Microsoft Builds Out Health IT Portfolio, Waits (and Waits) for Market to Materialize

2/26/10Follow @xconomy

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officials are still working to finalize the criteria and definitions of “meaningful use” of the technology, McLemore says. Microsoft is hoping the incentives for electronic medical record adoption are offered by this October, McLemore says.

“We think and hope it will happen by then, but nothing happens overnight in healthcare,” McLemore says.

Microsoft doesn’t think this is the right moment—not yet anyway—but at some point it may want to pour some marketing dollars into trying to convince consumers to be the grassroots agents of change. But before big Olympic-budget marketing bucks start to flow, more consumers need to be using it, and more devices, and more applications need to be compatible, McLemore says. He made the analogy to the Xbox video game system, saying Microsoft didn’t spend much on marketing until there was a critical mass of games available to play on the machine.

Hospitals are another key piece of the puzzle. About 115 U.S. hospitals have bought a license to the Amalga Unified Intelligence System, including academic leaders like the University of Washington and Mayo Clinic, as well as community hospitals. This is the program that helps hospital workers run queries that enable all the various proprietary software programs in a hospital to talk to each other. Microsoft’s latest move to strengthen this product came via an acquisition earlier this month of Andover, MA-based Sentillion, for an undisclosed sum.

Sentillion was considered useful because it enables a physician to check a lab report, a pharmacy record, or anything else while basically toggling between programs on a desktop, like anybody else would on a computer running Windows 7. It’s meant to eliminate the extra time-consuming hassles of logging in and out of separate programs, which might discourage a physician from double-checking something when they are busy—and might later prove to be important, McLemore says.

“It’s a powerful tool so you can go in and out of applications, yet stay within the context of the patient you’re examining,” McLemore says.

Since McLemore’s title includes business development and policy, I naturally had to ask if Microsoft still has an appetite to acquire more health IT companies like Sentillion. The Health Solutions Group has made six acquisitions over the past four years. “We’re always looking for different technologies to enhance our offerings,” he says.

I didn’t want to spend much time on policy, because we leave the coverage of policy and politics to other sources in the Beltway press corps. But the endless partisanship, and subsequent uncertainty about the scope of health reform, obviously isn’t ideal for a company trying to map out long-range business plans. Microsoft, McLemore says, still thinks a lot more needs to happen on the policy front to make the U.S. health care system more efficient, and ensure it provides bang for the buck.

“One of the things we think is critical to the success of health reform is to reform the way we pay for care,” McLemore says. “For a long time, we’ve paid for the volume of procedures done, not for the quality or value we get. There need to be changes to the way we reimburse providers, so they are not invested in doing more volume, but providing more quality.”

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