A trio of giant information technology firms that dominate the rapidly growing market for digital medical documents enjoy special insider access to key policymakers as the federal government implements its 2009 mandate that healthcare providers convert to electronic health records.
The three firms — Cerner Corp., Epic Systems and Allscripts Healthcare Solutions — accounted for more than $5.6 billion in annual electronic health records sales in 2013. Boosting their revenues are the federal mandate and a $30 billion subsidy program to encourage sales, both of which were strongly backed by President Obama in his healthcare reform agenda.
Steering the mandate’s implementation is the Health IT Policy Committee, a federal advisory commission within the Centers for Medicare & Medicaid Services in the Department of Health and Human Services.
From its inception, the panel’s membership has included academicians, nonprofit health organization officials, activist healthcare reformers, labor organizers, representatives of IT vendors, and Democratic Party donors.
No panel members, however, are practicing physicians, and only one is a hospital administrator, even though doctors and hospitals are the primary end-users of the new digital records systems.
Three members of the panel were appointed by former HHS Secretary Kathleen Sebelius, four by the majority and minority leaders of Congress, and 13 by the comptroller general of the United States. Obama can appoint as many additional members as he chooses.
Among his first appointees was Judith Faulkner, CEO of Epic and a heavyweight Democratic Party donor. She contributed more than $386,000 between 2004 and 2014, all to Democratic candidates and campaign committees, according to the Center for Responsive Politics.
In 2009, her firm was a small, private health IT company in Verona, Wis. Today it is the third-largest health IT firm in the country with estimated annual revenue of $1.5 billion in 2013, up from $47 million in 2000, according to the Milwaukee Journal Sentinel.
“As the only head of a health IT company appointed to serve on the Obama administration’s Federal Health IT Policy Committee, Faulkner was able to advise the national coordinator for health IT and other federal officials as they crafted a policy framework to develop a nation-wide health information infrastructure,” said a 2013 Rand Corp. study.
After Faulkner, Cerner founder and CEO Neal Patterson was appointed to the panel. Cerner is the largest health IT company in the country, with $2.9 billion in revenue in 2013, up from $1.67 billion in 2009.
Cerner spent $235,000 on federal lobbying in 2009, according to the Center for Responsive Politics, more than in any prior year. Cerner’s earnings nearly doubled from $193 million in 2009 to $398 million last year, according to Securities and Exchange Commission filings.
Glen Tullman, former CEO and founder of Allscripts, was a senior adviser in the 2008 Obama presidential campaign.
He contributed $311,000 to Democrats between 2000 and 2014, according to the Center for Responsive Politics, and reportedly visited the Obama White House on multiple occasions.
Tullman was ousted by Allscripts’ board in 2012 and replaced by Paul Black, Cerner’s former chief operating officer.
Doctors aren’t happy with their lack of representation on the panel.
“We are very concerned that there is currently no member of the Health IT Policy Advisory Committee who represents small physician offices, despite the fact that small physician practices represent 80 percent of all outpatient office visits,” the American Medical Association told CMS in 2010.
“We remain concerned there is insufficient representation of practicing doctors and continue to advocate for greater inclusion,” an AMA spokesman told the Washington Examiner last week.
Serving on the panel brought new business for the IT trio. Panel member Marc Probst, chief information officer of Intermountain Healthcare, joined with Cerner, while member Neil Calman, president of New York’s Institute for Family Health, now uses Epic.
Competitors of the big three aren’t thrilled by the panel’s makeup.
“These companies with enormous market share were essentially asked by the federal government to help write the rules intended to push them forward into the Information Age,” AthenaHealth Vice President Dan Haley said. “It shouldn’t be surprising to anyone that they were very kind to themselves in writing those rules and setting those standards.”
AthenaHealth, with 2013 sales of $533 million, is the fourth-largest company in the electronic health records market.
Similarly, Carol Robinson, a health IT consultant who is a temporary member of one of the panel’s subgroups, said “the evidence speaks for itself. You can look at the list and see what the relationships of people who’ve served on the policy committee have been.”
At Allscripts, annual sales have nearly tripled from $548 million in 2009 to $1.37 billion last year, according to the company’s latest SEC filing.
Allscripts openly acknowledges the crucial role federal subsidies play in its profits, saying in its filings that taxpayer funds “will continue to be a significant driver of healthcare IT adoption, including products and solutions like ours.”
The Journal Sentinel quoted a health industry analyst who attributed Epic’s growth to the subsidies, saying “it’s like a freight train going right now. You’ve either got to get on it or get out of the way.”
