The National Alliance for Health Information Technology and its five remaining employees face an uncertain future following last weeks announcement that the groups board of directors is reconsidering NAHITs continued relevancy in a much-changed healthcare information technology landscape.
While there have been unprecedented advances in the adoption and use of health information technology, there is enormous unfulfilled potential that needs (to) be realized sooner rather than later, said NAHIT Board Chairman Curt Selquist in a news statement. This will require new strategies and tactics and a different operating structure.
Selquist, a retired chairman of Johnson & Johnson Health Care Systems, is serving as the Chicago-based groups interim chief executive officer. Scott Wallace, the groups highly paid president and CEO, resigned effective immediately with the March 26 announcement. NAHITs board appointed Neil Jesuele, executive vice president of leadership and business development for the American Hospital Association, which co-founded NAHIT in 2002, to lead the initiative to reconsider NAHITs role and mission. NAHIT said those recommendations are due to the groups board by early May.
Richard Wade, senior vice president for strategic communications for the AHA, said the organization is satisfied both with Wallaces performance and that of NAHIT, which was formed in response to the requests of AHA members to provide them with guidance in the healthcare IT arena, particularly in the area of standards for interoperability.
Scott, being an energetic person that he was, really took on a broad agenda, Wade said. At the time, we were all talking past each other and NAHIT was a place to convene everybody and then try to influence federal policy. We all were convinced we had to pursue all of those things. Then you realize you need to narrow the focus and thats the crossroads where I believe NAHIT is at today.
We were very satisfied with the work that NAHIT did, except that we realized it had to be a different organization in the future, Wade said. The big issue today for our members is going to be performance improvement and their current concern with health information technologies is whether those technologies are going to take them down the road to performance improvement.
The declining need for NAHITs current work is reflected in its declining membership. At its peak, NAHIT boasted of having more than 80 member organizations. Current membership is now 54 organizations, according to the groups Web site.
The group also employed 14 people at its peak in 2007, according to NAHIT interim Chief Financial Officer Paul Sholty. Its down to five employees now, Sholty said. Four of the nine departures have occurred this year. In addition to Wallace, Ron Fruin, NAHITs controller, was let go in January, and two other staffers were let go last week. Selquist confirmed those layoffs.
Financially, NAHIT typically has operated in the red. NAHIT is a tax-exempt social welfare organization under Section 501(c)(4) of the Internal Revenue Code. In 2004, it lost $566,452 on total revenue of about $1.5 million, according to the groups Form 990 filed with the IRS. In 2005, it lost about $1.1 million on total revenue of about $1.9 million. And in 2006, the group enjoyed a $236,525 profit on total revenue of about $3.4 million.
However, those results were buoyed by $900,000 in revenue that came through its related foundation. Johnson & Johnson contributed $400,000 to the foundation, and Pfizer contributed $500,000 to the foundation. Johnson & Johnson contributed another $101,303 to NAHIT directly that year as well.
Over that same period, Wallaces total compensation jumped 50% to $545,992 in 2006 from $363,962 in 2004. In 2006, more than 17% of the groups total expenses were spent on Wallaces total compensation.
Weve always been close to the vest, Selquist said. What weve taken in, weve spent.
Wallace, 46, in an interview after the announcement was made public, said he was unable to discuss the organizations restructuring or finances.
My agreement was I wasnt to talk about the alliance, and I want to be careful about not violating that, Wallace said. Im pleased at what weve done in five years, he said.
Wallace said he will remain working in the area of healthcare information technology, something really exciting, but Im not quite ready to announce it yet. Ive got another six weeks of really intensive work before I can announce it.