Industry Watch – November/December 2019

Nov. 27, 2019
Recent news from around the world of health IT

Finance & Revenue Cycle

What Happens to Customer Satisfaction Following a Health IT M&A?

How do mergers and acquisitions (M&A) in the health IT vendor space impact these companies’ customers going forward, post-sale? Certainly, health IT vendor M&A is commonplace, and recent years have seen several big announcements in the electronic health record (EHR) space specifically, such as Cerner acquiring Siemens and Allscripts acquiring McKesson’s hospital IT business.

A KLAS report provides an update on recent M&A activity by examining customer satisfaction before, during, and one year after a merger or acquisition.

The research revealed that almost all M&As result in notable change in customer satisfaction—the odds that customers will be left untouched are less than 20 percent—and the chances of satisfaction improving or declining are almost identical (42 percent and 40 percent, respectively). “This shows that M&A activity is not inherently bad or good, but there are clear differentiators between companies who see improvement and those who see a decline,” said KLAS researchers, who got responses from more than 2,000 customers.

“Vendors’ deliberate choices around cost, culture, and value determine which way the pendulum will swing,” KLAS researchers added. What’s more, proactively making the right choices is essential—vendors who see a significant decrease in customer satisfaction in the first year typically take three to five years to recover, if they recover at all, the research noted.

Meanwhile, poor customer satisfaction in the wake of a merger or acquisition has a significant impact on customer retention, according to KLAS. On average, the number of customers looking to leave their vendor doubles one year after a poor merger or acquisition. The top cited reasons are frequent nickel-and diming, a decline in the quality of phone/web support, and stagnant product development.

Conversely, a strong merger/acquisition strengthens both customer loyalty and evangelism. This is because customers feel their vendor is aligned with their goals, cares about their success, and provides a sense of stability, the research revealed. What’s more, companies with a healthcare-specific focus are more likely to see increases in customer satisfaction after an M&A since such companies are often more aware of what’s required for healthcare customers to achieve promised levels of success.

Policy & Value-Based Care

HHS Proposes Stark Law Changes That Would Broaden Providers’ Maneuverability Under APMs

On Oct. 9, the Department of Health and Human Services (HHS) announced significant changes to the Physician Self-Referral Law, known as the “Stark Law,” and the Federal Anti-Kickback Statute, in order to allow for the leaders of patient care organizations participating in accountable care organizations (ACOs) and other value-based payment arrangements, greater leeway to create the structures they need to create, in order to thrive under alternative payment. Among the allowable activities will be the sharing of data analytics services between patient care organizations, more complex post-discharge care coordination, and data- and software-sharing around cybersecurity. Prominent associations are already applauding the move, which was published as a proposed rule.

The announcement read, “HHS announced proposed changes to modernize and clarify the regulations that interpret the Physician Self-Referral Law (the “Stark Law”) and the Federal Anti-Kickback Statute. The proposed rules provide greater certainty for healthcare providers participating in value-based arrangements and providing coordinated care for patients. The proposals would ease the compliance burden for healthcare providers across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse. The proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which seeks to promote value-based care by examining federal regulations that impede efforts among providers to better coordinate care for patients.”

The announcement stated that, “Below are [a few] examples involving coordinated care, value-based care, data sharing, and patient engagement activities that, depending on the facts, could currently be difficult to fit under existing protections and could potentially be protected by the Stark Law, Anti-Kickback Statute, or Civil Monetary Penalties Law proposals if all applicable conditions are met:

• In an effort to coordinate care and better manage the care of their shared patients, a specialty physician practice could share data analytics services with a primary care physician practice.

• Hospitals and physicians could work together in new ways to coordinate care for patients being discharged from the hospital. The hospital might provide the discharged patients’ physicians with care coordinators to ensure patients receive appropriate follow up care, data analytics systems to help physicians ensure that their patients are achieving better health outcomes, and remote monitoring technology to alert physicians or caregivers when a patient needs healthcare intervention to prevent unnecessary ER visits and readmissions.

• A physician practice could provide smart pillboxes to patients without charge to help them remember to take their medications on time.  The practice could also provide a home health aide to teach the patient and the patient’s caregiver how to use the pillbox.  The pillbox could automatically alert the physician practice and caregiver when a patient misses a dose so they could follow up promptly with the patient. 

• A local hospital could improve its cybersecurity and the cybersecurity of nearby providers that it works with frequently.  To do so, it could donate, for free, cybersecurity software to each physician that refers patients to its hospital.  The hospital and the physicians often share information about their patients, so it is important that there are no weak links that might compromise everyone else.

Interoperability & HIE

About 1 in 3 Senior Healthcare Execs Lack Familiarity With Feds’ Interoperability Proposals

Many senior healthcare executives lack familiarity with the federal government’s proposed rules designed to improve interoperability and patient access to data that were released earlier this year, according to a new report.  

A centerpiece of the 21st Century Cures Act, which became law in 2016, are new regulations designed to help drive increased efficiency and transparency in healthcare through a variety of measures, including preventing information blocking and expanding how patients can access their healthcare information. Organizations that do not comply with the new regulations—which apply to essentially any organization handling patient medical records—could face substantial penalties, per two separate proposals released in February from CMS (the Centers for Medicare & Medicaid Services) and ONC (the Office of the National Coordinator for Health IT).

The proposals have several layers to them, with key elements related to application programming interface (API) standards, electronic health record (EHR) certification, and EHR vendor business practices and behaviors.

New research findings from Accenture, however, reveal that fewer than one in five (18 percent) of the executives surveyed in key leadership positions at U.S. healthcare companies said they are “very familiar” with the proposed regulations, while 17 percent said they either “know nothing” or “have never heard” about the Cures Act. Around 53 percent said they are “somewhat familiar,” with 12 percent “vaguely familiar.” Overall, nearly one in three (29 percent) survey respondents lack familiarity with the proposals.

For the research, Accenture surveyed 76 chief information officers (CIOs), chief technology officers and vice presidents of information technology at U.S. healthcare providers and healthcare payers with more than $1 billion in annual revenue. Executives from providers comprised 57 of the interviews, and executives from payers comprised 19.

Healthcare payers, however, appear somewhat better informed and prepared for the new regulations than do healthcare providers. Specifically, 26 percent of payers surveyed said they are “very familiar” with the regulations, compared to 16 percent of providers. Similarly, 26 percent of payers believe their organization is “very prepared,” compared to only 5 percent of providers who share that view.

Overall, 40 percent of those polled believe the requirements will have little or no impact on the IT operations of their organization, and 30 percent see little impact on their organization’s ability to meet the needs of their patients and customers.

Recently, a group of prominent industry associations penned a letter to members of Congress, asking them to use their oversight authority to ensure that federal health officials improve certain elements of the rules. For instance, the groups believe that the rules need to do a better job of protecting patient data privacy and ensuring health IT security. What’s more, they believe that the information blocking components are too complex.

In that regard, in June, stakeholders similarly expressed major concerns with the government’s proposals, particularly as it relates to their vagueness, as well as timelines that some feel are far too aggressive. One group— Health Innovation Alliance (HIA)—went as far as to formally call on ONC specifically to rescind its regulation, noting that the information blocking exceptions to the proposed rule are so vague that “they will produce a market worse than today’s status quo.”

Indeed, in its proposed rule, ONC implements the information blocking provisions of the Cures Act, which defined information blocking as interfering with, preventing, or materially discouraging access, exchange, or use of electronic health information. Violators can be subjected up to a $1 million fine if they are found to be bad actors.

But as some stakeholders have attested, the proposed information blocking exceptions are “both complex and confusing.” One example of this is “significant confusion around the definition of ‘electronic health information’ or EHI, which forms the basis for much of the policies in the rule,” according to the recent letter from associations.

 “Our survey findings are a wake-up call for health organizations and agencies that remain relatively uninformed about the regulations, or who are not actively preparing. Complying with the regulations will provide them with a major opportunity to enhance the services they provide and to fundamentally improve consumer engagement in their healthcare,” said Andy Truscott, managing director and technology consulting lead in Accenture’s Health practice and a member of U.S. federal government advisory groups on health IT and Health Level Seven (HL7).

Phil Poley, Accenture managing director for public sector health, added, “Medicaid agencies, state health information exchanges, and state chief information officers will also be impacted by the new law. The new regulations will have major implications for public sector health entities, including Medicaid departments, state health information exchanges, and state chief information officers. These organizations will need to understand what the regulations mean for them in terms of technology requirements, processes and serving their customers, which include citizens and organizations alike. Given the timetable and requirements for compliance, they need to be in heavy preparation and planning mode now.”