GUERRA: HIMSS Analytics recently issues a report called, “State of US Hospitals Relative to Achieving Meaningful Use Measurements.” What was the motivation behind that report? Are you trying to help the hospitals, send a message to the politicians, or both?

DAVIS: Well, it was mostly to let the market know, especially the hospitals, what the industry looks like, so that they could understand where they stood and how much work they were going to have to do. The thing that we probably did in the report is validate the approach ONC is taking because, from what we can see right now, they’re going to be pretty loose in their interpretations of some of the measurements in 2011. And I think that’s appropriate because what they want to do is give people a taste of the money.

2013 is going to be a pretty difficult achievement for many hospitals, because in 2013 you must have not only CPOE up and running with most of your physicians but you must have closed loop medication. And so, as you look at our model, and as we’ve been studying that model and applying it to the industry over the last four years, what I can tell you is that when we did the evaluation of Stage 6 or Stage 7 hospitals, 90 percent will tell you that the closed loop is probably one of the toughest steps.

GUERRA: What is it about the closed loop that’s so difficult?

DAVIS: There’s two parts that make it difficult, other than the capital expense. The first one is that it disrupts the workflow of the physicians and the pharmacists and the nurses. So you’re having to reengineer, or do the change management, for all of those clinicians as part of that process.

Number two, they need to integrate the barcode or RFID technologies and, right now, I’ve only seen one hospital using similar RFID, and I don’t know if they’re even doing it anymore, but integrating the barcode technologies into that internal process is key. Pharmacy has to create the barcode for the medications and dispensing, the patients have to be bar-coded, you’ve got to do the whole thing where you’re scanning the medication, the patient, and then tying that all into clinical-decision support so that you’re managing the five rights of administration. It’s a big step.

GUERRA: So 2013 is going to be very tough.

DAVIS: Yes, I think 2013 is where they really must have their act together and, right now, we see challenges in the following areas. One is getting physicians onto CPOE, especially if you’re a hospital working with a lot of affiliated physicians and not necessarily residents or physicians that are on contract. Turning the tide may be the fact that many hospitals are hiring hospitalists, and that’s having an impact because part of the contract will be they have to use CPOE. I think that really helps adoption.

One of the things that we track right now is the percent of all medical orders being entered by physicians when we’re looking at the Stage 6s and 7s. The Stage 6s right now, they can vary anywhere from about 10 percent up to 70 percent. For Stage 7s, most of those hospitals have 90 percent+ of all their medical orders being entered by physicians. And that has a huge impact. When they first turn on that closed loop, they start to discover errors they never ever knew existed. So I think – from the standpoint of what ONC is doing with meaningful use – they’re doing a very good job. I like the approach they’re taking. I think, for 2011, they’re being very pragmatic. For 2013 and 2015, they’re going to ratchet up the requirements.

GUERRA: Under the 2011 measures, you write about the importance of nursing documentation and you used the word clinical documentation, you specify physical therapy, respiratory therapy, but you don’t talk about physicians. From the meaningful use matrix, it’s clear they want 10 percent CPOE, but it’s unclear if that’s 10 percent of clinicians or 10 percent of physicians. 

DAVIS: Well, I think it’s a little bit nebulous by design. The way we interpret that is they want 10 percent, which can include MDs, RNs, physician assistants, or nurse practitioners, so again, very pragmatic.

GUERRA: So you don’t need 10 percent of your physicians? You need 10 percent of your eligible clinicians, which means you may not need any physicians to qualify.

DAVIS: Well, I think that’s the part where they’re being pretty open. That’s why they included all those different clinicians. Our interpretation is that, for 2011, they’re just trying to get some advancement of CPOE use.

GUERRA: Right and, theoretically, you can get the clinicians that are employees of the hospitals onto CPOE much easier than the independent docs.

DAVIS: Yes. In fact, one of the elements we’ve looked into here is that in the smaller community hospitals or critical access hospitals many of those decisions were not made with input from the clinicians. They were made because the solution chosen was the cheapest. The CFO was trying to watch the bottom line.

So in this environment, where you now must get buy-in from the physicians and the other clinicians, there may be some opportunity for those clinicians to demand that they be include in the system selection process. They may get to say that the system purchased wasn’t the right one.

GUERRA: I’ve spoken to IT directors at small hospitals who say they’ve done everything in their power to get independent doctors involved in the system selection process, but no one showed up. It works both ways, doesn’t it? 

DAVIS: Yes. There’s definitely going to be instances where your scenario applies; there’s no doubt about that.

Going back to the original question about documentation, when you look at 2011 and the stuff they’re trying to get to – the hemoglobin A1C and the smoking cessation, are they on statins if they’re hyperlipidemic and all those good things – a lot of that is captured in nursing documentation.  And so that’s why we’re looking at Stage 3 saying, “Okay, if you’ve really got the nursing documentation stuff implemented, there’s a lot of this reporting requirement that’s going to be captured by those systems.” And so that’s why we’re saying, by 2011, if you really have nursing capabilities, or those applications implemented across most of your services, then you should be in pretty good shape.

And then it goes back to figuring out how much of that 10 percent CPOE really has to be physicians. And again, we’re saying that it’s open to all the other clinicians, so it gives them latitude.

GUERRA: When you get under a certain size, hiring hospitalists is not an option, correct?

DAVIS: Yes. I think when you get probably below 150 beds it becomes more of an issue. It’s definitely an issue for critical access. That’s part of the market we watch pretty closely because that’s over 1,200 U.S. hospitals. So the question is how do critical access hospitals really dive into this challenge?

We finally got our first critical access hospital to Stage 6, but that hospital is actually part of a consortium of hospitals. It’s very interesting. A group of critical access hospitals created their own data center so that they would have more buying power. They were able to create an environment where they can have much better IT support capabilities. So that’s one thing we’re watching – we think you’ll see more of these consortiums rise up among smaller hospitals.

The other thing we’re seeing is many of the larger hospitals, integrated delivery systems, are starting to extend their IT services out to these smaller facilities. In some cases, they’re actually starting to create a service around their IT for these smaller hospitals, saying, “We’ve already got this up and running. We can show you how to implement this. We’ve got our own data center. We can help support you.”

So I think, at the lower end of the market, you’re going to see a lot of solutions that are based on software as a service, remote hosting, application service providers, whatever acronym you want to use. I think you’re going to see that.

Part II