"Dateline: April 3, New York, N.Y.: Microsoft makes a play for Allscripts, then failing that attempt, pursues Kaiser Permanente to create an exclusive EHR-PHR agreement with the pre-eminent managed care behemoth. Allscripts independently cuts a deal with a large health care company to expand its sales force to aggressively penetrate the 80%-plus physicians who currently do not use EHRs."
Almost none of this has happened yet -- except within the confines of a war game used to stress test company strategies in the rapidly changing electronic health records industry. This war game, "The Battle for Healthcare Information," took place this spring, employing savvy health care-experienced business school students from Columbia, Kellogg, MIT and Wharton business schools. They formed teams, representing a variety of EHR players: Allscripts, Kaiser Permanente, McKesson and Microsoft.
If this war game proves as prescient as past public simulations, then expect most of the following predictions to become reality:
- EHR adoption will come more slowly than expected. Entrenched interests will continue to resist EHRs. Health care system change, engendered by EHRs, means that some interests will win dollars while other traditional players, such as hospitals, may lose -- and no one wants to lose.
- A shortage of technical manpower will slow down implementation of EHRs, no matter how much money is thrown at it.
- The "pure players," such as Allscripts (as well as Cerner, Eclypsis, Epic and a half-dozen others) likely will be acquired in the next few years.
- Small medical practices will band together. The market that is driving efficiencies, such as EHRs and other scalable solutions, will act as a catalyst to force small medical practices to band together or merge in the next few years.
- No more "walled gardens". Health plans will be forced to untether their records. Tethered patient health records (PHRs) will become historical artifacts.
War Game Defined
What is a war game? It's a disciplined series of exercises designed to stress test company strategy. It does so by introducing today's economic reality and constraints rolled together with fact-based background on all the players, mostly competitors.
Fuld & Company has conducted scores of war games for a wide variety of global companies in the health care industry and can report that nearly every game splashes reality before the company sponsoring the executive exercise, often modifying or dramatically changing the way it thinks about its market today and in the future.
At our day-long public war game, we introduced the Porter Five-Forces, Four-Corners strategy model (Michael E. Porter, Harvard Business School) and asked each team to characterize itself based on this model. Each team huddled for two hours and then presented its future strategy. The other teams, as well as the Fuld facilitator, questioned many of the statements made.
Besides stress testing each team's strategy twice, we presented a market disruption that included a Medicare stepped-up regulation and a coincidental IBM-Epic merger.
The result of the stress tests and the disruption forced each team to rethink its strategy from its own capabilities, as well as from the rival's perspective and that rival's potential damaging moves.
Do Your Homework
A key point when considering staging a war game or strategy game: Do your homework. You need to do research on each of the companies whose roles you will play or test during the exercise. For this event, we researched and wrote a 60-plus page briefing book, which supplied all the fundamental information each team needed to start. In addition, we recommend interviewing a half-dozen to a dozen of the stakeholders in your corporations.
It's important to get the political issues, assumptions and ghosts regarding the "fearsome" competitor on the table in advance. While a facilitator is not supposed to decide for a client, he/she does need to help the players stay within a real market and real competitive issues.
As we replay the war game in front of leading health care institutions around the country, acknowledgement of the game's reality is reaffirmed.
Another important echo comes in the comments on blogs reporting on the game. Doctors, hospital administrators, software designers and a large mass of patients have reacted strongly. Many patients are nervous about privacy issues. Doctors both fear the administrative burden and the potential distancing from patients that this technology will bring. The technology community admits that existing systems will not stand yet cannot see who can break down these tech walls, preventing true universal adoption of EHRs and PHRs.
Lessons From Games
Are there lessons for health IT professionals and the provider organizations they serve? All industries suffer from a few blind spots, and health IT is no exception. This war game shed light on several of the industry's most significant ones and pointed the way to some possible solutions.
Anyone with experience in the field is aware of the digital divide problem. Some respected clinical health IT vendors used to ignore inquiries from physician groups of fewer than 125. Similar reports have been made about vendor responses to inquiries from smaller rural hospitals.
For most of the major vendors, if a provider wasn't a large hospital, an IDN, or a major physician group, the revenue to be gained from sales to such entities wasn't worth the effort. However, the incentives in the HITECH law seem to favor the very customers these vendors have ignored.
It was intriguing to see how quickly the war game participants realized that most of the health IT industry isn't configured correctly to support the strategic intent of the stimulus funding and scrambled to try to address that weakness.
This leads to a second related industry blind spot highlighted by the MBA students: a shortage of trained workers. Estimates suggest that the implementation of HITECH could require up to 70,000 workers, and that the collective health IT industry could have a shortfall of as many as 30,000 workers. Helping the smaller and more rural provider organizations will be labor intensive. Even vendors with good products might fail if they are unable to find qualified help.
The regional extension centers created by the law will help, but they will have to dip into the same limited talent pool to staff up. Entities that want to capitalize on HITECH may need to begin considering whether it will be easier to take individuals who have technology skills and try to teach them enough about health care to be effective in health IT or find individuals who understand health care and try to teach them technical skills. The bottom line is that it is likely to be a strong seller's market for people with health IT skills.
No Vendor Covers All Needs
Finally, the war game pointed out that almost no health IT vendor organization had a product line that could cover the clinical health IT needs of providers, ranging from the largest academic medical centers to physicians in small practice settings. A priority for the MBA students was creating sufficient critical mass in product lines to be able to service the entire market.
Interestingly, the students looked not only at the traditional tools of mergers and acquisitions to solve this problem, but also at alliances. This suggests that all sorts of business development and cross licensing efforts will be an active area for strategically focused health IT vendor firms.
Perhaps business minds not so steeped in the health IT industry can expose truths to those who have been part of the health IT movement for years.