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Stuart Garfield
Wednesday, December 2, 2009
Most health IT firms still waiting for stimulus funds
By Julie M. Donnelly
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When President Obama’s $19 billion electronic health records initiative was announced in February, as part of the American Recovery and Reinvestment Act, Paul Grabscheid, vice president of strategic planning of Intersystems Corp. said the company planned to hire 100 workers as a direct result of the economic stimulus funds. Today, the company has met that promise, and then some — adding between 150 and 200 workers by the end of this year, to its initial 800-person team.
But Grabscheid said that the stimulus package hasn’t been the driver of that growth.
In fact, much of Intersystems’ new business has come from outside the United States. Projects in Chile and Europe have moved forward quickly, he said, in part because those countries have national health care with centralized information systems, rather than the fractured, complex patchwork we have here.
Grabscheid said that the “stimulus effect” has been slow to materialize. “Inside the U.S., what we’ve seen is a lot of interest and activity and pent-up demand, ” Grabscheid said. The ARRA does not begin offering incentives to doctors and hospitals to implement electronic medical records until 2011, and providers are waiting for guidance on so-called “meaningful use” rules, which are expected to be finalized next month.
The rules will tell providers what they need to do in order to be considered in compliance with “meaningful use” of electronic medical records, which will determine eligibility for reimbursement incentives from government health programs. These incentive payments begin in 2011 and gradually decrease. Starting in 2015, providers are expected to have adopted and be actively using a certified electronic health record, or EHR, that complies with the “meaningful use” definition or they will be subject to financial penalties under Medicare.
“To some extent the stimulus is having the opposite effect,” said Arthur Young, CEO at Natick-based Interbit Data Inc. “Customers are holding back from buying products, while they wait to hear the final guidelines.” Young said his company has done some new targeted marketing of its products, to help reassure providers that the applications will conform to the “meaningful use” rules. Interbit’s products are designed to help hospitals reach interoperability goals by translating health data from many different sources into one common language, a type of technological Esperanto called HL7.
The company partners with Westwood-based Meditech Inc. to provide complementary products and counts Cape Cod Hospital, and Newton-Wellesley Hospital among its customers. Young said he expects the company’s revenue for 2009 to be $2.5 million, up from $2.1 million in 2008. But he expects business to ramp up in the coming months after the final guidelines are released. Interbit is also looking at introducing new products to capture some of this opportunity next year.
Andover-based Sentillion Inc. is one company that is starting to feel the benefits of the legislation. One of the company’s products provides doctors with single sign-on access to all of the different electronic medical records applications, whether it’s for the laboratory or the radiology department.
“Doctors have to access different applications up to 60 times per day. Imagine how much time it takes if they have to constantly enter new passwords,” company president Paul Roscoe said. Sentillion has been growing slowly. But he plans to add 25 to 30 employees in 2010. The company will roll out new versions of products that include functions that will increase their “meaningful use” quotient.
Sentillion also is seeing growth in sales of its Privacy Auditor. Roscoe believes this is because of the requirement, set to go into effect in September, that hospitals alert a patient within 60 days if his or her electronic health records have been breached.
One company that has seen the dam burst is Wakefield-based Picis Inc., which provides electronic medical records for acute-care areas, including emergency and intensive-care units.
CEO Todd Cozzens said that until the third quarter of 2009, his company was seeing the same kind of pent-up demand as other firms. “Since then we’ve had a tremendous surge,” he said. “Our order book is filling up.”
Picis has hired 80 employees this year, and plans to continue hiring in 2010. Cozzens expects to see growth of 10 percent to 15 percent next year. Cozzens said one factor in Picis’ early success is that some of the company’s products are specifically designed to help hospitals capture additional revenue, an attractive proposition during the recession.
Other companies say they didn’t expect an immediate boost from the stimulus, and that has been more important to get EHR implementation done right, rather than rush the process.
Interbit’s Young said he knows his time will come. “Every time there is a new regulation, it’s a chance for us to make money,” he said.
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