Zach Mortensen -- The Economics of Healthcare Information Technology: Recent Comments

Comment on The Long Tail of Healthcare IT

2006-11-05T06:55:20Z

Joseph,

Thanks for visiting the blog and taking the time to comment on this topic.

Being familiar with the EMR vendor side of the acute-care segment, here's how I think vendors will deal with the situation you describe:

The commitment to CCHIT certification is ongoing with new requirements becoming available each year. I think vendors who are committed to the idea of CCHIT certification will orient their major releases to the timing of the CCHIT requirements cycle, and they may try to name their releases such that any occurring in the meantime are not new "versions" but rather updated releases of the certified version.

For example, if "Version 8" of a product is certified, then the vendor may reason that the next (non-explicitly certified) release should be called 8.1 instead of 9.0, since 8.1 could reasonably be construed as just a "service pack" for Version 8.

I'm curious to know whether that tactic has been employed in the ambulatory segment, and if so, how the vendor(s) in question have fared as a result. Best regards,

ZM

Comment on Metcalfe's Law: Manifest Destiny of Cerner and Epic?

2006-11-05T06:44:21Z

Thanks for reading and taking the time to comment.

You're right, this particular post addressed only the value side of the equation. My intent was to show that while there is an intrinsic value (network effects) to be realized through an integrated architecture, smart people in other industries have overestimated that value, sometimes with tragic results.

I addressed the cost side of the equation in a subsequent post, although I wouldn't consider it light reading. In a nutshell, the cost of creating the next feature on an integrated architecture is exponential with respect to the number of features already supported by the architecture. Since the cost of creating an integrated architecture is exponential with respect to size and the value of an integrated architecture is at best polynomial (quadratic) in that same respect, the cost is bound to overwhelm the value beyond some point.

So an integrated architecture is only economically feasible up to a certain point. The question is, have the market leaders crossed that point, and if not, how close are they to doing so? I'll have to address that one in another post, so stay tuned!

ZM

Comment on The Long Tail of Healthcare IT

2006-11-04T12:37:20Z

CCHIT will kill innovation as the certification is version specific and vendors will withhold refinements and improvements in their software because they have to tell CCHIT each time they upgrade and pay the fees.
The certification itself has nothing to do functionality as evidenced by a lot of doctors already using non certified systems.
Government wants interoperability. But there is no set standards yet. CCHIT just is a popup agency collecting fees telling doctors that if there is a seal of certification the software you are buying will be suitable for your office 100%. That is not the case as seen by postings by a lot of users at http://www.emrupdate.com/forums/default.aspx

Regards

Comment on Metcalfe's Law: Manifest Destiny of Cerner and Epic?

2006-10-26T05:36:49Z

Interesting thoughts here, although I don't see any logic to refute an "integrated architecture" strategy by health IT players. Even if the relationship is n log n instead of exponential the integrated system is still worth more connected than would be individual departmental systems in isolation.

Comment on The Long Tail of Healthcare IT

2006-10-26T05:17:51Z

I haven't read the long tail yet -but does it really apply to a market like HIT where there are a relatively small number of potential customers? YOur point #3 re: scale only applies if the scale is big enough that there are at least enough customers to make products at the end of the tail profitable.
Another consideration is that in software there are VERY strong network effects. In industries with strong network effects you don't see the long-tail ... you see a limited number of dominant players emerge. Just my 2 cents.