They say in the not-for-profit world: No margin, no mission.
The National Alliance for Health Information Technology, which operated without a positive profit margin for three straight years, is in search of a new mission.
The nationally prominent, Chicago-based not-for-profit healthcare IT policy shop also is without a permanent leader.
Topping a wave of recent layoffs, NAHIT announced Wednesday a restructuring program and that Scott Wallace, its president and chief executive officer since April 2003, had stepped down.
In addition to his leadership role in national IT policy as the head of NAHIT, a coalition that at one time had more than 80 members, Wallace also was appointed by President Bush in the fall of 2004 to head the Congressionally mandated Commission on Systemic Interoperability, which developed and released in 2005 a road map for converting the national healthcare system from paper-based to digital record-keeping systems.
Wallace was named to the Modern Healthcare 100 Most Powerful People in Healthcare three times in the past four years, in 2004 (No. 91), 2005 (No. 81) and 2007 (No. 90).
NAHIT and its linked National Alliance for Health Information Technology Foundation were launched in 2002 by the American Hospital Association and a host of other healthcare industry for-profit and not-for-profit organizations that included healthcare providers, IT vendors, pharmaceutical manufacturers, and national health and technology associations.
The alliance has participated in several federal efforts to promote healthcare IT. In 2004, NAHIT joined with the Healthcare Information and Management Systems Society and the American Health Information Management Association to found the Certification Commission for Healthcare Information Technology, now a federally supported not-for-profit organization that tests and certifies healthcare IT systems. NAHIT currently is a subcontractor to BearingPoint on an HHS contract to develop consensus definitions for commonly used healthcare IT terms.
In 2006, New Hampshire passed a law seeking to ban of the collection of physician prescription data for commercial use. In May 2007, it was struck down by a federal trial court judge as an unconstitutional abridgment of the data-miners corporate free-speech rights. Plaintiffs in a lawsuit to stop implementation of the New Hampshire law were data-miners IMS Health and Verispan, but they also were joined by friend of the court filings by NAHIT, data-miner Wolters Kluwer Health and several organizations representing the drug store industry.
Membership, however, is down, according to Curt Selquist, NAHIT's board chairman who is the retired company group chairman and worldwide franchise chairman of the medical devices and diagnostics group at Johnson & Johnson Health Care Systems. Selquist also is serving as interim CEO of NAHIT. In its heyday, NAHIT issued news releases about the signing up of new members with the ranks swelling to more than 80 organizations. Today, its Web site lists 54 members.
According to its Form 990sfinancial reports filed with the Internal Revenue ServicesNAHIT has spent more than it has brought in from membership dues and other operating revenue in 2004, 2005 and 2006. IRS reports for 2007 are not yet available, but there will be little changed from previous years, according to Selquist.
"We've always been close to the vest," Selquist said. "What we've taken in, we've spent."
In fact, an extraordinary infusion of donations of more than $1 million from two drug giants, Johnson & Johnson and Pfizer, were needed to keep NAHIT in the blackby about $267,000on its Form 990 income statement for 2006. Income statements for 2004 and 2005 showed NAHIT posted deficits both years totaling more than $1.6 million on combined revenue of $3.4 million. NAHIT spent nearly $1.1 million on consultants in 2004 through 2006, according to its IRS filings and Selquist. Wallace's compensation for 2006 was $545,992, according to the Form 990 for that year.
Wallace leaves as the most-notable of at least four departures of NAHIT personnel this year, an exodus that includes the organization's controller, Ron Fruin, who was laid off in January, and two other staffers who were let go this week. Selquist confirmed these departures.
The organization employed 14 people at its peak in 2007, according to NAHIT Chief Financial Officer Paul Sholty. It's down to five employees now, Sholty said.
Wallace, in an interview Wednesday after the announcement was made public, said he was unable to discuss the organization's restructuring or finances.
"My agreement was I wasn't to talk about the alliance, and I want to be careful about not violating that," Wallace said.
Fruin, in an interview Wednesday, said deficits were an issue when he hired in at NAHIT in September 2006 and remained a problem when he left.
Despite the red ink on the Form 990s, according to Selquist, there was no funding crisis at NAHIT.
"What is true is we had a lot of expenditures around our projects," Selquist said, including a significant effort in the wake of Hurricane Katrina in which NAHIT had joined with a state coalition in Louisiana to develop electronically linked "medical homes" for local residents.
"There we had two or three corporate sponsors that were interested in creating a new healthcare system," Selquist said. Simply stated, the idea is to find a way to give better care to people than have them wait in line in an emergency room. It's having a clinic system and you need a backbone of a healthcare information technology system. All of that would help identify problems earlier, and only go to the hospital when you have a need to go there.
"Now we're looking at the work we want to do in the future and it's totally different than in the past," Selquist said. "The interest of industry in this space was greater in the past, paying dues to an organization like the alliance. It's probably 25% fewer dues-paying members today than there was at the beginning. That alone would make us scale back our approach. We know we have a reason for being, we just want to size ourselves appropriately.
"There is still a lot to do, but we need to do it differently," he said. "We don't need the staffers that we had at the levels that we had. We're going to make more use of the AHA administrative groups so we don't have to spend dues money to pay for staff that we could probably get help for at less costs.
"A great deal has been accomplished and the original goals of the alliance have, in great part, already been accomplished. That doesn't mean the health IT space has been resolved, that just means initially we, the industry, struggled with some standards, standard approaches to how to use technology. Not all of that success was due to the alliance, but we were able to attract a lot of people at a very high level. We were able to help explain where the industry was and what the industry was capable of doing."
Selquist said the healthcare industry has gone from not having a clear understanding of the importance of health IT to a full awareness of its potential. "They still haven't made the investments necessary. It's one thing to get it, and it's another thing to convince the board to pay for it, but we're getting much closer.
"So, we at the alliance have less reason to do what we originally set out to do," he said. "We're looking to where we can best use our convening skills to help move this along."
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