My last post discussed a hybrid strategy for utilizing local and cloud based IT services.  I concluded the post by stating that I didn’t think we were ready for all cloud based IT services.  Let’s fast forward a few years and assume that businesses can run a majority of their IT services in the cloud.  Let’s assume that reliability, security and accessibility have all matured to the point that a total cloud based IT infrastructure is possible.   A key component would be that Internet access will mature to the point that it is as reliable and scalable as other utilities such as electric, natural gas, etc.  High speed Internet access would be ubiquious and reliable no matter whether you are utilizing wired or wireless connections.  Connecting to the cloud would be as reliable as turning on a light switch in a home or office.

What does a total cloud based IT infrastructure look like?  Let’s take some of the typical IT services that businesses utilize today and compare them to what would be offered by competing cloud based services.

IT Services

1. User Authentication – basic ability to log into your network and use those credentials to access other services
2. File Services – ability to access files (documents, spreadsheets, presentations, etc).  Ability to restrict access based on defined user access lists (i.e. only the marketing department can access the marketing network share)
3. Print Services – ability to print to various printers.  Queue multiple print jobs that require the same printer.
4. Email Services
5. Database Services
6. Firewall Services – protection of a network from outside access
7. Anti-virus / Anti-malware Services
8. Line of Business Applications – EMR, ERP, Accounting, etc.
9. Document Creation – ability to create documents, spreadsheets, presentations (i.e. Microsoft Office)
10. Remote Access Services – ability to gain access to other services when you are outside your network (i.e. home, traveling or at another location)

There are many other IT Services that businesses utilize but let’s just limit the conversation to these 10.

At this point I started having trouble wrapping my mind around how a total cloud based network would look like. I decided to take the approach that the network was fundamentally the same as it is today but just moved into the cloud.  I think this is the easiest approach.  Although it is an interesting exercise of trying to figure out how the network of the future would look.  A network that tied together all other cloud based services.  For more details on how it may possibly work, take a look at Dave Winers excellent post.

Let’s take our list of 10 typical IT Services and move them to the cloud

Cloud based IT Services

1. User Authentication – these services would function basically the same except that the servers you authenticate against would be running virtually in the cloud.  Amazon, Rackspace and other companies currently offer these services.  For this mind exercise we are going to assume that you can now take these validated credentials and use them to access other cloud based services.  This would be very similar to how both Google and Microsoft use a single account to access multiple services.
2. File Services – files would be stored on other cloud based services.  Access to the files would still be restricted to user access lists.
3. Print Services – ability to print to various local printers.
4. Email Services – ability to send and receive emails would be another function provided by a cloud based solution.  The solution would include anti-malware, anti-SPAM, email encryption and other services that are now usually added onto existing Email Services.
5. Database Services – SQL Server, Oracle, MySQL databases that would be hosted in the cloud.
6. Firewall Services – protecting a network from outside access will have a much more diminished role.  Local networks would no longer contain data that needed to be protected.  The role of Firewall Services would be much simpler and less complex.
7. Anti-virus / Anti-malware Services – currently these are separate services that are applied to other services such as protecting files, email, etc.  These services would be seamlessly integrated into the other cloud based services and would no longer be a separate function.  Cloud based providers would be responsible for integrating and managing these services.
8. Line of Business Applications – EMR, ERP, Accounting, etc.  Again these services would be provided in the cloud and most likely the individual vendor of the application would provide it as a cloud based service.
9. Document Creation – documents would be created using cloud based utilities such as Google Docs or Microsoft Office Web Apps.
10. Remote Access Services – the concept of Remote Access would totally shift.  EVERYTHING would now be remotely accessible from the cloud.  This would no longer be a separate service.

A typical office would now consist of just low cost workstations, laptops, tablets, thin clients and printers.  There would be no servers and no data stored locally in the office.  There would be no data to be backed up and the cloud providers would be responsible for data backups.  The IT support requirements would be minimal and the network complexity would be drastically reduced.

Companies who’s function is to implement and support the local IT services, would have a greatly diminished role.  With local IT services all moved to the cloud there will no longer be a need for a lot of  local IT support.   Although the functions that today’s IT companies now provide would still be needed.  User accounts will still need to be setup and maintained, printers setup, email accounts setup, etc.  Although these function would not require a lot of technical skill and may be able to be performed by non-technical staff.

A business that moves their IT services into the cloud would no longer have to worry about local IT support.  They would no longer be faced with the constant workstation and server upgrades, software upgrades and the monthly expense of supporting the network. All of these functions would be pushed onto the cloud based providers.  The cloud based providers would now take on these responsibilities and factor the associated expenses into the monthly fee that they charge.

All in all, a cloudy future looks pretty good.  We are not there today but we can make steps in that direction.  Some of the benefits can be realized today.  And as the cloud becomes more reliable, secure and accessible more benefits can be realize in the future.

Regular readers of this blog have heard me discuss cloud computing in the past.  I have pointed out the potential problems of cloud computing as well as discussed incredible things you can do utilizing the cloud. So it may I sound like I am all over the board regarding cloud computing.  I thought I would discuss the cloud a little more and try to clear up my stance.

Cloud computing offers businesses an opportunity to utilize computing resources and services that in the past may have been too expensive or too complex to setup.  This is especially true for the small to mid-size market (medical practices included).  I find it amazing that businesses can utilize full blown accounting systems, electronic medical records (EMR), disaster recovery services, etc. all from the cloud.  There is no local infrastructure to setup, no maintenance and support of servers and software, no capacity planning, etc.  In theory it is a dream come true for many businesses.  Usually the pricing model on cloud based services are reasonable and it provides a fixed cost and ability to accurately budget for IT services.  What’s not to like?

As long as all goes well, cloud based services are a good thing.  But if things don’t go well then the real issues with the cloud become apparent very quickly.  Single points of failure can completely stop an organization from accessing critical IT services.  A failure in communications links (i.e. T-1, FIOS, cable, etc.) could prevent access to the cloud.  Cloud based services do fail as we have seen in recent months.  These failures can leave an organization without access to critical IT services  for hours or even days. You can’t mention cloud computing without the discussion of security.  The truth is, your data is now sitting in servers and storage outside your organization.  You no longer know the individuals that have access to the data.  You don’t have control over the backups and really don’t know how or when they occur.  You data is commingled with data of other organizations. The cloud is usually publicly  accessible and you don’t have control over how the data is protected from unauthorized access.

All of the above issues are true but in reality they are no different then if you had the infrastructure, programs and data local.  Most businesses (aside from large Enterprise organizations) have many single point of failures which could produce similar problems as cloud based services.  Security in many small to mid-size organizations are usually much worse then you will find in the cloud.  Data backup and disaster recovery is usually very sketchy for many businesses.  Anyone who has faced the situation where critical data had to be restored from backup tape can attest to the level of praying required that the data on the backup tape is valid and can be restored.

So by now you may be saying to yourself that my cloud schizophrenia is clearly apparent again.  Let me lay out a framework for businesses that want to utilize cloud based services.

Start moving all non-essential services into the cloud.  If you are a medical organization your main business is treating patients. Your main IT related services are storing and retrieving patient information to assist with treatment.  Computer virus protection, Internet content filtering, email SPAM filtering, email encryption, and accounting services are not essential IT services that directly help you with your primary focus which is treating patients.  Don’t get me wrong, these are very important services but these are the type of services that are well suited for the cloud.  If you don’t have access to your cloud based accounting system but still have access to a local EMR there is minimal impact on the treatment of patients.

Utilize the cloud for services that are far to complex or expensive to implement locally.  Businesses with single offices or minimal IT resources have difficult times implementing costly and complex disaster recovery services or off-site data backup.  As I mentioned in this article, disaster recovery utilizing cloud based services can be setup for a couple hundred dollars a month.  This is far less costly then implementing redundant infrastructure in another location.  Again these are services that are important but not critical to a business’ essential services.

Keep essential services local to the organization.    Services that support the main focus of your business (EMR, manufacturing systems, etc.) should be kept local.  If you start moving non-essential services into the cloud that will make your infrastructure much more simple and easy to support.  You can then focus on ensuring that you have a stable and reliable infrastructure to run your critical IT services that support your main focus of your business.  As you start to move non-essential services into the cloud, you will be amazed at the reduction; in complexity, in the amount of servers needed and in the amount of operational support that will be needed.   This will then allow a business to focus on ensuring that there is the appropriate capacity needed for the core IT services.  That local infrastructure redundancies are in place for the core IT services.   Moving non-essential services to the cloud and keeping essential services local will allow a business to focus on ensuring that critical IT services are designed and supported properly.

By taking a hybrid approach to local and cloud based services, organizations can get the best of both worlds. Cloud based services are extremely useful and provide efficiencies and features that are difficult and costly to setup locally.  Local IT services for critical functions provide access and security. One day everything may be in the cloud and businesses may just focus on their business and have little or no thoughts of local IT services.  I don’t believe we are a this point yet.  So for now I say, keep your head (an non-essential services) in the cloud but keep your feet (an essential services) local to your business.

Every medical practice faces a similar issue; getting paid for services performed for patients.  Some practices have made medical billing a core component of their business.  They have a group of medical billers who are usually heads down, medical billing specialist.  The group manages the entire billing process and watches the accounts receivable like a hawk.  Other practices want no part of having the medical billing function in house and are happy to outsource it to a company that specializes in medical billing.  The questions to be asked; is there a right or wrong decision to be made and how do you make the decision?

Chris Thorman over at Software Advice gives a very good analysis of the costs to an typical 3 physician practice.  He compares the cost of in-house vs outsourcing medical billing.  Here is an overview of his cost analysis:

Cost Analysis
For many practices, the outsourcing decision boils down to one factor: cost.

To help compare the costs of in-house billing versus outsourced billing, we’ve created a hypothetical, three-physician practice. To arrive at these numbers, we’ve used what we believe to be industry averages. Here are the characteristics of this practice:

Three primary care physicians;

Two medical billing specialists;

80 insurance claims filed per day (~20,000 per year);

$125 billed per claim on average (~$2,500,000 per year); and,

We assume that the billing service has a high collection rate on claims.

So, how much does each billing approach cost? Take a look at the annual costs:

	In-House	Outsourced
Billing department costs	$118,000	$4,000
Software and hardware costs	$7,500	$500
Direct claim processing costs	$3,600	$122,500
Software and hardware costs	$5,500	$2,000
% of billings collected	60%	70%
Collections	$1,370,900	$1,623,000
Collections costs	$129,100	$127,000
Collections, net of costs	$1,241,800	$1,496,000

Chris goes on to justify this cost analysis by discussing the cost assumptions.  Click here for the complete analysis.  Based on Chris’ analysis he determined that collections would be higher for the the practice if they choose to outsource the medical billing function.

Today, companies and medical practices have the ability to outsource many functions that are required to run the business.  You can outsource your payroll, human resources, computer support, etc.  In each decision to outsource you have to ask yourself the questions; is this function core to my business and can I do a better job at it than outsourcing to a company that specializes in this function? 

I have seen practices that are really good at medical billing.  They have made billing a core function of the practice and have gotten the function to a well greased machine.  I have also seen practices with constant turnover in the medical billing department and have heard about the pain associated with the turnover. 

My advice is to make sure you know what you are getting into.  If you choose to keep medical billing in-house then you need to understand the costs, hardware/software/network dependencies, training requirements and staffing requirements.  If you choose to outsource you need to understand the costs, the functions your staff will still have to perform, the service level and the agreed upon expectations you have of the medical billing company.

Do you have a success or horror story related to medical billing?  Are there other factors that need to be considered when making the decision?  Feel free to share your thoughts.

The American Medical Association (AMA) along with 95 other physician organizations and associations (including including state, education and medical societies) have written a letter to the Centers for Medicare & Medicaid Service (CMS) with their comments regarding meaningful use and the EHR incentive program.  The 37 page letter outlines where the organizations agree and disagree with the proposed definition of meaningful use and it’s direct correlation to the EHR incentive payments.  To summarize the entire letter would be a lengthy process so I will pick out sections that caught my eye.

The overall message to CMS was that the proposed meaningful use requirements to achieve the initial stimulus payments are too aggressive and the cost to achieve them will deter physicians from participating in the EHR incentive program.

Physicians are deeply supportive of and committed to incorporating well-developed EHRs into their practices to improve quality of care delivery, enhance patient safety, as well as support practice efficiencies. To facilitate this transition, we want to ensure that there is widespread adoption and meaningful use of EHRs by physicians. We do, however, feel strongly that the Stage 1 criteria proposed by CMS for achieving meaningful use of EHRs is too aggressive and if adopted, will deter many physicians from participating in the Medicare and Medicaid incentive programs. This runs counter to the intent of ARRA, which clearly indicated that demonstrating meaningful use should progress over time.

The organizations are concerned about the impact on smaller physician groups.  They also are concerned with the high failure rates of EHR adoption.

The vast majority of physicians practices are comprised of five or fewer physicians.  Encouraging physician adoption of health IT, especially small physician practices, is critical to ensuring widespread EHR use. Studies of EHR adoption clearly show that it takes more time for smaller practices to adopt and implement EHRs because they have fewer resources and support. Aggressive timelines and criteria during the initial stage of the incentive program will only serve to undermine this effort. Some government officials have relayed that complex measures and high reporting thresholds are needed to discourage EPs from switching back to the use of paper during this transition to EHRs.  We are very troubled by this assertion. Physicians are deeply supportive of and  committed to incorporating well-developed EHRs into their practices to improve quality of care delivery, enhance patient safety, as well as support practice efficiencies. It is also very unlikely that after physicians make a significant up front investment in health IT and changes to their workflow that they will revert back to manual processes. We believe that the larger concern should be deterring the purchasing of costly EHR products that fail to improve physician workflow, patient care, and practice needs. Industry experts have cited that such failures have adversely affected EHR adoption rates ranging from 50 to 80 percent.

The letter goes on to suggest that the requirements for Stage 1 meaningful use should be spilt over the first two years.

We strongly agree with CMS’ proposal for establishing a staged approach to achieving “meaningful use” of EHRs. In this way, eligible professionals (EPs) are provided a predictable pathway, enabling them to plan, including consideration of practice workflow changes, and to engage in critical discussions with EHR vendors regarding functionalities. To support this, we strongly recommend that the focus of Stage 1 for the health IT functionality measures be on data entry (e.g., problem list, medication list) and structured data (e.g., enable EHR functionality for drug-drug, drug-allergy, drug 4 formulary checks). If achieved consistently and accurately, a more seamless use and reporting of quality measures will result. Therefore, we believe Stage 1 should be redefined and the proposed criteria should be segmented into two years to provide more flexibility on functionality measures and selection/awareness of quality measures

The letter addresses each of the 25 meaningful use objectives and describes where the organizations agree and disagree with the proposed objectives.  In my opinion it seems that the message to CMS is that they support the objectives but would like to see Stage 1 objectives scaled back.  The big push should be to get providers to implement EHRs and start using them, without strict requirements, to achieve the stimulus payments.  The organizations recognize that it is costly to implement EHRs and use them in meaningful ways.  It is costly to interface them with other systems including lab results, insurance providers, other EHRs.  And it is costly to support the new technology that is required.  Physician practices need to believe that the meaningful use objectives are realistic and that they are able to meet them.  Furthermore, they need to feel that they will be able to obtain the stimulus incentives to offset the costs of EHR adoption.  I feel the letter correctly addresses a lot of the issues that physician practices, both small and large, will face as they begin implementing EHRs.  It will be interesting to see what CMS does with the organizations’ recommendations.

The letter can be found on the AMA website.

The Medical Group Management Association (MGMA) has an interesting study on the benefits of electronic registration.  In January, 2009 the MGMA launched an initiative call SwipeIT.

Project SwipeIT is an industry wide initiative launched by the Medical Group Management Association (MGMA) in January 2009 to advance the adoption of standardized patient health-insurance identification (ID) cards containing machine-readable information.

The concept is that the insurance providers will issue patient health-insurance ID cards that contain patient information including demographics, health plan information, co-pays, etc.  The cards will act and function like a credit card.  Each medical practice, hospital, clinic will need to have a card reader that can process the information on the card.  The card reader can then be linked to a practice’s EMR or practice management system which will populate the patient demographic and insurance fields automatically.  The whole process is referred to as electronic registration.

The MGMA study takes a look at the costs of non-electronic registration and calculates the savings that can be realized by implementing electronic registration.  There are enough numbers and calculations in the study to make your head spin but I will highlight a few statistics that are eye opening.

Model Assumptions and Raw Inputs	Values
Number of claims per year for physician professional services	1,160,542,000
Hours saved per year during registration process by implementing electronic registration	95,280,498
Dollars saved per year during registration process by implementing electronic registration	$1,931,753,287
Number of claims per year that must be resubmitted due to payer denial due to incorrect patient demographics from non-electronic registration	57,168,299
Hours per year to resubmit claims denied due to payer denial due to incorrect patient demographics from non‐electronic registration	14,292,075
Dollars saved per year by not having to resubmit claims denied due to payer denial due to incorrect patient demographics from non-electronic registration	$289,762,993
Total savings due to implementing electronic registration (dollars per year)	$2,221,516,280

The MGMA estimates that $2.2 billion per year can be saved by implementing electronic registration.  It should be noted that the study does not estimate the cost to implement the electronic registration including the cost to insurance providers to issue the card, practices and hospitals to purchase and install card readers, EMR and practice management vendors to modify their software to interface with the card readers, etc.  I suspect that a good part of the initial $2.2 billion in savings would go to the implementation costs.  The savings on-going would still be significant.

The MGMA also studied the impact on a typical 6 FTE physician practiced and published their results.  They took conservative and non-conservative estimates on the impact of electronic registration.  The difference in the estimates are described as:

A conservative estimate where only 10% of patients have their insurance cards copied, presumably because of changes in their information.

The non-conservative estimate is where:

(a practice) copies the patient’s insurance card on each visit. This practice may also have a much larger proportion of patients whose information needs updating.

The highlights of the study are listed below:

Conservative estimate	Time
Time saved by Swipe card	7 h/ day	1820 h/ year
Non-conservative estimate
Time saved by Swipe card	23h45m/day	6175h/year

If these numbers are accurate, the need for front desk personnel could be reduced and savings could be realized at a practice.

Electronic registration is an industry wide initiative.  All stakeholders including insurance providers, EMR vendors, medical practices and hospitals would all need to be involved and implement the appropriate technologies.  Until then, the savings highlighted in these studies are only theoretical.

AIS’s Health Business Daily describes a New Jersey pilot program with major insurers that aims to cut provider paperwork and standardize processes.  The goal is to reduce the costs associated with determining patient eligibility and checking claim status

A typical primary care physician spends about $68,000 a year on administrative tasks such as determining patient eligibility and checking claim status. The goal of a 12-month pilot project — announced Feb. 10 — is to show how that problem might be fixed.

The pilot program will work with all the major insurance plans.

New Jersey’s five largest health plans and five physician groups will participate in the initiative, which aims to dramatically reduce administrative costs by allowing hospitals and physicians to communicate with health plans and address administrative tasks through a single Web portal.

“What we’re producing is a one-stop shop, through which physicians and their offices can contact all of the health plans they deal with” through a single Web portal. The participating health plans are Aetna Inc., Independence Blue Cross subsidiary AmeriHealth New Jersey, CIGNA Corp., Horizon Blue Cross Blue Shield and UnitedHealthcare, Inc.

Providers access access insurance information through the NaviNet web portal.

The portal is maintained by NaviNet, a health care information technology company. Several health plans that operate in New Jersey already use NaviNet. Horizon, the state’s largest health plan operator with 3.6 million members, expects to close its independent portal and move to NaviNet in March or April. During the conference call, Christy Bell, Horizon’s senior vice president of health care management, said the pilot is an opportunity for health plans and providers to move closer to standardizing administrative processes.

 Aetna has been using NaviNet’s portal for several years. More than 40% of the health plan’s network providers have access, said Aetna President Mark Bertolini. Along with helping to streamline administrative processes, he said the portal also can be used to improve health outcomes.

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