Under the Gun

Are Vendors Up to the Task?

The Mid-Term Performance Review Provides a Timely Assessment Against the Backdrop of Meaningful Use

The June release of the KLAS 2010 Mid-Term Performance Review came at an interesting time, several weeks prior to the official announcement of the final meaningful use rule under the federal American Reinvestment and Recovery Act/Health Information Technology for Economic and Clinical Health (ARRA-HITECH) Act. That coincidence makes the insights provided in this report especially relevant to both vendors and healthcare providers.

To be sure, vendors have not been sitting idly by in anticipation of the final meaningful use rule. Many have been refining their software offerings in anticipation of new requirements that health providers now know they will have to meet-all within relatively demanding timelines. With the release of the final rule, the time has arrived for health providers to take a hard look at how closely vendors’ offerings will meet their needs before making purchasing decisions.

This year's KLAS Mid-Term Performance Review takes into account major shifts that have occurred during the last year. In preparing the report on the following pages, HCI Senior Contributing Editor David Raths interviewed key industry observers, who provide their perspectives on industry trends, priorities of health providers, and the vendor competitiveness. Their views provide insight into what is really going on behind the numbers.

In this mid-year snapshot in time, experts weigh in on several key trends of equal importance to both vendors and health providers. What are the key deciding factors in electronic medical record buying decisions? Will meaningful use signal a time to switch vendors? What new criteria are CIOs using to evaluate their software options? How have the mergers and acquisitions that have taken place over the past year affected product offerings? How successfully have vendors integrated their product offerings?

While there are few clear-cut answers to those questions at this time of fast-paced industry change, the informed opinions expressed here, coupled with the hard numbers in this mid-term KLAS report, provide a reliable tool to help vendors and their customers plan their software strategies.

This mid-term review, released in June, shows product trending of performance by vendors such as Meditech, McKesson, Siemens, Cerner, Epic, Eclipsys, and GE Healthcare. The review is a snapshot in time mid-year between Top 20 Best in KLAS Awards reports.

MAJOR VENDORS JOCKEY FOR POSITION

Because computerized physician order entry (CPOE) is high on the list of meaningful use requirements, it continues to be a deciding factor in electronic medical record (EMR) vendor decisions, says Jason Hess, general manager of clinical research for KLAS. “The vendors that are seeing a growing installed base in hospitals align with those doing well on CPOE,” he says, “and the leading vendors continue to be Cerner, Epic, and Eclipsys.”

Epic

Cerner

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As the 2011 meaningful use deadlines grow closer, fewer organizations are considering a major switch of vendor, he adds. “But if their current vendor can't demonstrate CPOE, some CIOs are still looking at a different vendor. They figure why not peel that Band-Aid off now rather than later.”

Companies like GE and Siemens face the challenge of trying to develop a new product line without alienating their current installed base.-John Lovelock

The well-integrated Millennium product line from Cerner (Figure 2) is showing gradual improvement in customer perceptions. Historically the software was somewhat buggy and not that easy to support, Hess notes. “But since 2007 they seem to have a handle on some of those problems, and the scores going up reflect that fact. You don't hear Cerner customers talking about moving to something else.”

McKesson (Figure 3) has made progress, Hess says, but the percentage of installed base on Horizon CPOE is still low. The company is moving toward integration, but because it grew through purchasing ancillaries and tying them in, it has had to work to tighten its integration, he says.

Similarly, Siemens (Figure 4) for three years had only three Soarian CPOE sites. “The good news is that they are now up to 10 live sites and even a handful more since this report was completed,” Hess says, “so they are now making some progress.”

Scores for GE Centricity Enterprise Clinicals (Figure 5) fell 10 percent in this report, as the company continues to work on its Qualibria partnership with Intermountain Healthcare. “They may be able to commercialize all this cool stuff Intermountain has done in terms of evidence-based clinical decision support, but I think most providers don't understand that yet,” Hess says. “We just don't often hear about them getting any new business.”

Gartner's Lovelock observes that companies like GE and Siemens face the challenge of trying to develop a new product line without alienating their current installed base. “It is in part a corporate focus issue. It is not unreasonable that they would suffer slightly in the interim,” he says, adding that industry-wide it has taken 10 to 12 years for new platforms to develop from a series of modules into something that works well together.

In the mid-sized hospital market, most of the customers of Meditech (Figure 6) are in the midst of an update to version 6.0, and some may be getting nervous about their CPOE capabilities, Hess says. “For the first time we have heard customers talk about possibly moving somewhere else,” he notes. “That is somewhat surprising, because they are fairly inexpensive compared to other options. If there is an exodus, we will track how big it will be.”

McKesson

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One integrated health system that recently decided to switch from Meditech to Cerner is Fort HealthCare in southeastern Wisconsin. Jim Dahl, CIO of Fort HealthCare, says a key to the decision was the need for improved integration between ambulatory and acute-care systems. “Cerner has had a significant upward trend on the ambulatory side,” Dahl says. Physicians also recognized that CPOE will be a key to workflow changes, and they were impressed with Cerner's CPOE implementations elsewhere.

MAKING THE CONNECTION WITH AMBULATORY SOFTWARE

The recently announced merger between Allscripts and Eclipsys may signal more consolidation and closer relationships between ambulatory and acute care software vendors because providers suddenly care much more about interoperability.

Siemens

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Hospitals that have had a bad experience with PACS vendors may be looking to change, but it is a very cost-competitive market with differentials based on service and advances in platform.-Ben Brown

One ambulatory vendor that doesn't have a clear acute-care partner is eClinicalWorks, notes Mark Wagner, KLAS’ general manager of ambulatory research. “But in New York City they are working with multiple integrated delivery networks and many different types of inpatient systems,” he says. “If they can succeed there, they will have a proven footprint.”

Wagner observes another interesting trend: Highly rated ambulatory software vendors that traditionally serve smaller offices, such as Greenway, Athena, and e-MDs, are looking to expand upstream to practices of up to 50 physicians. “What is surprising is that some of the larger providers are starting to take these companies seriously,” Wagner says. A hospital CIO might see them as an attractive alternative to Epic for affiliated and community physicians, he adds, because they are easier to use, reliable, and less expensive.

GE

Meditech

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IMAGING: A COST-COMPETITIVE MARKET

The focus on EMR systems necessitated by the HITECH Act combined with tighter budgets has meant less action in the picture archiving and communications systems (PACS) and radiology information systems (RIS) markets in the last year, and that trend continues with this report. Those providers further ahead on meaningful use may be starting to rethink their enterprise imaging strategy, says Ben Brown, KLAS’ general manager of imaging informatics.

Hospitals that have had a bad experience with PACS vendors may be looking to change, but he says it is a very cost-competitive market with differentials based on service and advances in platform.

“Philips and McKesson continue to maintain a lot of mindshare, Brown says. “It is uncommon for one or both of them not to be in the mix when larger hospitals are considering a PACS replacement, GE, Fuji, and Agfa are also often in this mix.”

From the customers’ point of view, McKesson has an edge in terms of moving its platform forward, Brown says.

GE saw the rating of its Centricity PACS-IW fall 8 percent and its RIS product fall 9 percent. “Any change of more than 5 percent is a cause for concern,” Brown says. “GE customers are expressing frustrations at service levels.”

Jim Maughan, principal of the Houston-based Maughan Consulting, which provides PACS and RIS consulting services, says hospitals are postponing or delaying PACS/RIS replacements or vendor selections until the meaningful use work is done. “The exception might be on the storage side,” he says. “If an archiving system is on its last legs, it may get some attention.”

The difficult market conditions will lead to a natural selection process among vendors, Maughan believes. “With GE, Philips, McKesson, and Siemens all chasing fewer deals, the buyers have more leverage and negotiating power and the pricing gets aggressive,” he says. “There are too many vendors in the market and we are starting to see some consolidation like Merge buying Amicus, but we may see a shakeout where only the strong survive.”

BUSINESS SOFTWARE TAKES A BACKSEAT

Clinical may be king right now, but some organizations that are replacing clinical systems are considering replacing patient accounting systems along with them. “For instance, with most of the Epic wins, they are implementing both EMR and patient accounting applications,” notes Mike Smith, general manager of financial and services research at KLAS.

Smith says it is too soon to assess new financial modules from McKesson and Siemens. Only 33 percent of Siemens Soarian Financials customers say it has all the functionality needed. “Customers recognize the product is still maturing,” Smith says, “but the code is cleaner and the product is getting better.”

Cerner has a strong clinical client base but low adoption on the financial side, he adds, considering so many customers say they would like to work with a single vendor.

KLAS’ research on business intelligence software has found several industry-agnostic vendors gaining market share in healthcare, including Information Builders, SAP, Dimensional Insight and IBM.

In enterprise resource planning (ERP), although it has some competition from McKesson and Oracle, Lawson continues to be the clear market share leader, and most customers either have or are working on converting from version 8 to version 9. Despite its market penetration, Lawson continues to receive relatively low performance scores for its Healthcare Solutions Suite and its financial ERP implementation work.

CLINICAL IMPLEMENTATION SERVICES IN HIGH DEMAND

On the services front, KLAS divides offerings into principal and supportive firms in clinical implementation.

“Clinical implementation principal is a highly competitive field now,” Smith says, “and Deloitte Consulting has been moving up year after year. Accenture, ACS and CTG are also getting strong performance scores from their clients for their clinical implementation work.”

Smith is detecting a shift with the consulting work Dell Services (previously Perot Systems) is doing. “Previously, it was more of an outsourcer and its consulting work was with that outsourcing clientele,” he explains. “Now it is starting to do consulting projects independent of those clients.”

Many EMR vendors are developing stronger application hosting capabilities, an area where Cerner is a leader and Siemens has strong capabilities. In general, the vendors hosting their own applications continue to score better than third-party hosting vendors. “The only major vendors that aren't yet offering hosted applications are Epic and Meditech,” Smith says, “and there are several third-party players that would love to get some of that business.”

SHIFTING PRIORITIES

The scores in this Mid-Term Performance Review reflect the current concerns of healthcare system executives, but we know that six months and a year from now, their priorities will evolve, and the KLAS rankings will change with them. Topics such as integration between inpatient and ambulatory systems will take on greater urgency, as will portal software and health information exchanges. Some HIEs will be hospital-sponsored and private rather than public and supported by a regional nonprofit or state government.

But this mid-term report tells compelling stories about the software in use today and the vendors behind it. “You can really see a holistic view of their commitment,” says KLAS’ Mark Wagner. “If their chart is red everywhere, you know they have real challenges. Or if it is all green, you see they are executing, delivering clean code and taking care of provider needs.”