EMR Adoption: Some Are Skeptical About Adoption Gains

iHealthBeat has a good article presenting some skepticism of EMR adoption numbers. It includes Kalorama's estimate of the market from our new report EMR 2012.

Mitchell and some other observers believe that the growth in EHR acquisition will continue unabated. Research firm Kalorama Information recently reported that EHR sales were up 14.2% in 2011. Bruce Carlson, publisher of Kalorama's reports, told Healthcare IT News that sales would accelerate even further in the next two years because of Medicare penalties that will hit physicians who don't demonstrate meaningful use of EHRs, starting in 2015.

But DesRoches (Catherine DesRoches, senior scientist at Mathematica Policy Research
)is not so sure about that. She thinks that EHR adoption -- which already has leveled off for large groups -- might also plateau for small practices at some point, perhaps at a lower level than for the big groups. EHR acquisition is more difficult and financially risky for small practices than for large organizations, she pointed out. And, though cloud-based EHRs reduce some of the technical complexity, she said, EHRs as a whole are not becoming easier to use.

"Some practices may decide that the [government] incentives are not worth the cost of implementing the technology, or that the cost of implementing the technology outweighs the [Medicare] penalties," she observed.

It's a fair observation to make. Since 2007 Kalorama has noted slow uptake in adoption among confused smaller practices. Certainly the solo practices are not going to benefit as much as large group practices or health systems.

One of the things we've kept an eye on is Stark Exemptions that allow hospitals to subsidize affiliate physicians with EMR services. And the cloud services will help smaller practices adjust. Pharmacy and hospital use of EMR will make paper submission increasingly out of synch.

But in terms of our projection vs. the assessment of Mathematica's analyst may be that we are looking at 2 different factors. Adoption vs. revenue earned by vendors. There's plenty of revenue to be earned from a EMR sales, even wher adoption is slow, where even a minority of physicians are using EMR. Training and consulting on existing accounts will earn revenues for some providers, large hosptial buys represent the bulk of this market. Our reasonable growth rate assumes some continued resistance on the part of doctors. In fact a large adoption increase not resembling the growth rate we've seen so far would require a revision in revenue numbers.

That methodological difference being stated, we see a larger role for the disincentives than the article states, and we see the penalties in fact a bit more of a driver than the incentives.

Physicians are free to eschew incentive payments rather than invest, but will they tolerate a cut in Medicare/Medicaid income long term, especially where the penalty increases up to 2017, and perhaps could be increased after that point so that the government gets the paperless medicine it wants.

For Healthcare Marketers, Severability is Key

While political protesters have spent the past few days on the steps of the United States Supreme Court arguing for or against an individual mandate, for healthcare marketers it is today may be the most important day of oral argument. This was the day the Court was to consider the severability test on the healthcare reform bill of 2009. That is to say, if the idea of an individual mandate to purchase healthcare reform is unconstitutional in their interpretation, does the court throw out the rest of the law?

That will determine among other things if device makers face a new tax, or if a new tax would have to be re-enacted. A highly unlikely possibility in the current House of Representatives.

The argument of severability has legal scholars divided just as they are divided on the mandate. It could be argued that only the mandate portion is unconstitutional. But at least one Federal Circuit judge ruled the whole law unconstitutional, because lawmakers designed it as parts that would move together - mandate, prexisting condition discrimination ban, and subsidies. Taxes are designed to fund the subsidies. The logic is, if only the mandate is thrown out by the Court, then insurance companies would be unfairly punished -- all pain and no gain. All the burden of new insurees with pre-existing conditions without the gain of new healthy customers from the mandate.

This has increasing importance as watchers of the oral argument seem to agree that the mandate portion of the bill could be in danger with a court skeptical of the government's ability to order a citizen to purchase insurance or be penalized. Justice Anthony Kennedy's comments seemed to go in this direction:

Justice Anthony Kennedy said that the federal government "is telling an individual he has the obligation he must act" and purchase insurance.

"That threatens to change the relationship between the government and the individual in a profound way," Kennedy said.

And Chief Justice Roberts seemed to follow the same logic.

If Congress could regulate health care in the name of commerce, added Chief Justice John Roberts, "all bets are off" on a range of areas subject to federal oversight.

The mandate would determine if the healthcare industry will see millions of newly insured person, for its good and bad consequences to the industry. On one hand, there is the possibility of millions of device consuming, drug-taking, doctor-visiting customers, on the other primary care docs might see waiting rooms strained and hospitals may not be able to handle the influx for industries to ever see new revenue.

Will Pharmacies Push Docs to Adopt Electronic Records?

The government wants physicians to use EMR.  Affiliated hospitals in many cases would like physicians to use EMR.  And now, an additional encouragement comes from pharmacy chains.  According to this story in Fierce EMR, Walgreens' pharmacies and retail health clinics to share patient data directly to physicians electronically to improve the coordination of care.  7,800 Walgreens and Duane Reed pharmacies and 350 of its associated 'Take Care Clinics' retail clinics  will use Surescripts' network to deliver immunization data and patient summaries to physicians.

The good news about such a system is that physicians can check on their patients in terms of completing prescriptions, rather than having to take their word for it.  

We took note of this in the story, an accommodation for the not-so-paperless:

Cronin pointed out that while the project is designed to share information electronically, physicians will not be precluded from obtaining the information simply because they don't have an EHR. "We'll still get the information to them by fax or regular mail," as well, he said.

 So doctors do not have to use EMR to benefit from the program Still, Kalorama believes that with a major pharmacy chain now submitting information about patients that is easily to adapt into an EMR, the usefulness of adopting a system increases. The more EMR is relevant to all facets of practice, the higher adoption should grow.

Will the Real EMR Market Please Stand Up?

In what must be good news for the healthcare IT industry: EMR is growing.  Incentives, better patient outcomes, cost-savings EMR revenues grew 14.2%.  It doesn't mean the U.S. will have paperless medicine overnight, but the healthcare system is getting there, and some of the companies who help it along are making money.   How large is the market now?  That might vary according to what account you read. 

Each year since 2007, Kalorama Information has looked at the EMR market. Kalorama's latest study of the electronic medical records market estimates a market of over 17 billion dollars. We get a few questions from time to time about that number, because there are highly respected research firms with numbers in the single billions.  We can assure on this report that we have run the numbers by industry executives and they confirm or if anything say they are conservative.  Two things one should keep in mind.  a) We include 'Big EMR' if you will; the companies like McKesson, Cerner, GE Healthcare and the like as well as the smaller EMR companies.  b) we include ALL revenues related to the sale of an EMR: service fees, software, installation, training, CPOE.  Not including these would not reflect the real money that is being made in EMR.   Other estimates one sees in the press may only include software, or may exclude large companies who entered EMR by virtue of their strength in Patient Management IT. 

The revenue growth mirrors increased physician and institutional usage. Statistics from the National Ambulatory Medical Care Survey (NAMCS) indicate that 56.9 percent of the office-based physicians used partial or full EMR systems in 2011, an increase from the percent reported in 2010.  The first incentives were paid in 2011 based on 2010 performance. More than $1.3 billion in Medicare EHR Incentive Program payments have been made between May 2011 and the end of December 2011 and more than $1.1 billion in Medicaid EHR Incentive Program payments have been made between January 2011 and the end of December 2011.  We expect sales to grow further when the penalties are threatened , when Medicare and Medicaid could penalize providers who are not using certified EHRs by 2015.

The report can be found at Kalorama's website. 

http://www.kaloramainformation.com/EMR-6842545/

Major Companies Move Into PMx

A mention of Kalorama's personalized medicine market forecast in this Healthcare IT News article.   The magazine is published by HIMSS, the top trade association for tech companies involved in the healthcare space.   

Thus its not surprising that they make note of the digital connection to personalized medicine(PMx); the tech that will be needed to analyze data gathered to make the concept more of a reality.   And they note GE's recent acquisition of NanoString, whose nCounter Analysis System, is a fully automated platform for digital gene expression and other applications requiring the detection and counting of single molecules.

 They also note Dell's recent launching of a cloud computing technology to support pediatric cancer research programs, including what's billed as the world's first personalized medicine trial for pediatric cancer, conducted by the Neuroblastoma and Medulloblastoma Translational Research Consortium (NMTRC) and supported by the Translational Genomics Research Institute.

How New is "Personalized Medicine?"

Not as new as you think.  If we define personalized medicine as 'using testing to develop and individual therapy for a patient,' then there are all sorts of diagnostic products that fit the category of 'personalized.' or as we say PMx testing.   This broad scope is used by our analyst Shara Rosen in her latest report, Personalized Medicine Diagnostics.   

Glucose testing, antimicrobial susceptibility testing (AST), blood typing, transplant typing, HbA1c testing, coagulation testing.  These are among the tests already on the market and in routine clinical practice that can be said to do the same thing that any novel companion diagnostic test does: align a treatment strategy to the individual characteristics of the patient.   Another way of stating this broad scope in lay language perhaps is: tests to decide if a patient gets Treatment X, Treatment Y, both Treatment X and Y, or no treatment at all.  It's almost always applying to drugs but could in future applications apply to radiology or surgery. 

With all of these testing methods considered, and the new tissue diagnostics and tumor marker studies considered, Kalorama estimates a 28 billion-dollar market for tests that are personalized to a patient.  The primary growth drivers in the market for PMx tests, are the continued discovery of protein and genetic markers with proven clinical utility, the increasing adoption of these diagnostic tests as markers for personalized medicine, and the expansion of reimbursement programs to include a greater number of companion diagnostic tests. 

 Our recent report states in it's methodology section that "In accordance with a broad application of PMx, the market estimate in this report covers tests that can also provide therapy decision-making information that is tailored to the individual in the following ways:

• Tests that identify a population in which the therapeutic product will achieve greater (or little) effectiveness.
•  Tests that identify a patient population that should not receive a particular therapeutic product due to the possibility for therapy-related serious adverse events.
•  Tests that identify the characteristics of a disease, condition, or disorder to specifically determine what type of treatment is appropriate.  This area of disease stratification is one of the fastest growing areas of personalized medicine.  It includes tests for: tumor aggressiveness, risk of tumor reoccurrence, aggressive rheumatoid arthritis, pathways for severe cardiac disease and many others. 
•  Tests that are the basis for selecting a safe and efficacious therapeutic dose.  This is probably the oldest application of PMx that has been in use in clinical laboratories for at least 50 years. "

Our report details specific market estimates but overall it makes it clear that PMx testing is on an upswing; the number of assays introduced has been growing at a remarkable clip.  The expanding menu of PMx tests can be attributed in part to the publication of the human genome project and advances in functional proteomics, bioinformatics, miniaturization and microelectronics. 

 

Portable Units Could Ease the Sequencer's Move to Clinical Labs

 A sequencing device that is the size of a USB memory stick and that costs under $1,000.  Right now, it sounds like science fiction.  According to a recent New York Times article, this development is possible if a company named Oxford Nanopore is able to produce a very different kind of DNA sequencer as promised by the end of the year.  

Sequencing currently requires samples to be sent to one of a few central labs with a sequencing device.  The instruments are large and costly.  Price varies, but top models can cost more than half a million dollars.  A few companies, among them Roche, Illumina and Applied Biosystems compete in this market.  Price is not the only competitive factor - as cheaper models such as Polanator that use open-source technology and bring the price down to 170K have not made a dent in the market for the higher end systems; Kalorama's surveys of this market show  throughput and accuracy win out here.  Though the proposed price is much lower for the portable sequencer, its unclear that a nanopore or 'strand sequencing,' which Oxford relies on, has the accuracy/resolution of the next-generation sequencers.  

If it does it is not only the price but the portability that could disrupt the market.  Such a device might bring dna sequencing into the point of care (POC) diagnostics market, and as the article details, may help doctors to sequence genes at a patient’s bedside, wildlife biologists to study genes in the field, or food inspectors to identify pathogens.

Kalorama Information's latest report on personalized medicine diagnostics details the increasing role and potential of sequencing in clinical use.  The introduction of a portable unit with the capability to present results on a standard laptop could increase the penetration of sequencing.

A hurdle remains even if a portable unit is developed -- data analysis.  It's one thing to sequence a tumor or a pathogens in food, its another to inspect the office physician or hospital lab tech to be able to crunch very large data sets analyze the meaning of dna sequences to a preciseness that makes it relevant to treatment decisions.  Well-designed  computer software will be needed to get from the taking of a sample to a diagnosis that can impact treatment.