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A Market for Practicing Innovation


By Greg Gillespie, Managing Editor October 2005

Practice management technology has been the trusty old plow horse for group practices. The software hasn't moved too fast, and it's often cantankerous, but it keeps grinding away until the bills eventually get paid. But a host of factors-improved functionality, falling prices and the focus on clinical technology-are convincing many practices to put their old technology out to pasture.

In the past two years practice management vendors have been working feverishly to couple their software with electronic records software, either by developing their own records' systems or striking integration deals to offer a combined practice management/electronic records package.

This in turn is leading to a flurry of innovation downstream at the practice management level, experts say, as vendors look for ways to entice practices to ditch their old billing systems and install their larger software suites.

The sudden flurry of innovation is a result of the increased demand from group practices for clinical technology, experts say. Many groups feel the writing is on the wall. Federal and state governments, patients, hospitals and payers are all prodding them to increase automation, using carrots-higher reimbursements linked to I.T. usage-as well as sticks-the impending threat of government mandates.

So for those and other reasons, group practices are in a buying mode, says David Kibbe, M.D., director at the Center for Health Information Technology at the American Academy of Family Physicians, Leawood, Kan.

Practice management vendors are telling the AAFP that their sales on average are running 15% higher than last year, Kibbe says. In a related trend, about 25% of the academy's physician members say they are using an electronic records system, compared with 15% in 2004.

"The number of inquiries we get about how to purchase technology has nearly quadrupled in the past year, and the vast majority of those inquiries are about how to buy an integrated practice management/electronic records system," he says. "There are a lot of instances when a practice is looking for just an electronic records system, but then changes its mind and buys a practice management system as well. There's no doubt that sales are brisk."

Electronic records are driving the growth in the market for practice management systems. But practice management technology has not necessarily become an afterthought. Vendors are adding a variety of new features to the software to automate workflow, increase reporting capabilities and speed up the billing process.

"Group practices that are starting to use electronic records systems are seeing the value of removing the `friction' of information flow, and they're asking why there's still so much friction on the billing side," Kibbe says. "And that's a very good question to ask."

Setting the stage

The increased functionality of practice management systems is in a sense a byproduct of the Health Insurance Portability and Accountability Act, says Tony Arias, president and founder of NCG Medical Systems Inc., Altamonte Springs, Fla.

The oft-maligned HIPAA transaction and code sets rule required many practice management vendors to do major overhauls of their software to handle the new data formats, Arias says. Some-like NCG Medical-used the opportunity of rewrite their applications using more advanced programming languages and software platforms, such as the .Net platform from Redmond, Wash.-based Microsoft Corp.

"Upgraded platforms provide a lot more flexibility and make it easier to add new features on demand as well as embed more functionality into the core technology," Arias says. "That includes making the core technology more Internet and wireless `aware.' Extending the practice management online or to a wireless network was possible with older platforms, but it wasn't easy. These redesigned systems have those connectivity capabilities built in."

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