Health-Care VARs Win With Electronic Medical Records Solutions

A solution provider in the health-care field, of course, implementing and supporting electronic medical record (EMR) systems in physician offices in 30 states. "It's a challenge and it's a lot of work," Pisutha said. "I think there's a lot of opportunity, but it also takes a lot of investment."

It's an investment that's beginning to pay off for those solution providers like Pisutha's Dardenne Prairie, Mo.-based Curas that are now pursuing the EMR market. Outpatient physician offices, those with a single doctor to group practices with 10 or 12, remain one of the least automated, most paper-intensive professions.

While many use computer systems for tracking patient appointments and billing, only 10 percent to 20 percent of the 200,000 physician offices in the United States with 10 or fewer doctors have installed EMR systems, also known as electronic health records, used to maintain patient medical information such as notes from doctor exams and surgical procedures, test results and prescriptions. But that's changing.

"EMR has got to be 35 to 40 percent of our business," said Sandy Higgins, sales and support vice president of Computer Zone, a Rockingham, N.C.-based solution provider. Computer Zone provides doctors with a range of IT services and applications including physician office automation systems (such as patient scheduling and billing) and, starting six years ago, EMR.

"I see in the next five to 10 years you'll see and#91;doctorand#93; offices installing EMR the way they have electronic billing today," said Robert Ontolchik, president of Maritec Medical Systems, a Westlake, Ohio-based solution provider that implements EMR and office automation systems in physician offices in Ohio, Michigan and California. "There's tremendous potential for EMR," he said.

A Growing Market

The electronic health record IT market is growing 15 percent a year, according to market researcher International Data Corp., and will reach $4.85 billion by 2015. EMR applications designed for physician offices can start as low as $5,000, but generally cost at least $20,000 and can run up to $50,000 or more, Ontolchik said.

A combination of forces is driving the demand for EMR systems. Government policy and regulations are one factor.

One of the biggest drivers has been legislation that allows hospitals to help physicians cover part of the cost of implementing EMR systems. The legislation, passed by Congress in August 2006 to encourage EMR system adoption, permitted hospitals to help fund up to 85 percent of the cost of EMR technology purchases by physicians in their service areas without incurring penalties under the 35-year-old Stark antikickback statute.

EMR system adoption is also being driven by such government programs as the Medicare program's Pay-for-Performance ("P4P") initiative that rewards doctors for improving the quality and efficiency of the health-care services they deliver. Electronic health records are seen as critical to meeting P4P goals because they improve physician office efficiency and reduce record-keeping and prescription errors. While the Health Insurance Portability and Accountability Act doesn't mandate that physicians adopt EMR systems, several software vendors and solution providers said that complying with HIPAA without EMR is difficult at best.

Doctors are also under pressure from health-care insurers to reduce expenses. "Clinics are trying to cut costs because the insurance companies are reducing reimbursements," Higgins said. By reducing clerical errors, EMR systems can improve cash flow by speeding up insurance reimbursements. They can even increase clinic-related revenue because some health insurers won't pay for tests or procedures unless properly documented.

But perhaps the biggest drivers are coming from within the medical profession itself. Physicians, solution providers say, want to deliver higher quality care and spend less time on time-consuming administrative paperwork. "I've had doctors tell me they can cut an hour out of their day using electronic records," Ontolchik said. "That may not seem like much, but for physicians looking to increase the number of patients they can see, devote more time to patients or just reduce the amount of time they spend at work, it can be a major gain."

And while older doctors can be notoriously technophobic when it comes to computers, EMR vendors and solution providers say a new generation of doctors who grew up with computers and were trained to use EMR systems in medical school is changing that demographic as they join group practices or start their own.

Different Paths

Solution provider execs have followed different paths into the EMR market. Pisutha, who worked at Microsoft VAR Quilogy Inc., St. Charles, Mo., in 2004, co-founded Curas after a conversation with a physician friend who complained about all the paper forms he had to deal with during his residency. "It sort of planted the seed in my mind," he said.

Wesley Gipe was mulling the idea of applying to medical school in 1999 when he founded Agilit, a Troy, Ohio-based solution provider, as a way to earn money to pay for it. "The more I learned about the state of IT systems in health care, the more I recognized the opportunities there," he said. He never did get to med school.

All of which raises the question of how much medical expertise a solution provider needs to succeed in this market. Surprisingly, the answer is not much. Some say expertise with business processes and workflows is more important than specific medical industry knowledge.

Before starting Computer Zone, Higgins was the manager of a physician office where he oversaw the implementation of an EMR system. He also managed IT for a credit union. "Since I saw both sides of IT, it just became a real good niche for our company," he said. Maritec employs two people with physician office expertise. "You really, really have to develop an understanding of how a medical office operates," Ontolchik says.

Pisutha said that when starting Curas he and his partner spent the better part of a year just talking to physiciansand#8212;including family friendsand#8212;and sitting in their offices to study their work processes. Curas employs people with experience working in physician offices and people with workflow implementation skills.

The combination is needed, for example, when installing EMR for ordering lab tests and following up with the patient with the results, scheduling treatments and medical procedures, and issuing prescriptions. But Pisutha said finding people with the right mix of skills can be tough, and it can take a year before they are familiar with the EMR technology.

"We want to fulfill the role of technology adviser," Pisutha said. Once the trust of a physician is gained, "the rest of it becomes pretty easy."

Big Challenges

That's not to say selling EMR systems to physicians is a cinch. Adopting such technology, which one VAR described as "mini ERP and#91;enterprise resource planningand#93; systems for doctors," is often a big leap for many physician practices. "It's often an education issue," Gipe said. "It's a long sales cycle in health care, longer than the cycle in other verticals we've been exposed to."

Ontolchik agrees. "The biggest challenge is getting these guys to understand what these programs can do for them," he said. One key to success is identifying the critical decision maker, whether it's an individual doctor, a managing board of physicians or an office administrator. (Most offices with a dozen or fewer doctors don't have a dedicated IT person.)

Pisutha said cold-calling sales prospects isn't very effective with physicians. Most of Curas' EMR business is generated by word-of-mouth referrals, so building a reputation within the tight-knit physician community is key, he said.

Because so many of Agilit's clients rely on local hospitals to handle X-ray, CRT and other diagnostic imaging tests, the solution provider forged relationships with two area hospital networks. Being more plugged in to what's happening in hospitals has paid off by adding cachet to the company's consulting servicesand#8212;and to its marketing efforts.

Even the basics aren't easy. Higgins said hardware in many offices is often five or more years old and requires upgrading, adding to implementation costs, and training needs can be extensive. "We're still seeing people who have never used a PC," he said. "Training is probably the most important part of and#91;implementingand#93; an EMR system." No two EMR solution providers follow exactly the same business model.

Some install physician office automation and billing systems along with clinical EMR applications. Maritec, for example, has installed Medisoft patient accounting software (from Per-Se Technologies in Gilbert, Ariz., which was recently acquired by San Francisco-based McKesson Corp.) for some 500 physician clients in Ohio, Michigan and California. Ontolchik says that customer base is the solution provider's foot in the door for the Spring Medical Systems Inc. (Houston) EMR software it resells.

Because so many doctor practices have already implemented office automation and billing systems, that market is becoming saturated and solution providers that sell those applications should consider upgrading to electronic health record software, says Spring Medical CEO Jack Smyth. "These VARs need to protect their customer base and add EHR software like ours to their bag of tricks," he says.

Curas focuses exclusively on EMR, providing a range of services around software from eClinical Works such as system installation and support, project management, data migration, report writing and workflow consulting. If a client requires billing or office automation applications, Curas will bring in other solution providers.

Maritec does a lot of its work remotely and relies on local service providers to support clients' hardware needs. Curas provides client training while others leave that to the software vendor.

And opportunities for adding value abound. Curas has developed a mobile application that allows doctors to access patient records using a smartphone, for example. And Gipe foresees potential opportunities in linking VoIP to EMR for remote access to patient records.

Smyth predicts that for the next few years the 200-plus VARs that resell the vendor's SpringCharts EMR applications will have more business than they can handle. "VARs will have so much work they won't know what to do except go to the bank."