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How Cloud-Based Solutions Enable Small Medical Practices to Transform to Pay-for-Performance Models

By April 23, 2013Article

Editor’s note: Kareo is a medical software and service vendor whose cloud-based products and services address the clinical, financial and regulatory needs of small medical practices. In this interview, chief medical information officer Dr. Tom Giannulli and chief marketing officer Rob Pickell discuss industry trends and how software products help physicians achieve healthcare reform mandates for higher-quality patient care. Until recently, a lot of healthcare providers were not enthusiastic about the cloud. What drove them to cloud-based solutions? 

Dr. Giannulli: I think the cloud has been a constant moving force in a positive direction. Early on it was kind of like online banking; doctors really didn’t know if they could trust it. With experience in using today’s cloud-based consumer technology, they have grown to trust it. There haven’t been any major data breaches that have been reported using cloud technology in healthcare. And security with cloud vendors is HIPAA compliant.

A second influencer is the fact that doctors want to use patient data in multiple locations on multiple devices. In addition, the cost structure involved with managing client-server, or legacy, technologies has become cost-prohibitive for small medical practices.

Rob Pickell:  Another influencer is data security. Small practices have significant challenges in protecting local paper-based or technology-based solutions because they lack the IT resources to drive data protection. They recognize that cloud-based solutions solve this major pain point. Due to the Affordable Care Act, physicians, clinicians and hospitals are changing their operations to drive toward wellness programs because they will be paid for performance and outcomes. What are you observing in the market regarding how software products are helping them achieve this transformation of their operations? 

Dr. Giannulli: We’re seeing that when the patient is in the doctor’s office, and the doctor is advising on care plans, there is a significant effort to be very detailed and help the patient have a good understanding of what their care plan is when they leave the office.

In a pay-for-performance model providers must stay engaged and make sure the patient is following instructions correctly. And that’s where all the technology comes to bear. They need patient portals. And some portals use fitness technology on mobile devices that are off-the-shelf consumer products to allow the doctor to see what’s going on while a patient is out of the office. The demands that we see from our user base is an increased need for those kinds of technologies and for products that enable more engagement with the patients.

At Kareo we built patient-portal technology into our Electronic Health Records (EHR) solution. It allows the patients to log on and see their labs and other information and communicate with their doctor. And that’s very important to keeping the patient engaged and tracking their progress. Where is the driving force? Is it from IT providers making physicians and hospitals aware of solutions to achieve the new mandates, or are the doctors approaching the IT providers and asking for help? 

Dr. Giannulli: It’s really both. The doctors need technology for collaborating and communicating with patients and colleagues. But I would say right now the whole regulatory catalyst is “meaningful use.” Doctors need to comply with this so they can accept Medicare payments. By and large the doctors are coming to us saying they have a problem and would like to solve it in a way that’s intuitive, simple and economical.

Rob Pickell:  At the same time, there has been a convergence of consumer technologies in mobility, the cloud and social networking. There’s a tipping point where these technologies now can be combined in a way where solutions are available that previously simply weren’t feasible. When your company has developed its solutions, how much of the product development tweaking was driven by user feedback?

Dr. Giannulli: We’re constantly in the process of obtaining feedback and making adjustments. We use the Agile technique to develop our products, so we actually iterate on the product every 30 days and do a new release. That gives us the ability to listen to feedback and make changes rather quickly.

Rob Pickell:  The practical reality in our target market of small practices is that they are very cost-sensitive and historically wouldn’t invest to upgrade their installed software over time. So they were locked into one way of doing things despite their investment in technology. It’s pretty exciting that cloud solutions are evolving based on feedback from the user community every single month.

We’re focused on identifying the intelligence of the crowd in our user base, figuring out best practices and then building those best practices into our solution and making them instantly available without incremental costs to our customer base.

Dr. Giannulli: Our EHR product is offered as a freemium model. Then, based on success, we hope to entice our users to upgrade or expand to our practice management or our billing services. These products are completely integrated on a single data platform, so they’re very easy to expand on. And they are all deployed via the cloud, so they are easy to acquire and easy to manage.

We have a reputation in the industry of being very transparent and forward thinking. When a customer comes to our site and looks at our product offering, there’s one price, which includes everything. Unlike a lot of vendors, we don’t have a non-transparent way of engaging with customers. And the Kareo way of dealing with our customers is to be very friendly. We think that’s a differentiator in the industry. You mentioned best practices, but isn’t it still early with these products to be able to identify best practices? 

Dr. Giannulli: One of our three major differentiators is our clinical knowledgebase that drives our product. One is that we’re cloud based and the second is that we’re mobile by design. The third differentiator is that we’re designed by doctors for doctors, and part of that aspect is our clinical knowledgebase that drives documentation. The clinical knowledgebase presents best practices on a pick list, if you will.

We have done a lot of research on the current state of medical treatments for various problems; in fact, we cover the top 100 problems in primary care. For each one of those we have a pick list of care-plan options based on best practices and evidence-based guidelines. We integrate that knowledge into our products and the users are free to adjust it based on their thoughts.

Rob Pickell:  There’s really two pieces. In the core software being consumed by medical practices, there’s the clinical piece that Tom just addressed, and then there’s the business side. The business side is a more mature segment and doctors are highly motivated to figure out how their administrative side is performing versus their peers.

Since our beginning in 2004, a big part of Kareo’s focus has been on exposing metrics and data around what’s possible in the management of a practice, enabling doctors to make adjustments accordingly. You mentioned that your knowledgebase is a differentiator, but don’t competitors also have a similar knowledgebase? 

Dr. Giannulli: Our knowledgebase is the best of breed in many aspects. It was developed by the medical editors at Epocrates over a three-year period. So it’s quite a large investment of some of the most talented people in the business. We looked at what was available in the industry before we built our knowledgebase, and we could not find a knowledgebase that compared to the level we wanted to offer. We definitely have a differentiator in the quality and extent of the knowledgebase we offer our users.

Rob Pickell:  One of the inherent benefits in the cloud is that we’re able to aggregate the data from across the knowledgebase in a way that isn’t available if it’s isolated in local deployments. Most of our competition is really on the legacy side and lacks the ability to uncover these insights as an implicit part of the solution.

As an example, let’s say a key metric is how fast a medical practice collects from payers.  That information may exist in the practice’s management system, but it’s isolated to its servers. But with Big Data analytics in our system, we can uncover that information across our entire client base and then ultimately slice it in whatever way makes sense around a practice’s payer mix, specialty, practice size, etc. and then expose the range of metrics and best practice.

We then work with that medical practice in identifying what they could do differently, both from a process standpoint and in leveraging our technology, to move from where they are today to what’s possible. Just with that one metric there is phenomenal ROI. If the practice can collect two weeks faster, it could mean the difference between staying financially solvent or not. So it’s really high stakes on the business side in a really challenging economic environment in which small practices operate. Have you heard any feedback in the last six to 12 months from your customers about some major feature or capability they wish you had, or have you pretty much addressed the needs that are out there right now? 

Rob Pickell:  Our customers have been asking us for capabilities around two areas. The first was a collection of services around practice management to support their billing operations, which is generally called revenue cycle management. We launched Kareo’s billing service or revenue cycle management service in January 2013. The other key area was around electronic health records, which we launched in February.

Dr. Giannulli: The needs are a moving target. Some of it is regulatory; for instance, meaningful use 2.0 will require completion by Jan. 1, 2014. There are some other patient-driven healthcare features we’re working on that have to do with patient portals and how we can enhance the engagement between the doctor and the patient.

The third element is around doctor-to-doctor communications and communicating to third-party systems like Health Information Exchanges (HIEs). We’re working with technology vendors in that space to integrate their offerings so we can go across the country network-wide with communications between doctors through several different resources.

Those are areas we’re expanding on as part of our road map in the next 12 months. Is your company collaborating in product development with any health plans because of so much need to integrate provider and payer efforts to achieve the required outcomes mandated in the Affordable Care Act? 

Dr. Giannulli: There is a movement. For the past year the health plans have been offering what’s known as “care gaps.” They do data collection and analytics to determine which patients are not getting certain minimal coverage on their care plan. Examples: a diabetic who is falling out of range,  a person with high cholesterol who is not on a cholesterol-lowering agent or a woman who didn’t get a mammogram as scheduled for health maintenance. The health plans detect these gaps then communicate them to the patients and then to the doctors so they’ll be aware of something they might have missed. This is fairly new in the industry.

Now they are trying to transition those care-gap communications to the physician electronically through their EHR. So there are initiatives going on now where the payers are trying to reach out to the base of doctors/users on the EHR. That is evolving right now.

There’s a certain process that has to be adhered to regarding the care gaps, and there’s usually a third party in the middle that has to be dealt with. Right now there are a lot of intermediaries that get involved. I’m hoping that in the near future it will become much easier for physicians to receive those messages. 

Tom Giannulli, M.D., M.S. is the chief medical information officer and member of the leadership team at Kareo. As a practicing physician he guides Kareo’s EHR strategy. Previously, Tom was chief medical information officer at Epocrates. Prior to Epocrates, he was founder and CEO of Caretools, which developed the first iPhone-based EHR. He also drove mobile healthcare technology innovations as VP of advanced research for Data Critical and was the founder and CEO of Physix. 

Rob Pickell is chief marketing officer at Kareo. Prior to joining Kareo, Rob was CMO, SVP strategy for HireRight and helped it achieve the number one global share position in its industry. Prior to HireRight, Rob held leadership positions at technology companies including VP of worldwide marketing at Quantum Corp.; EVP, general manager of; VP of partner marketing for; and group director of marketing and channel development for Verizon Wireless (then AirTouch). 

Kathleen Goolsby is managing editor at

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