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State of the Health Care IT Union
Addressing Current and Future Industry Imperatives
Health Care IT Suite
©2012 THE ADVISORY BOARD COMPANY • ADVISORY.COM
IHT2 Health IT Summit
August 22, 2012 • Seattle, WA
Contributing Analysts
Jim Adams
Ernie Hood
Mike Davis
Ken Kleinberg
Peter Kilbridge, MD
Robin Raiford
Health Care IT Suite
Design Consultant
Hillary Tisdale
Senior Advisor
Dave Garets
LEGAL CAVEAT
The Advisory Board Company has made efforts to verify the accuracy of the
information it provides to members. This report relies on data obtained from many
sources, however, and The Advisory Board Company cannot guarantee the
accuracy of the information provided or any analysis based thereon. In addition,
The Advisory Board Company is not in the business of giving legal, medical,
accounting, or other professional advice, and its reports should not be construed as
professional advice. In particular, members should not rely on any legal
commentary in this report as a basis for action, or assume that any tactics
described herein would be permitted by applicable law or appropriate for a given
member’s situation. Members are advised to consult with appropriate professionals
concerning legal, medical, tax, or accounting issues, before implementing any of
these tactics. Neither The Advisory Board Company nor its officers, directors,
trustees, employees and agents shall be liable for any claims, liabilities, or
expenses relating to (a) any errors or omissions in this report, whether caused by
The Advisory Board Company or any of its employees or agents, or sources or
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Board Company, or (c) failure of member and its employees and agents to abide by
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Health Care IT Suite
State of the
Health Care IT Union
Addressing Current and Future Industry Imperatives
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Road Map
2
3
1
6
State of the Industry
Where We’re Headed
Drivers of Change in Health Care IT
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The Reform Paradox
7
Giving More Care to More People, and Paying Less for It
Drivers of Change in Health Care IT
How do we
maximize
access to
care?
How do we
afford
expanded
access?
Raise taxes?
Reallocate spending?
Cut benefits?
Cut reimbursement?
Delivery system change?
Source: Advisory Board analysis.
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Beginning of a Fundamental Transformation
8
Legislation Only One Part of Health Care Reform
Source: Advisory Board analysis.
Drivers of Change in Health Care IT
1) Sustainable growth rate.
Delivery System Reform Timeline
SGR1
ICD-10
Conversion
2014
Never
Events
Campaigns
Acute Care
Episode
Demonstration
2010
Physician Group
Practice
Demonstration
2005
Core
Measures
Coverage
Expansion
2010-2014
Shared
Savings
Program
2012
Bundled
Payment
Program
2013
Readmissions
Program - 2012
1997 2016
Meaningful
Use
2011-2015
HAC Medicaid
reimbursement
stops - 2012
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Toward Accountable Care
9
New Incentives, Greater Risk Characterize Industry Transformation
Source: Advisory Board analysis.
Drivers of Change in Health Care IT
Strategic and Operating Imperatives
Management
Imperative
Fee for
Service
Accountable
Care
AccountabilityOptimize performance within the
facility
Optimize performance across settings
and time
Utilization Maximize acute-care utilizationRedirect acute-care utilization to lower
acuity settings
Physician
Partnerships
Align economically to drive
acute-care volumes
Align economically to manage shared
risk
Technology
Investments
Win clinical technology “arms
race”
Wire the health system for
coordination and collaboration
Facility StrategyCentralize and co-locate acute-
care services
Widely distribute primary care and
preventive services
Care CoordinationInvest in only as an “avoidable
losses” strategy
Develop high-performance partner
network across continuum
Expense ManagementManage inpatient cost trend
below revenue growth trendDrive care to lowest-cost setting
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Road Map
2
3
1
10
State of the Industry
Where We’re Headed
Drivers of Change in Health Care IT
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Second of Three Increasingly Complex Stages
11
Source: HITPC Meaningful Use Workgroup, Stage 3 Subgroups; Medicare and Medicaid
Programs; Electronic Health Record Incentive Program-- Stage 2 Proposed Rule at
http://www.ofr.gov/OFRUpload/OFRData/2012-04443_PI.pdf; IT Strategy Council analysis.
• Increase implementation and
adoption of electronic health
record (EHR) systems
• Capture structured data
• Drive use of real-time data at the
point of care
• Use outcomes-focused clinical
quality measures
• Utilize clinical decision support
for prevention, disease
management, and safety
• Increase exchange of health
information
• Demonstrate care coordination
across sites of care
• Empower patients with health
information
Stage 1 Stage 3Stage 2
Data Capture and Sharing Advanced Clinical Processes Improved Outcomes
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Stages of EMR Adoption
12
HIMSS Analytics EMR Adoption Model, Q1 2012
State of the Industry – Acute Care EMR Adoption
Stage Description
Percent of
Hospitals At
Stage
Q3
2009
Q2
2012
7Complete EMR; CCD transactions to share data; Data warehousing; Data
continuity with Emergency Dept, ambulatory, Outpatient venues0.5% 1.7%
6Physician documentation (structured templates) on one inpatient unit, full clinical
decision support (variance and compliance), full radiology PACS1.2% 6.5%
5 Closed loop medication administration fully implemented on one inpatient unit 4.8% 11.5%
4 CPOE and clinical decision support implemented in at least one inpatient unit 4.1% 13.3%
3Nursing/clinical documentation (flow sheets) on one inpatient unit, clinical decision
support (error checking in pharmacy), image access outside radiology dept.40.4% 42.4%
2Clinical data repository, controlled medical vocabulary, clinical decision support
capability, may have document imaging; HIE capability 29.8% 11.7%
1 All three ancillary systems installed 7.1% 5.1%
0 Not all ancillary systems (lab, radiology, pharmacy) installed 12.1% 7.9%
Source: HIMSS Analytics™
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Towards Higher Levels of Interoperability
13State of the Industry – Health Information Exchange
Definition of Interoperability
“In health care, interoperability is the ability of different information technology
systems and software applications to communicate, to exchange data accurately,
effectively and consistently, and to use the information that has been exchanged.”
NAHIT, 2005
Source: NAHIT, 2005 and Advisory Board research and analysis.
”
Increased Usefulness of Interoperability
Syntactic
• Based on agreement on how to parse the content exchanged
• Generally sufficient for human use of the exchanged content
• Computer use requires a mapping between the terminologies used by the
participants – this acknowledges the (very real) possibility of different meanings
associated with mapped terms (semantic ambiguity)
Process
• Assumes Semantic
interoperability
• Includes shared process
definitions and inter-participant
workflow orchestration
Semantic
• Assumes Syntactic interoperability
• Requires participants to use the
same reference terminologies
• Requires mapping to a reference
information model
Degre
e o
f D
ifficulty
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HIE Market: Everyone Wants to Get into the Act!
14
Source: Advisory Board research and analysis.
State of the Industry – Health Information Exchange
CategoryRepresentative
ExamplesStrengths Challenges
Acute EMR
Vendors
Epic, Allscripts,
Cerner, GE…
Established client base of IDSs,
some experience with ambulatory,
lab and payer integration
Competing EMR vendors
will not play in the
“sandbox”
HIE Vendors
CareFx, Covisint,
dbMotion, ICA,
Intersystems,
MobileMD, Orion,
RelayHealth
Built for HIEs, have connectors and
adapters to most ambulatory and
lab systems, support for
centralized and federated models
Often reliant on grants
and government-based
non-sustainable funding
sources
Carriers Verizon, AT&TKnows networking and
communications
Lack of clinical HIE
experience
Specialty Surescripts, Emdeon
Existing extensive national
backbone connectivity with
providers, payers
Fee structures not
popular for HIE
PayersUnited Health/Axolotl,
Aetna/Medicity
Experienced with transaction
networks/clearinghouses – now
extending into provider space
Payer “parents” not
trusted by providers
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Direct Project – Information Sharing
15State of the Industry – Health Information Exchange
Incremental Improvements
Direct Project Announcement
from ONC
“The Direct Project specifies a simple,
secure, scalable, standards-based way
for participants to send authenticated,
encrypted health information directly to
known, trusted recipients over the
Internet.”
The Direct Project Overview,
11 October 2010
Today’s Technology –
FAX
Direct Project -
E-mail Attachments
Connect Project –
XDS Documents
”
Source: Advisory Board research and analysis.
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More Than Just Incentives At Stake
16
Redspin’s 2011 Report on Breaches
385 breaches of protected health information (PHI)
19,016,894 patient health records affected
49,396 average # of patient records per breach in 2011,
an 80% increase over 2010
59% of all breaches involved a business associate
39% occurred on a laptop or other portable device
25% occurred on a desktop PC or server
60% resulted from malicious intent (theft, hacking)
97% increase in total records breached, 2010-2011
76% increase in records breached involving a business
associate, 2010-2011
525% growth in records breached due to loss 2010-2011
Quintuple Whammy from a Breach
$1.5 MMaximum annual penalty
from HHS due to HIPAA
violations
$20,663Cost to solve single case
of medical identity theft*
Daily Disclosures of Breaches are Becoming Alarming – It’s “When,” not “If”
Some of the latest include Stanford Hospital and Clinics (20,000 patients’ data posted to the
web; sued for $20M), Tricare (SAIC – 4.9M patients’ data lost; sued for $4.9B), Fairview Health
Services and North Memorial Health System (Accretive Health – 16,800 total patients data
stolen), Nemours (1.6M total individuals’ data lost); UCLA Health System (16,288 total patients'
data stolen).
”
State of the Industry – Protected Health Information Breaches
$??? M $1,000 per patient seems to
be the metric for lawsuits
$??? MPotential loss of Meaningful
Use money due to HIPAA
violation
Redspin Breach Report 2011, Protected Health Information,
www.redspin.com (accessed 17 February 2012
*Miliard, M, “Medical Identity Theft on the Rise,” Healthcare IT News,
March 15, 2011, available at:
http://www.healthcareitnews.com/news/medical-identity-theft-rise
(accessed March 30. 2011)
Breaches Are Costly and Destroy Trust
$??? M Cost to your reputation
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ICD-10 versus ICD-9
17State of the Industry – ICD-10
Explosion of Granularity
Diagnosis
14,300
69,000
12,500
ICD-9-CM ICD-10-CM ICD-10 (WHO)
Procedure
3,800
72,000
0
ICD-9-PCS ICD-10-PCS ICD-10 (WHO)
ICD-10 CFO Survey respondents who expect to lose revenue
through transition:
• 28 % predict revenue loss between 6% and 10%1
• 23 % anticipate revenue losses to last one to two years1
”
1) Shaw, HealthLeaders Media, 7/26/11.
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Mobility-Enabled Business Process Management
18
Source: Care Advisory Board interviews and analysis.
Who is waiting on what from who?
Pharmacist
What shall we do about
this medication conflict?
Transport
When can I wheel this
cranky old man to the
pick-up area?
Physician
When will I get
those lab results?
Patients and
Families
When can we pick up Mother?Nurse
When will I get that order
from the physician to give
this pain medication? Medication reconciliation
Medication administration
Discharge processing
Bed management
Billing
Administration
When can we
get this bill out?
State of the Industry – Use of Mobile Technologies
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Business Intelligence Framework
19State of the Industry – Electronic Data Warehousing
Beware the
False Summits!
Degree of Competitive Advantage
Analyze the Past
• Reports and graphs
• Dashboards
• Drill down/around
Analyze the Future
• Statistical models
• Correlation Analysis
• Forecasting
• Simulations
Predictive:
What might happen? Analyze the Actions
• Mathematic Models
• Linear Programming
• Constraint Programming
Prescriptive:
What should we do?
Three levels of BI maturity with
each level more difficult and
more advantageous than the last.
Descriptive:
What happened?
1
De
gre
e o
f Diffic
ulty
2
3
Business Intelligence is key to developing a
thoughtful system of care out of the organic,
ad hoc processes that we have today.
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State of the Enterprise Vendors
20
You Win Some, You Lose Some…
Source: HIMSS Analytics Database.
State of the Industry – Movement in the Market
Number of Hospitals Gained/Lost, 2005–2011
56 57
458 204160
1541
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Road Map
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3
1
21
State of the Industry
Where We’re Headed
Drivers of Change in Health Care IT
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Spending Up, But Return Down
22
Where We’re Headed—IT Budgets Going UP
Source: Moody’s Preliminary Medians for Not-for-Profit Hospitals,
April 2010; Advisory Board analysis.
Where We’re Headed – IT Budgets Going UP
IT as a Percentage of Total
Capital Spending
Moody’s-Rated Hospital,
In Thousands
Breakdown of Capital Spending
In Thousands
2008 2009
Return on Invested Capital
$34,824
$33,249
12%
40%
Liquidating
the asset
8%6.6%
2008 2009
Total IT D&A Expenses
• Remote computing
• Edge solutions
• Image storage
• Outsourcing
Costs
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Toward Accountable Payments
23
Building Accountability Through Experiments in Payment
Source: Health Care Advisory Board interviews and analysis.
Where We’re Headed - The Great Risk Shift
Degree of
Shared Risk
Care Continuum
Pay-for-
Performance
Hospital-Physician
Bundling
Episodic Bundling
Capitation/Shared-Savings Models
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Emphasis on Change Management Is Essential
24Where We’re Headed – It’s All About Change
Under-Adoption, Under-Utilization, Sabotage Not Desirable Options
It’s Always About People
• Only 1/3 of change initiatives achieve success. Users determine success or failure of project.
• Change is messy. People start where they are, not where we want them to be. Get to hearts and minds to develop willingness and ability.
Technology Adoption
Claire McCarthy
The application of human Change
Management principles to technical
projects, such as Electronic Medical
Records or ICD-10 implementation.
”
EMR
+Human
Change
Management
+
Process
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The Intelligent Enterprise
25Where We’re Headed
Operational
Data Store
Tra
nsaction
Pro
cessin
g-O
riente
d
Opera
tiona
l Syste
ms
Exte
rnal
Syste
ms
Fact and
Dimension
Tables
Detailed data
Staging Area
Fact and
Dimension
Tables
Detailed data
Active Archive
Extract
Snapshot
Cleaned Standardized, Consistent
Summarized
Information
Metadata
Fact and
Dimension
Tables
Detailed
data
Data Warehouse
Exploration,
visualization,
and analysis tools
Data Marts
Real-
Tim
e U
pd
ate
Predictive
Models
Prescriptive
Models
Rules Engine
Predictive
Models
RCM
EMR
HIE
CMS
CIN
2445 M Street NW I Washington DC 20037
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