H.I.S.-tory by Vince Ciotti

Episode #87: Meditech Part 5

© 2012 by H.I.S. Professionals, LLC, all rights reserved.

Which One Would You Buy in 1993?

Big Win From 20 Years Ago• We left off last week with an RFI from Brooks Memorial, a 200-

bed hospital in upstate NY, being issued to the 10 leading HIS vendors back in 1993 to see how Meditech beat them so often.

• Before we wasted our time & their money flying in demo teams to frozen Dunkirk NY (located near Anchorage…), we reviewed the RFI results to determine which of the vendors were:– Large & stable enough to last the expected 10 year life cycle– Had a strong NY state presence to meet regulatory needs– Were affordable, in terms of capital, operating and TCO– Had clients of our bed size, apps, interfaces & conversion

The results are summarized in the table on the following page.• If you don’t recognize the acronyms for the vendors on the top

row, then you didn’t read last week’s episode that described them! You can find all these past episodes at hispros.com

1993 Vendor RFI ResponsesCHC

Compucare

First Data GTE HBO HCS IBAX

Keane

Medi-tech SMS SDS

Years in HIS biz 21 20 25 18 18 25 12 20 25 25 15Revenue in 000s

$43,400 $23,200 ≈$200,000 ≈$60,000 $280,000 ≈$10,000 ≈$50,000 $90,000 $92,300 $470,000 ≈$14,000

# of FTEs 260 215 1,031 222 1,814 75 582 244 1,105 4,000 148Nearest office

Texas VirginiaN.

Carolina Phila. Pitts.New

Jersey Florida New York Mass.New

Jersey Iowa# of US clients

42 34 128 238 188(Not

provided) ≈200 15 104 54 85NY state Clients

2 3 7 5 2 1 6 9 10 3 1Hard-ware

HP, G30DG Aviion

9500DEC

"Alpha"IBM

AS/400DG Aviion

5240IBM

AS/400 DEC 5000 DG or DEC

DEC 4000/Alph

a

Capital Costs

$984,624 $1,124,604 $650,750 $904,991 $1,375,306 $1,162,938 $1,496,000 $909,800 $1,335,000 $950,000 $824,082

Opera-ting Cost

$131,516 $104,052 $86,268 $137,652 $126,325 $178,553 $125,880 $79,200 $148,200 $96,000 $77,765

5 year TCO $1,642,205 $1,644,864 $1,082,090 $1,593,251 $2,006,931 $2,055,701 $2,125,400 $1,305,800 $2,076,000 $1,430,000 $1,212,906

10 Year TCO

$2,299,787 $2,165,124 $1,513,430 $2,281,511 $2,638,556 $2,948,464 $2,754,800 $1,701,800 $2,817,000 $1,910,000 $1,601,730

Winnowing the Field• We presented these RFI results to our selection committee, with

the caveats in red ink for those vendors with weak responses: small annual revenue, minimal NY presence, etc. Meditech’s only issue was high capital costs, however CFO Ralph Webdale said he would gladly pay top dollar if they turned out to be the best system!

• So we next scheduled demos at Brooks for the 6 RFI “winners,” making each vendor follow the same agenda (1-2 hours per user department) and grading each through a numeric checklist on:

– User-friendly GUI (or not), patient search, reports, security, flexibility, report writer, etc.

The checklists also helped to guide the committee into evaluating the system, rather than just liking the “demo dollie (or dude)” with the nicest personality, so totally irrelevant after the sale!

Brooks’ Demo Results• And here, 20 years later, are the results, which took afew thousand keystrokes to update from MS Works 1.0 to Excel 2012!

• As you can see, the highest score went to Meditech, but HBO and CHC did pretty well too.

• An no one really stunk, showing the committee that all modern systems beat their old SAINT…

• Next we made phone calls to the top 3 vendors, but a lot different approach than the near-perfect “98.5” scores KLAS comes up with:- Ours were peer-to-peer: RN to RN, biller-to-biller, IT to IT, etc.- And not to “flagship” sites, but our bed size, state, version, etc.- And scored with another thorough checklist, with these results:

Telephone Reference Calls• Meditech led again, but only a tad ahead of HBO. It was

poor CHC who’s few users in NY state were only so-so…• We’ve done

over HIS 150 searches by now, and our phone scores are about 70%, helping lower end users’ expectations.

• The next step in our process hardly anyone ever does: look at the user manuals before you buy! Paper binders were a pain to ship in ‘93, but today’s CDs and web sites are easily available. And you get much lower scores than on any RFP “feature checklist” response!

User Manual Review• You sure don’t get many “98.5” scores here either! Indeed,

some up-and-coming vendors don’t even have user doc…• They claim their systems

are so user-friendly, no manuals are needed!?

• (tell that to an RN on the 3rd shift trying to help a physician figure out how to DC a med via CPOE…)• As you can see above, Meditech had superb user manuals back then,

HBO’s were pretty good, but CHC had a long way to go in this regard.• So we pretty much had our two “finalist” vendors for the next steps:

- Site visits, once again peer-to-peer, with no sales “chaperones!”- Detailed cost review, with over 10 pages per (poor) vendor- And concurrent contract negotiations (no “VOC” beforehand)

Contract Questionnaire• As you figured out by now, we don’t place much stock in an RFP

“Feature Checklist,” defined as a “Request For Prevarication.”• One checklist we do make vendors fill out is for contract Ts & Cs.

Back in 1993, we had 25 items we drilled vendors on, such as:– Sub-1-second system response times, or the vendor buys more hardware– Veteran installers: 5 years in Healthcare, 2 with the vendor, 1 prior install

• By today, we have over 70 such nasty items on ARRA, ICD-10, etc.• This is the one area where Meditech

did poorly, as illustrated on the right:• The boys in Boston are just tough

negotiators, and we struggle to get them to grant any concessions...

• At our next committee meeting, we summed up all these scores & voted

Brook’s Committee Vote• Here is how Brook’s 10 user departments ranked the 3 vendors;

we inverted their ranking for scores so the highest score wins: 3 points to their first choice, 2 to runner up, and 1 for 3rd choice.

CHC FDC HBOC MeditechPharmacy 2

1 3Data Processing 12 3Human Resources 21 3Radiology 3 1

2Medical Records2 3Nursing 1.5

1.5 3General Accounting 1.51.5 3Laboratory 0.5

2 3Nursing 1

2 3Patient Accounting 2 1

3Totals: 12.5 4

13 29

• No contest! Meditech just swept the vote except for Radiology (maybe they had a deeper view?). It was so overwhelming, Ralph called off the remaining steps in the process (site visits, etc.).

Meditech Recap• So there you have it: how a handful of MIT grads formed a start-

up HIS vendor that swept the small to mid-range hospital market!– Strengths: Satisfied clients (functionality & support), “Total

HIS” (financial & clinical systems), low operating costs (12% of license fee/yr), and a stable management team/direction (no acquisitions, C-Suite change, nor 90-day Wall Street panic).

– Weaknesses: High capital costs (you get what you pay for?), proprietary data base (tough interfaces – this ad is a lie!), and rookie installers. Today, one might also quibble about multiple product lines…

• Next week? We shift to the 6th ranking vendor of today: GE Healthcare, and their roots in another frozen northland – Burlington, Vermont. Any HIS veterans who worked for “Burlington Data Processing” please write: vciotti@hispros.com