Guerra On Healthcare: Beginning Of The End For Meditech?
The health IT stalwart's focus on the standalone community hospital market may be blinding it to the changing needs of its customers.
Regular readers of this column will know that I'm a huge proponent of specialization and the high quality of service that can be attained only through a narrow and relentless focus on doing one (or a few) things really, really well.
The URL of my site, healthsystemCIO.com, says a lot about that attention, as I don't seek to serve a wide array of readers, but only one executive, with an easily definable profile that includes goals, challenges, and needs. Many of the companies I admire have that same narrow approach, which is probably why I adopted it. But lately, one of the greatest healthcare IT companies of today and, in fact, of all time, seems to be showing how an over-focus on one's mission -- despite how the changing needs of customers probably should have altered that mission -- can be dangerously detrimental.
I'm talking about Meditech -- the grand old stalwart of healthcare IT. The company, launched decades ago and focused on the standalone community hospital market (think around 200 beds), is embedded in a few thousand facilities throughout the country. Meditech is known for producing solid software, meaning it works. However, questions around usability (think physician friendliness) prompted a big revision of its core suite with version 6.0. With that suite slowly permeating the client base -- slowly because of long wait times for software, even among existing customers -- some are looking in other directions, exploring their options after years as Meditech shops.
But that's not really the issue looming as a long-term strategic problem for the company. Specifically, the problem seems to stem from Meditech's focus on the "standalone" adjective that can be used to describe its traditional client base. You see, with the advent of the Health Information Technology for Economic and Clinical Health (HITECH) Act and its meaningful use requirements around health information exchange, along with a trend toward greater integration between hospitals and (both owned and non-owned) physician practices, inpatient software that lacks a physician-friendly and highly integrated ambulatory electronic health record (EHR) companion product is being shunted to the back of hospitals' request for proposals line.
I've interviewed a number of CIOs -- most recently Doug Abel, CIO at Anne Arundel Medical Center in Maryland -- who say that Meditech's lack of a suitable ambulatory EHR (the company offers LSS as a companion product, but most physicians seem to compare it unfavorably with the competition) is taking the long-time favorite out of contention. To be clear, Abel says the usability issue removes LSS, and thus Meditech, from contention even before the level of integration with Meditech's core inpatient suite is evaluated.
Many, many hospital CIOs now share the concerns that caused Abel to remove Meditech from his list of potential vendors (even though Meditech was the incumbent): namely they want/need to offer a acceptable ambulatory EHR to independent community physicians. With the idea that "free isn't good enough," even a sound Stark subsidy (Anne Arundel is offering 55% out of a legal max of 85%), will not induce these physicians to use a system they don't like. And the future of a hospital's financial wellbeing depends on just such acceptance, due to the electronic integration and, thus, patient flow that necessarily attend it.
I keep asking those I interview, "Does the fact that Meditech does not have a more robust ambulatory EHR, which is fully integrated with their inpatient suite, shock you?" When I asked this question of Abel, he said, "The short answer is, yes."
So I wait to hear news from Meditech that it has acquired an ambulatory company (something not likely) or developed a product that will blow the market away to fill this seemingly gaping hole in its offering, but to date, I've heard nothing. When I look at a situation like this, one which doesn't seem to make sense, I have to assume I'm missing something. If I'm not, perhaps a company as in love with focus and specialization as I am has let that focus blind it to the evolving needs of its customers, and that may cost it big during the next decade.
I, for one, am taking this apparent lesson to heart, realizing that my infatuation with focus has a tipping point, beyond which the returns diminish exponentially.