The Impact Advisor 2Q19
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May 2, 2019
ONC AND CMS JUST MADE WAR AND PEACE SEEM LIKE LIGHT READING
ONC and CMS recently published separate proposed rules pertaining to “interoperability.” Although there are many details in the two rules’ combined 1,000 pages, one common theme is ensuring patients have access to their health data, particularly through standard FHIR-based APIs. The major provisions in the proposed rule from ONC would define exceptions to the 21st Century Cures Act’s highly-publicized “information blocking” provision for “reasonable and necessary activities,” as well as make fairly sizeable updates to EHR certification requirements. Many of the aspects of the proposed rule from CMS pertain to payers – but there are certainly notable provisions for providers as well. For example, CMS is proposing to revise conditions of participation in Medicare and Medicaid to require hospitals to send electronic notifications to another provider when a patient is admitted, discharged, or transferred. (Click here for a more detailed summary of both proposed rules.)
Why It Matters:
These proposed rules generated a considerable amount of news coverage, and as written could have major implications for provider organizations and EHR vendors. There is a LOT to digest in the combined 1,000 pages, but here are our initial thoughts:
- Public comments from key stakeholders will be very telling – and will likely have a significant influence on the final rules. It is important to emphasize that these are only proposed rules that can – and almost certainly will – change. The public comment period for both rules will be open until 6/3/19, after which ONC and CMS will review feedback and begin crafting the final versions. However, many provider organizations and EHR vendors are likely to have serious (and justified) concerns about the potential burden, overall uncertainty, and possibility for a variety of other unintended consequences that could result. To that end, it will be important to keep an eye on the degree to which ONC and CMS try – and are actually able – to address those concerns in the final rules.
- There are inherent challenges with implementing the 21st Century Cures Act’s “information blocking” provision. Congress defines “information blocking” extremely broadly in the 21st Century Cures Act – but the exceptions proposed by ONC are very specific, intentionally limited in scope and with strict conditions that would need to be met. The details get complicated quickly, but this basically creates a situation where a provider or EHR vendor would have no way of knowing definitively if they are engaging in a practice that could be considered “information blocking” – and yet, would still bear full responsibility for proving that one of the proposed exceptions applies in the event of an investigation. Even under the best case scenario, we think there is a real risk of focusing too narrowly on avoiding complaints of “information blocking” rather than on efforts that actually improve data exchange.
- The proposed changes to EHR certification don’t just impact EHR vendors – there are also important implications for providers, especially with the “information blocking” provision looming. The proposed changes to EHR certification are not minor, and as written would be all but certain to represent a sizeable burden on enterprise EHR vendors. However, any significant updates to EHR certification criteria eventually create a burden for provider organizations as well (e.g., the time and resources needed to test and implement updates from enterprise vendors, change workflows as needed to ensure capabilities are adopted, etc.). In fact, changes to EHR certification criteria affect hospitals and health systems more than ever now, as failing to actually enable and consistently use certain certified functionality from an EHR vendor could potentially constitute “information blocking.”
- The focus of the proposed rules seems to be more on access to data than “interoperability.” Both of the proposed rules use the term “interoperability” repeatedly, but our initial impression is the primary focus isn’t really on EHR-to-EHR data exchange. Rather, a much more prevalent theme seems to be ensuring that patients can access their electronic health information through 3rd party apps of their choice via standard FHIR-based APIs. However, the flow of data via certified APIs would largely be one way. EHR vendors (and other “API Technology Suppliers”) would need to make certain data available for “read” access through a standard FHIR-based API, but actually allowing 3rd party apps to write back into the EHR would be voluntary. Not only could this limit the value of 3rd party apps and the data they collect, it could also create the possibility for too many “sources of truth” and more silos of data.
DH FLOOD ALERT: COULD HIGHLIGHT PERCEIVED EHR SHORT FALLS
Per a report from Mercom Capital Group, digital health companies raised $9.5 billion in venture funding last year – an increase of 32% from the previous record of $7.2 billion raised in 2017. The top funded area in 2018 was “Data Analytics (AI, Predictive Analytics)” with $2.1 billion raised. [Note: in the chart below, Data Analytics falls under the “Health Information Management” category.] Overall, 55% of all digital health VC funding in 2018 was for “consumer-centric” companies, while 45% was for provider-centric companies. See the executive summary for more details.
Why It Matters:
We think the flood of VC investment in digital health not only underscores an evolving set of technology needs, but also current gaps with many enterprise EHRs. In fact, innovation – especially when it comes to digital health and the patient experience – is increasingly occurring outside the scope of traditional EHR solutions. Leading providers will need to turn to potentially less familiar strategic partners for the underlying technology and tools to support digital health, such as early stage HIT startup companies, niche vendors from other industries, and even tech giants looking to get more traction in health delivery. Identifying, managing, and building those strategic partnerships requires the right internal structure and leadership though – which is currently lacking in many hospitals and health systems today.
GAME OF HEALTH SYSTEMS: THE RISE, THE FALL, THE AFTERMATH
A recent report from Kaufman Hall looks at hospital and health system M&A activity in 2018. Although the number of deals last year (90) was down from the recent peak of 115 deals in 2017, Kaufman Hall note that “the size of transacting parties continues to grow.” In fact, per this year’s report: “The average size in revenue of sellers (defined as the smaller of two organizations in a transaction) has grown at a CAGR of 13.8% since 2008, reaching $409 million in 2018… the highest figure seen since Kaufman Hall began tracking this metric in 2008.”
Why It Matters:
We think the chart above is a good reminder that the number of M&A deals is only one part of the overall trend; other metrics, like the size of the parties involved, are telling as well. Even though activity may fluctuate from year to year, the need for size and scale isn’t going away any time soon– so we fully expect mergers and acquisitions to keep making headlines. However, we continue to think that the competitive landscape in a given region will not be shaped by the M&A events themselves, but rather by the aftermath of those announcements. Which organizations are investing the time and resources needed to align cultures, integrate IT systems, and standardize processes? How are competitors responding?
YOU’RE GOING TO FEEL A LITTLE PRESSURE…
For the third straight year, hospital CEOs ranked “financial challenges” as their biggest concern, according to a recent survey from the American College of Healthcare Executives. The 355 participating CEOs were asked to rank 11 issues affecting their hospital (with 1 being the most pressing issue and 11 being the least pressing issue). “Financial challenges” came in first by a wide margin (with an average rank of 2.8), followed by “government mandates” and “patient safety and quality” (both with an average range of 5.1). When asked about specific concerns related to “financial challenges,” the most common responses were “increasing costs for staff, supplies, etc.” (cited by 70% of hospital CEOs) and Medicaid reimbursement (68%). See tables below for details.
Why It Matters:
The fact that CEOs have ranked “financial challenges” as their most pressing concern for the third straight year obviously speaks volumes about current pressures, but we also think the survey results are a good reminder that there is a wide range of different financial issues that many hospitals are facing right now. It is also worth noting that “behavioral health / addiction issues” ranked quite high, narrowly trailing “government mandates” and “patient safety” – perhaps reflecting the fact that hospitals in many communities are increasingly taking a much more active role to combat the national opioid epidemic.
Q: Getting our arms around Enterprise Data Management is a challenge for my organization. Where do you recommend we start?
A: A simple starting point is understanding a few basic items about the data you are trying to manage. Scott Taylor, “data whisperer,” has a nice framework that applies well at a foundational level, which he calls the 4 C’s of master data management:
- Code, can I uniquely ID the data asset so I can find it and use it later if needed?
- Company, who owns it? Am I allowed to use it and what are the constraints there?
- Category, what type of data asset is it?
- Country, where does it come from?
Making sure you apply this concept up front for new data entering the organization means everything up stream is much easier to manage, including, data warehousing, data governance, analytics and any derivate thereof.
The same concepts can be applied to assets within the organization. You can start by assessing and categorizing using the 4C’s and creating an inventory of the data assets in your organization. Make this inventory available to your organization and communicate as the library increases.
Lastly, identifying any organizational growth or partnerships that may impact the enterprise master data management requirements is important. Once you have those external priorities, the next logical step is implementing a data acquisition roadmap to bring the data assets in house, this should include the prioritized data assets you need to acquire to support business growth and any associated strategies.
(Response provided by Liam Bouchier, Principal at Impact Advisors)