A Market for Practicing Innovation

Greg Gillespie, Managing Editor
Health Data Management Magazine, 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."

At Arizona Oncology Services, the increased flexibility has made previously onerous tasks relatively mundane, says Tim McKeough, COO at the 21-physician, 12-site practice in Phoenix. Arizona Oncology in 2003 implemented a combined practice management/electronic records systems from NextGen Healthcare Information Systems Inc., Horsham, Pa.

One area where improvements are particularly striking is reporting capabilities, McKeough says. Running anything other than "canned" reports used to require McKeough to hire a programmer or rely on the vendor to develop a programming script to pull together data in the practice management system. The flexibility of the new system's architecture enables him and his staff to design their own reports and extract the information in hours, instead of waiting days for a third party to do it.

"Enhanced reporting functions are extremely important, especially when you have added the electronic records component and have a database of clinical data you can analyze," he says. "I've seen a lot of vendors over the past three years focus on improving how their software filters data and enables practices to add unique data elements to reports. They've started to understand how important it is for those running the business operations. Those capabilities-and the level of commitment by vendors-weren't there in past generations of software."

The improved connectivity of the group's practice management software also has made it easier to maintain the software, McKeough adds. Software upgrades and maintenance tasks now can be done via a secure Internet connection instead of having the practice's staff download the software from CD-ROMs. In addition, the upgrades can be scheduled to automatically take place at night or during the weekend.

"Upgrades used to require us to take the practice management system down for half a day, and we had to pay staff overtime to come in to do it," he says. "The software architecture makes it easy and fast to upgrade without having to shut down our clinical operations. The software improvements pay off in a lot of ways."

Custom job

The higher levels of service that group practices are getting is in large part a byproduct of the market's increased competition, says Vinson Hudson, president at Jewson Enterprises, an Austin, Texas-based health care research and consulting firm.

Perhaps the best example of improved customer service is systems migration, he says. Many practices that want to implement an electronic records systems are loathe to tear out their old practice management systems because of the difficulty and expense of moving their legacy data. But vendors of integrated practice management/electronic records packages are starting to offer to do migrations for little or no cost, Hudson says.

In addition, vendors are starting to customize their products for medical specialists. Some companies focus their products exclusively on niche markets such as cardiologists and orthopedic surgeons, but more "mainstream" vendors are offering to embed specialized content and templates into their products to increase their market reach, he says.

"There's more software being aimed at specialists-at least specialists who have money," he says. "In fact, some of these products are not integrated practice management/electronic records products, but practice management systems that are embedded with clinical technology instead of a distinct, `full blown' records system."

Selling point

With many well-designed systems on the market, customization is an important selling point for group practices, says Garrett Doss, practice administrator at OB/GYN South P.C., a six-physician group in Birmingham, Ala.

Two years ago the practice decided to ditch its antiquated, "green screen" practice management system and purchase an integrated practice management/electronic records system. After winnowing its search to two products, the practice decided to purchase the system-from Carrollton, Ga.-based Greenway Medical Technologies Inc.-that had more content and templates designed for OB-GYN specialists.

Embedded templates might seem a small factor in such a large purchase. But having pre-loaded, specialized templates was a component of the practice's larger effort of automating clinical and administrative workflow, Doss says.

"When we used our old system, only a few people in our practice actually `touched' the application," Doss says. "Now, in large part because we've added an electronic record, virtually everyone is using the software. Templates were very important to us because we asked our physicians to automate their workflow, and to do so we had to ensure the change was as smooth as possible and that the coding and other billing information was right for the administrative side."

The stars seem to be aligned for buyers and sellers in the practice management market. Increased demand has led to an increased supply of well-designed systems, as well as the improved quality of vendor support and service.

However, large and medium-size practices-and specialty practices-are getting a disproportionate share of those benefits, contends Hudson, the consultant. Small family practices with one to three physicians "are being ignored" by vendors, which is a concern because of the amount of care provided by small groups, he says.

"Vendors have not figured out how to make money in that market, so small family practices still don't have a lot of technology options," Hudson says.

Tough nut

What makes the small practice market such a tough nut for vendors to crack is the expense of providing hands-on services to small groups, says Ken Kark, director of sales and marketing in the physician solutions division at Atlanta-based NDCHealth Corp. The division markets practice management software to the small practice market, but relies on a network of 400 value-added resellers to reach the majority of those clients.

"We couldn't reach the market with a direct sales model because of the expense of providing support on a local level," he says. "Our resellers themselves are typically very Mom and Pop businesses, and they can provide the hand-holding and the coaching small groups need. But it would be impractical for us or any other vendor to staff up to handle such small implementations."

However, small practices could have more options if more vendors start offering practice management software via the application service provider computing model, Hudson says. The ASP model enables organizations to "rent" applications, data storage and other services via the Internet. The advantages are lower monthly costs and eliminating the need for a practice to maintain applications in house.

"There are a few companies offering very good ASP products, and the model could be a boon for small practices that don't have a lot of money or technological expertise," Hudson says. "There are significant concerns with the ASP model, especially the fact that data resides outside the practice. And ASPs might be more expensive in the long run than purchasing software. But there have been a lot of improvements in the ASP market, just like there has been in the broader practice management market."

Works in progress

While the offerings on the practice management market have improved, the software still has room for improvement, experts say.

McKeough, at Arizona Oncology, says that reporting functions and connectivity have improved significantly, but need to be refined.

"I can design my own reports and add unique data elements, but it's still harder to do so than it should be," he says. "I'd also like to be able to more easily link the practice management system with other applications to help track what's going on at all our facilities. The software on the market still lacks the ability to effectively do `global' reporting that enables you to dig deep into your data."

Another area that could be improved is workflow automation, McKeough and others agree. Many systems have some workflow automation capabilities, but they typically don't provide the capability to create very detailed tasks lists that remind staff what they need to do-for example, follow up with a payer about an unpaid claim-and then track if tasks were in fact completed.

"The No. 1 concern for our clients is automating workflow so they can do more work with fewer people," says Kark of NDCHealth. "It doesn't matter if it's a 20-physician practice or a solo practitioner. Everyone wants to find better ways to automatically capture and get data moving through their practice."

Wanting more

OB/GYN South P.C. is an example of a practice that is reaping enormous benefits from workflow automation, but still wants more, says Doss, the practice administrator.

The practice recently went live with an automated lab reporting tool. When a lab order is ordered via the electronic records systems, the tool pulls the patient's demographic information from the practice management system and transmits the order to the laboratory. The results are sent back electronically and attached directly to the patient chart and their billing account.

"This saves us an enormous amount of time, since we don't have to match lab results with patients and we can automatically track whether we received the results," he says.

However, "I would really like to automate the workflow for when we have a test with abnormal results. We can flag those results so the doctors see them immediately, but I'd like to program rules so that abnormal results trigger certain actions for our staff. Setting up those protocols can't be easily done right now."

While practices see some room for improvement, the technology innovations of the past few years, and increased competition in the practice management market, have set the stage for continuously upgraded and innovative software, experts say.

"Vendors are listening closely to what their customers want," McKeough says. "That's going to be their competitive advantage in a market like this."

For more information on related topics, visit the following channels:

• Group Practices