© 2009

Health IT Transformation: FY2009-FY2014 State & Local Market

Chris Dixon, Manager, State & Local Industry AnalysisINPUT

April 13, 2010

Webinar

© 2009

Table of Contents

What impact has the federal stimulus had on health IT?

What is the role of regional health information organizations (RHIOs) and health information exchanges (HIEs) in S&L health IT?

How does the national health IT effort relate to Medicaid management information systems (MMIS)?

What is the size and scope of the S&L health IT market?

Conclusions & Recommendations

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Disruptive Change: Catapulting the US Health IT Market

3

Health IT market acceleration imminent as the federal government introduces disruptive change to the US health care industry

American Recovery and Reinvestment Act (ARRA)Pending healthcare reform legislation

Health IT dichotomy:Dominant segments of the federal Health IT, EHR and claims processing market were early innovators and are now fairly matureNational disruptive change will result in new segments and a second wave of innovation in the federal market

THIS WILL NOT BE YOUR NORMAL MARKET EVOLUTIONWe started out with hype around health IT, but

the carrot and the stick of cold hard Stimulus cash, rather than the “invisible hand,”

will propel this market!

“Nearly a century after Teddy Roosevelt first called for reform…. LET THERE BE NOT DOUBT: health care reform can not wait, it must not wait, and it will not wait another year.”

- President Barack Obama, Feb. 24, 2009

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Health IT Funding Ecosystem

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Federal

State Government

Provider Payer

Local GovernmentCity/County Hospitals Health ClinicsEMS Orgs Public Health Depts

Commercial/Private

Hospitals Practices Clinics

Ven

do

rsS

oftwa

reE

quipm

ent

Services

VADoD CMS SSAONC CDC NIH ARHQ HRSAIHS

Promoter

Consumer

ProviderState

HospitalsUniv

HospitalsPrisons

CorrectionsMental Health

DeptsEMS Orgs

Public Health Depts

ITDepts

RHIOs CHIPsAgencies

MedicaidOrgs

Promoter Payer

Provider Promoter

Private Insurance

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Trends and Drivers:• The Budget Crisis• National Healthcare Reform• Impact of Stimulus Funding • Standards and Certifications• Health IT Interoperability

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National Health Expenditures Skyrocketing

6

Source: HHS CMS

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20180

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

State & Local Federal Other Private Funds Private Health Insurance Out-of-Pocket

$B

illio

ns

“Make no mistake: The cost of our health care is a threat to our economy. It's an escalating burden on our families and businesses. It's a ticking time bomb for the federal budget. And it is unsustainable for the United States of America." – President Barack Obama, AMA Annual Conference, 6/15/09

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Funding to States to Promote HIT

7

Agency Use of Funds Recipients

States/State-designated

entity

States( Medicaid Agencies)

Providers

HIE Planning & Implementation

Hospitals, Physicians, &

Nurses

ONC

CMS

CDC

States

EHR Loans

Medicaid Incentives

Immunization & Infection

Prevention Strategies

Indian Tribes

States

Source: INPUT

Regional Extension Centers

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Funding to States to Promote HIT

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Agency Use of Funds Recipients

Construction and HIT systems

Higher Education Institutions

Community Health Centers

Workforce Training/Workforce

Shortage

Distance Learning,

Telemedicine, Broadband

Broadband

HHS

USDA

DOC

Students

Broadband & Medical

Providers

Education Entities

Broadband Service

Providers

Nonprofit

States

States

Source: INPUT

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Community Health Center Grants

Community Health Centers $2 billionAgency Health Resources and Services Administration, Bureau of Primary Health Care

Contact Mary Wakefield, Administrator, Health Resources and Services Administration301-443-2216 mary.wakefield@hrsa.hhs.gov

Eligibility: Federally qualified community health centers, migrant health centers, health care for the homeless and public housing primary care

Description:•$1.5 billion in infrastructure grants to support construction, renovation and equipment, including health IT systems•$338 million awarded to 126 grantees for New Access Point to support new center sites and service areas•$155 million in Increased Demand for Services (IDS) to 1,128 grantees to support increased services at existing sites and spikes in uninsured populations

Assistance Type: Competitive project grants

Provisions:• New Access Point grants and IDS grants have been awarded• Grants have a two year shelf life

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Health IT Regional Extension Centers

Mandated Under ARRA, valued at $598M

Office of the National Coordinator for Health IT (ONC) to make the first phase of final grant awards on Dec. 11, 2009, valued at $1-2M each

Objective – to enhance and promote adoption of Health IT through• Assisting providers with implementation, effective

use, upgrading, and ongoing maintenance• Broad participation from industry, universities, and

state governments• Active dissemination of best practices and research• Participation in health information exchanges (HIE) • Utilization of the expertise and capability that exists

in Federal agencies• Integration of Health IT into the training of health

professionals and others in the healthcare industry

Potential Contract Recipients

• California Regional Health Info Org (CALRHIO)

• Colorado Regional Health Info Org (CORHIO)

• Indiana Health Info Exchange (IHIE)

• New York eHealth Collaborative (NYeC)

• MPRO• Qualis Health• Health Services Advisory Group• Health Care Excel• Health Insight• Acumentra

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Health IT Regional Extension Center Grants

ONC Discretionary Grants $750 million - $1 billion (estimate)*

Agency Office of the National Coordinator for Health Information Technology

Contact David Blumenthal, National Coordinator, ONC202-690-7151 david.blumenthal@hhs.gov

Eligibility: Nonprofits, potentially quality improvement organizations (QIOs)

Description: Provide technical and change-management assistance, disseminate best practices and implementation support for providers adopting and utilizing EHRs at the local level.

Assistance Type:Competitive project grants

Provisions:•Part of the $2 billion in ONC discretionary grants•Specific funding levels and requirements TBD•ONC may not provide greater than 50% of the cost in annual operating and maintenance funds•Prioritize assistance to least-advantaged providers and critical access hospitals

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*Source: Rhode Island Quality Institute

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EHR Loan Program

ONC Discretionary Grants $TBDAgency Office of the National Coordinator for Health Information Technology

Contact David Blumenthal, National Coordinator, ONC202-690-7151 david.blumenthal@hhs.gov

Eligibility: States or Indian Tribes

Description: Grants are to provide loans to health care providers to facilitate EHR adoption and implementation. Loan funds can be used by providers to purchase or upgrade certified EHR technology, enhance technology, train personnel or improve the electronic exchange of health information.

Assistance Type:Competitive

Provisions:• Part of the $2 billion in ONC discretionary grants• Grants awarded no earlier than Jan. 1, 2010• States required to match federal contributions $1:$5• Funds can only be used for certified EHR purposes (purchase EHR, training

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HIE Planning and Implementation Grants

ONC Discretionary Grants $300 millionAgency Office of the National Coordinator for Health Information Technology

Contact David Blumenthal, National Coordinator, ONC202-690-7151 david.blumenthal@hhs.gov

Eligibility: States or state-designated entities

Description: Provided for the development and implementation of HIE programs. Planning grants are intended to jump-start HIE projects, while implementation grants are meant for entities that either already have HIE activities underway or have detailed plans in place.

Assistance Type: Competitive Project Grants

Provisions:•Funds are available upon the delivery of ONC’s report to Congress, May 18, 2009•State matching funds may be required in fiscal years 2009 and 2010 and will be required in 2011•Larger grants will likely go towards implementation•States have the responsibility of developing an HIE infrastructure in the near future to enable otherwise-eligible providers to earn their EHR incentive payments

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HIE Readiness Map

Operational plan are aligned with ONC criteria

Alignment with ONC criteria required prior to implementation

WA

ID

UT

TX

OK

MN

MI

INIL

KY

FL

AL GASC

WV

NY

ME

VA

MS

AR

OH

ND

SD

MT

NV

COKS

AZ

HI

AK

OR

CA

WY

NE IA

WI

PA

MD

DE

NJCT

RI

MA

NH

VT

NM

LA

TN NC

MO

Source: State-level HIE Consensus Project, Missouri Senate Healthy Missourians 2020 Committee Presentation, Manatt, and INPUT

Initial planning stages

Planning efforts required prior to implementation

States are beginning at different levels of maturity. Many submitted applications for both HIE planning

and implementation activities.

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DRIVER: Standards -Two New Committees Established To Fast-forward Standards

The Stimulus mandated 2 Committees to fast-forward standards:• Health IT Policy Committee: provides recommendations to ONCHIT on a policy

framework for the development and adoption of a nationwide health information infrastructure, including standards for the exchange of patient medical information

• Health IT Standards Committee: provides recommendations to the ONCHIT on standards, implementation specifications, and certification criteria for the electronic exchange and use of health information

Health IT Standards Panel (HITSP) has already done much: Pre-existing Sets of Interoperability Specifications (dating back to 2005):

• EHR Lab Results Reporting• Biosurvelliance• Consumer Empowerment• Emergency Responder EHR• Consumer Empowerment and Access

to Clinical Information Via Media• Quality

• Personalized Healthcare Consultations and Transfer of Care

• Immunizations and Response Management

• Public Health Case Reporting• Patient – Providers Secure Messaging• Remote Monitoring• Medication Management

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CCHIT Making Strides in Industry-led CertificationThe Certification Commission for Healthcare Information Technology (CCHIT) certifies products that meet the specified standards (CCHIT is a non-profit organization that works with HHS).

ARRA definition of “qualified electronic health record:”

• Patient demographic and clinical health information

• Has the capacity to provide clinical decision support, support physician order entry, capture and query information relevant to healthcare quality, and exchange electronic health information .

Current CCHIT Certification Categories

Ambulatory EHRs

Inpatient EHRs

Emergency Dept EHRs

Health Information Exchanges

Child Health

Cardiovascular Medicine

Enterprise EHRs

Electronic Prescribing (to be launched soon)

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DRIVER: Interoperability Depends on Participating RHIOs, HIEs and NHIN

Regional Health Information Organizations (RHIOs): Brings together healthcare stakeholders within defined geographic areas and govern the health information exchange among them.

RHIO and HIE are often used interchangeably. The market is moving more toward the use of the term HIE for the description of organizations in regional areas that facilitate the exchange of healthcare information.

Health Information Exchange (HIE): Defined as the mobilization of healthcare information electronically across organizations within a region or community. The acronym is also used to describe the organizations that have formed to accomplish the goal of information exchange. Most HIEs are structured as not-for-profit corporations.

National Health Information Network (NHIN): Being developed to provide a secure, nationwide, interoperable health information infrastructure that will connect providers, consumers, and others involved in supporting health and healthcare.

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NHIN: A National Network for the Exchange of Interoperable Patient Information

Creation of a Health IT infrastructure

Development of a Federal HID Strategic Plan

Creation of a Web site to facilitate collaboration of public and private entities

Creation of a HIT Policy Committee and a HIT Standards Committee

Expand security and privacy provisions beyond HIPAA

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Health Bank

HIE

Regional Health Centers

HIE/RHIO

State Gov

Labs

Pharma

CDC

VA

IHS

DoD

SSACommon “Dial Tone” &

Chain of trust

Source: ONCHIT, INPUT

The Office of the National Coordinator for Health Information Technology (ONC) provides leadership for the development and implementation of a nationwide health IT infrastructure allowing secure and seamless exchange of data and records through the National Health IT Network (NHIN).

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HIT Market Evolution Path & Forecasts

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Health IT Market Evolution Path

Healthcare Reform Drives Growth in 3 Critical Steps1. Patient records will be created and then exchanged2. When critical mass of records reached, records will be aggregated and analyzed3. Analysis will lead to determinations of what effects better health outcomes

Data Capture(1)

Collaborative Decision Support & Capabilities (2)

Health Transformation (3)

Reduced Healthcare Costs

Provide for the

Uninsured

Improve Health Outcomes

Time

Healthcare Reform Goals

Data capture in systems/application modules such as electronic medical records (EMR), electronic health records (EHRs), personal health records (PHR), electronic medication administration records (eMAR),pharmacy, and eligibility systems.

Interoperability/integration of systems for data mining, modeling and analysis to support better decision –making. Tangential systems (e.g. biosurveillance, GIS,e tc.) connect for analysis and modeling of larger populations.

Next Gen Applications, process improvements, increased automation and ongoing claims processing transformation allow for move from “pay for service” to “pay for performance.”

Claims Processing Transformation (On-Going)

Pay-for-Performance

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Total S&L Health Care IT Market Forecast CY 2009-2014

Source: INPUT

2009 2010 2011 2012 2013 20140

1

2

3

4

5

6

7

8

9

10

11

7.6

8.38.6 9.0 9.3 9.6

CAGR -- 4.6%

Ad

dre

ss

ab

le M

ark

et

($B

)

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Conclusions & Implications

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An Integrated Opportunity

How can industry address common challenges and requirements?

• Standards• Interoperability• Security & Privacy• Data Capture and Sharing• Business Process

Improvement Needs• Sustainable Financial

Models

Federal

Commercial/

Private HCLocal

State

To the extent possible, approach this single market with integrated BD, sales, product management, and marketing.

Health IT will be integrated across all sectors:

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INPUT’s Conclusions & ImplicationsIn State & Local healthcare, Health IT adoption will be either “by choice or by stick.”• Due to stimulus, public hospitals will be spending more money on Health IT;

however,….

• Many providers are slow to adopt EHR due to cost, maintenance, training and security concerns

Legislation will force new health IT adoption as well as more efficient use of existing health IT systems

For EHR vendors and networks, the State & Local market is about velocity (speed to reach critical mass) rather than total market size.

Federal government may have an inflated view of EHR adoption rates• “Meaningful use” definition will likely show lower than expected adoption

rates

• Stimulus EHR incentives will help gain a more accurate view

State and Local market will require a progressive approach to Health IT, i.e. modular systems that can be added and upgraded

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INPUT’s Conclusions & ImplicationsFederal is an established market, but will continue strong growth and undergo more transformation in the long-term

Look for opportunity in Health Information & Decision Support Systems

Provide integrated approaches for HIT – Think of integration from back-office apps to the last mile of telehealth

Claims transformation for pay-for-performance comes down the road. Until then, look for incremental opportunities to tweak the system address waste and fraud

Strong adjacent markets in health care facilities, training, staff augmentation, and call centers to support telehealth

Look to other sources of If Congress passes reform legislation, healthcare transformation enabled by Health IT (and cost reduction), still faces challenges:• Privacy and security issues will slow momentum of entire HIT market if not adequately

addressed• Desired cost savings will hinge on standards and interoperability

The federal health information sharing vision will require more active implementation and use of HIEs, RHIOs and the NHIN

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