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One-on-One With Allscripts CEO Glen Tullman, Part I

October 15, 2009
by root
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Tullman says hospitals should leverage IT to align with their customers – the independent docs.

As one of the main vendors in the ambulatory EHR space, Allscripts has been getting a lot of calls since HITECH moved the market. But in a change from the past, those calls are not only coming from interested physicians, but from hospital CIOs who want to underwrite licenses for both owned and independent practices. As the vendor’s deal with North Shore Long Island Jewish attests, the sale of ambulatory EHRs is, more and more, moving through the hospital CIO office. To learn more about how HITECH is effecting the sale of outpatient EHRs, HCI Editor-in-Chief Anthony Guerra recently talked with Allscripts CEO Glen Tullman about where he sees the market going.

GUERRA: What effect has HITECH had on your business? Are you seeing a lot of buying or are people just investigating?

TULLMAN: Well, I think we’re seeing both. This has gone through stages. The first stage was a steady state for the industry – this was a nice growing industry before ARRA was discussed and then, right before the legislation was signed, we actually saw a bit of a blip, and that blip came from some of the legislation, including the Snowe-Stabenow Bill, which basically said we’re going to give every physician $15,000 who hasn’t already bought an electronic health record.

Now, that would have been very bad if you already bought one. It would have been very bad for the innovators, and finally, it would have been bad for the taxpayers because it didn’t say anything about using the electronic health record, it said we’re going to give you that money if you buy it. So fortunately, that was changed and the legislation was passed with something called “meaningful use” and it said, “Listen, we don’t care if you already have one. In fact, if you already have one, it’s an advantage. So we’re going to reward the early innovators, as long as you use it and deliver results for the government, for the taxpayers, for the patients.”

And right after that legislation was passed, we saw an immediate increase in sales and interest. And so that was the first blip, if you will. And there, what you had was people were very interested, number one, and we started to see buying behavior increase. That was immediate following this.

Now, there is a group – there’s no question about it – that’s saying, “I want to wait until we see meaningful use finalized.” That will be another step up in the market and then, the next step will be when the first payments go out, because when the first doctor on the block gets a check for $18,000, every other doctor on the block is going to say, “This is real. I have to get going.”

So, we’ve see this move nicely in stages, and that’s very good for Allscripts because it’s given us the time to adequately prepare, hire, make sure the software is ready, focus on our implementation cycles. But let’s be clear – and I think this is evidenced by the strong bookings numbers that we are seeing – there is no delay, there is no pause, people are buying today, and they’re buying at an accelerated rate. In fact, if you look at the North Shore Long Island Jewish deal – that’s the largest deal probably in the country that was done – their interest in rolling out EHRs to over 8,000 physicians and investing their own money in addition to the stimulus demonstrates that the time is now.

GUERRA: Couple of things there. I’m wondering if you think there’s a difference between the buying practices in the ambulatory market versus the acute care market. I say that because KLAS came out with a report a month or two ago that said among the acute vendors, they had seen their weakest sales in years. What’s interesting is that the Long Island Jewish deal is not a purchase by ambulatory practices; that’s an acute care organization offering to subsidize ambulatory licenses.

TULLMAN: Well, there’s no question that those selling to large hospitals have had challenges. These deals – by the usual suspect, the Cerners of the world, the McKessons of the world – have had challenges, and that is because they cost $25, $50, $100 million dollars, and many of them require outside funding sources, whether it be bank involvement or bond issuances or the like. We know that, given the economy, all of that has largely stopped. So it’s completely understandable that part of the business is slowing down, the acute part of the business.

What has accelerated is the ambulatory piece of the business. (1), it’s less complicated, (2) it’s less expensive, and (3), especially with Stark, what you’re starting to see is hospitals are becoming the organizing force in the healthcare information technology sector. That’s because they have the capabilities to manage the technology as opposed to a one or two doc practice who doesn’t really want to deal with all the technology. That doctor just wants to run their practice. And so, clearly, there’s been a major shift in focus and a major shift in spending that’s moved it to ambulatory. That said, there are pieces of ARRA that relate directly to hospitals, and so we’ll see CPOE in hospitals continue to be focused on.

GUERRA: Some CIOs are interested in essentially becoming a vendor or a consultant of services, but some are not. We see both sides. What’s your take?