ANTHONY GUERRA: From what I gather, you are working with your sister company, GE Capital, to finance GE HealthcareIT products for your customers, and guaranteeing that your products will meet whatever is ultimately deemed to be a certified EHR. I’m sure you’d like to put some more color around that.
VISHAL WANCHOO: You’ve got the summary right. We’ve been talking to our customers extensively about the stimulus and what it means, and we’ve been doing webinars, focus groups, etc. We’ve addressed concerns that have come up from our customer base around the economy and the cost of capital dollars available to implement EMRs, and secondly, what meaningful use is going to be.
And we’ve been very active in Washington, D.C., with a lot of the different committees in terms of putting our input into certification, meaningful use, etc. So we had a very high degree, I would say, of confidence that we would be able to really help our customers with meaningful use with our products, and we already had experience in certification, so we felt comfortable giving a warranty to our customers that we will certify our products according to whatever certification criteria is published. We have a decent idea on what that’s going to be, whether that’s going to be an annual cycle or biannual cycle, the question remains to be seen, but whatever the case may be, we’ll put the resources in to ensure that we are certified year by year or once every two years, as required.
So we made a very simple offering; it’s a single contract with the customer from the GE company and it essentially provides for zero upfront cost for the EMR. We train the customer on the EMR, get them up and running, and their obligation to us is to pay us back for the EMR system that we’ve implemented. Once the stream of money comes in, either from Medicare or Medicaid or both, which would probably happen in 2011 or 2012, depending on when they implement, we get paid.
GUERRA: This seems to be something very few vendors could do. Very few vendors, if any, have a sister company that can put aside $100 million to loan potential customers, or do anything remotely like this. Do you think this will help you, vis-à-vis your competitors.
WANCHOO: We are very bullish right now on this program, and the feedback we are getting from our customers is great. We really think it helps us improve our position dramatically from a couple of angles. One is, it’s simple, and it’s a company that they trust. They know our products in the market. The draft of meaningful use is very much based on outcomes and quality metrics and quality reporting, and those have been strengths of our product line. We have really emphasized that portion. So not only just having the physicians use the EMR to document patient care and to run their practice, but to focus on the data collection and the data mining from the EMR. So we feel very good that we can put the products in and enable our customers to achieve meaningful use quickly. This way, we’re also protecting ourselves because if they get to meaningful use, they start to get money from the government and we get paid back.
GUERRA: Do you think any of your main competitors have the wherewithal to do this type of a financing program? Might they partner with an outside company, which is almost what you’re doing? Do you anticipate your financing option being mimicked?
WANCHOO: We’ve seen some variants of financing, mostly from smaller companies in the ambulatory space. But those are very short-term financing kinds of activities – no payment for 90 days. What we’ve done is really tied it to reimbursement from the government, which is much safer for the provider. They get paid by the government, they pay us, it matches the cash flow. I anticipate there’ll be certainly a reaction; I don’t know where our competitors will land in terms of what they do, but this is a program we think is going to give us a tremendous competitive advantage, and it’s going to be tough for a lot of companies to follow, we believe.
GUERRA: To me, we’re talking about three parts here – financing, certification, and meaningful use. You may have certified technology but not be able to prove meaningful use. Are you guaranteeing, in this program, that not only will the technology that your customers use from you be certified, but also that they will achieve meaningful use and qualify for the incentives?
WANCHOO: That’s a great question and we’re not. We’ve made that very clear that we are essentially providing a warranty that we will have a certified electronic health record for our customers deployed. As I was mentioning, we have a high degree of confidence that all of the things that we do with our EMRs, in terms of quality reporting, really enables our customers to achieve meaningful use. However, there are certain other things that the customers have to do — and we’re just deep diving into the meaningful use definition that was just released a couple of days ago — like computerized physician order entry, or e-prescribing. Those are obligations that the customer must meet. Now, we know our product is capable of meeting those, but the customer certainly has to implement the product in the right way and make sure that they adopt the technology. It’s hard for us to warranty that, as you can imagine.
GUERRA: I’m curious about the risk you’re taking. You’re lending out this money, but it must be paid back whether or not they receive HITECH funds, correct?
WANCHOO: The way we’ve got it structured is that they would pay us when they get reimbursement from the government. Let’s take one of two cases, they adopt the product, they do the things that the product is capable of doing to achieve meaningful use, everything is fine, they get reimbursement, we get paid.
The other scenario might be — we’ve got a CPOE product, we put it in, the customer decides not to implement it for whatever reason. Clearly they’ve got an obligation to pay us because it’s their responsibility to implement those things to achieve meaningful use. So that’s the way it’s structured.
