Correction to This Article
The column misspelled the name of David Main, a partner with the law firm Pillsbury Winthrop Shaw Pittman.

Kim Hart's The Download

Michael Slage of HealthEngage said he hopes to benefit from the increase in health-care spending.
Michael Slage of HealthEngage said he hopes to benefit from the increase in health-care spending. (By Kevin Clark -- The Washington Post)
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By Kim Hart
Monday, April 13, 2009

Breaking into the health-care industry can be daunting. Doctors, hospitals, insurance companies and patients speak different languages and have vastly different needs.

But more than $19 billion in stimulus money intended to revamp the nation's health system has piqued the interest of some local tech companies that have in the past shied away from the complex industry. And for companies with expertise in the business, stimulus dollars mean new opportunities.

"Health care is thought to be a safer place right now because more money is coming from the government, and it's not really something anyone can cut back on," said Michael Slage of Arlington, founder of HealthEngage, a firm that develops applications that help patients manage conditions such as diabetes and asthma. "Everyone senses that there's all this money out there."

The Obama administration is pushing to digitize health records; electronic records depend on fast data networks, interoperable software systems and devices to enter and track patient data.

FreightDesk Technologies of McLean has built its business by tracking international cargo for the U.S. Food and Drug Administration and the Department of Homeland Security. Chief executive Rob Quartel now sees the opportunity to deploy similar software for health organizations to track Medicare spending, insurance claims and other data. The company is hiring people with expertise in the field.

"It's now a much more receptive environment to new approaches to health technology," Quartel said.

That doesn't mean there's not some apprehension. Doctors and hospitals typically have been reluctant consumers. New technology often can be expensive and time-consuming to use. And the lack of specifics about government standards and patient privacy rules has discouraged some from moving forward, said David Wain, partner at the McLean law firm Pillsbury Winthrop Shaw Pittman.

"Many are saying, 'If we take government money, does that mean the government will take control of our processes or require our IT systems to have certain components? What strings will be attached?' " he said.

The answers to such questions "will define the industry for many generations," said Wain, who coordinates monthly meetings of the Healthcare Technology Network of Greater Washington, a discussion group for industry players.

Still, he said, membership has been growing.

There's also the issue of money. Companies trying to get into the health-care field say their technology would help industry players save costs, in the long run, by making their work more efficient.

But few hospitals, clinics and private practices have the funds to pay for new technology, especially when the savings from doing so may not materialize for several years, said Beverly Bell, partner in the Global Health Services practice at Computer Sciences Corp., based in Falls Church.

As part of the stimulus bill, doctors and other health-care providers would receive payments from the government after they effectively utilize new technology systems.

"Loans and grants will be coming available, but the incentives all come later," she said. "It's difficult for them to make that kind of up-front investment."

Firms that are established in the health business say their expertise and connections have made them quite popular these days.

"Health care is a cash-based business," said Bill Schafer, chief executive of Digital DME in Rockville, which manages the distribution of equipment that patients take home with them, such as knee braces and oxygen tanks. "Doctors have to see an immediate benefit to the service you're providing."

RollStream, a Fairfax company that manages communication between big companies and their vendors and customers, has helped Johnson & Johnson and Cardinal Health connect with suppliers. Chief executive Kristin Muhlner said she is putting more resources into the health-care area of the business.

"The stimulus bill poses substantial challenges for hospitals trying to implement these systems in short time frames," she said.

Some firms are hoping to be a part of the push into health care IT without directly going after stimulus funds. Ozmosis, a newly launched social network for doctors, expects to draw members as physicians get used to the idea of sharing information on the Web, founder Joel Selzer said.

Slage of HealthEngage said he hopes to benefit from the general increase in spending within the industry.

"During the gold rush, most people didn't make money right away, but the people supplying the shovels and picks made a fortune," he said. "We want to be the one selling the shovels."

Kim Hart writes about the Washington technology scene every Monday. Contact her at hartk@washpost.com.


© 2009 The Washington Post Company

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