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If the Shoe Fits: How Much Profit is Too Much?

by Miki Saxon

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mDecades ago computer manufactures, such as IBM and DEC, created closed systems that wouldn’t/couldn’t talk to each other.

Apple chose to keep a closed system for years.

While closed systems seemed to enhance profitability, in the long-run the strategy failed to protect the companies from competition.

What closed systems did do was cost customers millions when, for business reasons, they had to be made to communicate.

Closed systems are back again only this time forcing compatibility is costing billions.

And it is you and I who will end up footing the cost.

Why?

Because this time the incompatibility is in the proprietary electronic medical records (EMR) systems that are mandated under the Affordable Care Act and, far more importantly, are an imperative for the health of the entire population.

The money in play is substantial; privately held Epic is one of the largest suppliers and its founder, Judith R. Faulkner, is supposed to be worth around $2.3 billion.

When you’re making that kind of money who worries about lives ruined or lost because of EMR incompatibility?

While the companies building incompatible systems are doing just fine, those who have to buy the systems aren’t—although size does make a difference.

The University of California Davis Health System has 22 specialists installing the technology so that doctors can share patient data between its Epic system and other internal systems, like the hemodynamic monitors in its critical care unit, or with some non-Epic systems outside the hospital. “We’re a huge organization, so we can absorb those costs,” said Michael Minear, the chief information officer at the U.C. Davis Health System. “Small clinics and physician offices are going to have a harder time.” (…) “The systems can’t communicate, and that becomes my problem because I cannot send what is required and I’m going to have a 1 percent penalty from Medicare,” Dr. Raghuvir B. Gelot said. “They’re asking me to do something I can’t control.”

What about regulators?

Regulators responded that interoperability was a “top priority” and that they recently set out a 10-year vision and agenda to achieve it, in an emailed statement from the Office of the National Coordinator for Health Information Technology. The office’s spokesman added that achieving interoperability “requires stakeholders to come together and agree on policy-related issues like who can access information and for what purpose.”

So much for regulators.

Perhaps Congress… No; that’s a really stupid thought.

I guess the only sure things in all this is that the entrepreneurs who created the incompatible systems will increase their net worth, US medical costs will continue to skyrocket and you and I will pay the bills.

Image credit: HikingArtist

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