The industry is going to have to embrace technology as a means to an end rather than accept it because someone else is paying or because they have no choice. While there is tremendous promise in the ACO initiative and also with the widespread adoption of data fluidity, there are many cultural issues that make the outcome in the short term very hard to estimate. The good news is that lots of very well-intentioned and smart people are out there trying and innovating. I think that the realities of the financial marketplace will tell the tale of the tape. If carriers’ and providers’ businesses can’t compete because they haven’t committed to technological advancement, they will probably learn the hard way.

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  • http://venturevalkyrie.com Lisa Suennen

    Barbara, I really agree with you about the consumer data issue. Very few of the applications out there are meaningful enough to consumers to use them as regular tools and the lack of integration with their core data makes most of them weak as tools of overall health improvement. Whoever really cracks this code will make a big difference. Lisa