Linking ICD-10 and the future of HCIT

With only 18 months left until the Centers for Medicare & Medicaid Services (CMS) ICD-10 implementation deadline, pressure to comply is mounting for a vast array of healthcare constituents.  ICD-10, or International Statistical Classification of Diseases and Related Health Problems 10^th Revision, is a medical code set used to standardize both diagnoses (ICD-10-CM) and procedures (ICD-10-PCS).  Mandated to replace the existing ICD-9 standards on October 1, 2013, its been well documented that ICD-10 will provide a level of clinical granularity far exceeding that of its predecessor; and as shown below a vast increase in the sheer number of codes.

The implementation deadline has spurred some debate.  James Madard, Executive Vice President and CEO of the American Medical Association (AMA), recently wrote a letter to HHS Secretary Kathleen Sebelius asking her to halt the ICD-10 implementation process.  “The timing of the ICD-10 transition…,” Madard wrote, “… could not be worse as many physicians are currently spending significant time and resources implementing electronic health records into their practices.”

Madard alludes to an issue that is central to both payers and providers which are that multiple Healthcare IT guidelines (ICD-10, HITECH, etc.) will need to be smoothly and quickly implemented to ensure proper reimbursement and avoid heavy government penalties.  The ICD-10 concerns for providers are becoming a boon to vendors, as solutions ranging from data analytics and terminology management to consumer focused solutions are enjoying strong demand.

In our view, vendors need not worry that an extended deadline will curb this demand.  As the healthcare universe shifts from fee-for-service to capitation and bundled-care reimbursement models, innovative technology will be a chief driver in achieving cost reduction.  In addition, we’re recommending that vendors align their business strategy and product offerings around three initiatives:

1. Effectively working with Channel partners to provide bundled “end-to-end” solutions that satisfy reporting requirements for multiple federal mandates
2. Creating flexible product platforms that can be easily integrated into legacy systems (and updated as necessary)
3. Stay out ahead of government regulation and build organizational agility that can meet changing client demands

Let us know what you think.

Jeff Farnell

Jeff Farnell is an Analyst at TripleTree covering the healthcare industry, with a specialization in revenue cycle management, compliance and tech-enabled business solutions. You can email him at jfarnell@triple-tree.com.

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Healthcare: Survival of The Fittest

According to Levin and Associates, mergers and acquisitions in the healthcare industry totaled over $227 billion, an 11% increase over 2010 and the fourth-largest year of the past decade. Even more interesting, is that the value of healthcare services deals increased 43% while technology decreased 2%. Hospital systems are moving into new communities, integrated health systems are acquiring additional delivery system assets, managed care networks are growing, and specialty care service businesses are expanding their footprint—to be well-positioned for survival in a post-reform world.

This is the type of data we shared with TripleTree’s Health Executive Roundtable–the investment bank’s “think tank” comprised of a diverse group of health industry executives with backgrounds ranging from banking, medical device, education and life sciences; to food services, technology, human capital management, and compliance.

We asked each Roundtable member: “What are the key trends that will emerge from this consolidation?”

Their independent and unique perspectives are published in:

Viewpoint: A Kaleidoscope of Insights Regarding Growth Opportunities amid Consolidation in the Healthcare Industry.

You can view and download the report here.

In addition, you are invited to participate in a webcast on Wednesday, February 29, 2012 from 12-1 pm CST where we will discuss the highlights and key themes from the report. You can register for the webcast at: https://www2.gotomeeting.com/register/771534410. After registering you will receive a confirmation email with information about joining the event.

As a preview. the following are the highlights and key themes from the report:

1. Healthcare costs will increase. It’s all about supply and demand. Market consolidation sets the stage for increasing healthcare costs as fewer, large, hospital and healthcare systems leverage their size and strength during unit cost contract negotiations with payors.
2. Contraction of the delivery system = expansion of demand for meaningful innovation to combat the pressures of #1. However, the only “new new things” that will survive are those that solve real problems with a scalable, cost-efficient solutions that integrate with the existing healthcare infrastructure.
3. B to C solutions require B to B revenue streams. Consumer adoption is critical for demonstrating relevance, but consumers don’t typically fund high growth enterprises.
4. “Health and Wellness” will transition to “Life and Well-Being.” Payers and employers will seek innovations that support life and well-being as the distinction between work, home and health become increasing blurred.
5. Healthcare gaming will emerge–actually, it will explode. Gaming platforms that integrate entertainment, interaction, and achievement will be a transformational solution for driving consumer engagement and behavior change as well as provider education, training, delivery, research and cost containment.
6. Electronic health records will evolve into smart health information technology ecosystems. These ecosystems will (finally) enable the coordination of care and drive shared accountability among healthcare providers.
7. Doctors will be loyal to a single system. (Smart) hospitals and health systems will attract and retain doctors with mobile and wireless software applications that enhance personal income and lifestyle.
8. The most disruptive solutions are likely to come from outside the traditional healthcare industry. The core assets and capabilities that fuel retail, consumer packaged goods, banking, and telecommunications, for example, can be translated into unique and meaningful healthcare solutions by companies and individuals not trapped in parochial “we’ve always done it that way” thinking.

A “perfect storm” is brewing where science and technology have no boundaries, and the convergence of reform and unsustainable medical costs are generating opportunities for change. I can’t think of a more exciting time to be in healthcare.

I look forward to your feedback via blog post comments, personal email, or during the webcast.

Archelle Georgiou

Archelle is a Senior Advisor and Chair of TripleTree’s Healthcare Executive Roundtable, and focused on creating health through innovation.  You can follow Archelle on Twitter, on her blog, or email her at ageorgiou@triple-tree.com.

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5 MD’s, 4 CEO’s, a PhD and a CIO agree on “what”, they’re now focused on “how”

Last Friday, the TripleTree Health Executive Roundtable (HER) convened for their annual discussion and debate on this year’s theme…consumerism in health care in a post reform world.  In the spirit of giving you, our faithful reader, a glimpse into the upcoming research report from the HER, below I’ve summarized some of the opinions expressed during our day and a half gathering.

• Patients as consumers are emerging from being an afterthought to center stage…
  • “Getting consumers to understand price and its relationship to quality and value is important”
  • “In order to achieve customer loyalty, we must find a way to individualize care”
  • “Trust is key in driving change of consumers”
  • “Business focus is tough if the consumer isn’t at the center of decision making”

• Current health care models support (and create) dysfunction and call for innovation…
  • “Physicians are only paid through the tyranny of the office visit”
  • “Managed Care neither manages nor cares”
  • “Unfortunately, our current reimbursement model is inefficient, yet is at the center meaningful changes for patients to become consumers”

• For electronic health records (EHRs) and other technologies, start with the end in mind..
  • “EHRs must get the right info into the right hands, but there is no consensus on what that info is and that is where the question of purpose”
  • “It a stretch to think that technology alone will change practice, culture trumps strategy”
  • “Technology is ahead of the change curve and misaligned with reality”
  • “ICD-10 is akin to ‘academics gone wild’”

Needless to say, we witnessed a spirited and opinion filled day-and-a-half session!

While it’s not controversial to opine that innovation in health care is a fragmented pursuit, and as our roundtable focused on how best practices from financial services, retail and media can be applied to consumerism in health care; the often cited hurdles of reimbursement and physician-patient-payer connectedness remained as massive hurdles.

We will publish the collective viewpoints on consumerism in healthcare from our HER this quarter, including companion video interviews bringing each individual opinion to life.  We’ll host both on our web site, and would be happy to send you the link when published.  Let us know if you would like a copy of the report and have a great week!

Joanna Roth

Joanna Roth is a Senior Analyst at TripleTree covering the healthcare and technology industry, specializing in education solutions. Follow Joanna on Twitter or e-mail her at jroth@triple-tree.com.

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ACO Speed Bumps, Courtesy of CMS

We recently reviewed an article outlining the current debate between the American Telemedicine Association (ATA) and Centers for Medicare & Medicaid Services (CMS) regarding the statutory restrictions placed on telehealth by CMS in certain rules effecting accountable care organizations (ACOs).  In summary, ATA is asking that five Medicare requirements that effectively limit the use of telemedicine—by prohibiting reimbursement—be waived or modified.

It is ironic that CMS is supporting unnecessary road blocks to ACO enablement, a care delivery methodology that is a cornerstone of the 2009 health reform legislation.    At the core of the government’s support for ACOs is the idea that Medicare and Medicaid spending is unsustainable and a system that rewards providers for delivering the same (or better care) could be most impactful by better managing patients with chronic conditions, reducing readmissions and minimizing ER visits.

Thus, it seems counterintuitive that new approaches to delivering care (i.e., ACOs), should be encumbered.  As persuasively pointed out by a letter from the head of the ATA to the head of CMS; “telehealth should be an integral part of how ACOs provide healthcare. The benefits of telehealth for Medicare beneficiaries and Medicare program include:

• Reduction of in-person overuse, such as in emergency rooms and preventable inpatient admissions
• Triaging for faster, appropriate specialist care
• Improve[d] patient outcomes and quality
• Increase provider productivity
• Relief for provider shortages
• Reduction in disparities to patient access
• Decrease unnecessary variations in care…”
  – Source

While impactful, yet another memo from the ATA on this same subject was even more persuasive.  Entitled “Recommendations to the Center for Medicare and Medicaid Innovation,” the ATA explored connecting doctors to patients via telehealth instead of traditional office visits, and the significant savings in Medicare spending that could result.  In this memo, the ATA used the example that Medicare spent over $4.5 billion in 2009 on ambulance rides for patients. While it was not argued that this entire amount was wasteful or unnecessary, the memo pointed out that the Center for Information Technology Leadership analyzed this line item and determined that leveraging telehealth would result in $500 million of annual savings.

We haven’t yet seen the reply by CMS to the ATA memo, but it seems that any past reservations about telehealth should be reevaluated to reduce the friction of pursuing the ACO model.  As the ATA’s Administrator ironically points out in his memo to CMS regarding the CMS ‘definition’ of an ACO: “An ACO will be innovative in the service of the three-part aim of better care for individuals, better health for populations, and lower growth in expenditures.  It will draw upon the best, most advanced models of care, using modern technologies, including telehealth and electronic health records, and other tools to continually reinvent care in the modern age.”

Let us know what you think and have a great week.

Jamie Lockhart

Jamie Lockhart is a Vice President with TripleTree covering healthcare software and service providers with a focus on consumer directed healthcare.  You can contact him at jlockhart@triple-tree.com

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M&A Activity and Hospital Priorities Seek a Groove as ICD-10 Looms

While the deadline for ICD-10 implementation is not until October 2013, the new clinical documentation code set expands over 8x from 24,000 to > 200,000 and with enterprise-wide effects will be one of the most impactful mandates in the history of medical coding.

According to studies from HIMSS and AHIMA, the majority of provider organizations are lagging in their ICD-10 preparedness. Emdeon also mentioned in their Q1 earnings release that their hospital customers have only recently started to focus on remediating their systems in anticipation of ICD-10.

Under the ICD-10 environment, hospitals will quickly find that their current levels of physician documentation will not support the new mandates, which could pose risks to reimbursement rates. Our significant work in healthcare IT and compliance are underscoring the importance of hospitals aligning now with their physicians so that improved documentation protocols can ease the pain of transitioning to ICD-10.

M&A activity in healthcare IT has been robust as my colleague Seth Kneller illustrated in a recent post.  The clinical documentation space in particular was invigorated with the recent announcement of two notable deals:

• Nuance Communications acquired Webmedx:  Both Nuance and Webmedx offer transcription services with speech recognition capabilities and natural language processing (NLP) technology. Webmedx proprietary data mining technology, QualityAnalytics™ will enhance Nuance’s clinical language understanding which will allow more clinically intelligent speech-driven conversion of clinical information.
• MedQuist acquires M*Modal:  Medquist, a leader in integrated clinical documentation solutions, advanced its opportunity to penetrate the transcription market segment with the acquisition of M*Modal’s advanced speech and natural language processing technologies. M*Modal reported an annual revenue run rate of $24m, and with TEV on the deal reported at $130m, a healthy 5.2x revenue multiple bodes well for the sector.

These two trades are indicative of the market’s anticipation of an increasing focus on clinical documentation due both to meaningful use requirements as well as the likely needs under ICD-10. To the defense of hospital administrators who have seemingly ignored ICD-10 to-date, the funding demands associated with health reform present tremendous challenges; and these executives likely have a few other priorities competing with ICD-10 conversions in their queue including:

• EHR and Meaningful Use:  While providers are focusing on EHR templates and spending millions meeting meaningful use guidelines, they would be well served to incorporate ICD-10 into these projects in order to enable documentation now with the specificity necessary for the future.
• HIPAA 5010 compliance:  With a deadline of January 2012, crunch time is approaching to meet (yet another) new transaction standard associated with the HIPAA 5010 upgrade (which relates to increased transaction uniformity, pay for performance support, and streamlined reimbursement).   AHIMA published a Top 10 list for phase two of ICD-10 preparation which includes step-by-step processes designed to encourage organizations to prepare for ICD-10 in parallel to the migration to 5010.

U.S. hospitals are busy toeing the line on a range of mandates, and if not addressed in parallel with more pressing needs, ICD-10 will by pushed to the bottom of most priority lists.

We believe the most successful provider organizations (e.g. hospitals) will optimize reimbursement levels under ICD-10 and their core business processes around the revenue cycle.  As this occurs jointly all boats will rise – enabling higher levels of reimbursement, analytics, quality, efficiency and coordination of healthcare.

Let us know what you think.

Emma Daugherty

Emma Daugherty is a Senior Analyst at TripleTree covering the life sciences sector with a focus on provider technologies and patient safety.  You can contact her at edaugherty@triple-tree.com.

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Wanted: Smart investors, smart developers & smart policy makers

Ahead of his keynote address at the upcoming Wireless-Life Sciences Alliance Convergence Summit in San Diego next month, Bill McGuire, M.D., recently sat with mobihealthnews (MHN) editor Brian Dolan for an interview on the efficacy of technology in healthcare and the road ahead.

(MHN) How do you characterize the opportunity for wireless health? Could you also provide us with some sense of the current investment climate — a lot of activity? A lot of interest but not a lot of activity?

I like to position it as: How can we build products, services, and systems that facilitate the eventual appropriate health and wellbeing for the people in this country and elsewhere. In pursuit of that and in consideration of all that has been done — both good and bad — and all that is yet to be done, which is significant and formidable, I think the whole area of technology enabled healthcare or mHealth or any term you’d like to apply, offers significant opportunity to meet that end. It still remains to be seen obviously what the most appropriate areas and most beneficial areas will be to accomplishing that. When it comes to investments, of course, there will be a lot of investments in things that don’t make any difference or are not contributory to the kind of outcomes I am describing.

(MHN) What kind of things?

If you look at what has happened in last several years particularly with reform: These huge expenditures that have been directed at technology applications in healthcare. I’m afraid we will see that we have spent an enormous amount of money for marginal or no gain. It’s very indiscriminate. That’s classic healthcare, though and classic investing: ‘Let’s just throw money at things.’

You have the whole idea of applications on cell phones for example. Embedded among [the thousands] of health apps out there are probably a few that will make a difference in the lives of some people. Those apps should theoretically lower costs and improve outcomes, but most of these apps exist because we happen to like apps, it’s a nice story, so we chase them. Discerning what is ultimately going to make a difference and result in the kind of outcomes we are looking for, which is differentiated from just investing money, is the critical issue. The smart investors, smart developers, smart policy makers and so on will benefit from that. The land grab that is going on right now — just throwing money at it — is a little bit misguided.

Another issue is the lack of interactivity among these technology applications. The fragmentation and silos continue. Rather than determining how to piece a number of necessary components together, we have a lot of independent efforts out there to chase after something. We ask for electronic medical records (EMRs) but we don’t necessarily put out standards of performance and interactivity between them. So when someone comes along and asks to gather data or information we know that we can’t get it from each and every one of them.

(MHN) So EMR efforts are misguided?

The amount of money that is being thrown at this stuff relative to the value that it is going to return to us is ridiculous and it will not prove to offer up the kind of end gains that we are touting. Those are health outcomes gains and financial gains in terms of lowering costs. I see nothing that suggests this is going to dramatically improve outcomes, improve access to care for people who had heretofore not had access to care and certainly nothing that suggests that it is going to lower the costs of healthcare in America. People are rushing to do various EMRs simply because the government says we will pay you to install it. If you talk to people who try to extract data from various EMRs they would tell you that there is no consistency in the expectation to do it from many different systems and yet we are spending billions of dollars on this.

(MHN) Let’s switch gears back to wireless health. Are any companies on the right path? If you aren’t comfortable naming companies, what are some specific use cases that you think are promising?

I will be necessarily cautious about the specifics because I don’t want to come across as endorsing or refuting things that I know relatively little about specifically. Let’s start with a concept. What I think we are talking about in some way parallels what we are seeing from efforts in education. As we confront challenges around resource availability and the spacial relationship between the users (the someone in need) and the resource. The ability to take content out to individuals — which is what mHealth or various mobile technologies have done — becomes a substitution for asking those people to go to the content source in a different way.

It’s sort of like: If the cost of gas goes up and bus costs go up, how do we really expect kids to learn about the arts when they used to get on a bus and go on a field trip to a museum? Museums are beginning to take their content to the students where they live. The Metropolitan Opera says we can’t expect everyone to come to the Met, but opera is an important cultural element for society. So they started filming it and showing it at theaters around the country, which has been wildly successful. In these cases we are looking for ways to bring content out to touch people when we can’t in essence do it physically.

In healthcare the same principle exists. People who live in remote sites do not have access to care — primary care to say nothing of secondary or specialized care. How do we help them manage their health and wellness and help deliver services that might be beneficial to acute but relatively everyday problems? That is the kind of application opportunity that the technology provides. Whether that includes telehealth, applications, gaming… that’s the huge opportunity.

(MHN) Any closing thoughts?

I think healthcare might be unique in that it is a space where technological advance has not positively influenced efficiency or cost reduction. Just across the aboard it has not happened. Costs keep going up year after year after year. Why is that? The discussion we hope to have at the WLSA Summit is around how the companies presenting are in fact going to accomplish the needs of both enhancing efficiencies and lowering costs while achieving improved health outcomes for people. I expect it will be a lively discussion about disruption and how mobile will play into that.

Dr. McGuire is widely respected for his uncensored clarity about what has, hasn’t and can work relative to advancing the health of our nation.  This interview offers a sneak peak at the keynote remarks he will deliver during the WLSA Convergence Summit on May 11, 2011.  Click here to register.

Bill McGuire, M.D. is the former CEO of UnitedHealth Group and current Vice Chairman of TripleTree Holding Company.

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Data Aggregation and M&A Activity Bookend Outlook for Health Information Exchanges

Health Information Exchanges (HIEs) have been a hot topic in healthcare IT dating back to 2009.  HIEs are so often mentioned with interoperability platforms, data exchanges and integration engines that it has been difficult to sort out the actual services performed by an HIE, much less the relevant vendors and their solutions.

TripleTree defined HIEs as aggregators of electronic patient-centric, clinical information from disparate, unconnected information systems into a common repository for translation in a common format.  HIEs eliminate the need for patients having several EMRs for their health information – in some ways it becomes the virtual master patient record.

Three measurable benefits from the ability of providers to pull patient information from an HIE for a more accurate, real-time view of the patient’s health history resulting in better patient care and reduced costs include:

• Enhanced care coordination
• Prevention of harmful drug interactions
• Elimination of redundant tests and procedures

The mixture of consumerism and reform in healthcare is forcing this inevitable shift toward HIEs – and since Q1’10 we’ve seen four market proof points:

• Harris acquires Carefx: Feb 2011 – Harris acquired Carefx for $155m to expand Harris’ capabilities in government healthcare, provide an entry into the commercial healthcare market, and strengthen its position as a provider of interoperability solutions.
• Aetna acquires Medicity: Dec 2010 – Aetna acquired Medicity for $500m as a potential counter to Ingenix’s acquisition of Axolotl and a way for Aetna to become more relevant in the provider market.
• Ingenix acquires Axolotl: Aug 2010 –  Ingenix continued its 2010 buying spree and picked up a leader in the HIE space with Axoltol.  With Ingenix’s growing portfolio of HIT assets, we’re closely watching how they integrate Axolotl with their other clinical assets.
• Lawson acquires Healthvision (Cloverleaf): Jan 2010 – Lawson made a move to expand their healthcare presence “beyond just an apps vendor” to become a more integrated HIT player.

Despite this consolidation, a number of standalone, pure play HIE vendors (Wellogic, Informatics Corporation of America (ICA), MobileMD, HealthUnity, Orion Health) offer relevant solutions.  Aggregating patient and clinical data into a common repository is (and will be) relatively simple.  Complexity will come from those vendors who begin to build new applications that leverage the patient-centric, rich clinical data to create “data assets” on the backs of HIEs – a key to feeding the insatiable appetite around Accountable Care Organizations (ACOs) and the marketplaces growing need to influence:

• Care coordination
• Decision support and evidence-based care protocols
• Real time monitoring and event-driven triggers
• Longitudinal patient reporting
• Provider quality reporting and benchmarking
• Unified patient dashboards

The winners won’t be “data plumbers” or “just integrators” but will focus on adding the applications that leverage data into new business models.  It’s still too early to tell if the consolidators can beat out the specialist pure play providers, but if you have any thoughts or would like to hear more about this sector let us know.

Thanks and have a good week.

Judd Stevens

Judd Stevens is an associate at TripleTree covering the healthcare industry, specializing in the impacts and transformation of health plans in a post-reform world.  Follow Judd on Twitter or e-mail him at jstevens@triple-tree.com.

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Meaningful Use Considerations Are Just Small Part of a Broad Compliance Landscape – 08/03/10

The subject of compliance conjures an image of a massively fragmented arena where technologies, workflows and processes are intertwined to address economic, legislative and vertical industry mandates.  Because healthcare is one of the thorniest industries on the planet (and fraught with considerable legislative hurdles), its complexities are significant.

“Meaningful Use” has been in the press of late, and is one of a host of significant compliance initiatives impacting clinical reporting requirements in healthcare. As part of the American Recovery and Reinvestment Act of 2009, Congress included up to $34 billion in incentives for eligible hospitals and physicians to implement and use certified electronic health record (“EHR”) solutions.  Known as HITECH, the provision requires that providers achieve meaningful use through a staged roll-out of the program through 2015. While the exact parameters of the program have not been established, the following broadly outlines the objective of each stage:

Stage 1 criteria focus on electronically capturing health information in a coded  format, using that information to track key clinical conditions, communicating that  information for care coordination purposes, and initiating the reporting of clinical quality measures and public health information (for more on the proposed Stage 1 meaningful use criteria see the Appendix).

Stage 2 expands on Stage 1 criteria in the areas of disease management, clinical decision support, medication management, support for patient access to their health information, transitions in care, quality measurement & research, and bi-directional communication with public health agencies.

Stage 3 will focus on achieving improvements in quality, safety and efficiency, focusing on decision support for national high priority conditions, patient access to self management tools, access to comprehensive patient data, and improving population health outcomes.

The roll-out of meaningful use requirement sets varies depending on the provider’s initial payment year. For example, providers can satisfy Stage 1 meaningful use standards as late as 2014, but must adhere to Stage 3 requirements in 2015 to receive the incentive payment.

Meaningful use has far reaching implications for providers and remains an area within reform that our team is watching.  Two recent articles that touch on the topic can be found here and here.

In the coming weeks, look for our team to write more on these pages about the four sub-sectors within the Compliance landscape:  Clinical Auditing, Consumer Engagement, Anti-Fraud & Recovery and the emergence of ICD-10.

Until then, let us know if you have any questions and have a great week!

Chris Hoffmann

Chris Hoffmann

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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