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Hospitals Weigh Cost of Technology Vs. Patient Care

With one product on the market and no others in the pipeline, Patientline’s focus is as clear as the display screen on its bedside unit: to penetrate San Diego hospitals and those in other U.S. markets.

There’s only one problem for the European company that built a North American headquarters in San Diego in June , there are already a plethora of health information technology firms with similar products that bring everything from Internet and e-mail, phone, room service, movies and medical libraries to the patient bedside.

Competitors include Dublin, Ohio-based Cardinal Health Inc., San Francisco-based McKesson Corp., Germany-based Siemens and Raleigh, N.C.-based TeleHealth Services.

Luxuries at the hospital bedside such as the Internet, games, movies-on-demand and audio books are a national, if not global, trend, experts say, and the companies, including Patientline, had their version of Bedside Unit on display at the annual Healthcare Information and Management Systems Society conference at the San Diego Convention Center last week.

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Cardinal Health is clearing the path somewhat for its competitors in that market. Claudia Russell, the vice president of strategic marketing, who works from Cardinal’s San Diego offices, said the company realized that PatientStation, its competitor to Patientline’s Bedside Unit, “was probably not our strongest opportunity.”

“Where Patientline is putting a lot of emphasis on communication services, we’re more clinical-oriented,” she said, adding that Cardinal’s eye is on hardware and software that ease delivery of medication from pharmacies to the bedside. Ensuring different components of the systems are standardized and interoperable , a buzzword at the conference meaning the systems can talk to one another , also decreases the risk of medication errors, Russell said.


A Competitive Market

Tom Bang, the chief executive officer and founder of the North American offices for Patientline, admits the company’s product has plenty of competition. The Bedside Unit is a TV-computer monitor with a hand-held keyboard, as well as a phone attached to a flexible, three-jointed arm that mounts to a wall beside a hospital bed.

In 2005, U.S. revenues for the wholly owned subsidiary were between $1 million and $2 million, according to Patientline.

Some of its competitors offer wireless products, making them more portable. But Bang said the ability to have a “nurse’s desktop” anchored at the bedside with the ability to move the display out of the way is among Patientline’s biggest advantages.

“Right now, a lot of patient education is done as they are wheeling patients through the parking lot,” Bang said. “Or the nurse has to wheel a computer from room to room. Some companies might provide a piece of what we provide , some content, but not digital, and not expandable.”

Patientline is based and trades publicly in the United Kingdom and has its products in 200 hospitals in four countries, though just five in the United States. No San Diego hospitals have yet purchased the technology from the company, but Bang hopes to change that.

Although the annual HIMSS conference, one of the largest such exhibitions in the country, showcased thousands of health care information technology companies’ gadgets, health organizations cannot always have the latest and greatest products, said Scripps Health Chief Executive Officer Chris Van Gorder.


Balancing Act

Hospitals have a delicate balancing act to perform as health costs and the number of uninsured patients rise, Van Gorder said. According to the California Hospital Association, more than half the state’s hospitals operate in the red. San Diego-area hospitals struggle to break even too, area hospital trade group leaders have said.

“The board has to balance resources,” Van Gorder said. “We spend just shy of $20 million each year on charity care. Physicians aren’t charity, and they deserve to be compensated for what they do. At the same time, the cost of technology is going up.”

Jonathan Gaev, director of technical programs for the health devices group at ECRI, a Pennsylvania-based nonprofit health research agency, said his organization exists partly to help health organizations make more educated decisions.

“They can call us and say, ‘Are we about to pay too much for this?’ ” Gaev said. “And we can tell them because we are basically the Consumer Reports magazine of the health device industry. Instead of toasters and cars, imagine defibrillators.”

Gaev said he sees a trend toward purchasing more sophisticated versions of what were once simple devices.

ECRI, formerly called the Emergency Care Research Institute, aims to improve the safety, quality and cost of health care, according to its Web site.

Jennifer Myers, the vice president of health technology services at ECRI, keeps a close watch on what health companies nationwide are purchasing. Myers said point-of-care diagnostics, which allow doctors to get some test results immediately, instead of sending material to a laboratory, has surfaced the past several years as a popular market, but the high cost has “kept it somewhat controlled, unfortunately,” she said.


Difference In Expenditures

Dave Burda, the editor of Chicago-based Modern Healthcare Magazine, which hosted a forum at HIMSS on health care trends in information technology, said the magazine’s research shows hospitals spend 2 percent to 3 percent of their annual budget on information technology, but around 50 percent on labor.

“Because of requirements in California on nurse staffing and labor, hospitals in California might have more difficulty in spending on IT,” he said. “They want to, but can they?”

When asked why hospitals here should be purchasing technology such as Patientline’s Bedside Unit or Cardinal Health’s PatientStation, when one in five San Diegans are uninsured, according to the local nonprofit the Alliance Healthcare Foundation, Patientline’s Bang said even the uninsured are accustomed to entertainment and do not wish to feel secluded during a hospital stay.

“Odds are they have a TV at home , or even a cell phone and Internet,” Bang said. “They’re still used to that technology. Those patients who are even just hoping to get basic care , even they want to be entertained. Whether it’s South Central L.A. or La Jolla, it is a universal need.”

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