Philips Acquires Emergin
Philips announced this week that they have acquired private health care IT vendor Emergin for an undisclosed sum. From the Philips press release:
transmit medical alarm signals throughout hospitals. The transaction is
expected to close in the fourth quarter of 2007, upon which Emergin will
become part of the Patient Monitoring business unit within Philips
Healthcare sector. Through this acquisition, Philips will expand the use
of information technology in healthcare - and
specifically in its patient monitoring business -
to improve patient outcomes and help hospitals work more efficiently.
Philips Healthcare CEO, Steve Ruschowski, brags on Philips' number one position in the patient monitoring market, and notes that the addition of Emergin will provide the means to address a long standing unmet market need – alarm notification. Sure, Ruschowski's not that direct, he refers to, “solutions that help them access the critical
patient data that our monitors provide, quickly and flexibly throughout
the hospital.” Same thing.
It seems that Philips is thinking that the Emergin acquisition fills a very specific gap:
notification software helps ensure that critical information is sent
rapidly to the right caregiver on the personal communication device of
their choice - be it a pager, wireless
telephone, PDA or LED sign. Emergin
software has wide acceptance among hospital chief information officers
(CIOs), who increasingly play a central role in the purchasing decisions
at hospitals. The acquisition of Emergin will enable Philips to
integrate the functionality offered by Emergin
software directly into Philips' current and
future patient monitoring products. Philips also expects to capitalize
on Emergin's strong relations with hospital
CIOs. Philips has a leading position in the global patient monitoring
market, which in 2006 was estimated to be approximately EUR 2 billion or
approximately USD 3 billion.
I guess that the first thing Philips will do is get premarket approval for Emergin's software for alarm notification. It's one thing for a small entrepreneurial software company to claim their product only provides “secondary” alarm notification, it's another when you're a big medical device company. Philips also realizes that alarm notification without a sample of the waveform that generated the alarm is of limited value. Displaying waveforms with the alarm appears to be the line drawn in the sand by the FDA; “secondary” alarm notification without waveforms will not be noticed, alarm notification with a waveform get you a lot of notice (just ask Cisco). Besides, Philips doesn't want any more of these.
The quote above also hints are a mid to long term vulnerability for Philips. Patient monitoring is a sorely undifferentiated market, and numerous big and small competitors will be entering the field over the next few years. Philips has the broadest, most up to date patient monitoring product line. But Philips will need more than their shiny new patient monitors to beat this competition. Future continuation of hospitals standardizing on one patient monitoring vendor will be dependent on delivering some real enterprise value. They are way behind with the solutions required to provide an enterprise solution that the market needs, and the Emergin acquisition will go a long way to fill that gap.
Post acquisition, Philips would be crazy not to continue an independent
Emergin distribution strategy. Only by actively selling Emergin's
solution, independent of patient monitoring sales, will other device
vendors be compelled to maintain integration with Emergin. Think back
to DataCritical. Their alarm management solution, StatView, got a lot of market traction – and a 510(k)
- and was resold by GE, Philips and others. After DataCritical was
acquired by GE Healthcare, vendors reselling StatView slowly evaporated.
Philips (then Hewlett-Packard) has apparently learned a lot from their Heartstream debacle. The brain drain that resulted from moving the company from McMinnville, Oregon (in the heart of the Willamette valley wine country) to the Boston suburb of Andover wrung a lot of the value out of the deal. The ATL Ultrasound acquisition was handled much better. Plans are to leave Emergin in their Florida digs. Senior management has probably signed the obligatory “we'll stay around a few years” contracts to help ease the transition.
More important questions will revolve around distribution strategy and product strategy. You'll note that the press release mentions Emergin's relationship with hospital CIOs, but says nothing about the many relationships it has with other medical device vendors. Emergin acts like the Switzerland of the point of care, integrating with everyone on an equal basis. Yet cooperation between direct competitors is not done among medical device vendors. While the Philips and GEs of the world dream of hospitals dominated by single vendors, we still live in a heterogeneous market. How Philips balances the de facto proprietary end-to-end product strategy with a product like Emergin's will determine how much value they can get from this transaction (and for how long).
For Emergin competitors this is good news. Until now, the big medical device vendors have withheld cooperation from other medical device middleware vendors like Globestar and Ascom because Emergin had the critical mass of vendor interoperability and they wanted to conserve R&D resources. Now vendors will be scrambling to secure compatible alternatives to their biggest competitor's offering. This news should be a real plus for a more clinically oriented competitor like Cardiopulmonary whose value proposition has been reinforced by Philips' move. Others, including Global Care Quest, LiveData, Nuvon and even Sensitron can claim a certain validation for cross vendor/cross device connectivity.
For hospitals, this is a mixed blessing. How Philiips balances the Dr. Stranglove compulsion towards proprietary systems and the open interoperability Emergin offers will tell the tale. (It's almost too bad that a health care IT vendor like Cerner or McKesson didn't buy Emergin.) Workflow automation at the point of care is difficult just because so many things are interrelated. Initiatives like wireless communications, meds administration, charting, alarm notification – all of these impact multiple systems, and there are no single vendor solutions. Heck, you can't even buy vents, pumps and patient monitors from one vendor. Hospitals should walk slowly, buy when there is a clear ROI matched with a released product, and take vendor roadmaps with a grain of salt.
Pictured right is a view from Emergin's integration lab.
Medsphere Settles with Cofounders
For those of us interested in new business models and open source software, Modern Healthcare has a nice overview story the evolving relationship between Medsphere and the open source movement.
in Orange County (Calif.) Superior Court against the Shreeves and 20
other unnamed defendants, alleging – among various
complaints – misappropriation of trade secrets, breach of contract,
breach of duty of loyalty, violations of the Racketeer Influenced and
Corrupt Organization Act, commission of computer crimes, intentional
interference with contract relations and unfair competition. The
Shreeves' employment at Medsphere also was terminated, though Steve
Shreeve remained on the board.
In November, the Shreeves filed a countersuit against the company, its
then-CEO and board chairman, Kenneth Kizer, and other officers.
At issue was the posting in early June of Medsphere computer code to
SourceForge.net, a popular Web-based platform for open-source
development projects. At the time, in addition to his position on the
board, Steve Shreeve was the company's chief technology officer and
Scott Shreeve was its chief medical officer.
You can read a history of the company that Steve Shreeve, posted here
after the Medsphere lawsuit against him and his brother
was filed. Brother Scott Shreeve said after the settlement,
open-source company, dedicated to a transparent development process, a
transformative business process and a clear commitment to openness so
as to engender trust in the community and the marketplace.”
The Schreeves' position aside, there is no litmus test for open source software vendors. All such enterprises derive most of their revenue from services. Some offer software that is fully open source, and some offer software that is mostly open source while withholding some “secret sauce” as proprietary.
When I met with Ken Kizer (former Medsphere CEO and now Chair) at HIMSS 2007, we spoke about Medsphere's tiff with the Schreeves. He noted Medsphere's commitment to open source and the company strategy to retain product differentiation through keeping some software proprietary.
Balancing open source and proprietary software is not easy. A product must be open source enough to attract a community of developers who will contribute to the code base. Your resulting solution, including services, must be sufficiently commoditized (i.e., priced lower) than conventional solutions, otherwise the market will stick with conventional vendors.
The barriers to entry for the software business are low. The biggest barrier to health care IT is the investment required to develop big applications like EMRs and other key hospital information systems. If an application is purely open source, that primary barrier falls away. A fully open source solution also presents product differentiation challenges to a vendor. As an open source vendor, you want reasonable competitive barriers to entry and sufficient differentiation to provide a basis upon which to compete with other's in the open source community.
The question frequently comes down to how much is enough, and when do you go too far?
Web site devoted to open-source healthcare IT where much of the debate
about the Medsphere approach to software development has been argued.
Valdes said Medsphere needs to open up more of its software to be
considered a true open-source developer, including several applications
“that were intended by the Shreeves to be open source.”
“One of them was JUMPS, a Java implementation of MUMPS,” the
Massachusetts General Hospital Utility Multi-Programming System, Valdes
said. Both the VA's VistA system and the WorldVistA version run on
versions of the MUMPS database and programming language.
From the rumors he has heard, Valdes said JUMPS “would be a pretty big
bridge between the MUMPS world and the Java world. If that's going to
be open-sourced, that would be a significant event.”
According to Medsphere's complaint, however, the source code to JUMPS
was part of the June 2006 release to SourceForge that triggered
Medsphere to let loose its lawyers on the Shreeves.
Is the creation of a new development platform on Java an irresistible incentive to attract open source contributors to the VistA code base, or an important product differentiator for Medsphere? Of course, there is no one right way to draw that line. What matters is the result, commercial success or insufficient adoption.
Is Microsoft HealthVault Safe?
Many have criticized HealthVault regarding privacy and security concerns, or perceived limitations of HV as a personal health record (PHR). I suspect that HV is challenged more by the market's perception of Microsoft's long running security issues than with any actual shortcomings of that type in HV. And since HV is not a PHR, but rather a “platform,” criticisms about any lack of PHR features is not relevant.
One topic I've not seen addressed is the safety and effectiveness of the data within HV – and I don't mean “safety” as in the data is secure from unauthorized access or misuse. I mean “safety” as in the utilization of data stored in HV by other applications won't result in an unsatisfactory patient outcome, you know, like death or injury.
Certainly at first blush HV does not fall under the FDA's purview, but things could end up that way. (More on this later.) A key tool mandated by the FDA's Quality System regulation (QSR) to ensure quality and safety is the risk analysis. Any kind of connectivity needs to be thought of with risk analysis in mind – what can go wrong and how can those risks be mitigated?
If HV is more than just an interface engine, pushing data from one application to another, the risks are narrow. Sample risks include: data corruption during transfer into or out of HV, and data corruption during conversion of the data from one standard format into another. Mitigating these risks is straight forward; common data communications techniques to ensure data quality, and design and testing of the HV platform itself to verify data conversions are done accurately and reliably.
What if HV is more than a translator, but a repository of patient data? Most applications have a database that is written, updated and controlled by that application. It is the application that ensures that the data in the database is correct and valid. It is the application that provides the workflow to safely and reliably validate, edit and update data.
How is data quality ensured when various applications can read and write that resides on HV? Let's say data is edited or a calculated value is generated and then rewritten to HV. Does it overwrite the existing data? If there are multiple sets of the same data, how do you know which set is the best and most accurate data? Do you assume that the most current values are correct? What if they're not? What if that “better” data is not rewritten to HV but remains in the clinical information system in which it was generated – and another application comes along and uses the “wrong” data?
HV does track the properties, history and sharing of patient data. It also logs the time received and the source of the data. (You can see more detail in this page from the HV Developer Center.) Is this sufficient? Perhaps. What seems to be missing is the logic that controls the workflow between various applications, both what they do to the data and how they use it. Also needed is a formal verification process to ensure that any logic concerning HV data is implemented properly between applications, which is not mentioned on the HV Going Live! page.
The first red flag for the FDA regarding HV is the Connection Center (CC). Here data is acquired from medical devices, and if that data is to be used in rendering a diagnosis or guiding therapy (clearly the case with hypertension, diabetes and other chronic diseases) then CC meets the legal definition of a medical device. Presently, the FDA does not actively regulate products like CC, although there are examples of standalone connectivity products and features similar to CC that are built into broader based products that have received the FDA's premarket approvals. The regulatory risk for Microsoft is that the FDA could change its position and recall the product until it receives premarket approval. This change could result from political pressure (Congress or advocacy groups), adverse publicity from reports of patient injuries or deaths, or if Microsoft markets HV (or HV CC) in a way that gets the FDA's attention.
Regardless of the FDA's potential interest, the real issue is provider confidence. If Microsoft cannot demonstrate its ability to ensure the safe and effective use of data on the HV platform, then HV will never see much adoption. Such uncertainties could also dissuade vendors from incorporating HV if they feel that providers won't adopt.
There are many important contributions that HV can make to health care, and Microsoft is off to a good start. As a beta product there are still a few gaps to fill.
See previous Microsoft HealthVault posts here and here. Pictured right is the futuristic HealthVault logo.
New Qualcomm Chip Swings Both Ways
Qualcomm released a new 3G chip that supports both EV-DO (Verizon and Sprint) and HSDPA (AT&T and T-Mobile). This will result in radio cards that will run on either technology and provide the greatest choice in selecting carriers.
The chips are apparently targeting laptops and should appear in new laptops by the second quarter of 2008.
The latest technology to join the 3G alliance is WiMax, which the Qualcomm chip (called Gobi) does not support. In the US, Sprint is the first carrier to announce plans to deploy a nation-wide WiMax wireless network.
Pictured right is Qualcomm's QSC6240 chip with integrated radio
transceiver, baseband modem and multimedia processor – together with
power management functionality into a single chip for WCDMA (UMTS)
and HSDPA handsets.
Microsoft Health Vault and Telehealth
Vince Kuraitus and I have a blog post up at the Center for Connected Health, a division of Partners HealthCare. Titled, What Will Microsoft's HealthVault Mean to the Telehealth Community?, the post explores the role Health Vault's Connection Center software may play in the commoditization of remote monitoring solutions.
Today, telehealth applications are based on point to point
relationships: home health agency to patient; disease management
company to patient; health system to patient.
Telehealth devices and their connectivity are similar. There is a
proprietary chain of key components for a remote patient monitoring
(RPM) solution: 1) the RPM device; 2) a gateway — which could be
mobile like the Biotronik Cardio Messenger
or static like a personal computer — to aggregate data from multiple
devices and move data to a server-based application; and 3) the server
application that stores and manages the data in accordance with the
application, e.g., glycemic control, medication compliance, etc.
Be sure to read the whole thing.
eVent Medical Ventilator Incorporates Web Server
The ventilator market is an interesting one – there are many more vendors than in most other product categories, and greater product differentiation between vendors. This is also a product category where hospitals have, for the most part, been unsuccessful in standardizing on a single vendor.
I came across an interesting ventilator vendor the other day, eVent Medical. Their adult and neonatal ventilators are pictured right. Key features include:
- Invasive and noninvasive ventilation
- 5 hour battery life
- Emergency backup compressor
- Integral nebulizer
- Heliox gas support
What intrigued me about their product is the optional web server. The product has both serial and Ethernet network connectivity – obviously, a network connection is require to serve web pages. Remote surveillance has become important as ventilated patients are increasingly placed outside of critical care areas where nurse to patient ratios are lower and the patients covered by a respiratory therapist could be sprinkled widely across a hospital.
This feature suggests certain product architectures that could perhaps support some truly innovative and compelling patient safety and workflow automation features. I hope to learn more soon.
