Minhang District Health Bureau Shanghai, China February 9, 2012 Evolution of Global HIT Where Does China Stand on the Global HIT Continuum?

Minhang District Health Bureau

Shanghai, China February 9, 2012

Evolution of Global HITEvolution of Global HIT

Where Does China Stand on Where Does China Stand on the Global HIT Continuum?the Global HIT Continuum?

MINHANG DISTRICT HEALTH BUREAUMINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUPDORENFEST CHINA HEALTHCARE GROUP22

Presentation Agenda

PagePage

About the Dorenfest GroupAbout the Dorenfest Group 33

The Evolution of Global HITThe Evolution of Global HIT 1111

Evolution of RHNs in Other CountriesEvolution of RHNs in Other Countries 2020

Current Status and Future Direction of HIT in ChinaCurrent Status and Future Direction of HIT in China 2727

Evolution and Current Status of RHNs in ChinaEvolution and Current Status of RHNs in China 4040

Where Does China Stand on the Global HIT Continuum?Where Does China Stand on the Global HIT Continuum? 4747


About the Dorenfest Group

40 years experience in HIT40 years experience in HIT

Offer healthcare improvement services through a variety of businesses.Offer healthcare improvement services through a variety of businesses.

– SoftwareSoftware

– Hospital Operations ImprovementHospital Operations Improvement

– Consultation with Technology and Software Vendors In HealthConsultation with Technology and Software Vendors In Health

– Information BusinessInformation Business

Focus on improving patient care and operational efficiency through better Focus on improving patient care and operational efficiency through better change management change management

– Work process improvementWork process improvement

– Management systems improvementManagement systems improvement

– Improvement in services for patientsImprovement in services for patients

– Improvement in quality of patient care Improvement in quality of patient care


Some Dorenfest Hospital Projects

Abington Memorial Hospital Addison Gilbert Hospital Adventist Health System/Sunbelt Adventist Health System/West Akron General Hospital Albemarle Hospital Baptist Healthcare System Baxter County Regional Hospital Baylor Health Care System Benedictine Health System Boulder Community Hospital Brackenridge Hospital Bristol Bay Regional Health System Burlington Medical Center Caritas Health Services Carondelet Health System Central DuPage Health System Central Washington Hospital Centura Health Charleston Area Medical Center Children’s Health Care Cleveland Home Health Agency Community Memorial Hospital Conway Regional Medical Center Cortland Memorial Hospital Cox Medical Centers and Health Services DCH Healthcare Authority Delnor Community Hospital Dreyer Medical Clinic Duluth Clinic East Alabama Medical Center Edward Health Services Corporation Flagler Hospital Florida Hospital Freeman Health Services Freeport Memorial Hospital Glenoaks Medical Center

The Good Samaritan Hospital Grady Health System Greenwich Health Authority Hamot Medical Center Hazleton-St. Joseph Medical Center Hinsdale Hospital Holy Redeemer Hospital and Medical Center Horizon Health Care Group Howard Young Medical Center Humility of Mary Health Care Illinois Medical Billing Service Integris Health System Jackson County Memorial Hospital Johnston Memorial Hospital Kennebec Health System Lakeland Regional Health System Little Sisters of the Poor Health Services Los Angeles County Department of Health Services Marion General Hospital Medical Center of Southern Indiana Memorial Health Alliance of Burlington Memorial Health Services – Long Beach Memorial Hospital – Belleville Memorial Health System – South Bend Mid-Maine Medical Center Michigan HealthLink Miller-Dwan Health System Mount Clemens General Hospital Muskogee Regional Medical Center Nebraska Methodist Health System Presbyterian Health Care Services Progressive Health System Providence Medical Center Pungo District Hospital Rapides Regional Medical Center Ravenswood Hospital

Resurrection Health Care Corporation River District Hospital Riverside County Health Services Agency Robert Wood Johnson University Hospital Rush North Shore Medical Center Salinas Valley Memorial Hospital San Antonio Community Hospital Scripps Clinic Shadyside Hospital Sharp HealthCare Sisters of Charity of Nazareth Healthcare System South Jersey Hospital System Southeastern Ohio Regional Medical Center Southern Illinois Health Corporation St. Agnes Hospital St. Clare’s Hospital St. Elizabeth Hospital St. Francis Medical Center St. Joseph Health System – Orange, CA St. Joseph Hospital – Cheektowaga, NY St. Joseph’s Hospital – Marshfield, WI St. Joseph’s Medical Center – Brainerd, MN St. Luke’s Hospital – Duluth St. Mary’s Hospital – Amsterdam, NY St. Mary’s Hospital – West Palm Beach St. Mary’s Medical Center – Duluth St. Vincent Infirmary Medical Center Stillwater Medical Center SwedishAmerican Health System Texoma Medical Center Tulane University Hospital and Clinic University of Tennessee Bowld Hospital Valley Hospital Washington County Health System William Beaumont Hospital Corporation Willis-Knighton Medical Center Yuma Regional Medical Center


Some Dorenfest Healthcare Supplier Projects

3COM Corporation 3M Corporation Abbott Laboratories ALLTEL American Business Computers American Hospital Supply Corporation American Medical International Amicare Anacomp, Inc. Anixter, Inc. Apple Computer, Inc. Arthur D. Little, Inc. Arthur Young & Company AT&T Information Systems AT&T Technologies Automated Information Systems, Inc. AVNET Bacon, Whipple and Company Bain and Associates, Inc. Basic American Medical Inc. Baxter Diagnostic, Inc. Baxter Travenol Laboratories BayNetworks Becton Dickinson Bell Atlantic Bell Laboratories Biovation, Inc. Bristol-Myers Squibb Brunswick Corporation Cerner Community Health Computing COMPAQ Computer Compucare Computer Sciences Corporation

Crowntek, Inc. Datacare, Inc. Dell Computer Corporation Digital Equipment Corporation E.I. du Pont de Nemours & Company Eclipsys/TDS Eli Lilly Emtek General Electric Company Habush & Habush, Inc. Hambrecht & Quist, Inc. HBO & Company Health Data Network Health Systems International, Inc. Health-Comp. Inc. Hewlett-Packard Hill-Rom Honeywell Hospital Corporation of America Humana, Inc. IBM Corporation IDX Corporation IMS America, Ltd. Information Strategies, Inc. Intel Corporation Intellimed Johnson & Johnson Kimberly Clark Lawson Software LORAL/Martin Lotus Development McDonnell-Douglas Health Information Systems McGraw Hill McMullen & Associates (Canada)

MedAmerica Health Systems Medicus Systems Mediflex Systems Meta Software Microsoft Corporation Moore Business Systems, Inc. Motorola, Inc. National Medical Enterprises NCR Corporation NetFRAME Nuvatec, Inc. Ohio Nuclear Pathlab PeopleSoft Physio Control Praxis International Prime Health, Inc. PROMIS Health Technologies Ransburg Corporation Retrieval Systems SAIC Sentry Data, Inc. Shared Medical Systems Spacelabs, Inc. Standard Register Sun Information Systems Sunquest Corporation TETRAD (England) Total Business Systems Trinity Computing Systems Universal Health Services VoiceLinks Medical Wisconsin Blue Cross Xerox Computer


Dorenfest’s Investigation of China Healthcare in 2005-2006

1.1. Visited 17 cities in ChinaVisited 17 cities in China

2.2. Met 100’s of healthcare industry leaders in ChinaMet 100’s of healthcare industry leaders in China

3.3. Visited over 100 hospitals to review hospital operations and define Visited over 100 hospitals to review hospital operations and define opportunities for improvementopportunities for improvement

4.4. Met provincial and city health bureau leaders in cities visitedMet provincial and city health bureau leaders in cities visited

5.5. Met with many companies selling products and services to the healthcare Met with many companies selling products and services to the healthcare industry in Chinaindustry in China

6.6. Evaluated a group of hospital ownership and management opportunities and Evaluated a group of hospital ownership and management opportunities and assessed viability of the Dorenfest “model hospital” in Chinaassessed viability of the Dorenfest “model hospital” in China

7.7. Developed a strategy for bringing Dorenfest skill and experience to ChinaDeveloped a strategy for bringing Dorenfest skill and experience to China


Dorenfest Vision of a Model Hospital

Provides improved quality of care to its patientsProvides improved quality of care to its patients

Operates at a highly efficient level through effective use of systems and Operates at a highly efficient level through effective use of systems and better work processesbetter work processes

Offers its services to patients at an affordable costOffers its services to patients at an affordable cost

Creates a highly satisfied patient population with the patients observing a Creates a highly satisfied patient population with the patients observing a noticeable improvement in the services and treatments provided by the noticeable improvement in the services and treatments provided by the hospitalhospital

Utilizes appropriate digital technology to create a state of the art “digital Utilizes appropriate digital technology to create a state of the art “digital hospital”hospital”


China Healthcare Leaders Want to Leapfrog the World in IT Use

Chinese hospitals and health bureaus are carefully considering how to be Chinese hospitals and health bureaus are carefully considering how to be more successful in taking next steps forward in IT usemore successful in taking next steps forward in IT use

There is a recognition that for China to accomplish its objectives in HIT There is a recognition that for China to accomplish its objectives in HIT requires the following: requires the following:

– Learning quickly from the global experienceLearning quickly from the global experience

– Overcoming resistance to changeOvercoming resistance to change

– Knowing how to manage changeKnowing how to manage change

– Doing more of what the rest of the world did right and less of what they Doing more of what the rest of the world did right and less of what they did wrong to avoid mistakes other countries have made and China is did wrong to avoid mistakes other countries have made and China is still makingstill making

– Developing more expertise in these areas of need quickly Developing more expertise in these areas of need quickly


The Dorenfest Group Is Bringing Needed New Skills to China

1.1. Hospital Operations Improvement, Work Process Improvement, and Change Hospital Operations Improvement, Work Process Improvement, and Change ManagementManagement

2.2. IT Program Improvement, Problem-solving, Strategy, and Planning IT Program Improvement, Problem-solving, Strategy, and Planning

3.3. New Approaches to Buying IT Systems in a Stronger Partnership with Users New Approaches to Buying IT Systems in a Stronger Partnership with Users

4.4. New Ways to implement IT Systems New Ways to implement IT Systems


Examples of Dorenfest Projects in China

Some health bureau clients for RHN and digital hospital planning Some health bureau clients for RHN and digital hospital planning

– ShenzhenShenzhen

– ChongqingChongqing

Some hospital clients Some hospital clients

– Peking University Third HospitalPeking University Third Hospital

– Shanghai Changning Maternity & Infant Health InstituteShanghai Changning Maternity & Infant Health Institute

– Rizhao City People’s HospitalRizhao City People’s Hospital

– Foshan City First People’s HospitalFoshan City First People’s Hospital

Help clients from other locations bring their skills to Mainland China Help clients from other locations bring their skills to Mainland China

– Hong Kong Hospital AuthorityHong Kong Hospital Authority

– MicrosoftMicrosoft

– PhilipsPhilips


The Evolution of Global HITThe Evolution of Global HIT



Opportunities to Improve the Healthcare Delivery Process Have Been Pursued for Many Years

Great redundancy of informationGreat redundancy of information

High error potentialHigh error potential

Lack of timelinessLack of timeliness

High costHigh cost

Organization complexityOrganization complexity


The U.S. Hospitals Have Sought an EMR/EHR Since the 1960s through Four Generations of IT Systems

Finance Systems (1960s and 1970s) Finance Systems (1960s and 1970s)

Limited Clinical Systems (1970s and 1980s) Limited Clinical Systems (1970s and 1980s)

More Advanced Clinical Systems (Late 1980s and 1990s) More Advanced Clinical Systems (Late 1980s and 1990s)

Electronic Health Records (2000s)Electronic Health Records (2000s)


But Poorly Implemented Change Layered Redundant Work on Top of Original Inefficiency

Before IT=1x

2x

3x

4x

Growth in Growth in

RedundancyRedundancy

Total Hospital Work ProcessTotal Hospital Work Process


At the Beginning

1.1. Large visionLarge vision

2.2. Hardware technology limited and expensiveHardware technology limited and expensive

Large computers Large computers

Inefficient software development methodologies Inefficient software development methodologies

3.3. Self development was the only software approach and remained the preferred Self development was the only software approach and remained the preferred approach for a period of time approach for a period of time

4.4. Packaged software emerged first as a customizable starter set and later Packaged software emerged first as a customizable starter set and later became products requiring less customization from user to user became products requiring less customization from user to user

5.5. As time passed, packaged software products became preferred As time passed, packaged software products became preferred

Less expensiveLess expensive

Faster to implement Faster to implement

But many problems in implementationBut many problems in implementation


The Late 1970s and 1980s

1.1. Several generations of technology, software vendors, software approaches, and Several generations of technology, software vendors, software approaches, and products came and went products came and went

2.2. Software buying and implementation methods improved Software buying and implementation methods improved

Users and management became more involved Users and management became more involved

Functional requirements to define needs and compare vendors became Functional requirements to define needs and compare vendors became more complete and usefulmore complete and useful

User site visits, user customer references, and user discussions with User site visits, user customer references, and user discussions with counterparts at other hospitals became part of an improved buying counterparts at other hospitals became part of an improved buying approachapproach

3.3. Integration became a large problem as the number of software vendors used by Integration became a large problem as the number of software vendors used by a hospital increased a hospital increased

Started out all manual with duplicate entry into multiple systems Started out all manual with duplicate entry into multiple systems

Moved to “hard coding” of interfaces between systems Moved to “hard coding” of interfaces between systems

Caused a focus on the development of standards for software products of Caused a focus on the development of standards for software products of different vendors to communicate with each other different vendors to communicate with each other


The 1990s and 2000s

1.1. Management of the buying and implementation of IT software continued to Management of the buying and implementation of IT software continued to improveimprove

2.2. A new generation of software systems emerged, with better features and A new generation of software systems emerged, with better features and functions built on superior technological platformsfunctions built on superior technological platforms

3.3. Integration problems kept growing, causing the movement from hard coded Integration problems kept growing, causing the movement from hard coded interfaces to standards such as HL7, and interface engines which facilitated the interfaces to standards such as HL7, and interface engines which facilitated the transfer of data in a more efficient way between software systems transfer of data in a more efficient way between software systems

4.4. Clinical data repositories, data analytics tools, and clinical decision support Clinical data repositories, data analytics tools, and clinical decision support systems emerged systems emerged

5.5. The pressure for physicians to enter orders through CPOE grew in the late The pressure for physicians to enter orders through CPOE grew in the late 1990s and early 2000s1990s and early 2000s. .

6.6. In the 2000’s, the long sought after vision of an EHR began to emerge in In the 2000’s, the long sought after vision of an EHR began to emerge in inpatient and ambulatory settings. The U.S. 2009 healthcare stimulus will inpatient and ambulatory settings. The U.S. 2009 healthcare stimulus will further expand EHR use further expand EHR use


HIT Evolution in the Rest of the World

Canada started in the late 1970sCanada started in the late 1970s

Europe and Australia began in the early 1980sEurope and Australia began in the early 1980s

Asia began in the 1990sAsia began in the 1990s

Canada, France, Germany, England, and Australia all started later than the Canada, France, Germany, England, and Australia all started later than the U.S., Invested less, and have made more progressU.S., Invested less, and have made more progress

Hong Kong started even later, invested less, and now is the state of the art in Hong Kong started even later, invested less, and now is the state of the art in HIT use in the world HIT use in the world

China HIT is now at an earlier stage of development. China has the goals and China HIT is now at an earlier stage of development. China has the goals and desire to “leapfrog” the rest of the world in HIT use in the next few years desire to “leapfrog” the rest of the world in HIT use in the next few years


Successful Later Adopters Learned from the Experience of Earlier Adopters to Make Progress Faster

By playing close attention to what worked and did not work in earlier adopter By playing close attention to what worked and did not work in earlier adopter countries, later adopters were able to avoid many of the difficulties experienced countries, later adopters were able to avoid many of the difficulties experienced by earlier adopters and accomplish better results by earlier adopters and accomplish better results

China is now at a key point with more rapid progress in IT use being a key China is now at a key point with more rapid progress in IT use being a key factor to support the successful implementation of healthcare reform in Chinafactor to support the successful implementation of healthcare reform in China


Evolution of RHNs in Evolution of RHNs in Other CountriesOther Countries



RHNs Were First Introduced As CHINs in the U.S. in the Early 1990s

Hospital A

Doctor’s Office Doctor’s Office

GovernmentReimbursement

Blood BankHome Health Agency

Hospital B

Patient DataDoctor’s Office

Insurance Payor

Nursing Home

Outpatient Clinic

Outpatient Clinic

Outpatient Clinic


Summary of Evolution of RHNs in the U.S.

Community Health Information Networks (CHINs) began in 1990 as the first Community Health Information Networks (CHINs) began in 1990 as the first generation of RHNs in the U.S.generation of RHNs in the U.S.

– Formed with a Formed with a broad broad vision of sharing information among health vision of sharing information among health organizations within a city or state organizations within a city or state

– Unclear objectivesUnclear objectives

– Lack of value to potential participantsLack of value to potential participants

– Much money invested by many CHIN projects Much money invested by many CHIN projects

Integrated delivery Integrated delivery ownership models ownership models emerged in 1993 as the hospital answer emerged in 1993 as the hospital answer to the Clinton healthcare reform proposal to the Clinton healthcare reform proposal

By the middle 1990s, integrated delivery systems emerged in every city in the By the middle 1990s, integrated delivery systems emerged in every city in the U.S., and the CHIN concept disappeared by 1996 U.S., and the CHIN concept disappeared by 1996


The Vision of Integrated Delivery System Ownership Models

Hospital A

Doctor’s Office Doctor’s Office

GovernmentReimbursement

Blood BankHome Health Agency

Hospital B

Patient DataDoctor’s Office

Insurance Payor

Nursing Home

Outpatient Clinic

Outpatient Clinic

Outpatient Clinic


RHIOs Emerge in the Decade of the 2000s

RHIOs were the second generation of RHNs in the U.S.RHIOs were the second generation of RHNs in the U.S.

– Many different organizations promoted them in the early 2000sMany different organizations promoted them in the early 2000s

– By 2004, national policy emerged By 2004, national policy emerged through through the Office of the National the Office of the National Coordinator for Health Information Technology (ONCHIT) Coordinator for Health Information Technology (ONCHIT)

In the ensuing several years between 2004 andIn the ensuing several years between 2004 and now now, , almost 100almost 100 officially officially designated RHIOS emergeddesignated RHIOS emerged

– Heavy investment in these RHIOs with most funds used in their start-upHeavy investment in these RHIOs with most funds used in their start-up

– Many were unable to find a sustainable operating model and approached Many were unable to find a sustainable operating model and approached financial collapsefinancial collapse

– Some long term successes emergedSome long term successes emerged to share limited data to share limited data


HIEs Emerge as A New Name for RHIOs with Objectives to Fit US Healthcare Reform

Similar goals to CHINs and RHIOsSimilar goals to CHINs and RHIOs

The new model is built into the “Meaningful Use” standards in EHRs in the US The new model is built into the “Meaningful Use” standards in EHRs in the US and gains more stakeholders’ support and gains more stakeholders’ support

But still difficult to develop a financially self-sustaining business model But still difficult to develop a financially self-sustaining business model


Executing Broad Visions Needs Detailed Plans

Broad visions Broad visions needs detailed plansneeds detailed plans

Oversimplified implementation approaches Oversimplified implementation approaches create flawed and create flawed and limited successlimited success

Lack of stakeholder commitment Lack of stakeholder commitment created failed programscreated failed programs

Heavy investment in poorly conceived ideas Heavy investment in poorly conceived ideas wasted moneywasted money

Success accomplished through limited, well thought through first Success accomplished through limited, well thought through first steps and strong stakeholder participation and supportsteps and strong stakeholder participation and support


Current Status and Future Direction Current Status and Future Direction of HIT in Chinaof HIT in China



The Development of HIT in China

1.1. Chinese hospitals began to computerize in the early 1990s Chinese hospitals began to computerize in the early 1990s

2.2. The initial focus of computer efforts was on financial systems The initial focus of computer efforts was on financial systems

3.3. In the early 2000s, Chinese hospitals began to implement IT for clinical In the early 2000s, Chinese hospitals began to implement IT for clinical systemssystems

4.4. Many software solutions are now available, with well over 1000 smaller Many software solutions are now available, with well over 1000 smaller software companies now operating in the HIT market in Chinasoftware companies now operating in the HIT market in China

5.5. Between 2005 and 2010, China hospital spending on IT grew from 5 billion Between 2005 and 2010, China hospital spending on IT grew from 5 billion RMB in 2005 to 16 billion RMB in 2010, and we estimate it has risen to 21.5 RMB in 2005 to 16 billion RMB in 2010, and we estimate it has risen to 21.5 billion RMB in 2011 billion RMB in 2011

6.6. This rapid growth in spending will continue at an even more rapid pace over the This rapid growth in spending will continue at an even more rapid pace over the next several years next several years


Factors Contributing to Future Spending Growth in China HIT

1.1. China hospital work processes were redundant, expensive, and error-prone, which led China hospital work processes were redundant, expensive, and error-prone, which led to the initiation and development of HIT in China to the initiation and development of HIT in China

2.2. In 2003, the ministry of health (MOH) issued guidelines for health IT development which In 2003, the ministry of health (MOH) issued guidelines for health IT development which called for all cities in China to implement RHN and digital hospital programs by 2010 called for all cities in China to implement RHN and digital hospital programs by 2010

Gave momentum to hospitals to purchase clinical systems Gave momentum to hospitals to purchase clinical systems

Very little progress towards stated goals during the policy period Very little progress towards stated goals during the policy period

3.3. The healthcare policies of China were pronounced a failure by the NDRC in 2005. The healthcare policies of China were pronounced a failure by the NDRC in 2005. Much publicity about this appeared in the Chinese press. The Chinese government Much publicity about this appeared in the Chinese press. The Chinese government promised to reform this failed policypromised to reform this failed policy

4.4. It took four years for healthcare reform to be passed in 2009. The reason for this is that It took four years for healthcare reform to be passed in 2009. The reason for this is that many government ministries had some relationship to the new reform programs, and many government ministries had some relationship to the new reform programs, and these ministries did not agree on what the reform should look like. Finally, in 2009, a these ministries did not agree on what the reform should look like. Finally, in 2009, a program was passed. It involved a healthcare stimulus spending program to support the program was passed. It involved a healthcare stimulus spending program to support the reform in the order of magnitude approaching 1 trillion RMB (published as 125 billion reform in the order of magnitude approaching 1 trillion RMB (published as 125 billion USD in U.S. press)USD in U.S. press)


Factors Contributing to Future Spending Growth in China HIT (Continued)

5.5. Improved use of IT is one of eight pillars of the new China healthcare reform plan, giving a new Improved use of IT is one of eight pillars of the new China healthcare reform plan, giving a new momentum to HIT in China healthcare. Focuses include: momentum to HIT in China healthcare. Focuses include:

Improved hospital IT systemsImproved hospital IT systems Electronic health records Electronic health records (EMR and EHR) (EMR and EHR) Data sharing through RHNs and integration with community clinics Data sharing through RHNs and integration with community clinics IT systems to support expanded health insuranceIT systems to support expanded health insurance

6. Healthcare reform fueled a number of central government programs as well as increased spending by district, city, and provincial health bureaus and hospitals on various aspects of the reform program

7. A vision for HIT was summarized in the 12th 5-year plan for HIT, referred to as the 3521 Project. This vision provides a framework for RHN efforts in China from 2011 to 2015. The vision is very high-level and complicated, so most of the local government implementation programs define first and second steps in their own way.

8. The vision document components may be summarized as follows: 3 levels of health information platform – nation, province and region (city or county) 5 groups of applications – public health, healthcare service, health insurance, drug

administration, general management 2 basic databases – resident electronic health record and electronic medical record 1 dedicated health infrastructure network 2 sets of systems – data standards system and network security system


Factors Contributing to Future Spending Growth in China HIT (Continued)

9. Execution of this vision is in the very early stages and has many aspects to be thought through in order to become a reality. Much of the spending going on right now is to implement first steps in the execution of this vision and is fueling the HIT market in China to grow much more rapidly over the next few years

10.10. The Minhang District RHN is one of the best RHN accomplishments in China, The Minhang District RHN is one of the best RHN accomplishments in China, and the district should be proud of its efforts. The Minhang District conceived a and the district should be proud of its efforts. The Minhang District conceived a vision, which it began implementing in about 2006 and is now a showplace vision, which it began implementing in about 2006 and is now a showplace that represents one of the big steps forward in the country in implementation of that represents one of the big steps forward in the country in implementation of the 3521 vision framework the 3521 vision framework

11.11. Chinese hospital leaders want to take a big leap forward in improving work Chinese hospital leaders want to take a big leap forward in improving work processes and in digitizing Chinese hospitalsprocesses and in digitizing Chinese hospitals

12.12. While money has always been a problem in Chinese hospitals, today there is While money has always been a problem in Chinese hospitals, today there is much more money available from many sources, and it is now being spent much more money available from many sources, and it is now being spent more freely more freely


HIT Is One of Eight Pillars of China Healthcare Reform

Core of Health Reform: Establish Basic Healthcare System

Healthcare system that covers all urban and rural residents

Public healthcare systemMedical service systemMedical insurance systemSecured pharmaceutical

supply system

Managem

ent M

echanism

Operation

Mechanism

Investment

Mechanism

Pricing M

echanism

Supervision M

echanism

Talent Supply

HIT

Construction

Legal System

Further Implement Health Reform

MINHANG DISTRICT HEALTH BUREAUMINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUPDORENFEST CHINA HEALTHCARE GROUP

12th 5-Year Plan HIT 3521 Framework and Development Architecture

3333


What Are the Key Factors Impeding Success in Chinese Hospital IT Use?

1.1. Chinese hospitals have not invested a lot of resources in IT systems and Chinese hospitals have not invested a lot of resources in IT systems and infrastructure to get to the present level of accomplishmentinfrastructure to get to the present level of accomplishment

2.2. Because of weak change management, the implementation of new IT systems Because of weak change management, the implementation of new IT systems in China has often added work instead of reducing work, and has created in China has often added work instead of reducing work, and has created unnecessarily redundant work processes and unhappy users unnecessarily redundant work processes and unhappy users

3.3. The poor results in HIT in China have been caused primarily by the way The poor results in HIT in China have been caused primarily by the way Chinese hospitals buy and implement software products Chinese hospitals buy and implement software products

4.4. The inexperience in the buying of HIT software products in China has followed The inexperience in the buying of HIT software products in China has followed a similar path to other countries around the world in their early stages of a similar path to other countries around the world in their early stages of evolution. Most countries have learned from bad experience in their early evolution. Most countries have learned from bad experience in their early investments a better way to make HIT buying decisionsinvestments a better way to make HIT buying decisions

5.5. Fueled by healthcare reform, substantial investment in new IT systems will be Fueled by healthcare reform, substantial investment in new IT systems will be made by Chinese hospitals. But the reasons for the poor results accomplished made by Chinese hospitals. But the reasons for the poor results accomplished from past investments in HIT are from past investments in HIT are not well understood by Chinese hospitals and not well understood by Chinese hospitals and are not being corrected fast enough are not being corrected fast enough


What Are the Key Factors Impeding Success in Chinese Hospital IT Use? (Continued)

6.6. The current state of the art in HIT software products, hardware platforms, and The current state of the art in HIT software products, hardware platforms, and integration tools to facilitate the accomplishment of China’s HIT goals is in need integration tools to facilitate the accomplishment of China’s HIT goals is in need of improvementof improvement

7.7. More importantly, the implementation and change management skill required to More importantly, the implementation and change management skill required to take this big leap forward in IT use in China is not yet available at the level take this big leap forward in IT use in China is not yet available at the level required for China to accomplish its goals required for China to accomplish its goals

8.8. Many times, hospital leadership, not knowing what it does not know, is Many times, hospital leadership, not knowing what it does not know, is continuing to use poor buying and implementation approaches, because they continuing to use poor buying and implementation approaches, because they do not know better ways are possible, and there is still strong momentum to do not know better ways are possible, and there is still strong momentum to continue with these poor approachescontinue with these poor approaches


The Current Computing Environment in a Typical Large Complex Chinese Hospital Today

Major Ancillary Systems

Note: Chart taken from a couple of real hospital situations with each vendor or product family shown in a different color

Sample Current Systems (High Level View)

Major FinancialSystemsMajor Clinic

OR/Anesthesia(Vendor 5)

R.I.S./PACS(Vendor 4)

L.I.S.(Vendor 3)

Blood Bank(Vendor 3)

Bar Code(Vendor 3)

Ultrasound(Vendor 6)

Stomatology (Vendor 7)

Financial(Vendor 2)

MD Workstation(Vendor 2)

Pharmacy(Vendor 2)

L.I.S.(Vendor 3)

Core Vendor(Vendor 1)

Inpatient EMR(Vendor 8)

Cashiering(Vendor 2)

General Accounting (Vendor 2)

Medical Records(Vendor 11)

Medical Ins(Vendor 9)

Medical Ins(Vendor 10)

Human Resources(Vendor 12)

Performance Assessment System

(Vendor 13)Policy Exchange

Platform (Vendor 13)

Webport System(Vendor 13)

Hospital Website (Vendor 13)

Office Automation

Systems

MajorAdmin Systems

Order Management

Inpatient Physician Workstation

Outpatient PhysicianWorkstation

Inpatient Pharmacy

Outpatient Pharmacy

Inpatient ADT and Billing

Outpatient and ER Registration

Outpatient Pricing and Charging

Material Supply

Smart Card

Patient ConsultationSurvey

Lab Price System

Instrument and Equipment

Management

InpatientInsurance Interface

RF Card Producing Sub-System

Many Other Niche andSpecialty Systems


The Competitive Environment

1.1. There are over 1,000 small software vendors active in China HIT There are over 1,000 small software vendors active in China HIT

2.2. The market segments with the most vendors are HIS, PACS, RIS, LIS, and The market segments with the most vendors are HIS, PACS, RIS, LIS, and EMREMR

3.3. All HIT vendors in the market started in a city and most are still operating in All HIT vendors in the market started in a city and most are still operating in that city or a small region around the city. that city or a small region around the city. Many of these smaller local vendors Many of these smaller local vendors have a dominant market share in the area they service. have a dominant market share in the area they service. Some HIT vendors are Some HIT vendors are becoming more national in scopebecoming more national in scope

4.4. Many vendors in the hospital computer systems market offer heavily Many vendors in the hospital computer systems market offer heavily customized solutions rather than products. These heavily customizable customized solutions rather than products. These heavily customizable solutions create greater dependency on the software vendor and are more solutions create greater dependency on the software vendor and are more difficult/expensive to keep current when vendors release new software updates difficult/expensive to keep current when vendors release new software updates periodically periodically

5.5. Chinese hospital leaders would like to see a new generation of HIT software Chinese hospital leaders would like to see a new generation of HIT software developed for the country to assist in helping them accomplish their “leapfrog” developed for the country to assist in helping them accomplish their “leapfrog” objectives objectives


Major Areas of Future Product Development and Opportunity in the China HIT Market

1.1. Application software will become more productized with greater tools to support Application software will become more productized with greater tools to support the growing use of IT in hospitals the growing use of IT in hospitals

2.2. New application software to serve the not yet automated areas of clinical work New application software to serve the not yet automated areas of clinical work processes are emerging very quickly processes are emerging very quickly

3.3. Integration tools to facilitate the development of an improved IT environment Integration tools to facilitate the development of an improved IT environment will emerge will emerge

4.4. Data analytics products and support tools to facilitate better data analysis, Data analytics products and support tools to facilitate better data analysis, reporting, and decision making will emerge as Chinese Hospital Managers reporting, and decision making will emerge as Chinese Hospital Managers grow in sophistication grow in sophistication

5.5. Service and implementation tools will improve Service and implementation tools will improve

General contracting for entire efforts with some company software and General contracting for entire efforts with some company software and some partner softwaresome partner software

Planning and implementation services to support making better buying Planning and implementation services to support making better buying decisions and creating more successful implementation of software decisions and creating more successful implementation of software

Other problem-solving servicesOther problem-solving services


Today Chinese Hospital HIT Investment Is Spent Differently Than the Rest of the World

SOURCE: CCW ResearchSOURCE: CCW Research

2005 GLOBAL H.I.T. INVESTMENT STRUCTURE

28.9%20.2%

27.8%

64.7%12.2%

13.2%

20.7%

22.3%58.9%

66.6%

51.5%

13.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Global U.S. Europe China

Service

Software

Hardware


Evolution and Current Status of Evolution and Current Status of RHNs in ChinaRHNs in China



Evolution of RHNs in China

1. The Ministry of Health (MOH) guidelines for Health IT Development called for regional health networks and digital hospitals to be implemented throughout China between 2003 and 2010

2. This provided much momentum for RHNs a few years ago as many health bureaus undertook regional health network and digital hospital investment

3. In the last few years data sharing has begun to emerge in China as some RHNs share limited data such as test/diagnostic results and some patient information

4. Healthcare reform calls for a more aggressive pursuit of EHR and RHN development, and has provided substantial additional funding in a variety of ways, so it is expected that substantial additional progress will be made in the next few years

5. Much more activity and funding in many cities and provinces with even U.S. funding for one or two major planning projects, including the Sichuan Provincial Health Bureau EHR and Regional Health Network Project


Overview of the RHN Market in China

1.1. We have been surprised by the amount of RHN buying going on today. Our We have been surprised by the amount of RHN buying going on today. Our review of RHN bidding data in the first 7 months of 2011 found 63 health review of RHN bidding data in the first 7 months of 2011 found 63 health bureau acquisitions to support RHN activities. These acquisitions were at the bureau acquisitions to support RHN activities. These acquisitions were at the district, city, and provincial health bureau levels as follows:district, city, and provincial health bureau levels as follows:

2. The RHN programs can be invested in a variety of different models, but the purchasing activity falls into three categories


Overview of the RHN Market in China (Continued)

3. The first category of purchasing is around a model where the health bureau encourages the hospitals it owns to buy EMR systems that meet certain guidelines or funds the acquisition of such EMR systems for its poorer hospitals. In addition it funds the acquisition of HIS and EHR systems for outpatient visits to its community clinics. It then plans to put the data from the EHR systems in community clinics and EMR systems in hospitals into a central database for data analysis at the health bureau level. While many health bureaus are pursuing this model, there is little awareness of what to do with the data it will accumulate in the central database. Questions such as the following have not been answered:

How is the EHR and EMR data linked?

What happens to the data that is now in the patient’s outpatient manual record and is not yet automated (usually covers all hospital outpatient activity)?

How will the data that will be available in the central databases be analyzed?

In spite of these unanswered questions, there is much funding of programs following the model described above



4. A second category of spending in the RHN area is for the community clinic model without the hospital EMR component.

5. The third category of buying to support RHNs are to develop the RHN platform to handle data from various sources and construct some public health applications for the health bureau. In this model, a big investment is being made in hardware with little clarity about the applications that will run on the platform

6. There are still many health bureaus in China that have not taken a first step in spending to build their RHNs. They are now in the planning process

7. Minhang District is an early adopter of RHN in China. In Minhang a patient can visit any of the clinics, and the data for prior visits at any of the clinics is available in a central database. It’s now in an early stage to have hospital EMR data to shared in the central database.



8. Health bureau buying of software applications has increased from a relatively small percentage of total China HIT software buying five years ago to 2.8 billion RMB in 2010 and 5.3 billion RMB in 2011

9. In the bidding data, there were 42 vendors that won bids that did not appear in the hospital bidding that we examined, and 17 vendors that won bids that were also winning bids in the hospital bidding

10.These 59 winning vendors had a total of 69 wins. 7 vendors have more than one win

11.The MOH 12th 5-year plan HIT development framework, referred to as the 3521 Project, provides guidelines for RHN development covering what should be bought and how the RHNs should be architected. While health bureaus are trying to comply with these guidelines, the complexity of the guidelines makes it difficult to comply. For example with the EHR, health bureaus are defining it in different ways, and often these definitions do not meet the intention of the MOH guidelines



12. Given this scenario, it is difficult to evaluate what will emerge in successful RHNs. If the RHNs move in the right way to answer the questions that are unanswered right now, then the RHN market in China will grow substantially

13. If the questions remain unanswered, and if the MOH vision is not attainable by the RHN investment over the next couple of years, then some rethinking will take place

14. At this stage it looks like the health bureau RHN investment will grow substantially over the next five years and represents a great market to be in front of so that the vision of MOH can be fueled and accomplished by the products of one of the successful companies that emerges from this setting

15. Many companies are benefitting from RHN development. Many others will benefit in the future


Where Does China Stand on the Where Does China Stand on the Global HIT Continuum?Global HIT Continuum?



Broad Comparison of U.S. and China HIT Situations

. .

Key Element U.S. China

Per Capita Healthcare Spending $7,500+ $100+

Employees per bed 6+ 1 to 2

HIT Spending Very high Very low

Number of Software Vendors in a Hospital 80+ 20+

Integration Status Okay Very bad

Size of IT Staff Very Big Small

Dependence on Software Vendors Medium Very High

Implementation Approaches Fair Bad

Historic Data Available in Any Form Lots Very Limited

Historic Data Available in Accessible Automated Form Considerable Very limited

Clinician Use of Data Growing Limited to none


Creating More Success in the Current China Healthcare Environment

1.1. There is much momentum for change

2. The rapid change being fueled by healthcare reform activities requires stronger IT systems to support it. More money will be spent, and better results are required

3. By recognizing what the rest of the world learned from their successes and failures, and doing more of what the rest of the world did right and less of what the rest of the world did wrong, China will be able to make faster and better progress in the future


THANK YOU.THANK YOU.FOR MORE INFORMATION CONTACT:FOR MORE INFORMATION CONTACT:

SHELDON I. DORENFESTSHELDON I. DORENFEST

THE DORENFEST CHINA HEALTHCARE GROUPTHE DORENFEST CHINA HEALTHCARE GROUP

SUITE 908, NO. 998 RENMIN ROAD, SHANGHAISUITE 908, NO. 998 RENMIN ROAD, SHANGHAI

PHONE: 021-63203522, 63269722PHONE: 021-63203522, 63269722

WEB SITE ADDRESS: WEB SITE ADDRESS: www.dorenfest.com

E-MAIL ADDRESS: E-MAIL ADDRESS: [email protected]

SHELDON’S E-MAIL ADDRESS: SHELDON’S E-MAIL ADDRESS: [email protected]

Documents

Minhang District Health Bureau Shanghai, China February 9, 2012 Evolution of Global HIT Where Does China Stand on the Global HIT Continuum?