HIStalk Quotes
An Exclusive Interview with Don Schoen, CEO and President of MediNotes
posted 07/03/2006
A regular reader suggested I interview Don Schoen, CEO and President of ambulatory EMR vendor MediNotes, saying "You've responded to the hot community physician EMR market with a variety of A-team CEOs, each of whom offered unique perspectives and approaches to the market. Don has unusually keen insights into the ambulatory market and competitive dynamics, in particular the potential impact of STARK relaxation." Which he does! Thanks for the interview suggestion and thanks to Don for taking the time to speak with me.
Tell me about yourself and about MediNotes.
I’ve been a serial entrepreneur since I was 22 years old. I started as an audiologist and worked in four or five settings in 2 ½ years. I set up my own healthcare screening company for preschool children. I also opened a TCBY frozen yogurt shop. My in-laws were in the supermarket business and I went into that for ten years, running stores.
A little knowledge can create opportunities. I had one course in programming at Northwestern University and I realized I wasn’t going to be a programmer, but when the PC came out, I thought I’d put my store inventory on it and receive deliveries with hand held devices. That was in 1983-84. I built a company from that and sold it in 1992, working as a member of the acquiring firm's executive team for the next three years. I met a guy on a plane doing a fellowship in podiatry and that’s how I started this company, in a 10x15 room. Now, 3600 sites later, we have 19,000 square feet and 96 employees.
MediNotes is an electronic medical record, similar to other products you’ve talked about. Users can write notes electronically, review discrete data, modify past history, do e-prescribing, create referral letters, and generate patient instructions. Our product is more modifiable and can be more easily individualized without waiting for the software company. Some products require you to leave the product, use an editor, and come back when you want to make a change. Ours has symbols for Add, Change, and Delete. Users can literally hand-write in the new information they want for choices if they have an XP tablet.
Doctors and staff interact with software in different ways. Text box choices are one way to display information. Others are slide bars or graphic representations like a picture, where you touch the area afflicted by a symptom and a sentence is generated. We’re a sentence generator. Users can customize and individualize how they want the product to work. They’re not bound within the parameters that we as a software company want them to be. We also have patient flow and work flow.
We originally focused our attention on the one-man practice with no IT staff. The product had to be easy to customize, install, and support. Obviously we now have much larger clinics, but we have the same philosophy, which is enticing and intriguing for a pragmatic user.
We’ve really tried to make our product so there’s minimal typing needed. From the early onset, we focused on making it so that it was pen-centric for tablets, so people didn’t have to type or even have a keyboard. They can input through handwriting, modify screens, modify what’s on screens, or group items on them differently by dragging and dropping them on a panel. We developed a work flow process, where they can route information and alert users to take action and take them to the right screen. We’ve focused on work efficiencies and reducing training.
Literature misses the point that automation of a medical record shouldn’t be viewed as replacing a paper chart with a computer. You’re redoing how you practice medicine and how you utilize staff to optimize patient care.
There are number of different ways that a doctor looks a product. One ways is note-centric, where they create a note that does several things afterward. The second model is patient-centric, where different individuals in the practice can enter information at any time, which is collated when the note is done. The third way is practice-centric, which involves how the practice uses the note and the information to optimize patient care. That’s where we are. We've gone through the first two steps. We not only optimize the note and the information from sources like fax, e-mail, or digitized forms, but also in terms of how to optimize staff using these tools.
Does your product save doctors time?
Absolutely. The doctors that use our product see as many, if not more, patients in a day than they did prior, and we have thousands of doctors using our product. For a number of practices, the payback period is less than a year. I disagree that doctors won’t implement EMRs because they won’t get a payback. Our products, as well as others, are reasonably priced. The issue is, can they implement it in a way that makes sense to them? That’s a key to a good software product. A number of companies have that.
Your studies show that 90% of patients want to complete an Instant Medical History. How does that work and how many vendors have a similar offering?
A patient comes in and, through a touchscreen or the Web, fills out questions the system prompts them through. It’s kind of a decision tree. Most of the other products take that information as a file that is dumped to them as a text blob inserted into the note. We actually map the discrete data to our product, so that if someone talks about allergies from the Instant Medical History, our screens are objects and they can change it on the fly instead of adding via typing.
Is it a challenge to sell a best-of-breed product to small physician practices?
There has been a wonderful marketing campaign by companies that have suites. The vast majority of doctors that we have surveyed, probably 80%, would much rather buy a product that interfaces to their existing practice management system. They would rather not throw out the PMS side. They don’t want to retrain the office staff. They don’t want lose accounts receivable data. We've heard many horror stories when doctors went to a suite.
Suite companies have a single point of contact, but we offer that, too. With us, customers get to choose the best practice management product and EMR product. We have a network of 100 reseller companies that do that locally. Smaller offices, say 1-10 docs, which is maybe 70% of the market, want local representation. They don’t necessarily want a single vendor, they want a single point of contact. Companies and consultants push a suite, but there are a lot of other ways to slice and dice that. Also, if you’re having problems with a product or company, it’s hard to switch out a suite, so you don’t have much leverage.
Do you think relatively new players like eClinicalWorks and eMDs have changed the industry or will have future impact?
I think there’s a huge opportunity for many companies to do very well. Those two are very fine companies. CCHIT and the certification process will certainly weed out many of the existing players in the industry. Being one of the founders of EHRVA, we’ve tried to stay close to CCHIT and the interoperability standards that will come about in the next 12-18 months. It's important that vendors who survive this washout listen to their doctors and meet the needs of the segment they serve. We don’t try to be everything to everybody. We pay most attention to the 1-10 person practice, which we think is the ideal size for our product.
EMDs has been around for a while and they’re a good company. eCW has come out of nowhere, but they have very good management. The trouble with any company, us included, is that companies are growing so rapidly that you have to be careful that the quality of the product and support to the end user is not compromised. We’re trying carefully to maintain those points as we grow.
How important is interoperability to your customers?
I’m not so sure they view it as a deciding factor. In the next 12-18 months, when the interoperability standards are out, it will be paramount, for both equipment interfaces and software interfaces. For RHIOs and IHE, it will be important. It will also allow data to be dumped from one product to another, so if a vendor is bought or their product replaced, the doctor can get their data and move on without gut-wrenching experience. It’s a standardization that will enhance the practice.
Are your customers finding that patients are interested in personal health records?
We’re really not being asked by the majority of our clients for that. It will be out there eventually. One of the things that the industry continues to do is to bring out ideas like PHRs and maybe put the cart before the horse. We need to make sure the office is using and optimizing what they have before allowing patients to move ahead with PHRs. The time is near and it will be great to have it, and we’re developing that capability. We’re not getting asked, but we should be, by customers using EMRs effectively in their practices.
You’ve said that MediNotes won’t participate in CCHIT certification in the first round because the process was rushed and overly expensive. Do you think certification will improve the marketplace, reduce customer risk, or increase physician reimbursement?
In terms of reimbursement, I don’t know if CCHIT will do that. It will allow a comfort level for physicians, with one caveat we’re concerned about. There are a number of good vendors in the market, but some are coming to the market who haven’t had a product in a practice before. They designed a product around CCHIT. They could pass the test and be certified, and maybe a physician would buy it because certification makes them think it would meet their needs. But, it could be an immature product that isn’t tried and true. It may need time to evolve. Certification would fail to meet expectations in that case.
We have to be clear that certification is just one aspect of what a physician should look at before purchasing an EMR product. I think a number of fine products will fail in 12-18 months because they won’t get certified, yet they will be better than certified products. From a functional aspect, is it practical to use the product at the point of care? CCHIT doesn’t look at that. Is CCHIT, in some instances, based on practice overkill? It covers what an EMR has. Certain sized practices may need functionality that others would never even use.
Certification will add to the cost to the product. There have to be trade offs in development time. We don’t focus our attention on the competition that’s out there. We try to focus on what clients and our current customers want. We try to do what’s best. CCHIT has really raised or delayed in some instances some of the development because you now have to pass this litmus test. It's unfortunate on one hand, but on the other, the industry obviously wants to do it
We won’t be certified in the first round, but we will apply on August 1 now that we’ve read the contract. There is a very active group of vendors that are knowledgeable and concerned about the industry. It’s not about our products, but ultimately what doctors want. When CCHIT started two years ago, there were 1500 requirements on the initial list. Trying to get it so it's reasonable for what clients want was a huge effort undertaken by a number of companies. It took thousands of man hours to get it to where it is today.
It will be very interesting how CCHIT plays out in the next three years. Will it be the litmus test that everyone thinks, or will other things evolve that are more relevant to doctors?
You're referring to EHRVA, which Girish Kumar of eClinicalWorks said was a trade association to which he is indifferent.
I totally disagree. Their company is a member and I know they have people who attend. We’ve spent hundreds of hours on this subject, because if we didn’t come together, the rules and regs on what would have been delivered to clients would have been so onerous in cost that it would have killed IT. It’s too bad that he feels that way, but EHRVA has been instrumental in improving IT for the betterment of the nation. I‘m proud to be serving on it.
If customers haven't demanded certification and vendors aren't convinced of its value, should CCHIT just go away?
I don’t know. I’m a big fan of free market. The market will determine whether CCHIT is a good idea and whether its seal of approval will have lasting effects. There are a lot of people with businesses who will be hurt by it, and that’s too bad. There are some fine individuals that, because of their company's size, will be washed out.
I don’t think the expense of taking the test is the expense at hand for vendors who won’t make it. It’s totally redoing an infrastructure without the time, dollars, or people to get it done. Some vendors who are capable will be certified in the first year. For those who aren’t, they have probably a 2-3 year development cycle. By that time, it might be too late because of the hype. The companies that get certified will be talking about it.
Do you get your money's worth for exhibiting at HIMSS?
Yes. HIMSS for years was focused on the large players, the hospital based systems. They’ve broadened their scope to the point where they’ve got a focus on the ambulatory space. It’s an extremely important part of healthcare and they’re bringing a lot of resources to this market. That’s very encouraging.
Is the physician office EMR market consolidating, and if so, how will that affect multi-product vendors?
It will consolidate. How it does will be very interesting. When consolidation finally happens, it may be similar what happened in the practice management arena, where acquired companies found it hard to get their doctors to go to the acquiring company's EMR. It’s easier for the office staff than for the doctor. The doctor won’t be happy about being forced to another EMR after investing the time in it. The legacy systems will be there for a long time, even longer than some of the PMSs on the market.
What about Emdeon?
They and Misys are realizing that the game has changed. Companies like ours understand how to serve the small marketplace. Some of the large vendors are scratching their heads on how to survive.
Allscripts bought A4 to compete in the small practice market.
The A4 product isn’t really geared to the 1-5 man practice. It's more like the 5-25 doctor practice. For the small practice, there aren’t a lot of products geared to that. But, Allscripts has some very talented people and there will be space for them and others.
Will retail-based clinics succeed and will technology be important to them?
I think our product would work well for them. We have NPs and PAs using our product. Finding doctors today to go to rural America is becoming difficult. You can wait years to get a doctor willing to move to a town of 5,000 people. PA and NP triage could be the model that happens in many places.
What changes are needed to the Stark Act?
Stark needs to allow for choice, almost forcing choice for doctors in an area. There should be a minimum of three EMRs that are offered through a hospital, if the hospital distributes systems. That will force interoperability among vendors that otherwise might feel they have a leg up in the hospital industry. It gives the doctors the best choices.
One product is not going to fit all. They all work in varying degrees and we should allow free enterprise to make the decision. It will help industry get over the hump of having hospitals offer only the vendors they’re comfortable with that may not be the best choice. It won’t happen, but Stark should allows doctors to choose whatever system they want and allow the hospital give them a stipend. Legislation won’t go that way and interoperability standards aren’t here yet that would ease transmission of data.
What conventional thinking do you feel is wrong in the industry?
That suites are the end-all. The CCR/CRS data transfer debate – let’s use HL7 and the CCR data set under the wrapper, CCD. It's imperative that we have a single standard for data transmission. If vendors have to write to multiple standards, the cost will increase to the physician and there’s no need for it. I sit on the HL7 advisory board and I hope my fellow CEOs in this marketplace will take a more active role so we can evolve standards and the private market, the doctors, will make good choices for their practice and provide the best care possible.
Where will you take the product and company?
Our goal is to be the #1 vendor in the small marketplace. Best-of-breed allows us to be unique in this segment. We don’t have to force the office to uproot what they currently have. I’ve been in business long enough in different segments to have seen a lot of mistakes people have made, but also the positive things that come from people who run their companies well. This is a huge market with potential and some people will benefit greatly from it. I hope to be one of them.
comments (1)
1. Blue left...
07/05/2006 2:16 pm
That was a great interview, I think one of the best yet. Don has a great
perspective and gave answers with great substance.
