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Cerner, McKesson Lead Alliance to Let Doctors Share Data

Cerner Corp. (CERN) and four rival providers of electronic medical records said they will ease barriers preventing doctors and hospitals from sharing data, a potential breakthrough in the effort to get U.S. physicians to better coordinate patient care.

The five companies are forming a nonprofit group aimed at setting standards for exchanging data across their systems. Cerner, the second-biggest provider of electronic health records, joined McKesson Corp. (MCK), Athenahealth Inc. (ATHN), Allscripts Healthcare Solutions Inc. (MDRX) and Greenway Medical Technologies (GWAY) Inc. in the effort, according to a statement released today at an industry conference in New Orleans.

The agreement brings together some of the biggest providers of medical software as technology companies and hospitals face criticism for building closed systems that don’t easily share data. The Obama administration, which has set aside almost $30 billion in funding for doctors to buy digital systems, is considering new standards for the industry.

“We believe the industry needs to step up to the challenges,” Neal Patterson, chief executive officer at Kansas City, Missouri-based Cerner, said in the statement. “This alliance is about setting aside the admittedly tough politics of this issue to do what is right for the health-care consumer.”

The companies’ partnership, dubbed the CommonWell Health Alliance, will “define, promote and certify a national infrastructure with common platforms and policies.” The agreement doesn’t include the largest medical-records provider, closely held Epic Systems Corp. of Verona, Wisconsin. In their statement, the other five said the group was committed to working with all vendors.

’Fight and Die’

More open systems will “make us scrap and fight and die on the basis of transparency and innovation,” said Jonathan Bush, Athenahealth’s CEO, at a joint news conference held by the companies. “It will no longer be, ‘Hey, we can use opacity to lock people up and keep them from shopping.”’

Along with deflecting scrutiny from federal regulators, the partnership may help the companies compete with Epic, which has been extending its dominance among big, well-funded hospital systems, according to Eric Coldwell, a Robert W. Baird & Co. analyst in Chicago.

Epic’s Momentum

“Epic has a tremendous amount of momentum,” he said. Its competitors “want to make their systems easier for everybody to work with and they want to use that to their advantage in marketing pitches. They also want to help patients and help health care, but there’s a business reason to do this, too.”

Cerner rose less than 1 percent to $89.60 at the close of New York trading while San Francisco-based McKesson fell less than 1 percent to $107.39.

Athenahealth, based in Watertown, Massachusetts, fell less than 1 percent to $95.64; Allscripts, based in Chicago, slipped 1.2 percent to $12.57; and Greenway of Carrolton, Georgia, sunk 1.7 percent to $16.24.

At the same conference, Verizon Communications Inc. (VZ) announced its own bid to ease communication among physicians, saying it will start the nation’s first service enabling doctors to securely exchange medical records online.

The service will debut tomorrow following testing among about a dozen U.S. hospital systems and other clients. Under the program, medical providers who pay a monthly fee will be able to share data, texts and e-mails while still meeting U.S. privacy standards.

’Huge Savings’

Verizon, the nation’s second-biggest telephone company, generated about $5 billion of its $111 billion in total revenue in 2011 from health-related customers, said Peter Tippett, the New York-based company’s chief medical officer. It’s competing with Dallas-based AT&T, the biggest U.S. phone company, as well as cable and Internet providers for a share of the market in connecting the medical community electronically.

“The vast majority of stuff shared by providers ends up not digitizable and it’s a huge pain,” Tippett said in a telephone interview. “There’s huge savings in this. There’s a huge easing of access and care.”

Verizon will charge about $10 to $60 a month per user for doctor’s offices and hospitals to be on the system, Tippett said. The new service will consist of two components: an information exchange for hospitals to securely move data, and a web-based portal though which providers, from doctors to nurses to ambulance drivers, can exchange messages and texts.

Security Concerns

Physicians have traditionally avoided e-mail because of security concerns and data limits that often prevent them from sending large files such as X-Rays and MRIs, Tippett said. Verizon’s product, known as Secure Universal Message Services, overcomes those problems and is likely to attract “thousands” of medical providers, he said, declining to be more specific.

Verizon believes its new service will be a “game- changing” solution, Tippet said.

“We really think it will be disruptive,” he said. “It’s kind of like giving a gift of e-mail, but in a secure form, to the entire health-care ecosystem.”

The Obama administration’s records initiative makes hospitals eligible for payments of as much as $11.5 million if they can demonstrate “meaningful use” of computer system. Doctors can earn up to $44,000 in incentives over five years. Hospitals and doctors who don’t adopt electronic records by 2015 will be penalized with lower Medicare payments.

Verizon rose less than 1 percent to $47.11.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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