Health tech companies fight for stimulus money March 1, 2009

Friday, February 27, 2009

The nation’s health care system is far behind in technology. Area tech firms hope a flood of federal funding will help speed their solutions to the market.

Washington Business Journal – by Darlene Darcy Staff Reporter

View Larger Private industry trailing the government in innovation may seem surprising. But in the use of technology to deliver and manage health care more effectively, the government is taking the lead — at least for now.

Health-related agencies such as the Department of Veterans Affairs and components of the Defense Department have been plugged into electronic medical records and medical information exchanges for years.

But many private hospital groups and small physicians’ offices have not adopted big-ticket tech systems and software because of various hang-ups, including the cost of technology.

President Barack Obama’s technology agenda, not to mention his massive stimulus package, include plans and billions of dollars for a nationwide electronic health information system to house and exchange patient records, insurance information and other medical data.

He sees these information technology improvements as the foundation for future health care reforms.

Obama’s health care proposals would invest at least $10 billion annually for the next five years to accelerate technology adoption.

In addition, the new $787 billion stimulus legislation, the American Recovery and Reinvestment Act of 2009, includes $19 billion to boost the economy through implementation of electronic medical records.

Tech industry officials hope the cash infusion leads to a broader adoption of health care IT, which might benefit many Washington-area companies, including those building and supporting systems for electronic medical records, data exchanges and Web sites that enable doctors to interact with patients.

Here are several local companies involved in the effort to fix a costly and inefficient health care system.

Symptom: Inefficient operations
Treatment: Systems integrator CSC has developed a system for the government that would enable insurance companies, hospitals and doctors’ offices to exchange electronic records over a nationwide network.

The Falls Church company has installed electronic records systems for organizations that include the National Institutes of Health’s research hospital in Bethesda and New York’s Medicaid program. But without a way for electronic records to be shared, those systems can’t realize their full value.

Prognosis: “There hasn’t been a commitment at the federal level to do this,” said Dr. Robert Wah, chief medical officer of CSC’s North American public sector business.

CSC is connecting systems for the National Health Service in the United Kingdom, where a budget of more than $17 billion over 20 years was committed years ago, he said.

The U.S. is “going toward a national medical records system driven primarily through legislation and regulation … [and] the pace is pretty clearly defined,” Wah said. Electronic medical records for all patients by 2014 is “probably achievable,” but incentives for doctors to spend money today is critical for a nationwide system to emerge.

Symptom: The paper-to-digital divide
Treatment: Wisper Technologies LLC in Reston, a subsidiary of IMC Inc., is developing software that uses speech-recognition technology to capture and organize patient-doctor conversations for planning patient care and billing insurance companies. The resulting electronic records can be fed into digital health information systems.

Wisper Technologies launched the software on a trial basis in 2004 but has not yet found a commercial market for the product because it is too costly for doctors.

Prognosis: “Doctors don’t have the money to buy sophisticated technology,” said IMC’s chief executive officer, Sudakar Shenoy. “The only people who can help them do that is the federal government.”

Stimulus funds used to reimburse doctors for investments in medical records technology could help reduce the barriers to adoption of Wisper’s software. But at hundreds of thousands of dollars for a hospitalwide implementation, IMC’s software will remain costly until high volumes of sales bring the price down, Shenoy said.

Symptom: Patient data unleashed
Treatment: McLean-based Trust Digital Inc., which provides mobile security software, has created an application that secures patient data stored electronically on a care provider’s mobile device.

Early in January the company landed deals with three health care organizations to support as many as 15,000 doctors, nurses and other health professionals in a single implementation.

Care providers and administrators at hospitals, physician practices and insurance companies are increasingly sending information over mobile devices, and they need an inexpensive way to make those transmissions securely.

Prognosis: “Trust Digital is already doing a brisk business with health care providers who use our product to protect confidential patient and doctor information stored on employee smart phones,” said Chief Executive Officer Nick Magliato.

The loss of a doctor’s phone could have a huge impact on patient privacy if data is stored there, and “obviously the stakes go way up as hospitals and other health care institutions, spurred on by funding from the government, quickly move to electronic patient records,” he said.

Trust Digital is counting on the new federal funding to advance more efficient care delivery systems and create new customers for the company.

Symptom: Choking on costs
Treatment: Health care management company WellNet Inc. is testing software designed to help employers understand the medical risks driving up their cost of employee coverage.

The software, called Point to Point Healthcare, was developed by Glenwood, Md.-based Healthcare Interactive Inc. and uses The Johns Hopkins University’s predictive modeling and pharmaceutical claims data to create charts and reports for employers. The data reveals cost-saving options by simulating changes to the company’s benefits plan.

Point to Point, which complies with privacy provisions of the Health Insurance Portability and Accountability Act (HIPAA), keeps employees’ identities confidential but lets workers access social networking tools to manage their care.

Prognosis: WellNet already has 100 clients testing the software, which the Bethesda-based company and Healthcare Interactive plan commercialize this year.

Employee health care is one of the biggest expenses for companies, but employers don’t know what is driving up their costs and employees don’t have tools to take preventive health measures before those costs hit them, said WellNet CEO Keith Lemer. “We give that data back to the employer.”

Symptom: Good information can be hard to find
Treatment: Ozmosis Inc. provides a social networking Web site that doctors can use for collaboration, continuing education and sharing “best practices.”

Formed by Joel Selzer and Jason Bhan in 2008, Vienna-based Ozmosis has 1,000 active members and will grow by invitation-only so that doctors’ identities can be verified and the site remains a trusted environment for trading information. The service is free to member physicians, universities and hospitals.

Prince William Hospital in Manassas is using Ozmosis within its electronic health information system.

Although not a traditional ad-supported site, Ozmosis will get revenue from pages sponsored by medical device and drug companies. Physicians can opt into those pages for new product information.

Prognosis: Ozmosis hopes to “benefit from the tremendous momentum low-cost, social media solutions are gaining throughout the health care industry,” Selzer said. “With 84 percent of physicians now searching online for health care product information, the pressure to shift physician marketing and product education online has never been greater.”

Ozmosis needs to capture those marketing dollars to make its site sustainable.

Selzer warns that “just giving economic incentives to doctors to buy [electronic medical record systems] and hospitals to deploy them doesn’t mean they’re going to use them effectively.” That requires education — a role Ozmosis can fill, he said.

How much and how long?
Despite the increased use of electronic technology in health care, the cost of implementing new systems remains a major roadblock to a nationwide network.

President Barack Obama’s health care agenda includes a $50 billion investment in information technology over five years, but critics say he should be thinking more like $100 billion over 10 years.

The administration believes the savings will be worth the investment. A “fully functional” nationwide system could reduce health care costs by $200 billion annually by decreasing human error and fraud, according to the Department of Health and Human Services.

In addition to the $50 billion investment in Obama’s health care agenda, $19 billion will be provided through the new stimulus legislation to offer financial incentives to hospitals and physicians’ offices that implement electronic health records systems. A minimum of $2 million would be awarded to each organization that can show meaningful use of those health IT systems by 2011.

“The challenge for hospitals that haven’t committed a budget to purchase electronic systems is that current economic conditions will make it difficult to find the extra money to deliver these systems,” said Deward Watts, president of CSC’s commercial health care sector.

An additional $87 billion of the stimulus money will be used to offset state contributions to Medicaid. It is unclear how states would be allowed to spend their savings and if any of that money would go toward health IT.

Whatever money is spent now could be viewed as a down payment on a bigger investment in health, Watts said. “We need to put in place some technical foundation to make sure that is done … in the best way possible.”

E-mail: ddarcy@bizjournals.com Phone: 703/258-0831

SOURCE: http://washington.bizjournals.com/washington/stories/2009/03/02/focus1.html?b=1235970000^1785332&t=printable