As a technology industry executive I’m a student of market adoption. As a technology company executive I’m intrigued any time government goes beyond supporting pure innovation and technology development and leverages their way into commercialization processes and driving market adoption. In many ways, governments have every bit the power of Google or Microsoft to be game-changers in nearly any industry as a by-product of their access to raw technology. Few private or public companies in the world can match the resources, depth and breadth of the US government’s R&D capabilities. NASA’s continued success over the years highlights the sheer power of our country’s resources. The US government’s technology transfer programs also appear to work fairly well as evidenced by the commercialization of GPS technology into numerous private market applications. It’s when government takes the next step into driving market adoption that its success is spotty, at best.
The federal government’s most recent efforts to increase the adoption rate of healthcare information technology (HIT) via the American Recovery and Reinvestment Act (ARRA) provides a good case in point. Recent feedback from several HIT companies suggests, contrary to its objective, ARRA has actually hampered adoption of HIT systems in the short-term and potentially compromised longer-term healthcare industry gains in favor of mid-term political gains. In the short-term, many HIT software companies have stated that government “froze their market” when ARRA was initially announced. In its haste to launch a program, the federal government outlined a carrot-and-stick funding approach without providing the necessary details surrounding “Meaningful Use” of HIT systems. They also announced that only HIT systems certified by an as-then-undetermined certification authority would qualify for incentive payments. The entirely natural and predictable result was that many medical practices and physician offices put their HIT system purchasing plans on hold until critical details were available. Doing so made perfect sense given the potential financial and operational risk to medical practices of making a decision that may have to be reversed later. The delayed purchasing decisions negatively impacted HIT system vendors. Perhaps unwittingly, and certainly unnecessarily, government compromised the health and stability of the very HIT firms that would be ultimately responsible for delivering on government’s promise.
Understanding the longer-term potential ramifications of ARRA requires a closer look at the convergence of two different but interrelated factors. First, understanding what drives normal market adoption and how ARRA changes normal behavior. Second, looking at how ARRA may be conditioning future HIT system purchase decisions.
To the first point, few individuals have contributed as much to an understanding of how markets adopt new products or technologies as has Geoffrey Moore. Moore’s work as outlined in “Crossing the Chasm” details the different types of buyers and stages that technologies evolve through on their way to ubiquity. Moore’s adoption lifecycle model taught us that each successive stage or group of buyers relies on the gained experiences of the preceding buyer groups. “Innovators” thrive on being the first to own a new technology for technology’s sake even if it doesn’t fully work yet. “Early Adopters” typically seek out new applied technologies that may give them a leadership advantage, after the Innovators have worked out the initial kinks. The “Early Majority” seeks out proven and well-established products that deliver a calculable and demonstrable return, once the Early Adopters have proven the potential value. The “Late Majority” tends to buy mature products that represent little risk, once the Early Majority has reached full market penetration. Finally, the “Laggards” would prefer it if we all went back to taking notes on papyrus, and will resist buying technology at all. The critical point that the government’s approach misses is that compressing the buying lifecycle stages as ARRA does deprives succeeding groups of buyers of the “lessons learned” knowledge necessary for their success. Medical practices buy HIT systems then because they have to, rather than as an enlightened business decision to solve problems or build a more effective or efficient healthcare delivery practice. The foregone “lessons learned” of normal adoption lifecycles are a necessary element of successive buyer’s decision criteria and to ever-improving implementation processes. The resulting absence of accumulated knowledge creates risk. The most likely impact of the risk is a greater number of HIT implementations that fail to achieve their goals of improved health outcomes or reduced healthcare costs.
On the second aspect, ARRA reinforces the physician practice behaviors originally shaped and then perpetuated by Medicare / Medicaid funding approaches and priorities. Medicare and Medicaid dominate the market to such an extent that healthcare practices have learned to react and respond to government funding initiatives instead of proactively developing best business practices. ARRA represents a continuing conditioning effect that ensures that Electronic Medical Record or Health Record (EHR / EMR) systems will be adopted. The continued conditioning suggests that further incentive approaches may be expected or required in order to drive HIT adoption beyond EHR / EMR implementations.
When you consider the implications of ARRA and the counter effects to natural market adoption and technology buying processes it becomes clear that we’ve legislated a sub-optimal solution over the long term. Troubled HIT system implementations will curb the appetite for the follow-on layer of HIT systems. Limited tangible industry-wide health outcome successes will curtail the taxpayer’s and lawmaker’s desire to create a second ARRA-like program. It certainly doesn’t appear that real business issues such as these, and others, were duly considered as the ARRA bill was being developed. That may be asking too much of a politicized process. The end result will likely be that progress will be claimed by the proponents of the legislated bill and ARRA will be credited with driving HIT system adoption. The industry will likely reach a very high level of penetration, but unless something changes, the hoped-for economic gains and improved health outcomes will be far less visible and touted than are the political gains. A much better approach, although far less politically viable, would have been for government to focus its efforts and resources on development of core technologies that could support healthcare, allow for technology transfer to the market and then support normal market adoption.
Illustration courtesy of Geoffrey Moore, Crossing the Chasm, Collins Business Essentials (2002)