1. Minhang District Health Bureau Shanghai, China February 9, 2012 Evolution of Global HIT Where Does China Stand on the Global HIT Continuum?

2. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 2 Presentation Agenda Page About the Dorenfest Group3 About the Dorenfest Group3 The Evolution of Global HIT11 The Evolution of Global HIT11 Evolution of RHNs in Other Countries20 Evolution of RHNs in Other Countries20 Current Status and Future Direction of HIT in China27 Current Status and Future Direction of HIT in China27 Evolution and Current Status of RHNs in China40 Evolution and Current Status of RHNs in China40 Where Does China Stand on the Global HIT Continuum?47 Where Does China Stand on the Global HIT Continuum?47

3. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 3 About the Dorenfest Group 40 years experience in HIT 40 years experience in HIT Offer healthcare improvement services through a variety of businesses. Offer healthcare improvement services through a variety of businesses. –Software –Hospital Operations Improvement –Consultation with Technology and Software Vendors In Health –Information Business Focus on improving patient care and operational efficiency through better change management Focus on improving patient care and operational efficiency through better change management –Work process improvement –Management systems improvement –Improvement in services for patients –Improvement in quality of patient care

4. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 4 Some Dorenfest Hospital Projects

5. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 5 Some Dorenfest Healthcare Supplier Projects

6. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 6 Dorenfest’s Investigation of China Healthcare in 2005-2006 1.Visited 17 cities in China 2.Met 100’s of healthcare industry leaders in China 3.Visited over 100 hospitals to review hospital operations and define opportunities for improvement 4.Met provincial and city health bureau leaders in cities visited 5.Met with many companies selling products and services to the healthcare industry in China 6.Evaluated a group of hospital ownership and management opportunities and assessed viability of the Dorenfest “model hospital” in China 7.Developed a strategy for bringing Dorenfest skill and experience to China

7. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 7 Dorenfest Vision of a Model Hospital Provides improved quality of care to its patients Provides improved quality of care to its patients Operates at a highly efficient level through effective use of systems and better work processes Operates at a highly efficient level through effective use of systems and better work processes Offers its services to patients at an affordable cost Offers its services to patients at an affordable cost Creates a highly satisfied patient population with the patients observing a noticeable improvement in the services and treatments provided by the hospital Creates a highly satisfied patient population with the patients observing a noticeable improvement in the services and treatments provided by the hospital Utilizes appropriate digital technology to create a state of the art “digital hospital” Utilizes appropriate digital technology to create a state of the art “digital hospital”

8. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 88 China Healthcare Leaders Want to Leapfrog the World in IT Use Chinese hospitals and health bureaus are carefully considering how to be more successful in taking next steps forward in IT use Chinese hospitals and health bureaus are carefully considering how to be more successful in taking next steps forward in IT use There is a recognition that for China to accomplish its objectives in HIT requires the following: There is a recognition that for China to accomplish its objectives in HIT requires the following: –Learning quickly from the global experience –Overcoming resistance to change –Knowing how to manage change –Doing more of what the rest of the world did right and less of what they did wrong to avoid mistakes other countries have made and China is still making –Developing more expertise in these areas of need quickly

9. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 9 The Dorenfest Group Is Bringing Needed New Skills to China 1.Hospital Operations Improvement, Work Process Improvement, and Change Management 2.IT Program Improvement, Problem-solving, Strategy, and Planning 3.New Approaches to Buying IT Systems in a Stronger Partnership with Users 4.New Ways to implement IT Systems

10. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 10 Examples of Dorenfest Projects in China Some health bureau clients for RHN and digital hospital planning Some health bureau clients for RHN and digital hospital planning –Shenzhen –Chongqing Some hospital clients Some hospital clients –Peking University Third Hospital –Shanghai Changning Maternity & Infant Health Institute –Rizhao City People’s Hospital –Foshan City First People’s Hospital Help clients from other locations bring their skills to Mainland China Help clients from other locations bring their skills to Mainland China –Hong Kong Hospital Authority –Microsoft –Philips

11. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 11 The Evolution of Global HIT Minhang District Health Bureau

12. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 12 Opportunities to Improve the Healthcare Delivery Process Have Been Pursued for Many Years Great redundancy of information Great redundancy of information High error potential High error potential Lack of timeliness Lack of timeliness High cost High cost Organization complexity Organization complexity

13. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 13 The U.S. Hospitals Have Sought an EMR/EHR Since the 1960s through Four Generations of IT Systems Finance Systems (1960s and 1970s) Finance Systems (1960s and 1970s) Limited Clinical Systems (1970s and 1980s) Limited Clinical Systems (1970s and 1980s) More Advanced Clinical Systems (Late 1980s and 1990s) More Advanced Clinical Systems (Late 1980s and 1990s) Electronic Health Records (2000s) Electronic Health Records (2000s)

14. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 14 But Poorly Implemented Change Layered Redundant Work on Top of Original Inefficiency Before IT=1x 2x 3x 4x Growth in Redundancy Total Hospital Work Process

15. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 15 At the Beginning 1.Large vision 2.Hardware technology limited and expensive Large computers Large computers Inefficient software development methodologies Inefficient software development methodologies 3.Self development was the only software approach and remained the preferred approach for a period of time 4.Packaged software emerged first as a customizable starter set and later became products requiring less customization from user to user 5.As time passed, packaged software products became preferred Less expensive Less expensive Faster to implement Faster to implement But many problems in implementation But many problems in implementation

16. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 16 The Late 1970s and 1980s 1.Several generations of technology, software vendors, software approaches, and products came and went 2.Software buying and implementation methods improved Users and management became more involved Users and management became more involved Functional requirements to define needs and compare vendors became more complete and useful Functional requirements to define needs and compare vendors became more complete and useful User site visits, user customer references, and user discussions with counterparts at other hospitals became part of an improved buying approach User site visits, user customer references, and user discussions with counterparts at other hospitals became part of an improved buying approach 3.Integration became a large problem as the number of software vendors used by a hospital increased Started out all manual with duplicate entry into multiple systems Started out all manual with duplicate entry into multiple systems Moved to “hard coding” of interfaces between systems Moved to “hard coding” of interfaces between systems Caused a focus on the development of standards for software products of different vendors to communicate with each other Caused a focus on the development of standards for software products of different vendors to communicate with each other

17. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 17 The 1990s and 2000s 1.Management of the buying and implementation of IT software continued to improve 2.A new generation of software systems emerged, with better features and functions built on superior technological platforms 3.Integration problems kept growing, causing the movement from hard coded interfaces to standards such as HL7, and interface engines which facilitated the transfer of data in a more efficient way between software systems 4.Clinical data repositories, data analytics tools, and clinical decision support systems emerged 5.The pressure for physicians to enter orders through CPOE grew in the late 1990s and early 2000s. 6.In the 2000’s, the long sought after vision of an EHR began to emerge in inpatient and ambulatory settings. The U.S. 2009 healthcare stimulus will further expand EHR use

18. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 18 HIT Evolution in the Rest of the World Canada started in the late 1970s Canada started in the late 1970s Europe and Australia began in the early 1980s Europe and Australia began in the early 1980s Asia began in the 1990s Asia began in the 1990s Canada, France, Germany, England, and Australia all started later than the U.S., Invested less, and have made more progress Canada, France, Germany, England, and Australia all started later than the U.S., Invested less, and have made more progress Hong Kong started even later, invested less, and now is the state of the art in HIT use in the world Hong Kong started even later, invested less, and now is the state of the art in HIT use in the world China HIT is now at an earlier stage of development. China has the goals and desire to “leapfrog” the rest of the world in HIT use in the next few years China HIT is now at an earlier stage of development. China has the goals and desire to “leapfrog” the rest of the world in HIT use in the next few years

19. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 19 Successful Later Adopters Learned from the Experience of Earlier Adopters to Make Progress Faster By playing close attention to what worked and did not work in earlier adopter countries, later adopters were able to avoid many of the difficulties experienced by earlier adopters and accomplish better results By playing close attention to what worked and did not work in earlier adopter countries, later adopters were able to avoid many of the difficulties experienced by earlier adopters and accomplish better results China is now at a key point with more rapid progress in IT use being a key factor to support the successful implementation of healthcare reform in China China is now at a key point with more rapid progress in IT use being a key factor to support the successful implementation of healthcare reform in China

20. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 20 Evolution of RHNs in Other Countries Minhang District Health Bureau

21. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 21 RHNs Were First Introduced As CHINs in the U.S. in the Early 1990s Hospital A Doctor’s Office Government Reimbursement Blood Bank Home Health Agency Hospital B Patient Data Doctor’s Office Insurance Payor Nursing Home Outpatient Clinic

22. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 22 Summary of Evolution of RHNs in the U.S. Community Health Information Networks (CHINs) began in 1990 as the first generation of RHNs in the U.S. Community Health Information Networks (CHINs) began in 1990 as the first generation of RHNs in the U.S. –Formed with a broad vision of sharing information among health organizations within a city or state –Unclear objectives –Lack of value to potential participants –Much money invested by many CHIN projects Integrated delivery ownership models emerged in 1993 as the hospital answer to the Clinton healthcare reform proposal Integrated delivery ownership models emerged in 1993 as the hospital answer to the Clinton healthcare reform proposal By the middle 1990s, integrated delivery systems emerged in every city in the U.S., and the CHIN concept disappeared by 1996 By the middle 1990s, integrated delivery systems emerged in every city in the U.S., and the CHIN concept disappeared by 1996

23. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 23 The Vision of Integrated Delivery System Ownership Models Hospital A Doctor’s Office Government Reimbursement Blood Bank Home Health Agency Hospital B Patient Data Doctor’s Office Insurance Payor Nursing Home Outpatient Clinic

24. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 24 RHIOs Emerge in the Decade of the 2000s RHIOs were the second generation of RHNs in the U.S. RHIOs were the second generation of RHNs in the U.S. –Many different organizations promoted them in the early 2000s –By 2004, national policy emerged through the Office of the National Coordinator for Health Information Technology (ONCHIT) In the ensuing several years between 2004 and now, almost 100 officially designated RHIOS emerged In the ensuing several years between 2004 and now, almost 100 officially designated RHIOS emerged –Heavy investment in these RHIOs with most funds used in their start-up –Many were unable to find a sustainable operating model and approached financial collapse –Some long term successes emerged to share limited data

25. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 25 HIEs Emerge as A New Name for RHIOs with Objectives to Fit US Healthcare Reform Similar goals to CHINs and RHIOs Similar goals to CHINs and RHIOs The new model is built into the “Meaningful Use” standards in EHRs in the US and gains more stakeholders’ support The new model is built into the “Meaningful Use” standards in EHRs in the US and gains more stakeholders’ support But still difficult to develop a financially self-sustaining business model But still difficult to develop a financially self-sustaining business model

26. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 26 Executing Broad Visions Needs Detailed Plans Broad visions needs detailed plans Broad visions needs detailed plans Oversimplified implementation approaches create flawed and limited success Oversimplified implementation approaches create flawed and limited success Lack of stakeholder commitment created failed programs Lack of stakeholder commitment created failed programs Heavy investment in poorly conceived ideas wasted money Heavy investment in poorly conceived ideas wasted money Success accomplished through limited, well thought through first steps and strong stakeholder participation and support Success accomplished through limited, well thought through first steps and strong stakeholder participation and support

27. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 27 Current Status and Future Direction of HIT in China Minhang District Health Bureau

28. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 28 The Development of HIT in China 1.Chinese hospitals began to computerize in the early 1990s 2.The initial focus of computer efforts was on financial systems 3.In the early 2000s, Chinese hospitals began to implement IT for clinical systems 4.Many software solutions are now available, with well over 1000 smaller software companies now operating in the HIT market in China 5.Between 2005 and 2010, China hospital spending on IT grew from 5 billion RMB in 2005 to 16 billion RMB in 2010, and we estimate it has risen to 21.5 billion RMB in 2011 6.This rapid growth in spending will continue at an even more rapid pace over the next several years

29. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 29 Factors Contributing to Future Spending Growth in China HIT 1.China hospital work processes were redundant, expensive, and error-prone, which led to the initiation and development of HIT in China 2.In 2003, the ministry of health (MOH) issued guidelines for health IT development which called for all cities in China to implement RHN and digital hospital programs by 2010 Gave momentum to hospitals to purchase clinical systems Gave momentum to hospitals to purchase clinical systems Very little progress towards stated goals during the policy period Very little progress towards stated goals during the policy period 3.The healthcare policies of China were pronounced a failure by the NDRC in 2005. Much publicity about this appeared in the Chinese press. The Chinese government promised to reform this failed policy 4.It took four years for healthcare reform to be passed in 2009. The reason for this is that many government ministries had some relationship to the new reform programs, and these ministries did not agree on what the reform should look like. Finally, in 2009, a program was passed. It involved a healthcare stimulus spending program to support the reform in the order of magnitude approaching 1 trillion RMB (published as 125 billion USD in U.S. press)

30. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 30 Factors Contributing to Future Spending Growth in China HIT (Continued) 5.Improved use of IT is one of eight pillars of the new China healthcare reform plan, giving a new momentum to HIT in China healthcare. Focuses include: Improved hospital IT systems Improved hospital IT systems Electronic health records (EMR and EHR) Electronic health records (EMR and EHR) Data sharing through RHNs and integration with community clinics Data sharing through RHNs and integration with community clinics IT systems to support expanded health insurance IT systems to support expanded health insurance 6. 6.Healthcare reform fueled a number of central government programs as well as increased spending by district, city, and provincial health bureaus and hospitals on various aspects of the reform program 7. 7.A vision for HIT was summarized in the 12th 5-year plan for HIT, referred to as the 3521 Project. This vision provides a framework for RHN efforts in China from 2011 to 2015. The vision is very high-level and complicated, so most of the local government implementation programs define first and second steps in their own way. 8. 8.The vision document components may be summarized as follows: 3 levels of health information platform – nation, province and region (city or county) 5 groups of applications – public health, healthcare service, health insurance, drug administration, general management 2 basic databases – resident electronic health record and electronic medical record 1 dedicated health infrastructure network 2 sets of systems – data standards system and network security system

31. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 31 Factors Contributing to Future Spending Growth in China HIT (Continued) 9. 9.Execution of this vision is in the very early stages and has many aspects to be thought through in order to become a reality. Much of the spending going on right now is to implement first steps in the execution of this vision and is fueling the HIT market in China to grow much more rapidly over the next few years 10.The Minhang District RHN is one of the best RHN accomplishments in China, and the district should be proud of its efforts. The Minhang District conceived a vision, which it began implementing in about 2006 and is now a showplace that represents one of the big steps forward in the country in implementation of the 3521 vision framework 11.Chinese hospital leaders want to take a big leap forward in improving work processes and in digitizing Chinese hospitals 12.While money has always been a problem in Chinese hospitals, today there is much more money available from many sources, and it is now being spent more freely

32. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 32 HIT Is One of Eight Pillars of China Healthcare Reform Core of Health Reform: Establish Basic Healthcare System Healthcare system that covers all urban and rural residents Public healthcare system Medical service systemMedical insurance system Secured pharmaceutical supply system Management Mechanism Operation Mechanism Investment Mechanism Pricing Mechanism Supervision Mechanism Talent Supply HIT Construction Legal System Further Implement Health Reform

33. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 12 th 5-Year Plan HIT 3521 Framework and Development Architecture 33

34. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 34 What Are the Key Factors Impeding Success in Chinese Hospital IT Use? 1.Chinese hospitals have not invested a lot of resources in IT systems and infrastructure to get to the present level of accomplishment 2.Because of weak change management, the implementation of new IT systems in China has often added work instead of reducing work, and has created unnecessarily redundant work processes and unhappy users 3.The poor results in HIT in China have been caused primarily by the way Chinese hospitals buy and implement software products 4.The inexperience in the buying of HIT software products in China has followed a similar path to other countries around the world in their early stages of evolution. Most countries have learned from bad experience in their early investments a better way to make HIT buying decisions 5.Fueled by healthcare reform, substantial investment in new IT systems will be made by Chinese hospitals. But the reasons for the poor results accomplished from past investments in HIT are not well understood by Chinese hospitals and are not being corrected fast enough

35. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 35 What Are the Key Factors Impeding Success in Chinese Hospital IT Use? (Continued) 6.The current state of the art in HIT software products, hardware platforms, and integration tools to facilitate the accomplishment of China’s HIT goals is in need of improvement 7.More importantly, the implementation and change management skill required to take this big leap forward in IT use in China is not yet available at the level required for China to accomplish its goals 8.Many times, hospital leadership, not knowing what it does not know, is continuing to use poor buying and implementation approaches, because they do not know better ways are possible, and there is still strong momentum to continue with these poor approaches

36. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 36 The Current Computing Environment in a Typical Large Complex Chinese Hospital Today Major Ancillary Systems Note: Chart taken from a couple of real hospital situations with each vendor or product family shown in a different color Sample Current Systems (High Level View ) Major Financial Systems Major Clinic OR/Anesthesia (Vendor 5) R.I.S./PACS (Vendor 4) L.I.S. (Vendor 3) Blood Bank (Vendor 3) Bar Code (Vendor 3 ) Ultrasound (Vendor 6) Stomatology (Vendor 7) Financial (Vendor 2) MD Workstation (Vendor 2) Pharmacy (Vendor 2) L.I.S. (Vendor 3) Core Vendor (Vendor 1) Inpatient EMR (Vendor 8) Cashiering (Vendor 2) General Accounting (Vendor 2) Medical Records (Vendor 11) Medical Ins (Vendor 9) Medical Ins (Vendor 10) Human Resources (Vendor 12) Performance Assessment System (Vendor 13) Policy Exchange Platform (Vendor 13) Webport System (Vendor 13) Hospital Website (Vendor 13) Office Automation Systems Major Admin Systems Order Management Inpatient Physician Workstation Outpatient Physician Workstation Inpatient Pharmacy Outpatient Pharmacy Inpatient ADT and Billing Outpatient and ER Registration Outpatient Pricing and Charging Material Supply Smart Card Patient Consultation Survey Lab Price System Instrument and Equipment Management Inpatient Insurance Interface RF Card Producing Sub-System Many Other Niche and Specialty Systems

37. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 37 The Competitive Environment 1.There are over 1,000 small software vendors active in China HIT 2.The market segments with the most vendors are HIS, PACS, RIS, LIS, and EMR 3.All HIT vendors in the market started in a city and most are still operating in that city or a small region around the city. Many of these smaller local vendors have a dominant market share in the area they service. Some HIT vendors are becoming more national in scope 4.Many vendors in the hospital computer systems market offer heavily customized solutions rather than products. These heavily customizable solutions create greater dependency on the software vendor and are more difficult/expensive to keep current when vendors release new software updates periodically 5.Chinese hospital leaders would like to see a new generation of HIT software developed for the country to assist in helping them accomplish their “leapfrog” objectives

38. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 38 Major Areas of Future Product Development and Opportunity in the China HIT Market 1.Application software will become more productized with greater tools to support the growing use of IT in hospitals 2.New application software to serve the not yet automated areas of clinical work processes are emerging very quickly 3.Integration tools to facilitate the development of an improved IT environment will emerge 4.Data analytics products and support tools to facilitate better data analysis, reporting, and decision making will emerge as Chinese Hospital Managers grow in sophistication 5.Service and implementation tools will improve General contracting for entire efforts with some company software and some partner software General contracting for entire efforts with some company software and some partner software Planning and implementation services to support making better buying decisions and creating more successful implementation of software Planning and implementation services to support making better buying decisions and creating more successful implementation of software Other problem-solving services Other problem-solving services

39. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 39 Today Chinese Hospital HIT Investment Is Spent Differently Than the Rest of the World SOURCE: CCW Research

40. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 40 Evolution and Current Status of RHNs in China Minhang District Health Bureau

41. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 41 Evolution of RHNs in China 1.The Ministry of Health (MOH) guidelines for Health IT Development called for regional health networks and digital hospitals to be implemented throughout China between 2003 and 2010 2.This provided much momentum for RHNs a few years ago as many health bureaus undertook regional health network and digital hospital investment 3.In the last few years data sharing has begun to emerge in China as some RHNs share limited data such as test/diagnostic results and some patient information 4.Healthcare reform calls for a more aggressive pursuit of EHR and RHN development, and has provided substantial additional funding in a variety of ways, so it is expected that substantial additional progress will be made in the next few years 5.Much more activity and funding in many cities and provinces with even U.S. funding for one or two major planning projects, including the Sichuan Provincial Health Bureau EHR and Regional Health Network Project

42. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 42 Overview of the RHN Market in China 1.We have been surprised by the amount of RHN buying going on today. Our review of RHN bidding data in the first 7 months of 2011 found 63 health bureau acquisitions to support RHN activities. These acquisitions were at the district, city, and provincial health bureau levels as follows: 2.The RHN programs can be invested in a variety of different models, but the purchasing activity falls into three categories

43. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 43 Overview of the RHN Market in China (Continued) 3. 3.The first category of purchasing is around a model where the health bureau encourages the hospitals it owns to buy EMR systems that meet certain guidelines or funds the acquisition of such EMR systems for its poorer hospitals. In addition it funds the acquisition of HIS and EHR systems for outpatient visits to its community clinics. It then plans to put the data from the EHR systems in community clinics and EMR systems in hospitals into a central database for data analysis at the health bureau level. While many health bureaus are pursuing this model, there is little awareness of what to do with the data it will accumulate in the central database. Questions such as the following have not been answered: How is the EHR and EMR data linked? What happens to the data that is now in the patient’s outpatient manual record and is not yet automated (usually covers all hospital outpatient activity)? How will the data that will be available in the central databases be analyzed? In spite of these unanswered questions, there is much funding of programs following the model described above

44. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 44 Overview of the RHN Market in China (Continued) 4. 4.A second category of spending in the RHN area is for the community clinic model without the hospital EMR component. 5. 5.The third category of buying to support RHNs are to develop the RHN platform to handle data from various sources and construct some public health applications for the health bureau. In this model, a big investment is being made in hardware with little clarity about the applications that will run on the platform 6. 6.There are still many health bureaus in China that have not taken a first step in spending to build their RHNs. They are now in the planning process 7.Minhang District is an early adopter of RHN in China. In Minhang a patient can visit any of the clinics, and the data for prior visits at any of the clinics is available in a central database. It’s now in an early stage to have hospital EMR data to shared in the central database.

45. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 45 Overview of the RHN Market in China (Continued) 8.Health bureau buying of software applications has increased from a relatively small percentage of total China HIT software buying five years ago to 2.8 billion RMB in 2010 and 5.3 billion RMB in 2011 9.In the bidding data, there were 42 vendors that won bids that did not appear in the hospital bidding that we examined, and 17 vendors that won bids that were also winning bids in the hospital bidding 10.These 59 winning vendors had a total of 69 wins. 7 vendors have more than one win 11.The MOH 12th 5-year plan HIT development framework, referred to as the 3521 Project, provides guidelines for RHN development covering what should be bought and how the RHNs should be architected. While health bureaus are trying to comply with these guidelines, the complexity of the guidelines makes it difficult to comply. For example with the EHR, health bureaus are defining it in different ways, and often these definitions do not meet the intention of the MOH guidelines

46. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 46 Overview of the RHN Market in China (Continued) 12.Given this scenario, it is difficult to evaluate what will emerge in successful RHNs. If the RHNs move in the right way to answer the questions that are unanswered right now, then the RHN market in China will grow substantially 13.If the questions remain unanswered, and if the MOH vision is not attainable by the RHN investment over the next couple of years, then some rethinking will take place 14.At this stage it looks like the health bureau RHN investment will grow substantially over the next five years and represents a great market to be in front of so that the vision of MOH can be fueled and accomplished by the products of one of the successful companies that emerges from this setting 15.Many companies are benefitting from RHN development. Many others will benefit in the future

47. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 47 Where Does China Stand on the Global HIT Continuum? Minhang District Health Bureau

48. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 48 Broad Comparison of U.S. and China HIT Situations. Key ElementU.S. China Per Capita Healthcare Spending$7,500+$100+ Employees per bed6+1 to 2 HIT SpendingVery highVery low Number of Software Vendors in a Hospital80+20+ Integration StatusOkayVery bad Size of IT StaffVery BigSmall Dependence on Software VendorsMediumVery High Implementation ApproachesFairBad Historic Data Available in Any FormLotsVery Limited Historic Data Available in Accessible Automated FormConsiderableVery limited Clinician Use of DataGrowingLimited to none

49. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 49 Creating More Success in the Current China Healthcare Environment 1. 1.There is much momentum for change 2.The rapid change being fueled by healthcare reform activities requires stronger IT systems to support it. More money will be spent, and better results are required 3.By recognizing what the rest of the world learned from their successes and failures, and doing more of what the rest of the world did right and less of what the rest of the world did wrong, China will be able to make faster and better progress in the future

50. MINHANG DISTRICT HEALTH BUREAU DORENFEST CHINA HEALTHCARE GROUP 50 THANK YOU. FOR MORE INFORMATION CONTACT: SHELDON I. DORENFEST SHELDON I. DORENFEST THE DORENFEST CHINA HEALTHCARE GROUP SUITE 908, NO. 998 RENMIN ROAD, SHANGHAI PHONE: 021-63203522, 63269722 WEB SITE ADDRESS: www.dorenfest.com www.dorenfest.com E-MAIL ADDRESS: info@dorenfest.com info@dorenfest.com SHELDON’S E-MAIL ADDRESS: sheldon@dorenfest.com sheldon@dorenfest.com