The GovCon Report Newsletter

Government Healthcare Information Technology: Lessons for New Entrants from the Market Leaders

In the wake of shifting priorities over the Obama administration’s first 6 months, the government contractor community is assessing the meaning of these changes for their business plans over the next 2-4 years. With a drawdown in Iraq expected and cuts in several longstanding Defense Department programs (i.e. F-22, Future Combat Systems, etc), where should contractors be directing their business development efforts? Three areas have emerged as clear areas of emphasis for the new administration: clean energy, infrastructure modernization, and healthcare information technology. Of these, healthcare information technology has been most appealing to traditional defense players who see a demand for technology solutions and a low level of investment required to enter the market. Now firms are assessing their internal capabilities, looking at their past performance, and taking inventory of their personal networks to determine what resources can be applied to the healthcare information technology market. They consider Health IT a near adjacency to work they have been doing for years in command and control, network centric systems, and other applications of information technology to national defense.

But are traditional defense firms making a mistake when they consider Health IT a near adjacency? In fact, is this market really even new, or is it just receiving more attention because of federal stimulus funding? Speaking with two leaders in government healthcare information technology who have been working in the field for decades, it becomes clear that not only is Health IT not new, but that it has had for years a robust community of practice that focuses on issues such as Electronic Health Records (EHR) and DOD-VA interoperability. Additionally, these leaders point out what new entrants to the market are missing, as well as what they see as the best and worst implications of the unprecedented level of attention their field is now receiving.

Dr. Harry Greenspun, Chief Medical Officer for Perot Systems for the past year, begins by pointing out the criticality of people to the healthcare community. “The problem with most technology in healthcare is people are seeing it as just technology. There’s a critical interaction between people, process, and technology.” He points out that technology providers often neglect the way in which physicians are expected to interact with the technology, and whether required procedural changes negatively impact patient care. If it takes a minute to log on and log off a system for each patient visit, a physician may have to lengthen each appointment by 5 minutes, resulting in fewer appointments per day. This procedural change adds to frustration, and creates inefficiencies in emergency response. At the Combat Support Information Technology event hosted by AFCEA NOVA on May 27 th, the Military Health IT Panel noted an incident where computers timed out and a screen saver came on in a demonstration surgery room. All the doctors and nurses had already completed the lengthy process of scrubbing-in and no one was able to log back in so the surgery could continue. This example represents the sort of challenge technology firms need to consider as they bring their solutions to the healthcare environment.

Dr. Robert Wah, the Chief Medical Officer for CSC since 2007 and formerly a senior official at the Office of the National Coordinator for Health IT echoes this point, saying, “the unique feature to healthcare technology is the interaction between physicians and machines. Government is clearly going to have a much bigger role in Health IT going forward, and they will need to understand the technological implications of their policy decisions.”

When asked about the best implication of the new attention being placed on Health IT, Dr. Wah sees the National Coordinator as a focal point for the transformation, and the increased funding flowing through the ONC as a net positive. “The National Coordinator should be seeking to build integration and functionality at the national level. In addition to information on demographics, coverage, privacy and security assurance, with epidemic surveillance capability, we need a summary record that can move around.” This summary record, said Wah, is key to achieving interoperability without overloading systems or sharing more information than is necessary to provide seamless patient care.

Dr. Greenspun also sees incredible opportunity as a result of increased funding and interest in Health IT. He envisions Health IT as an enabler of affordable, quality healthcare, as well as other federal missions. “We can actually transform healthcare, moving to an evidence-based and wellness-based system; we can find a sustainable answer to access, cost, and quality. Additionally, other federal agency missions could be made vastly easier, providing better results because they will be based on actual data.” Dr. Greenspun cited the examples of medical research at the National Institutes of Health, epidemic monitoring at the Centers for Disease Control, post-approval drug monitoring and food safety investigations at the Food and Drug Administration, and disaster planning and response at the Federal Emergency Management Agency. He asserts that each of these federal agency missions would be enhanced by access to a large-scale, accurate database of health records and information.

Both doctors also saw a potential downside to the acceleration of Health IT efforts. “There is a risk that people will rush into this chasing the dollars that don’t understand the interactions between data, patients, and physicians, and there will be high profile failures, potentially endangering patient care,” said Dr. Greenspun. Dr. Wah worries about “shooting too low, looking to simply get a computer on every physician’s desk. The emphasis has to be on meaningful use.” Any failure that results in less than optimal patient care could halt progress and bring in additional regulation and associated costs. Ineffective investments, such as technology that sits unused while business continues as usual, could result in outcry from taxpayers who have been promised improvement in services and costs.

So what can new entrants to the Health IT market provide? As a first step, Dr. Greenspun sees a need for innovative contracting, “Because of how the dollars are flowing from the stimulus, there have to be new ways for customers to pay for it. There’s no money up front, companies are going to have to get creative about how they deliver and charge for their services. Maybe profit sharing, you may see companies putting themselves at risk.” He acknowledges that there are difficulties in a profit sharing model, where EHR providers share in the cost savings realized by medical practices. Firms accustomed to selling software will need to focus on implementation services as part of a package in order to ensure physicians are using their technology as intended. A firm that creatively partners with physicians as opposed to simply selling them technology stands to carve out a significant competitive advantage in the electronic health records market.

Firms looking at government healthcare information technology as an adjacent market stand to benefit by first recognizing that there is an established community of physicians, firms, and policymakers who have been working to implement Health IT. Firms should recognize the role of people in the healthcare community, and consider the impact the proposed technology solution will have on both patients and physicians, and associated business processes. Additionally, they should consider the risk of moving too quickly, both on patient care and on the returns on the government’s investment. Firms should seek to be innovative in contracting, and look for other issues that may benefit from fresh eyes and new solutions. Finally, they should consider partnering with more established players in order to learn the lay of the land and create trust with the government customer. The impact that current investment in Health IT will have on the way medicine is practiced in the United States will have repercussions for decades to come.

For 25 years, The Avascent Group has combined deep market knowledge with proven strategic planning methodologies, providing invaluable decision support to our clients in the government contracting community. Amy Strouse is an Associate at The Avascent Group and can be reached at astrouse@avascent.com.

The GovCon Report is produced by the Greater Washington GovCon Council’s communications committee: Co- chairs: Anne Crossman (Completed Systems) and Dave Lundsten (Cherry Bekaert & Holland LLP.) If you wish to submit an article for consideration by the communications committee, send them to govconarticle@fccc.org.