Evaluated on a revenue basis, they don’t get any bigger in the healthcare IT space than McKesson Provider Technologies. So when the President of that division speaks, it’s a good idea to listen. As such, healthsystemCIO.com editor Anthony Guerra recently talked with Sunny Sanyal to learn how the market was looking from his unique perch. It’s a story of much activity, good advice and lessons learned. What follows is an interview that any healthcare IT insider should take the time to absorb.
BOLD STATEMENTS
Customers aren’t necessarily just condensing their plans; what they’re doing is making tradeoffs.
If the customer is headed down the wrong path, if their hospital doesn’t have the type of sponsorship that’s needed to make it successful, if they’re headed down the path that’s going to delay the deployment, I believe it’s the vendors responsibility to make a pretty strong point of that, because either their deployment will not be successful or the customer will miss the timelines and their opportunities.
Sometimes the customers want to do it a certain way and they have certain internal priorities and requirements for doing it a certain way, but those haven’t always necessarily been the right ways.
GUERRA: How has the HITECH legislation affected business over the last 12 months, and what do you think is going to happen over the next six months?
SANYAL: One way for me to summarize this is last year, at this time, there was a lot of uncertainty and that uncertainty was driven by a lot of unknowns around the stimulus requirements, around what it would take for the hospitals to demonstrate meaningful use. That uncertainty translated into, I would say, a hesitation on the parts of several organizations to make a move one way or another. And so there was a period of time last year, early, during this cycle, when it seemed to have frozen the market. That period lasted, I’d say, three to four months when everyone just took a deep breath to say, “Let’s just reassess what we’re doing.”
During that time, vendors like ourselves got out there and did a lot of education to the market to explain what the stimulus was all about. Frankly, I think the vendors should get a lot of credit for taking that ONCs message and getting it out and disseminated across the organizations and distilling it into what it means for them. McKesson, for example, went to every one of our customers and we laid it out to them, not in general terms, but in terms that are practical to their particular situation. So based on what they had deployed, based on what they had done, we explained to them what it means for them. And then what we saw was a freeing up of movement again.
As a result, over the last 12 months, we’ve seen two major trends. One is customers who had begun the journey of deploying acute care clinicals, now picked it up with a sense of urgency. If they had a five-year plan, they pushed to make it into a three-year plan. If they had a three-year plan, they’re pushing to make it into a two-year plan.
Above all, the biggest hesitation in the market segments we serve was around deployment of CPOE. Stimulus has raised the level of urgency around CPOE and, as a result, we find most of our customers now engaging us in contracting for CPOE and immediately starting the process. Most have already begun the process of planning for deployment of CPOE. So those are positive things. It brought a sense of urgency to people that had deals on the table or were thinking about it and had been in the sales process for quite some time. They started to ink the deals by putting pen on paper. So as a result, you’ve seen most vendors, including ourselves, doing well from a sales booking standpoint.
The second thing that it did for us over the last 12 months is the smaller community hospitals, that had been behind in the decision to deploy clinical systems, have accelerated their process. So if they hadn’t planned for it, they’re now planning for it, and we’re seeing a lot of movement and activity in the community hospital space. We’ve benefited from that. We have a product line called Paragon that is extremely competitive in this space, and we’ve had a really good year with Paragon, and I see that trend continuing. Small community hospitals typically tend to gain disproportionately from the stimulus because a $5-8 million windfall from the stimulus may not be as significant for a large IDN, but for a small community hospital, for a $100 or $75 million hospital, $5-7 million is quite a bit of money. It’s also an opportunity for them to leverage these funds to get done what they need to get done.
On the acute care side, those are the two trends that we’ve seen. A year ago, we weren’t in this situation. A year later, now we’re in a situation where everyone is actively moving forward and making plans to drive towards meaningful use. They see the seriousness in it. There was a lot of skepticism a year ago about whether this stuff would be really true or not, whether the money would be real or not, but now we’re seeing a high level of seriousness across our customer base and across all the prospects that we’re selling to.
There is the other side of this which is on the ambulatory side, where things are still fairly mixed. There is obviously a little more time on the ambulatory side and physicians — especially in the small offices/small practices, which is where the adoption of EMRs is the lowest — have more time and some more flexibility than the hospitals. A two- or three-doc practice can deploy an EMR relatively quickly. So we’re still not seeing the level of adoption or activity there that we would like. But frankly, as I stretch it forward into the coming year, I think we will see continued adoption and continued activity in the community space, and we will see increasing adoption in the physician space. That’s being supported by what we’re seeing in our sales activity, the number of RFPs, the increasing number of inquiries.
GUERRA: You mentioned some organizations are accelerating their plans, isn’t that dangerous?
SANYAL: A couple of points there. Customers aren’t necessarily just condensing their plans; what they’re doing is they’re making tradeoffs. So, if someone had a legacy system they wanted to replace, they’re willing to now push that out as a priority into the outer years and replace that with CPOE. If they have a lab system that they’ve been clamoring to change out, they’re more likely to wait and swap it out with CPOE deployment first. CPOE might have been in the year three or year four of a plan, but they’re saying, “You know what, let’s swap that out, let’s do CPOE now, we’ll do the lab later.”
So we’re seeing that kind of swapping out and reprioritizing of their IT roadmap. That’s what’s taking place. They still have capacity constraints on their end, whether its capital constraints, whether it’s IT capacity, and an organization can only absorb so much. So there are some things that are moving to the outer years and some things that are moving back into the first two years. At the end of the day, I think everyone is shooting for getting everything done by October 2012. So that’s the first part of the answer; refactoring and reprioritizing of the product roadmap. And we’re helping our customers and prospects with that.
The second thing is, whereas hospitals would have taken a more — for lack of better word — luxurious approach to implementation, where they would take longer and they would probably customize it more, we’re recommending they take a more prescriptive approach. They’re coming to us and saying, “Okay, we want to do it in 12 months. How do you recommend it? McKesson, what is your prescribed way of doing it?” And that’s helping drive down the cycle time to these implementations. At the end of the day, vendors like McKesson who have done it hundreds of times and deployed CPOE a hundred times, are in a much better position to advise our customers as to what works. Eighty five, 90 percent of the time, we’ve got pre-configured content, we’ve got prepackaged installs, and they’re going with prescribed methodologies.
GUERRA: Do you sometimes have to advise an organization that they cannot accomplish their goals in the allotted time, that it’s just too ambitious for their culture and resources?
SANYAL: You’re touching on something that’s absolutely crucial, which is if you look at the deployment of advanced clinical solutions, especially the stuff that touches nursing workflows and, more importantly, complex physician workflows, I think vendors absolutely need to make that point. If the customer is headed down the wrong path, if their hospital doesn’t have the type of sponsorship that’s needed to make it successful, if they’re headed down the path that’s going to delay the deployment, I believe it’s the vendors responsibility to make a pretty strong point of that, because either their deployment will not be successful or the customer will miss the timelines and their opportunities.
We are doing that, and I would advise every vendor to do that as well, to be very firm about what really drives success based on their experiences with their applications. I don’t think, historically, all vendors have done that. Sometimes the customers want to do it a certain way and they have certain internal priorities and requirements for doing it a certain way, but those haven’t always necessarily been the right ways.
Given the timelines, given the urgency and the need to get this thing right, I think vendors should absolutely take that stance and be proactive in prescribing what they believe is the right approach for their products.
GUERRA: We’re still waiting for the government’s guidance on certification. How does that impact a vendor like McKesson?
SANYAL: I can’t speak for other vendors, but let me just give you the McKesson side of the story: we have been very closely involved and engaged with the whole process over the last 12 months. So we kept a very close ear to the ground, and we’ve watched this evolve, and we’ve looked at all the certification requirements. We started with the baseline of the CCHIT certification requirements and, from there, we saw what was coming out of ONC. So we’ve actually stayed very closely in touch, and rather than wait for the final requirements, we baked into our product roadmap over the last 12 months the things we saw were coming.
As a result, we weren’t surprised at all when the requirements were released at the end of December. We looked at them and they lined up with what we were expecting. So we do believe that between now and June, there will be some modifications on these requirements, but we’re not anticipating anything dramatically different from what’s been rolled out. Maybe some things will get pulled back, maybe some things will get tweaked, maybe clarified. I think it’s probably more about clarification than anything else. If there is anything new that comes out that we missed or was added, we will add it to a service pack.
What we’re telling our customers is, “We will be ready for you. We will be absolutely ready to apply for certification when the certification process is announced and the certifying bodies are announced.” Meanwhile you, as a customer, should focus on the things you need to do from a meaningful use perspective, and we suggest you focus on CPOE. If you haven’t begun the process of rolling out CPOE, you’re looking at a 12-to-18-month timeframe. Focus on that, and somewhere in there, we will schedule an upgrade for you, so that you will have the certified release of the product. And so our customers are listening to that and taking that seriously, and that’s how we feel. We will be ready because we began the process of making the necessary changes to our products quite awhile ago.
GUERRA: So your position on this to your customers is McKesson will get them on a certified version of the product, not that the company will certify all versions of the product that are being used out there?
SANYAL: That’s correct. We will create a version that will get certified, and we will upgrade you to that version. At the end of the day, we have staffed up to meet that capacity requirement, and we believe that we will be able to take care of everyone who needs that upgrade.
GUERRA: You just mentioned staffing up. Have you see a lack of talent out there?
SANYAL: As vendors, we’re in a slightly different position from hospitals and provider organizations because I think we offer a different value proposition for people, different career paths. I think our challenge has been that it’s harder to get more and more nursing resources. Technical resources have not been a problem at all. Our facilities are located in cities where there are large engineering schools. So we have not had those challenges.
I do believe that there is a shortage of clinical resources, especially clinical informatics, that the market is going to face. We feel like we’ve got what we need. And also, to supplement our resources, we have several small boutique partners that we’ve worked with historically. So if we get a peak somewhere in scheduling upgrades or slots or installs, we can use those resources as well.
Speaking generally for the industry, I think we have to look at training and education. There is a lot of education and training work that needs to occur, whether to the existing resources or to all the clinical professionals that have to start using CPOE and EHRs. I think that is, operationally, a pretty big challenge for most of the providers.
Timothy Hartzog says
Nice Article. Just from a physician/medical informatics person, CPOE with Closed Loop Medication is much harder and complicated to implement compared to CPOE alone. Implementing Closed Loop Medication requires more workflow discussion, more standardization, more overall cooperation in the healthcare setting.