Cool use of technology

Steve Lohr has an article in The New York Times about a great new use of technology (and the fact that it's an Apple product only makes it better):

There is no silver bullet for reforming America’s health care system, but medical experts have long agreed that digital patient records and electronic prescribing can help improve care and curb cost
It seems straightforward. Just combine technology skills with investment money, and then develop innovative products. But to date, the push for a digital revolution in doctors’ offices has brought mostly frustration for the many companies big and small that are trying to conquer the field.
Just ask the Doerr brothers: John Doerr, the well-known venture capitalist who was an early backer of Google and Amazon, and Dr. Tom Doerr, a physician and software designer.
Dr. Doerr founded a software company in 1999, beginning with an electronic prescribing product and later adding electronic health records. His brother is the largest investor. After more than a decade, the venture has fewer than 500 doctors using its software.
The experience, Mr. Doerr said, has been “a long, slow march.” And Dr. Doerr conceded, “It’s been a lot harder getting to a business that is self-sustaining than I had imagined.”
But the Obama administration’s economic stimulus package contained an ambitious program to encourage the market for electronic health records, with billions in incentive payments to buy and use digital patient records, and eventually penalties for the failure to do so.
The Doerrs’ software company is only one of many hoping to cash in on the national mandate for digital medical records. The companies range from giants like General Electric to specialists like Athenahealth that cater to small physician practices.
They, like the Doerrs, are betting that the law will help create a turning point for the economics of digital health records, opening the door to rapid adoption by doctors and a thriving business at last.
The brothers are also betting that internet technology and Apple’s iPad can make electronic records far easier to use and less expensive. Last week, they introduced a new product, Nimble, to allow doctors to manage patient information by connecting their iPads to data centers managed by the Doerrs’ software company, ClearPractice.
The Doerrs’ aging start-up is unusual in that it has evolved to extend its reach in health care beyond technology. The lessons it has learned along the way are a microcosm of the challenge of applying technology to health care.
To attack the problem of wayward financial incentives, the Doerrs bought a Medicare Advantage health maintenance organization, Essence Healthcare, in 2007, and shifted it toward paying doctors for helping make patients healthier. It now covers 50,000 people in six states. They also built up a medical analytics software company, which tracks procedures and patient results for payers, enabling them to manage outcomes instead of just costs. The software also mines data to help hospitals and doctors make more informed decisions about treatments. Their target market is doctors in small practices, with ten physicians or less, where digital records are used least. More than seventy percent of the nation’s doctors are in such small practices.
The Doerrs’ three companies are part of the Essence Group, based in suburban St. Louis, not far from where brothers grew up. Dr. Doerr, 53, is co-founder and head of clinical strategy of Essence, and Mr. Doerr, 59, is the largest shareholder.
Though a small private company, Essence has attracted the attention of some experts. Intrigued, Dr. Denis A. Cortese, former chief executive of Mayo Clinic and a professor at Arizona State University, joined the Essence board two months ago. It is trying to bring to small physician practices, he said, the kind of health care championed at Mayo. “These guys may or may not be successful, but they’ve got the right ideas,” Dr. Cortese said.
The goal, Dr. Doerr explained, is to deliver the better care and lower costs achieved by some large health care groups without being one. Essence, he said, is trying to combine technology tools, cooperative relationships between doctors and insurers, and financial incentives to create the “virtual equivalent” of an integrated system.
The goal also, of course, is to make money. Essence, though, does not have the look of a big winner anytime soon. It has 330 employees and yearly revenue of about $450 million. But the vast majority of the revenue comes from the Medicare insurer, which is like a regulated utility with modest profits.
If the Doerrs’ venture is going to become a money-spinner someday, it will come from software, a business that can grow rapidly and profitably, if successful. For its new offering, ClearPractice worked closely with Apple to develop the Nimble, a service tailored for the iPad.
Using Nimble, doctors do not need other computers in their offices, since most of the software and patient information resides on remote computers in data centers managed by ClearPractice. A doctor’s iPad connects to the patient data and software wirelessly, over the Internet, as if in a computer “cloud,” as this fast-growing model of computing is known.
Doctors pay a subscription fee of up to $499 a month if they choose all the ClearPractice offerings: electronic prescribing, electronic health records, and billing software.
“With the right software that is cloud-based, the iPad is going to be transformational in health care,” Mr. Doerr said.
The right technology, medical experts say, can potentially overcome two major hurdles to the adoption of electronic health records by doctors: cost and complexity. Those obstacles are most pronounced in the market of doctors in small practices that the Doerrs are pursuing.
About one in five doctors now uses digital health records. But the percentage is far lower in small practices, while in larger, integrated health groups— Kaiser Permanente, the Mayo Clinic, and others— all use digital records.
The larger groups are big enough to afford the investment in electronic records, training, and technical support. But they also use the electronic patient data as a tool to better manage patients with chronic conditions like diabetes and heart diseases, so they are healthier and less apt to require costly hospital care. The groups use that performance-improvement data to market themselves to insurers and employers, and many are insurers themselves. So they have considerable economic incentive to use electronic records. Yet such larger groups provide less than fifteen percent of health care in America. For the rest, the dominant economic model is fee for service. The incentive is for more of everything: more visits, more tests, more pills, more surgeries. The sicker the patient, the more lucrative.
For Mr. Doerr, his private health care venture has been an education. “Our health care system,” he said, “is an absolutely dysfunctional circle where none of the participants— patients, payers, or providers— are linked together in any kind of rational economic system.”
Until recently, doctors in small practices had no incentive to invest in electronic health records. They would bear the costs, but savings would go to insurers. But, with the federal stimulus package, the economic barrier will be lowered. The government plans to spend $19 billion in incentive payments, up to $44,000 per doctor, and gave practices five years to adopt electronic records before penalties begin.
As an investment, Essence is a world apart from the classic Silicon Valley venture-capital mentality of finding the Next Big Thing. Mr. Doerr, who joined Kleiner Perkins Caufield & Byers three decades ago, has done that as successfully as anyone.
“Health care is a complex system, where the improvements and effects are felt over time,” said Esther Dyson, an analyst, investor and friend of Mr. Doerr’s. “So in that sense, this is very different from conventional venture capital investments. It’s not going to take off quickly.”
Still, at the headquarters in Maryland Heights, Missouri, Mr. Doerr’s team is thinking big. The chief executive of the Essence Group is Frank Ingari, who has known Mr. Doerr for twenty years, and headed a computer networking company that Kleiner had backed and helped take public. Mr. Ingari, who is working Silicon Valley-style 80-hour weeks, speaks of health care technology as a “tremendous opportunity” both as a business and as a benefit to society. “This is a missionary endeavor,” he said.