Cerner CEO Confirms Interest in Medical Device Market
At the Cerner shareholder’s meeting this week, Neal Patterson described 4 new “fundimental directions” for growing the company.
Building on 2005 revenue of $1.2 billion and earnings of $86 million, Patterson said the health care information technology leader will focus on moving: [...] Further into medical devices, using Cerner software to integrate everything from hospital beds to drug-dispensing cabinets with electronic medical records.
This position reinforces a press release from this past February.
For more than a quarter century, Cerner has been driving the automation of healthcare through its industry-leading information technology solutions,” said Neal Patterson, Cerner chairman and chief executive officer. “Today, Cerner is taking the next step to providing our clients with end-to-end solutions that deliver a greater level of patient safety and increase organizational efficiency.”
Although most of the steps described in the press release depict the benefits of more extensive systems integration between information systems capabilities rather than medical devices, there is this:
In addition, Cerner is working together with several device manufacturers to develop integrated clinical data delivery mechanisms, allowing interoperability between Cerner Millennium technology and healthcare providers’ hardware. For example, Welch Allyn, a leading manufacturer of frontline medical devices and solutions, and Cerner intend to work with select client sites to study workflow efficiencies and innovative methods for turning patient data into actionable healthcare information.
The benefits that could be gained through interoperability between medical devices and information systems are considerable. Cerner already has connectivity with most of the “smart” pumps. However there are numerous barriers to realizing interoperability, least of all medical device vendor’s preference for proprietary technology and business strategies.
The barriers I’m talking about include regulatory, systems integration, and business model. Someone is going to break through these barriers (there are a number of vendors working on this). In a world where hospitals frequently prefer single vendor solutions, and many vendors are more interested in protecting their installed base than launching ground breaking new products, I don’t see interoperable solutions impacting the market for some time.
Philips Medical Announces Outsourcing Deal with UPS
In what has become a classic outsourcing move in other industries, Philips Medical has contracted with UPS to redesign and operate its global parts logistics network. The goals of this new business arrangement are to improve customer service and no doubt lower costs for Philips Medical.
UPS has been given the task of ensuring Philips Medical customers
in 50 countries around the world receive parts according to service
level agreements, including same day delivery for critical parts
delivery and return services. That contrasts with the current practice
of next business day service. The UPS-designed network will replace a
regional response system utilizing 12 logistics providers in about 40
locations.
As part of the global SPL contract, UPS will
provide material storage and inventory management, order fulfillment,
inbound and outbound transportation, global visibility and reporting,
as well as inspection, re-packaging and labeling.
Both outsourcing and off shoring were embraced by other tech industries a few years ago. The extensive world wide communications infrastructure, that was a unintended consequence of the Internet bubble of the late 1990s, provides a commodity platform for enabling lots of different outsourcing, offshore or otherwise, between companies. In addition to parts logistics, UPS is also transporting and installing cardiovascular and x-ray equipment for Philips.
How One Hospital Integrated Medical Devices
Portland is fortunate to be home to a number of top notch health care delivery organizations; Legacy Health System is one of them. I had a chance to meet with two of their IT folks to specialize in medical device connectivity, and wrote a story about their recent experiences that came out in yesterday's Health IT World e-newsletter. There are many reasons why hospitals integrate medical devices into paperless charting systems – systems ranging from flow sheets to $20 million EMRs. Here is the reason they do it at Legacy:
relies on user adoption. Legacy Health System learned some time ago
that users expect data from medical devices to be automatically
acquired into the information system. Without this integration, users
are left asking, “What's in it for me?” After all, we are talking about
automation, right?
This particular situation was prompted by the construction of a new hospital, Legacy Salmon Creek. This new hospital is one of the “most paperless” (least paperful?) hospitals in the area, and Legacy wanted to push the envelope with their medical device connectivity.
Health System was done via point-to-point serial connections between
bedside medical devices and a computer, also located at the bedside.
For this new hospital, the integration team wanted to move to a
networked architecture. Like most medical device selection processes,
devices for Legacy Salmon Creek Hospital were selected by committees
comprised mostly of clinicians and organized by clinical area. Once all
devices were selected, the integration team had less than two months to
configure, install, and test all the interfaces before the hospital's
opening.
The story contains lots of good “best practices” for medical device connectivity. And thanks to Alan Rosenfeld and Peter Gould for sharing their experiences with me.
Update on Medical Device Connectivity
MX Magazine was kind enough to ask me to write a story about the current state of medical device connectivity. This isn't a comprehensive market analysis, but a discussion of market trends, technology, and the current state of connectivity. Numerous examples of new products are included in the review. The following product categories are discussed in detail:
- Imaging information and PACS
- Integration and Interoperable Systems (wireless medical devices)
- Wearable and Implantable IT (wireless sensors and gateways)
- Alternate-Site and Home-Use IT (remote monitoring)
Steve and Lori at MX did a great job getting photos and descriptions of some of the latest connectivity features and devices – some of which haven't gotten much press. This excerpt from the conclusion touches on many of the themes of the story:
EHR adoption is increasingly driving medical device connectivity.
This integration will create opportunities for third-party vendors to
provide solutions for the huge installed base of medical devices that
have only a serial port for data output. How these new entrants will
leverage their footholds in the market remains to be seen.
Reacting to the nursing shortage and continued reimbursement
pressures in the United States will require significant productivity
gains at the point of care. At the same time, patient safety and
patient-flow bottlenecks are driving point-of-care connectivity and
work flow automation. Increased patient acuity outside of critical-care
areas is driving demand for more-pervasive and distributed
surveillance. In response, basic clinical market requirements are
evolving.
Increased IT involvement will continue to influence the
purchase of new medical devices. Besides technology, perhaps the
biggest challenge facing medical device vendors will be related to
sales. Connectivity changes the selling process, creates new decision
makers, and even affects sales administration. The days of simply
“selling the box” are fading.
As I'm fond of saying, read the whole thing. And if you're struggling with connectivity – and want to minimize risk and costs, and maximize your investment – let me know. I can help.
UPDATE: Reader Jim Maughan offers some comments about connectivity in diagnostic imaging (both radiology and cardiology):
few other items that you may want to add to your connectivity thoughts. There
are three applications/technology elements that come to mind that are
“integrated” to various degrees into RIS, and PACS systems. They are
Voice/Speech Recognition Systems, Document Imaging/Management Systems, and
Third Party Image Rendering Systems (MIP/MPR, 3D). All of these systems work best when they
are integrated into the workflow of the users and are context based. Context
based meaning that the third party application can be launched or used by the
user without having to go to the third party vendor’s application, log on, open
it, find the patient that you were working on and start a new session. The
application simply opens and all of the relevant patient information is there.
There are many vendors who can provide Voice, Document, and Rendering apps. In
order for all of these systems to connect and work fairly seamlessly some kind
of API needs to worked out and supported by the various players. This is
another level of connectivity that must be considered purchasing and supporting
systems. It is beyond HL7 or DICOM interfacing. The requirement is that all of
these systems, even though provided by different vendors, must fit intimately
into the user workflow and interoperate as seamlessly as possible.
And let’s not forget that since these systems
are from different vendors that when software upgrades occur, the changes made
to one of the systems may negatively impact that performance of another. And
hence the customer must consider the requirement of pre-testing the software
upgrade prior to moving into production environments. So the connectivity is a
living breathing dynamic thing.
As Jim says, “some more grist for the connectivity mill.”
Remote Monitoring and Disease Management Gets Boost from Dyson
Health care guru and blogger Matthew Holt reports on Esther Dyson's comments at the CDHCC conference.
I asked her what VCs should be investing in. She suggested
management of the chronically ill, such as compliance reminders, and
products for women and family aimed at pregnant women and those with
newborns.
Given that she’s spending a lot of time holding conferences on
personal health records, Esther was asked about her vision for
them….but more interesting was who was going to win. She said health
plans were not trusted. We need something like banking system. She
thinks that employers might be the driver of this. They're well
positioned to be the key. In the end its the consumer who has access,
they'll assign permission to providers and insurers to access that
record. Each patient will have broad records, that will cut out lots of
inefficiency, and pay up quicker. Then add data for researchers which
will improve health care, even without changes in legislation.
Even with the scarcity of reimbursement, I think management of the chronically ill is a better bet than personal health records.
