Richard Helppie is chairman and CEO of Santa Rosa Holdings, chairman of Sandlot Solutions, and founder and managing partner of Vineyard Capital Group.

With Meaningful Use implementations winding down, ICD-10 almost done, and the Department of Defense EHR bid issued, is the industry poised to contract?

No. The reason would be — anticipating your follow-up question of “why is that” — I sense that healthcare pivoting to business needs now away from some of the forced march on regulation. That is a ripe opportunity.

Which of those business needs will create the most need for products and services, such as consulting?

On the provider side, you have legacy and very well-run organizations that are designed around fee-for-service and volume. They have been constructed in the way that the business is organized, the way people are trained, the way that their IT systems are designed and deployed, and have been around fee-for-service. Those systems are mostly passive. They’re mostly tabulation systems. They wake up when there’s an admission or a registration, then they count stuff or they move a little bit of information around.

Then you have this other tower over here on the payer’s side that is also set up just for fee-for-service. It says, "Gosh, you shouldn’t have done that service that you want a fee for or maybe you should have done another service." But again, those systems — pre-authorization and registration aside — wake up when there’s a claim, then they do their thing and try to process it.

When I talk to CEOs in this industry, on both the payer and provider sides — which as you know are coming together — I pose this question to them. I ask them how many employees they have. The last one told me he has 28,000. I say, “You have 28,000 people today coming to work who don’t really know it, but they’re doing fee-for-service medicine.” One hundred percent of the time, I get the nods. “Yes, that’s exactly what my problem is.”

You’re going to see very rapid change in the next few years. I’m very excited to be part of it at this stage.

Hospitals have performed poorly in doing what’s now expected of them, managing costs and health. Will they be able to change their direction and stay on top or will new competition overcome their money and influence?

This will sound like I’m avoiding the question, but I’m not. The answer is “and both.” When you think about what that healthcare enterprise of the future is going to look like, you’ve got to have hospitals and facilities to put the very sick and the very injured in. You need to have a well-developed physician network. You need to have some kind of risk-bearing entity.

Those components are going to come out of the traditional, hospital-centered health systems who have evolved their businesses a lot in the last couple decades. Some will come out of physician groups, some will come out of payers, and certainly there’s going to be new players. As you turn to IT and you think about the confluence of those factors along with the change in the payment methods and the availability of technology, there’s going to be new players out there on the frontier for both care delivery and technology.

I’m sure other folks have views on this, I look at it around that adage that IBM didn’t invent Google. They were the largest computer company in the world. Why didn’t they invent Google? It went against their old business model. You’re going to see some of that in care delivery, in risk management, and certainly with IT.

What factors determine which technology startups will have the best chance to succeed?

It’s always going to come down to scale. Scale is going to come from distribution. Distribution is going to come from dealing with that very specific business issue.

By way of example, you see some things on the periphery that I don’t think are going to work. Somebody made a little app for the Apple watch. You say, "How big can that market be?" Well, first of all, how many people are using an Apple product versus an Android product? How many people are going to buy the watch? How many people are technologically adept to do that? It getting smaller and smaller. You go, that’s going to be an interesting project, it’s going to contribute to the body of experience and body of knowledge that we have as an industry, but it’s not going to be something ubiquitous that’s going to move the needle.

The frontier is about true interoperability. Many people have said that we have mountains of data, but what we don’t have is interoperability. We have folks that have business models that aren’t built for that, both folks that are using those systems — the traditional healthcare industry participants — as well as the vendors. Both of those have been in a fee-for-service type of mentality, so it’s not in their business model to go to interoperability.

People want to talk about interoperability. They talk about bi-directional. Interoperability is omni-directional. It’s not planned interfacing. I’m Vendor A and I’m going to go communicate with Vendor B and vice versa. Interoperability is this: I use my systems, you use yours, and our information is translated seamlessly and it’s done in real time.

The operative question that I like to ask when it comes to interoperability is this. The person you love the most is in front of the doctor. What information do you want the doctor to have? What do you want the doctor to have to do to get that information?

That’s what we have to be driving toward as an industry. Long way around, when I think about things that are going to be very successful in the future, they’re going to address that question of making all that data interoperable and in a contextually relevant way and serving it up where it does the most good, which is at the point and the moment of care.

I asked Grahame Grieve what his one wish would be for interoperability and he said it’s that clinicians would consider it a clinical problem and apply the same level of enthusiasm as the IT people. I also asked him who creates the demand and incentive for sharing data and he didn’t have a clear answer.

First of all, I love the quote. I think he’s really on to something. That’s a terrific insight.

You’ve got two questions there. Looking at it as a clinical issue, I’m chairman of a company called Sandlot Solutions, arguably the best interoperability play in the industry today. One of our physicians, who’s been a pioneer in it and is a GI doctor, says this is the most important invention in the time that he’s been practicing medicine, and he’s well into his 60s. He goes through all the different medical devices. It comes down to, when he goes to treat a patient, he knows about them.

One of his many stories is a fellow coming into get polyps removed form his colon. He’s a Medicare patient, very well organized, and he hands the physician a list and says, “Here are all the meds I’m on.” The doctor, because he’s on Sandlot, looks in his own EMR, and he says, "Hmm, I’ve got something here that says you were put on Coumadin two weeks ago, the blood thinner." He says, "You’re right. I forgot to add that to my list." That is a medical disaster avoided because of interoperability. Even well-organized patients don’t do a great job of transferring that information. I’m above average at it and I don’t do a great job at it. I’m not an MD or a DO.

That’s where the demand can come from. From doctors saying, give me a full suite of information, a full payload, and give that to me at the point and moment of care. Give it to me in my workflow. Give it to me within my EMR. You guys quit fighting. I don’t care what enterprise it came from. I don’t care what brand of system sourced it. I want to be able to know where it came from, but I don’t want to go find it. I don’t want to have to go look in five or six places for it, which is what a lot of this first wave of so-called interoperability did.

Now to your second part of your question, which is how do you get people to participate? My experience in doing this now for almost four years is that everybody wants to be first to be last. Let me explain that. If you go to any provider in Memphis and you say to any provider, we want you to connect to a system that has all the other providers in town seamlessly moving information around. Right in your EMR you’ll get all of the data from the other folks within your enterprise, and within your affiliations, and with any public health data we have. It will be delivered into your EMR in the format you’re used to looking at it.

In exchange, as you treat this patient, within the consent laws, your information will be shared. One hundred percent of people would agree to do that. That’s the barrier right there.

It’s less about incentives and more about leadership. There are some good stories forming out there about leadership, so back to your first point, who creates the demand? It’s going to come down to leadership in our industry.

What did you think about the DoD contract and what are your thoughts on how Leidos will execute it with Cerner and the other partners that are involved?

It was a very thoroughly vetted process. They certainly had the right players that were going down the stretch drive.

Everybody in the industry wants to see them be successful. We don’t want some of the fits and starts like we’ve seen in the NHS experience. I just hope that they go about it in a methodical way and create value along the way.

I do hope that they have an open mindset and enough openness in the architecture to connect to the information systems stacks that are out there. I hope that we’re able to demonstrate better healthcare for our veterans and our service men and women.

What does the future hold for Allscripts, Cerner, Epic, and Meditech?

Individually, clearly Cerner, Epic, and Meditech are the three that we see in the market doing well. All are vigorously competitive. All three have very substantial customer bases. They all have their very loyal fans. They all have the ability to engineer and deliver product.

It’s going to be the ones that operate in conjunction with all the other technology out there are going to be the most successful. Again, I’d go back to the IBM-Google type of dynamic that is coming up in our industry.

This industry needs to start paying today’s price for IT. That’s not client server, that is cloud. Secure, private cloud, not just random cloud because of the privacy and security that we have. When those players — the major ambulatory and physician-based vendors — are truly operating in an interoperable world, open to the other data sources and places they need to provision data, especially down to the patient level, I think they’ll all be very successful.

All three of those companies are going to be part of the fabric of the next wave of healthcare. There will be other technologies that will leverage them and make them even more value, but all three of those are going to do rather well.

IBM is doing a lot with Watson. Will precision medicine have a significant impact on healthcare or is IBM just trying to find a lucrative market?

Time will tell on that. It’s a grand scheme and I’m wondering how they can bring it down to a granular level.

You asked at the top of our conversation if things were going to stall and I think not. Business requirements are going to drive IT. The question will be whose business requirement is going to bite off something that big, that complex, that far out on the edge, and that unproven?

I hope that they can move the needle and we get the best research driven to the point of care, but I see that there’s a gap between the demands of the market that I see arising today and the power of what may — but isn’t guaranteed — to come out of that collection of that technology. I think we have to wait and see.

Along those lines, NantHealth is investing a lot of money to nibble around the edges of healthcare IT. Do you think they are for real?

It’s an interesting collection of point solutions. Period.

Have you seen any startups that will be able to work their way into the enterprise?

Let me tell you what we haven’t seen. I don’t see anybody out there that is necessarily the silver bullet. I think what the industry is driving for right now is meaningful information in a contextually relevant way – both in the clinical setting and in the management of risk — and in dealing with the financial case. This is something that goes beyond the boundaries of the enterprise.

The way I look at it, there’s a continuum of that data capture. On the back end is analytic reporting. We have a number of analytic companies that are doing quite well, but they’re analyzing data that’s really bad. Healthcare has been accustomed to having data that is incomplete, developed for another purpose, and old. But now we have on one end of the spectrum analytic companies developing reports around that. Now we have better reports on really bad data.

I’ve been in the IT business 41 years and it’s still garbage-in, garbage-out. We see now the awakening for, "Let’s get to better sources of data." If one end of the spectrum is analytic reporting, the other end — the front end — is the interoperability, the capture, the curation, the collection, and the merging together of data, both at a patient level and at a population level. Between those two points, you have care coordination, referral management — both being done in very archaic ways — and care management for your chronically ill patients.

That’s the continuum that I see. I see a lot of work being done on the analytical reporting end, though I do see the folks that have been using those awakening and saying, "We’ve got better reports, but we still don’t have very good data." That’s what we have to do as an industry — connect from that source during that workflow of that actual patient encounter back through the big data analytics.

What should small companies know if they’re going to succeed in healthcare IT?

Innovation comes before standards. We have people that chase standards and regulation, and if standards ever did what they should do — which is make things cheaper and faster — it would work, but they rarely do.

I would encourage them to look more at innovation and look at a business reason for doing something versus trying to define a standard or drive a regulation and then answer that. That would be my advice to them — innovation before standards. Standards should fall out of innovation, not innovation being driven toward a standard, because we don’t know exactly how we’re going to get there.

Do you have any final thoughts?

We have a very important mission to do in healthcare. It’s not only demographic with the aging of the country, but it’s also very personal. Ultimately, this is the system that will take care of us and our loved ones. We need to make sure that we do a great job so that we have the best healthcare system possible.