Eighteen month ago Avon Products stopped its global SAP implementation, a.k.a., the “Service Model Transformation” or SMT project.  In its 8-K regulatory filing, Avon stated that it planned to write off the $125 million investment in SMT.  The Canadian SMT pilot failed to produce the results Avon was looking for, and the CEO decided to nix the rest of the global rollout.  On the day of the 8-K filing, Avon shares closed at $16.82. Today the stock sells for $6.75, down 60% from the filing date.  The Dow is up 12% in the same period.  If Avon tracked the rise in the Dow, it’s market cap would be more than $8 billion, versus today’s actual market cap of $3 billion.

Is an IT Project worth $5 billion?  According to Information Week, “the technology worked, but it was so hard to use that Avon salespeople — many of them part timers who network among friends and hold in-home parties — left the company in droves.”  This tells us that the Avon sales force didn’t want to use a system that made their lives more difficult!  We hear the same complaint from doctors about their Electronic Medical Records systems.

A company’s worth can pivot considerably based on whether it invests in IT wisely. Perhaps Avon should have spent its IT dollars toward giving its salespeople the tools to make more money, more easily, and in less time!

Healthcare.gov. Electronic Medical Records.  HIPAA.  Meaningful Use.  Telemedicine.  Insurance Coverage.  COBRA.  Privacy.  Medical Errors.  Productivity Requirements.  No-Recourse Billing.  The Cloud.  For the remainder of this decade, the health care industry will be overwhelmed by managing its information, and less able to help you manage your health.  The long-term outcome may be good, but the near term is sure to be rocky.  The launch debacle at Healthcare.gov is the first act in what will likely be a sordid tale.

The private practitioner cedes his Lexus to the repo man and gives up his country club membership because he can’t afford to computerize his practice.  Corporate and university health systems are gobbling up independents and group practices, because they are the only ones that can afford the massive fixed cost investment of health care IT.

Like other sectors, health care is starving for information in a swelling sea of data.  Medical costs are skyrocketing, and this is partly due to the exponential explosion of health care data, enabled by the cheap storage, ubiquitous bandwidth, and hungry technology vendors.

Go to a doctor today and then examine your bill.  Do you understand it?  Is it correct?  What recourse do you have if it’s not?  Did you receive a bill from the doctor’s hospital in addition to the doctor’s bill, even if you didn’t go the hospital?  Thought your insurance coverage would cover it, right?  What can you do?

The Federal Government entered the fray via Meaningful Use, which pays doctors for computerizing, but the legions of IT consultants are the real winners.  They’ve thrown their Re-Engineering, Six Sigma and Sarbanes-Oxley brochures into the trash to make room for their health care IT services.  The big consulting firms lobby lawmakers to codify complexity so they can sell our heath care providers a lifeline out of it.

Until heady ambitions are distilled down into doable projects, we will continue to wait for results.  We must curtail the data deluge and pare the consulting legions or our health care industry won’t get healthier.

Jon Bellman

http://www.amazon.com/Escaping-Delete-CEO-Black-Hole/dp/0615331947/

To my healthcare industry friends and colleagues, I hope you will watch this video.  How far along is your Electronic Medical Record or Electronic Health Record project?

IBM Deal Mostly Wasted Money State Says

How does Pennsylvania’s failed Unemployment Compensation system relate to your EMR or EHR project?  Large projects often fail! EMR and EHR projects are waiting in their acorns to be the ERP disasters of the late ’90s and early 00’s.  The bottom line: PA made a decision in 2006 to spend $107M.  In 2013, after spending $153M, PA booted the upgrades into the trash and is now trying to reboot their 2006 system!

Pennsylvania hired Carnegie-Mellon’s SEI (think Level 5 CMMI) to evaluate IBM’s project with the state before pulling the plug.  My guess is the state already decided to pull the plug, but needed to bring a “big-gun” consultant to justify terminating IBM.

Now back to EMR & EHR.  Why will your massive healthcare IT project fail?  Long-term projects with changing requirements and teams usually do.  Who pays?  Not the software company that wooed you and payed the lobby dollars that mandated the need for these systems.  Certainly not the consulting firms, who get paid by the hour – their goal is always more hours!  The real question is that when you finally go live with a portion of your EMR or EHR (after you have written off the rest) will it keep your patients healthier and safer and will it enable your healthcare organization to earn a profit?

IBM, have you given back the money?  IBM, please tell us what percentage of the billings were IBM staffers versus subcontractors?

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