Fuld’s Competitive Musings

On April 3, 2009, dozens of experts from leading healthcare institutions and technology companies assembled to watch a war game unfold on The Battle for Healthcare Information. Some of the brightest business students from Columbia, MIT, Kellogg, and Wharton represented healthcare giants, Microsoft, McKesson and Kaiser Permanente. Their purpose: To stress test technology’s future role in rewriting America’s healthcare map. Tens and perhaps hundreds of billions of dollars are on the table for the company that can figure out the strategic solution.

We held this year’s event in New York City. It is the fifth national war game championship organized and run by Fuld & Company.

Teams assumed the identity of four major healthcare icons, simulating and ‘stress testing’ their anticipated strategies to determine who will profit from the adoption of Electronic Medical Records (EMRs). The Obama administration’s injecting $19 billion to kick-start this nascent electronic medical records industry just gets the players moving. It is no guarantee you will see universal adoption of electronic records in healthcare anytime soon.”

Among the predictions during this fast-paced business school war game event are:

• Entrenched interests will continue to resist EMRs for some time to come. Healthcare system change, engendered by EMR, means some interests will win dollars while other traditional players will lose - and no one wants to lose.
Physician, hospital and patient/consumer markets—are going to be major challenges for all companies in the field, the teams acknowledged. Hospitals and doctors actually can make money through these current inefficiencies and will likely resist change. Smaller medical practices may continue to resist installing such EMR systems, not wanting to invest in long-term promises while sinking lots of money into new and complicated electronic medical records systems. Emerging pay-for-performance requirements, and reimbursement incentives, may sway the thinking.

• A shortage of technical manpower will slow down the implementation of electronic medical records, no matter how much money is thrown against the challenge.

• Allscripts (and other similar pure plays, such as Epic Systems) will seek to leverage its unusually close proximity to the medical community to bring EMRs to smaller medical practices than had been reached before. In order to penetrate the small medical practice market where most of the EMR potential user base exists, it will have to form an  alliance or merge with a larger player that has a far more extensive sales force.

• The market that is driving efficiencies, such as EMRs and other scalable solutions, will act as a catalyst to force small medical practices to band together or merge in the next few years, allowing doctors to spread the cost – and the risk – of EMR implementation.

• Kaiser-Permanente seeks to lower healthcare costs by “undocking” healthcare information within its system, vastly increasing the access and portability of patient data. As a major healthcare provider, Kaiser is well positioned to set industry best-practices and influence adoption of EMR systems, rather than provide the ‘killer app’ platform itself. Kaiser will become the nexus of important alliances between government and industry to craft standards in healthcare IT—e.g., to afford interoperability of data-related tools and technologies—that have been nonexistent.

• McKesson will be working to vastly expand its healthcare IT niche through its dominance in logistics and understanding of the health value chain, data creation and data utility—with an emphasis on physician, payor and healthcare delivery applications. The company will be looking to generate synergies among all these different points of the healthcare delivery chain through information technology. MIT’s team, simulating the McKesson strategies, won the war game competition based on four criteria: the team’s strategic insight, accuracy in presenting McKesson’s strategy, creative ways it expressed McKesson’s culture and goals, and finally, its ability to project their strategic vision into the future. Last year’s war game on “The Battle for the Wireless Internet”, won by the Kellogg MBA team, successfully predicted a number of industry alliances.