© 2007 EAC

Emery Stephans, EACemery@eacorp.com

AACC, San DiegoJuly 17, 2007

Health Care Information Technology

in Transition

v.8

Is IT driving health care? Or is health care driving IT?

© 2007 EAC

2Observations

•Hard to do “new” medicine without sophisticated IT on an enterprise-wide foundation–Other industry sectors experienced similar transitions

–Banking, supply chain management, airlines

•Health care networks–Efforts to combine knowledge from clinical medicine and life science

–Deploy EMR, clinical systems

•Large integrators and major health care IT companies–Heavily engaged in EMRs, content vs. care process, development partnerships

–Continuing to support imaging modalities, departmental systems, care domains

•Electronic medical record programs gaining ground in Europe and US–Government spending–Institutional investment

•US Federal Government program appears to be real; 2004 presidential directive–EMR for every patient–Nationwide data exchange and integration

–Good goals; behind schedule

•States more aggressive –e.g. California

•Large integrated health care networks adjusting strategy for next decade

© 2007 EAC

IVD IndustryIVD Industry

© 2007 EAC

4

Technicon Revlon(1980)

Bayer(1989)

Siemens(2006)

Beckman SmithKline(1982)

Coulter

Beckman Coulter(1997)

BoehringerMannheim

Roche(1997)

Abbott Dx GE (2007)

Dade Baxter(1985)

BerhingwerkeDade Behring(1997)

Phase 1Phase 1IndependentIndependent

Phase 2Phase 2Pharma Pharma

Phase 3Phase 3ITIT--ImagingImaging

Mergers and Acquisitions in the IVD Sector

© 2007 EAC

5Selected IVD Acquisition Investments in Past Year: $33 $25 Billion

Company Acquired by Date 2006 Revenues Transaction Value Multiple

DPC Siemens July 2006 $551m $1,860m x3.4

Phadia Cinven Nov. 2006 297 1,610 x5.4

Vision Systems Danaher Dec. 2006 80 520 x6.5

Tripath Becton Dickinson Dec. 2006 100 350 X3.5

Bayer Diagnostics Siemens Jan. 2007 1,907 5,200 x2.7

Abbott Diagnostics GE Healthcare Jan. 2007 2,643 8,130 x3.1

Hemocue Quest Diagnostics Feb. 2007 88 420 x4.8

Adeza Cytyc Feb. 2007 52 450 x8.7

Cytyc Hologic May 2007 608 6,200 x10.2

Dako EQT May 2007 311 1,300 x4.2

Diamed Bio-Rad May 2007 200 490 x2.5

Biosite IMI June 2007 303 1,690 x5.6

Cholestech IMI June 2007 69 320 x4.7

Digene Qiagen June 2007 176 1,600 x9.1

Ventana Roche June 2007 238 3,000 x12.6

$7,623m$4,980m

$33,140m$25,010m

x4.3x5.0

© 2007 EAC

6In Vivo vs. In Vitro

103

102

101

100

PET

MRICT

X-RayUltrasound

EKG

Genetic

CardiacImmuno

Clin Chem

Glucose

Owning both sectors provides higher confidence

for investment decisions

Owning both sectors provides higher confidence for investment decisions

© 2007 EAC

72007: IVD Industry at Crossroads

Integrate in vivo and in vitro and

IT

Rx and Dx

Decentralized Rapid

Diagnostic Testing

Traditional Central

Laboratory IVD

•GE-Abbott•Siemens-(DPC +Bayer)

•Beckman Coulter•Dade Behring•Ortho Clinical Diagnostics•Abbott

Philips Roche

© 2007 EAC

8

Health Care ITHealth Care IT

© 2007 EAC

9Goals for the “National Health Information Infrastructure” Project

Presidential Directive•An EMR for every US citizen

in a decadeA longitudinal electronic health recordLifetime

•Nationwide interoperability•Regional information

interchanges•Patient data portability•Patient data protection•De-identified patient data

available for medical research

•Tie together acute and ambulatory care (hospitals, physician practices)

Target Benefits•Essentially – combine the

benefits of European-style, single payer systems with US-style market-driven health care practices

•Reduce overhead and transaction costs

•Synchronize service and reimbursement

… provide service at 10:00 am; get paid at 11:00 am …

•Reduce fraudulent claims

© 2007 EAC

10Emergence of EMRs: 32% Operational, Another 37% Started Installation

Source: HIMSS 2007 Leadership Survey, Harris Interactive

© 2007 EAC

11IT Budgets Continue to Increase

Source: HIMSS 2007 Leadership Survey

© 2007 EAC

12Top Three 2008-2009 Priorities: Medical Errors, Clinical Systems, EMR

Source: HIMSS 2007 Leadership Survey

© 2007 EAC

13CPOE, EMR, and Clinical Information Systems the Top Three Applications

Source: HIMSS 2007 Leadership Survey

© 2007 EAC

14Hospital IT Priorities; Viewed by a Different Survey

2000 2005 2010

• Electronic medical records

• Administrative systems• Financial systems

• Insurance claims processing

• Integrated financial and administration modules

• PACS and radiology information systems

• Computerized physician order entry

• Surgical information systems

• Fully integrated clinical information systems

• Decision support systems

• Web-based interactive systems

• Robotic dispensing systems

Source: “Hospital Information Systems” Frost & Sullivan, 2006

© 2007 EAC

15Health Care IT Spending in US

•2007 US Health Care IT roughly $50 billion•US about 40% of worldwide spending

•2007 WW spending est. $125 billion•$125 billion roughly 6% of all IT spending

© 2007 EAC

16Spending by Sector

Source: Gartner, Dorenfest, 2005

© 2007 EAC

17

Selected IT Case Selected IT Case StudiesStudies

© 2007 EAC

18US Health Care IT Sales

Source: IDG, 2006

© 2007 EAC

19Selected Partnerships Between Large Integrators and Large Health Care Networks

GE Healthcare

Intermountain Health Care (IHC), Salt Lake City, Utah

• Convert proprietary IHC rules-based EMR to GE standardized “Centricity” architecture

• Comprehensive EMR and decision support system

Partners Health System, Boston, Massachusetts

• Integrated enterprise-wide clinical and process management system

• Hospitals, ambulatory treatment centers, telemedicine• Interpretation and decision support for clinicians on

genetic testing

Siemens Medical Systems

SAP • Soarian-SAP Process integration• Global alliance

Mayo Clinic, Rochester, Minnesota

• Integrate data from life-science and clinical medicine domains

• Single architecture to support clinicians and research staff

Cleveland Clinic, Cleveland, Ohio

• Integrate data from life-science and clinical medicine domains

• Single architecture to support clinicians and research staff

IBM

Geisinger, Danville, PA

• Enterprise-wide EMR with decision support• Metrics and “Best Practices” parameters for “Pay for

Performance”• Telemedicine

© 2007 EAC

20

Piet C. de Groen, MD, Mayo Clinic, Rochester, Minnesota

IBM-Mayo Clinic Life Sciences System (MCLLS)

Conceptual Overview Architecture; Phase I and IIConceptual Overview Architecture; Phase I and II

Mayo IBM Other

© 2007 EAC

21

Clinical LaboratoryClinical Laboratory

© 2007 EAC

22Classification of Broad Needs – as Seen in EAC Research

Category DescriptionInterfaces Ability to transfer data to the LIS for all platforms

regardless of test volume and location

Integration of Data Ability to transmit (report to clinicians) data from multiple data sets: images, graphics and text

Order Entry and Results Distribution

Ability to receive electronic orders from anywhere and distribute results back to the ordering location end-user

Specimen Tracking Draw to result tracking of specimens to reduce errors, improve turnaround time and improve processes

Laboratory Process Control

Ability to improve lab processes by monitoring productivity data, improved documentation

Quality Control Reporting

Ability to automate qc reporting and to be able to respond to QC issues in real time

Auto-Validation Ability to result specimens more quickly, to add diagnostic value and support clinicians

Source: EAC research

© 2007 EAC

23Top IT Needs in the Hospital Clinical Laboratory (EAC 2006 Study, N=22 Hospitals)

Functional Needs Description %

InterfacesAbility to transfer data to the LIS for all platforms regardless of test volume and location 79%

Integration of Data

Ability to transmit (report to clinicians) data from multiple data sets: images, graphics and text

68%

Order Entry and Results Distribution

Ability to receive electronic orders from anywhere and distribute results back to the ordering location end-user

68%

Specimen Tracking

Draw to result tracking of specimens to reduce errors, improve turnaround time and improve processes

63%

Lab Process Controls

Ability to improve lab processes by monitoring productivity data, improved documentation etc. 58%

Quality Control Reporting

Ability to automate QC reporting and to be able to respond to QC issues in real time 53%

Auto-ValidationAbility to result specimens more quickly, to add diagnostic value and support clinicians 47%

Source: EAC research

© 2007 EAC

24Classification of Broad Needs; the Geisinger View

Category DescriptionWide Area Network

Readily available; security (not the same as privacy) a growing concern

Data Centers Enterprise hardware security; “rack & stack” client servers; “lights out” backup and mirrored applications

Lab Connectivity POCT and centralized instruments connected with harmonized test codes

Enterprise Analytics

“Eggs in one basket” model emerging; easier to harmonize and group purchase; builds important results database

Client Servers Drives enterprise analytics, facilitates standardization and maintenance; enterprise IT increasingly chooses hardware

Clinical DSS Enterprise results (and specimen!) repositories; informatics standardization (HL7, LOINC, XML) needed for specificity

IT Interoperability Emergence of EHRs to integrate departments and RHIOs to integrate healthcare systems; coding for CMS reporting

Outcomes Organized by government, regional systems to discover actionable information for disease management

Best Practice Harnessing outcome data to EHR care delivery; incentives for “pay-for-performance” reduces cost & improves population health

Source: Geisinger

© 2007 EAC

25Middleware Initiative

•An IVD industry service to clinical laboratories•Kicked off at AACC 2005•Objectives

–Confirm “middleware gap”–Establish IVD industry willingness to consider prospective solutions–Define framework for collaboration –Determine initial level of standardization (connectivity, data interchange)

•Objectives largely attained–11 IVD companies active

•Final meeting of “initiative” held yesterday, Monday, July 16, 2007 at AACC•Made decision to proceed to next stage: organize an industry consortium•Organizing meeting October 10-11, 2007 in Tarrytown, New York

© 2007 EAC

26

SummarySummary

© 2007 EAC

27Summary

•Hard to do “new” medicine without sophisticated IT on an enterprise-wide foundation–Other industry sectors experienced similar transitions

–Banking, supply chain management, airlines

•Health care networks–Efforts to combine knowledge from clinical medicine and life science

–Deploy EMR, clinical systems

•Large integrators and major health care IT companies–Heavily engaged in EMRs, content vs. care process, development partnerships

–Continuing to support imaging modalities, departmental systems, care domains

•Electronic medical record programs gaining ground in Europe and US–Government spending–Institutional investment

•US Federal Government program appears to be real; 2004 presidential directive–EMR for every patient–Nationwide data exchange and integration

–Good goals; behind schedule

•States more aggressive –e.g. California

•Large integrated health care networks adjusting strategy for next decade