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Katlyn Graham: Hello, I'm Katlyn Graham. I'm here with Mike Lucey, the President of Community Hospital Advisors.
Mike formally worked with McKesson. He was part of the team that reintroduced Paragon to the market in the early 2000s. Then he created Community Hospital Advisors, a consulting firm dedicated to helping hospitals effectively install Paragon.
Welcome, Mike.
Mike Lucey: Hi, Katlyn.
Katlyn: Thanks for joining us today.
Mike: My pleasure.
Katlyn: I appreciate it. We're discussing these new standards McKesson Paragon require for Meaningful Use 3. What is Meaningful Use 3, Mike?
Mike: Meaningful Use is the vein of many, many CIOs in hospital executives these days. It's a set of standards that a hospital has to meet in the use of new electronic tools, electronic medical records. It's not just that you're putting in a system, but a government has come up with a set of...It's like checklist of minimal standards that you need to meet for using these products. That has reporting requirements. It has care requirements. It has patient access requirements.
It's been a struggle because as the standards have been delivered, they've also changed. There are three sets of standards. You use one, then two, then three. The Meaningful Use 3 standards are still a bit influx. Hospital executives, CIOs in particular, are trying to figure out, "Where do I need to be from a product‑set standpoint in order to meet these standards?"
One of those challenges is in the McKesson environment, there is a good set of products out there today. Their star is one set of applications and then the horizon set of applications that many people have invested in over the years. The question is hanging out there. Can I keep my current product and then meet these new standards? It can keep folks up at night and give them a lot of headaches.
Katlyn: Do you need Paragon or McKesson Paragon to meet the Meaningful Use 3 standards?
Make: No. In a qualified way, the answer is no. You do not need to buy Paragon to meet what we expect to be the Meaningful Use 3 standard. Looking about what those standards are today, no, you don't need it. You can get there with today's product. That's a general statement.
The sad reality is then you say, "OK. Generally, that's true, but what about for me? What about for my particular hospital?" The interesting thing that's happened with these stars‑slash‑horizon hospitals over the years is that everybody has a very different mix of products.
In many cases, it's not just McKesson products. I'll have McKesson products and I'll have McKesson products from the different business units. I'll have Relay products. I'll have Pathway's products. I have Horizon. I've got Star. I've got this sorter lab or I have some other things that are augmenting my environment. This whole ball of wax can whole thing get Meaningful Use 3. That is an individual question, and you have to go through individually to see if I can get to the standards with this set that have.
Generally, though, I'd still say, "Yeah, you probably can. If you've been able to get through other Meaningful Thresholds with your current set, you can get to Meaningful Use 3 with your current set."
Probably not with your current versions, though. That's the other that comes in there is, "I have all these products. They're working pretty good. Got me Meaningful Use 1, maybe get me to Meaningful Use 2. What does it take to get me to Meaningful Use 3?" That's where you have to start down with a calculator and pencil and figure out the dollars.
There are very big upgrade costs associated with a lot of these applications. One of the services we provide is an analysis of that current state and that current set of applications. We generally find the, "Yup, they can all get you to Meaningful Use 3, but then you go and do the other math."
If I'm at version ‑‑ just to pick a number ‑‑ but I'm at version 11, it's OK. To get to Meaningful Use 3, you're going to get to version 15, and version 15 requires these kinds of technology changes, these kinds of upgrades, this kind of new training. If you do that for one application, it has a cost associated with it.
Now, you take that cost and you do it the 2nd the 3rd, the 12th, and the 14th. Suddenly, you're in this place of, "Wow, I'm doing enough work that I could put the whole damn thing in again and start over." That's where you start saying, "It's time to look at Paragon."
Eventually they're going to have to make the move. Eventually these products, whether it's three years, five years, seven years, are going to go away. You're going to move to, if you're staying with McKesson, McKesson's newer platform, which is going to be Paragon. It's just a matter of whether I'm going to do it today or I'm going to do it in three years or I'm going to do it in five or seven years.
Katlyn: When you stick with Star or Horizon, you're putting off the inevitable or...
Mike: Yes. You could be putting off the inevitable, but we have recommended hospitals do that. We've gone into some sites, and you see they're very current. They might have built things out in a very effective way. In some respects you're saying, "All right. We're going to hang on here because our upgrade costs are very manageable."
In most, and I'm qualifying that, but I do think right now it's most other environments. When you start doing the math, it starts looking from a dollar perspective, "I could be better off to make the change earlier rather than later" because we do have this other." There's a third calculation here.
Calculation one is, "How much does it cost me to upgrade?" Calculation two is, "How much does it cost me to put in Paragon?" Calculation three is, "How much does it cost me if I don't get to Meaningful Use 3?" Now that's an interesting calculation because that also is very, very individual. I find that most hospitals don't do that math.
It's an important piece of the equation because if the penalty is not horrifying, then you should really take a look at your timing. Our struggle with the government is that the timing has been changing pretty regularly. Every time we think we know what the calendar is, well, the calendar can change.
Most recently we saw this with the ICD‑10 change, which moved a whole year one weekend, which was good news for some people and frustrating for others who were really all ready to go.
Katlyn: It sounds like that someone might choose Paragon when these upgrades to their old software just gets really expensive, and they want to be able to do more? Is that why someone chooses?
Mike: Exactly. The mix that comes in is many hospitals had been delaying upgrades for a series of years with the expectation of making a move. That is not a bad decision. Some folks would start to question it because they start thinking, "Man, I should have done it a while ago. The direction we were thinking we were going has now changed. Now it's going to be Paragon."
Nobody likes to have that kind of shift. "I had a direction that I was heading. Now that direction is gone. Paragon is the alternative that's out there. Am I being forced to go to Paragon?" The answer is no.
I have not found a hospital that could not make the move to Meaningful Use 3 with augmenting their current set. It's just a matter of looking at the detail of how much pain is involved in that upgrade, how much cost is involved in that upgrade, and then doing a very objective unemotional view of, "OK, if I go to Paragon, which is the best way?"
I would say when we get to the even, it's X million to go upgrade, and it's Y million to go Paragon and they're relatively even, maybe this sounds self‑serving, but we generally would say earlier is better than later because eventually you're going to make that change.
The more time you have to adopt a new technology, optimize that new technology, and make it a part of your culture the better off you're going to be. You'd hate to be up against the gun saying, "I have to meet a standard by January 1st or July 1st or I'm in trouble." That puts a lot of pressure on a project, and you'd prefer not to be there.
Katlyn: When are these standards required for hospitals? You said it keeps changing.
Mike: It keeps changing. I'd be in huge trouble if I...
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Mike: ...I told you.
Katlyn: Oh, OK.
Mike: If I put a date, but we've mapped it out for folks. It's individual there, too, because depending on when they made Meaningful Use 1, when they made Meaningful Use 2, now they're looking at Meaningful Use 3. We would put that date, though, clearly into the analysis and it becomes a huge part of the equation.
As I said, the other part is not just when do we need to be there, but what are the ramifications for losing? Because, very interestingly, when we do that math, maybe it's not as bad as you thought it would be and it has a lot of different elements to it, but I think that it's the further part of the equation, it's the further part of the conversation that many folks don't get to. But it's all part of the analysis. Once you sit down and look at it, you'll look at your alternatives, and you make a decision.
To answer the question that originally started it, no. If you have a set of products now and you've gotten to Meaningful Use 1, you've gotten to Meaningful Use 2, you can probably get to Meaningful Use 3. It's just a matter of whether or not it's the best cost decision.
Katlyn: OK. Thank you, Mike, so much for explaining this. If you would like more information, visit the Community Hospital Advisor's website at commhospital.com, that's comm with two Ms. Or you can call (888) 811‑4687.
Thank you, Mike.
Mike: Thank you.
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