In this podcast with Irwin Teodoro, Laurus Technologies' director of engineering and systems integration, we discuss the U.S. government's efforts to drive digitization of medical records. Find out how Laurus Technologies is approaching this market opportunity by reading the transcript below or downloading the podcast.
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Laurus Technologies hopes to get involved with work related to the American Recovery and Reinvestment Act, aka the economic stimulus package, which has about $20 billion set aside for the health care industry to digitize its medical records. How is Laurus plugging into this opportunity?
Irwin Teodoro: From a variety of ways. Let's take it from a resource perspective first, because, in my opinion, I feel that most of the opportunities will reside in the consulting ranks. Providing the actual resources to help digitize all the medical records, I think, is going to be one of the key opportunities for us. So we've hired members of our team from the health care provider space. Meaning, actual former practitioners and former clinicians that were once part of these organizations that can understand the workflow and processes around EMR and how it relates to technology. I think one of the biggest gaps today is the effort and the amount of technical expertise not only from the infrastructure side but expertise on the workflow within the provider space. We actually had hiring campaigns and have hired several folks that were ex-CIOs within the health care provider space, former clinicians, those kinds of things, to get a better feel, so we have the right mix of individuals both from a infrastructure technology side and from the work processes that occur in the health provider space. So that's one area where we're plugging into the opportunity, really focusing on the consulting side, how to actually digitize the EMR that legislation is pushing.
Secondly, we're also looking into other opportunities with our solutions. There are several providers in this space that are anchor solutions and basically corner the market with respect to EMR. We're looking at those companies today and potentially looking at how we could integrate our current solutions with those of the major providers. So, what we specialize in as an integrator is taking two or three or four solutions and combining them into one. So that's what we're looking at from a solution perspective is to find out those key vendors and see how compatible they are with other solutions and potentially offer more of a comprehensive solution than a single targeted solution that some of these major vendors have. So, to add some of the value that we feel we're going to bring as an organization (and I think you'll see other organizations doing the same thing). They're going to want to present an overall solution combining several other vendors' products. And have the ability to design, architect, implement and manage the overall solution. So that's where a lot of our investment lies, mainly from a consultancy standpoint and investigating what the various solutions are on the marketplace.
A follow-up question to that: What percentage of your business is health care-related?
Teodoro: Laurus is split up into three verticals. We have a financial services/commercial; a growth territory, so essentially new accounts, net-new businesses; and our third vertical is health and education. So I would say that health care represents a little over 40%, and a lot of that is predicated on recent economic conditions. We have seen a growth in our education and health care space, believe it or not, in this economy. So I would say right now roughly 40%, traditionally probably around 30%.
I was trying to get a sense for what kind of investment you have and what kind of revenue you're getting from health care in order to make the investments in personnel that you are.
Teodoro: Overall, from a company standpoint, we're experiencing 35% growth year-over-year at the halfway point of 2009. We're seeing a lot of explosive growth in health care, mainly in the consultancy space. Overall we're about 119% over last year, and a lot of that is attributed to the increase of compliance and the move toward some form of EMR among our clients, and we're seeing the most growth within the company within that space.
You talked a little bit earlier about taking two, three or four solutions and combining them into one broader, more comprehensive thing that you go to market with. What kind of system are you talking about here?
Teodoro: Mainly from an EMR standpoint, it's how you archive and digitize. One of the components of the legislation they have in the drafts is, How do we get there, and how do we do it? There are no standards for technology, but we know that there is going to be an influx of data and obviously a growth in archive of data. What we're going to try to do is try to find a way to archive that a little bit more systematically, so a combination of maybe disk-based backup or after a period of time, it gets archived into some lower form of storage. But our solutions are going to most likely be predicated around storing the data, archiving the data, retrieving the data, that kind of thing. Digitizing the EMR and those kinds of things, that's more of a manual effort. But the technology on where to store it, we know that's going to grow. We know that there's going to be some compliance around how long to keep it, but we're seeing the most explosive area is going to be around the data storage arena.
I've been reading that the government says that the economic stimulus money is going to go to health care providers that demonstrate "meaningful use" of electronic medical records. But at this point, there's no real consensus around what "meaningful use" means. And so projects are on hold. Are you seeing that kind of dynamic at play?
Teodoro: No, we're not really seeing that. I think, at least in our customer base, even prior to the legislation being passed sometime earlier this year, most of our clients were already on a path or in a direction to go to some form of EMR. We're in some major health care providers -- for instance, a hospital network of 17 hospitals, 12 hospitals, those kinds of things. They're already on that path. Not every one has started it, but they're definitely budgeting for it. So I think there's some incentive to capitalize on going to EMR and it's by way of rebate premiums paid to Medicare and those kinds of things. That might be an incentive to move forward on it. If you think about a hospital practice that has a number if practitioners, that could be a significant amount of rebate money or those types of funds for a hospital network. So that might be an incentive to move forward, but we've seen most of our clients already on that path. This is just accelerating it a little bit more. The term "meaningful use" is a gray area. I liken the newest legislation back in the Sarbanes-Oxley days, where you needed to have [some standard], and over time it's going to be refined and defined. It's going to be the same thing [with economic stimulus money for EMR]. Everyone's going to have their own definition of it at first, and until there's a set form of standards, I think there's a foundation for it already. I think they should borrow from some of the standards out there, namely, HIPAA compliance, JCAHO standards. I think they should start within the more established governing bodies to at least apply some form of standardization. Right now, everybody has their own definition of "meaningful use," and from the research I've found, it [relates to] some form of reporting. Can you report the fact that you have an EMR? A lot of research that we've done centers around CPOE, or computerized physician order entry. So I think that's a good start. My research over the last few months has been fairly consistent. You look at a lot of different groups and a lot of committees that are starting, and they're all centering around the ability to prescribe medicine as something that's going to be standard. [Plus,] the ability to exchange information, interoperability, the ability to share records across various networks. I've also heard of the use of a national health network, the NHIN, getting involved. It's already established, but it's a fast-forwarding of what they really want to do. So it could be predicated around CPOE, exchange of information, the interoperability of all the different systems. There are maybe five or six different players that from an EMR standpoint kind of dominate the market. What's the interoperability going to be among those vendors? So it's all going to have to be ironed out, but if I had to take a guess, it would be primarily defined around those criteria I just mentioned.
The customers that you have that are already moving toward archiving and digitization, is your sense that they're doing it because they expect to see savings there, or are they doing it just because they want to get a head start on the legislation [requirements]?
Teodoro: I think it's a little bit of both, but if you ask most of our clients, they feel it's a better experience for the patient overall. A lot of the research and some of the feedback that I've gotten [indicates that it relates to] the ability to provide a better experience for patients and, more importantly, they could potentially save lives. [As technologies enable that], the push toward EMR is even more accelerated. The clients that we have that were already down this path have already recognized how important it is and how it can improve efficiency within the health care experience, not only from the practitioners/clinicians, but also from the patient's point of view. When the legislation was passed, it just reaffirmed their decisions and probably almost required them to start accelerating their plans around it.
You have to look at the actual practitioners themselves. Most of the doctors that I visit or the doctors that I see are embracing technology, whereas maybe 10 or 15 years ago, physicians or clinicians really weren't adapting to technology. Now I think they realize that technology can only help them in their practice and in their ability to help patients. But it's garbage in, garbage out. If you don't use the tools the way they're designed and you don't enter the information that is required or that would make the experience more valuable, then having EMR is really more of a checkbox thing rather than something that will make a difference. But what we're seeing is a lot of clinicians, mainly on the physician side, are a little bit more technology-savvy, though you still have the more traditional doctors. I'm sure you've gone into some medical offices or some hospitals where it's wall-to-wall files. If that works for them and it's been working for the last few decades, fine, but you also have a lot of doctors that are more progressive thinking and are moving toward EMR.
We talked about the vendors that are out there. You said there were four or five big vendors in this space.
Teodoro: Yes. So some of the EMR vendors that we run into typically, let's take it from the software side, Cerner, McKesson, GE Healthcare, AllScripts. Those are what we run into. I'm sure there are some other smaller players, but these are considered Fortune 50, Fortune 100 companies. You have to look at the overall health care industry in itself. They're more followers than they are leaders. In health care, there's no competition there, when it's not for profit or affiliated with some not-for-profit business model. There's really no competition among that industry. They want to see who has the best solution, if XYZ Hospital is using Cerner and it's working for them, they'll go with the major player vs. some startup company. That's why we focus our efforts around partnering with these four or five major vendors because they've established themselves; it's instant credibility, which is the big thing in health care. It's all about credibility when you walk in the door. You don't really have a lot of time to demonstrate a newer solution that's cutting edge. They like to go with more established vendors. So we look at the ones I just mentioned, which we feel on the software side are the mainstays. On the server side, we see a lot of HP, Dell, IBM. Not so much Sun, but there are Sun applications that are widely used in the industry, which has a nice Sun solution base to it. From a storage perspective, there's a lot of EMC, some HDS, some IBM.
I'm trying to get a sense for how the solution that Laurus Technologies is working on will plug into Cerner and McKesson, etc., systems. Are you basically pulling stuff from the storage industry, pulling different pieces, and it will be compliant with the stuff from Cerner, McKesson and AllScripts?
Teodoro: Yes, that's what we're hoping to do. This is one of the other things that we're hoping within the industry occurs: A lot of these solutions are closed off to other vendors. In other words, Cerner is only compatible with certain servers or certain types of storage. So what we're hoping is that some of that gets opened up and that you'd have a little bit more flexibility in the type of solution you put together. That's part of the challenge in health care today. Some of these major application solutions, specifically EMR, are relegated to only a few vendors, because they're sold essentially as one solution, one appliance. Where you'll have the server, the software, the storage, all in one bundle, and basically implement it. So what we're trying to do is think outside of the box and see if we could match solutions that aren't so closed off to some of the supportability that you have out there.
For solution providers that are not now in the health care space, is it too late for them to get involved in it? Or is there still time for them to see some of that economic stimulus money?
Teodoro: That's a great question. I think there definitely is. It's not a matter of whether it works or not. Virtualization is a great example. We've proven that you can virtualize some of these solutions; however, some of the major vendors are just a little hesitant about moving forward because it's breaking out of the norm more than the leader/follower type of mentality. But we've demonstrated that has worked. So we're seeing that they'll start opening up and there's still time. It's more of a business matter vs. a technical matter whether or not it works. You have to get to the technical first: Does it work? Is it compatible? Can it function? The last thing you want is for it not to be supported. And some of the discussions and feedback we've had with our clients show that if you open it up, it doesn't mean it's not going to work; it's just that getting it supported from company to company is the business matter that has to be addressed. Some of these vendors, server vendors -- HP, Dell, IBM -- have alliance managers that work specifically in health care. So they're already managing those alliances. Some of the other storage vendors or solution vendors aren't working those alliances. So that's part of the reason why you don't see a lot of compatibility.