Texas Health Resources has launched Texas Health Advisory Services, a professional services arm of the “Innovative Technology Services” division of Texas Health. Initial services offered by THAS include:
- EHR advisory and hosting, implementation and optimization support;
- Meaningful Use readiness;
- IT strategic planning; and
- IT governance and PMO assistance.
Texas Health has implemented its EHR — spending more than $200 million to cover 4.7 million patient records — at 13 hospitals since 2006.
Here we go…It’s 1975 all over again!
EPIC is doing what IBM did 35 years ago, turning every client into a hosting site (see SHAS circa 1975). Epic is allowing / encouraging the large medical centers to distribute its applic on a host basis to almost any remote client (particularly if they are under 150 beds) without incurring a new acquisition license fee. Just add more work stations, or users, and pay a small seat license increment and you can buy them in ‘bulk’.
I spoke to several CIOs at HIMSS that are doing this for owned, managed and non-affiliated facilities. All other vendors require you to pay a sizable new facility license fee. Epic says…not necessary. Oh, but along with the seat charge they bump up your monthly support fee. How can Epic do this, forgo the big revenue bump you get with a new license? If you’re a private company easy…cash is king, not revenue recognition. That’s why you do not see Cerner, McK, Allscripts, etc, do this. Wall Street wants the rev NOW! Epic can wait.
Why would Epic forgo a possible meaty license fee? They view this as incremental revenue that they would otherwise never see since it’s too costly to sell and support the small facility.
So I predict in the next year you will see many IDNs do the very same as THR. Only trouble is, running a software/service operation is very different than running a facility-focused HIT department. I know I’ve done both and the balancing act can make you pull your hair out!
The Kelzon Group
Anthony Guerra says
Thanks for the comment Frank. I have a question for you, and I think you’re the right person as a former CFO. How can a nonprofit health system launch what is essentially a consulting business? How does that work from a legal/accounting point of view? Thx!
Yes they can. There are many ‘fee for service’ operations under 501C3 corporations (non-profit, tax exempt). The obvious one is HIMSS. Look at all the ancillary revenue things they do. For a hospital as long as the service does not generate a significant amount of revenue (say 40% of total)the IRS will usually allow it under the non-profit umbrella.
The real issue here is not tax issue, it is more about syncing objectives. In my decades of experience where most fail is when the needs of the mother ship are different than the needs of the clients. For example the mother ship wants to move aggressively into ambulatiory care (neeeding specific IT support) and the clients are focused on Home health. Unless you have unlimited resouces you have a problem. Also when the feds start hacking away at reimbursements (as WILL happen in the not to distant future) and IT needs to cut 10%…well I think you get the picture. Customers want a vendor to focus on their needs, not ‘the other business’.