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New eHealth subsidiary will fund expansion (MS)

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Electronic health records firm adds for-profit unit

The Massachusetts eHealth Collaborative, a Waltham nonprofit that has played a leading role in implementing electronic health records, is creating a for-profit subsidiary as it expands its business helping doctors and hospitals adopt the new technology.

The move comes as Massachusetts prepares to implement the electronic health systems beyond a three-community pilot project, which the collaborative ran over the past few years, and the collaborative prepares to bid on electronic health record work for commercial customers. Micky Tripathi, chief executive, said after paying taxes, profits from the new organization will help fund the collaborative’s nonprofit work.

"With this separate company, we can address commercial customers’ needs for electronic health records implementation," said Tripathi, who said the collaborative will need to hire more people as a result. "We have an immediate need to grow right away."

The new entity is already working for commercial customers including Beth Israel Deaconess Medical Center and its physician group. The parent company will continue to fulfill its charitable mission, "to improve the quality, safety, and efficiency of care through the adoption of electronic health records and health information exchange," said Alan Macdonald, the chairman of the collaborative, in a statement.

The move reflects the momentum that is growing in the field of health information technology. Politicians and academics have long espoused the anticipated benefits from electronic health records. Many claim computerized records will reduce medical errors and save money, in part by making it easier for doctors to share patient information.

The industry is currently split between firms like eHealth Collaborative that provide specialized software to support the records at doctors’ offices, and those that use the Internet to provide similar capabilities. Athenahealth Inc. of Watertown is one firm pursuing the Web-based model.

"Web-based systems will grow and become the norm," said John Lovelock, a research vice president of Gartner, a market research firm.

The actual implementation of the software systems has been slow. In part, that’s because the equipment and software are expensive, and many physicians don’t want to make the large upfront investment. For its part, the eHealth Collaborative received a $50 million grant from Blue Cross and Blue Shield of Massachusetts and spent several years installing communitywide systems in North Adams, Newburyport, and Brockton.

The state has allotted $15 million in the current fiscal year for continued implementation of the electronic record systems. But it may be months before any of that money is spent.

First, the governor is expected to disclose a new electronic health record oversight council. The council will then oversee a bidding process to choose firms to install additional equipment. The eHealth Collaborative intends to bid for that business.

Nationally, interest in electronic records has grown enormously. President Obama’s stimulus package includes $19 billion for a national rollout of the systems. It’s still unclear how that money will be paid out – in payments to doctors through Medicare, the national health insurance system for seniors, or through another mechanism.

Tripathi, in a letter and a white paper, has argued that the new federal money should be distributed through regional extension offices, as opposed to payments to individual physicians. He believes that individual payments to physicians might not be used to purchase new systems.

Despite the uncertainty of how the payments will be made, the prospect of that money is giving the entire industry a jolt. Lovelock – who said the eHealth Collaborative and its three-community pilot project are well regarded in the industry and seen as a successful implementation of the complex technology – predicts that total spending on healthcare information technology in the Untied States will reach $28.4 billion this year, and will grow to $32.7 billion by 2012.
"We will see spending this year in anticipation of the stimulus funding," he said.

Jeffrey Krasner can be reached at