A decade ago, I was writing two blogs for ZDNet.
One covered open source. The other covered health IT.
People were very excited about both beats.
Companies like Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) were about to use the cloud, based on open-source software and cheap hardware, to transform the world. By the end of the decade, even mighty Microsoft (NASDAQ:MSFT) had succumbed to the movement. In the process, it became the most valuable company in the world.
Meanwhile, the prospect of Electronic Health Records and $26 billion of sweet, sweet stimulus cash were exciting for the health-care sector. The American Recovery and Reinvestment Act, a.ka., President Obama’s stimulus plan, was supposed to finance Electronic Health Records, resulting in the automation of medicine.
The hope was that by now, doctors would be seamlessly exchanging health information among themselves and patients, improving care and lowering costs.
How did that work out?
Open Source Ignored
It didn’t.
A recent study by Fortune and Kaiser Health, whose parent was a primary booster of the health-records stimulus, shows it has been a complete disaster.
Some of the companies that took the cash did very well, financially. Cerner (NASDAQ:CERN) stock is up 136% since early 2010. Athenahealth (NASDAQ:ATHN) has surged 214%. But how good is that, really, when the average NASDAQ stock has jumped 190% in that time?
The biggest winner of the health-IT stimulus has been United Health (NYSE:UNH), which isn’t even an IT company, but a health insurer. It has rallied 513% and now brings in over $8 billion per year from health automation.
But most “mainstream” IT companies did not exploit the health-IT opportunity. Google, International Business Machines (NYSE:IBM) and Microsoft had booths at the 2009 HIMMS health-IT trade show, which I covered.
None was among the top-10 health-IT vendors in 2017.
Instead, that list is filled with proprietary-software companies like Cerner, the Change Healthcare unit of McKesson (NYSE:MCK), and privately-owned EPIC. Their incompatible solutions have left the health-IT industry in worse shape than before.
The Real Scandal
The scandal wasn’t the stimulus. The scandal was the response.
There was an open-source alternative to all this, called Vista. It was created a half-century ago to automate the Department of Veterans Affairs. The download is free. A cloud-based version was rolled out in 2017. But its sponsor, privately-held Medsphere, remains a minnow in the health-records industry.
Vista has become starved of investment because the current Administration walked away from it.
While the code is still alive, the Administration is replacing it with a proprietary solution from Cerner. The Department of Defense is going with Cerner and Leidos (NASDAQ:LDOS), another proprietary vendor.
This may be the biggest technology scandal of the decade. A development model that we know works is being dumped for one we know doesn’t. Cerner and Epic can’t even agree to connect their systems. Now patients are dying because the software that hospitals bought is hard to use and doesn’t move data.
The Bottom Line on Health IT
This may turn out to be the biggest business opportunity that Amazon has ever seen.
Amazon knows cloud and open source. Amazon IS cloud and open source. Amazon is also behind Haven, an effort to solve its own health-care cost crisis, along with those of Berkshire Hathaway (NYSE:BRK.A) and JPMorgan Chase (NYSE:JPM).
The failure of the electronic-health-care-records stimulus, and the current proprietary health-IT system, means Amazon can launch its health records from a clean sheet of paper. Or it could download, and enhance, the Vista code, as it has incorporated other open-source projects into Amazon Web Services.
If you want a tip on how to profit from health -IT profits, buy Amazon stock.
Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in JPM, MSFT and AMZN.
