In speaking recently with industry experts and healthcare IT leaders about the topic of strategizing around vendor contracts (my feature article will appear in our June issue—please look for it!)—I had a particularly interesting conversation with Fran Turisco, a Boston-based principal in the Denver-based Aspen Advisors consulting firm, and one of my very favorite industry experts. Fran has been working with some integrated health system clients lately, trying to help them strategize forward to lay the IT foundations for participation in accountable care organizations (ACOs).
And she had an especially intriguing story to tell me about the work she’s been doing with one integrated health system client in particular. That organization is actively establishing an ACO right now, Fran reports, and her work has specifically been with the hospital. To begin with, as she explained to me, it has required a very in-depth, complex process just to identify which activities the ACO would be engaged in, going forward, including quality reporting, performance measurement, incentives and contract management, and so on.
Then, once the key processes that would be taking place had been identified, the hospital leaders were stunned at what happened when it came to reaching out to healthcare IT vendors, as they began assembling their ACO’s IT infrastructure. The key point, Fran says, is this: “We sent out 18 RFPs and got 16 responses back. And of the vendors that had the majority of capabilities needed—patient portal, provider portal, health information exchange, EMPI, rules engine, cross-care management, business analytics, quality reporting, and ACO/back-office accounting/contract management—all of them had to partner to be able to offer all those capabilities; it was unbelievable. One vendor had six partners it needed to provide those offerings.”
What’s happening now, Fran notes, is unprecedented. And so what are those three things you absolutely cannot get wrong about the emerging vendor landscape around accountable care? Here you go…
Number one is that no vendor—and that very much includes the core electronic health record (EHR) vendors whose products are the anchors for integrated health systems’ clinical information systems—has the full range of capabilities needed to support accountable care organization development right now. There are many, complex capabilities required, and at the moment, the “big-box” vendors (as some call the core clinical IT vendors) are having to stitch together constellations of capabilities, through partnerships with smaller, niched vendors. That is simply the reality of healthcare software development at this stage of healthcare system evolution.
Number two is that, because of number one, above, the need to hammer down optimal terms in your organization’s contracts with software vendors is becoming more critical than ever. Signing long-term contracts that are to vendors’ advantage is developmentally suicidal, in this context. So much will be changing over the next several years, and creating maximum flexibility for your patient care organization, while doing everything possible to hold your vendors to rigorous requirements and deliverables, will be essential in this context. Of course, there’s an art to such negotiations. Please do read my feature on vendor contracts, and hear what Steven J. Fox of the Washington, D.C.-based Post & Schell law firm has to say about contract terms.
Number three flows naturally from numbers one and two, and that is that, clearly, the patient care organization-vendor relationship is going to have to evolve over time into more and more of a partnership when it comes to building the IT foundations for the new healthcare—new reimbursement and operational models that cross sites and modes of patient care, require trans-enterprise collaboration, and demand top-flight data analytics, business intelligence, reporting capabilities, and continuous performance improvement from patient care organizations. Given that our industry is only in its first steps on the journey towards accountable care and the new healthcare, it will take tremendous partnering to develop, organize, and optimize the new IT solutions that will be required to support and facilitate the new healthcare.
We will be discussing precisely these topics, with industry luminaries and pioneers, at the Healthcare Informatics Executive Summit next week in San Francisco. There is still some limited attendance availability; if you’re committed to developing an ACO, a bundled-payment contract, a patient-centered medical home, or population health, this will be a not-to-be-missed event. You can register here.
Meanwhile, what will be absolutely essential for CIOs, CMIOs and other healthcare IT leaders, going forward, will be to let go of the mental constructs of the past, and to think about what kinds of constellations of vendor solutions they might need, say, five years from now, and strategize accordingly. Getting boxed into the vendor contracting and relationship patterns of the past could be devastating, as the train to the new healthcare leaves the station.