Dollar Blocking, Part 1: Getting To The Root Of The Interoperability Debate

In ONC’s 2015 Report to Congress on Health Information Blocking, Karen DeSalvo fired one of her namesake salvos at HIS vendors. Page 13 of the report identified four business practices that ONC feels interfere with the exchange of health information, paraphrased below:

1. Contract terms that restrict access to data
2. Charging fees for data exchange and interfaces
3. Developing health IT in non-standard ways
4. Developing IT that impedes information exchange

For sure, the debate about data blocking has generated an abundant exchange of information among CIOs, regulators and vendors in HIS media and conferences, so the situation isn’t totally bleak. In this two-part blog, we’ll give you our 2 cents worth for free, unlike vendors who dare to charge for access to their information.

Let’s start by comparing the financial perspective of the three parties in the debate:

• CIOs — who, for the most part work for not-for-profit hospitals, which comprise about 80% of the US healthcare market.
• Government — agencies like the ONC are extremely not-for-profit, spending our tax dollars in excess, causing large deficits.
• Vendors — how many not-for-profit vendors do you know? That’s like asking how to spell oxymoron!

This disparity in financial perspectives may be the root of the debate. Every vendor is in the business to make money, through the four above issues that ONC raised, or any other means they can think of. And they do it very well, or they don’t stay in business very long. Just ask Siemens, Healthland, McKesson, etc. Leading vendor profit margins for 2015 were:

• Cerner = $539M profit on $4.43B in revenue, ≈12 percent
• athenahealth = $184M profit on $924M in revenue, ≈19 percent
• Meditech = $124M profit on $545M in revenue, ≈22 percent
• Evident (CPSI) = $18M on $182M in revenue, ≈10 percent

So for vendors, making money is their primary goal — in essence, caring for the financial well-being of their stockholders, quite a different mission from community hospitals who care mainly about the medical well-being of their patients, or government officials who are primarily concerned with regulatory issues. So a debate is natural among these three disparate parties.

Let’s drill down into the ONC’s second issue: charging for interfaces. To be profitable, vendors must sell their products, and they would much rather sell their entire suite of “integrated solutions” than develop custom interfaces to other vendor’s products. In many cases, the fees for interfaces are clearly intended to discourage “best of breed” solutions — we once saw a vendor quote pricing for interfacing their EHR to a “foreign” lab system that was about equal to the cost of purchasing the vendor’s own integrated LIS module. Kind of a no-brainer for hospital CIOs!

Just how much do interfaces cost? Thanks to 160 system selections we performed over the past 30 years, we’ve learned how to request detailed quotes for all the interfaces hospitals require, including such diverse systems as PACS, reference labs, lab instruments, HIM encoders, drug dispensing, local HIEs & RHIOs, etc. The number of interfaces varies directly with bed size: from 10-15 for a critical access hospital (CAH), 20-30 for a community hospital around 150 beds, and 50 or more for a large AMC or multi-hospital IDN. We make vendors quote implementation fees, license fees, annual maintenance, and any remote hosting fees, to calculate hospitals’ total cost of ownership (TCO). Based on the most recent selections we’ve done, typical interface 5-year TCO runs from ≈$100K for a CAH, ≈$250K for a mid-size facility, and ≈$750K or more for an AMC or multi-IDN. A lot of dough for sure, but do vendors profit much on it?

Consider the complexity of the diverse data elements required for a single interface, usually comprised of 4 parts: ADT in, charges out, orders in, and results out. Then, for example, try to extract these data elements from a Meditech LIS with its highly proprietary Release 6.x “MAT” database, write four custom “point-to-point” interface programs in another programming language, and then import the data into Epic’s highly proprietary EMR “Cache” data base. The amount of meetings, phone calls, emails, specs, coding, tests, bugs, re-tests, etc., easily sucks up most of these fees. It’s like moving a bumper from a Volvo to a BMW, or placing the speedometer from a Toyota into a new ‘vette — can be done, but it ain’t easy! HIS vendors’ programming languages, data bases, operating systems and hardware platforms are as diverse as automobile models, and they vary with every annual release/recall.

In the second part of this two-part piece, we’ll look into some of the solutions that have been proposed to facilitate interoperability, and delve further into the true costs for both vendors and providers.