Microsoft CEO: Health care IT market 'confused' and tough to jump into

During visit, Ballmer also expounds on 'three screens and a cloud,' previews hands-free gaming system for Xbox

Microsoft CEO Steve Ballmer spent his first day in Nashville in more than 40 years discussing the potential for and future impact of technology innovation in business, health care, and our daily lives, while illustrating Microsoft’s initiatives to stay on the cutting edge of innovation.

At a Nashville Technology Council breakfast of more than 800 attendees, Ballmer discussed some of the powerful changes he expects in the next five to seven years. “I think people would still underestimate just how far we can go over a very short period of time,” he said.

He said we are in the midst of a “profound shift in technology today – much like previous shifts from personal computing to graphical computing, the move to the Internet and the move to Web 2.0 and social computing – that Microsoft calls ‘three screens and a cloud,’” with screens being a phone, television or wallboard and a personal computer connected through the Internet.

Moving forward, devices and applications will be designed around this computing platform to connect people and businesses in ways that are still difficult today, he said. With the cloud as the back end, front-end intelligence will include speech, natural language, gesture and vision recognition in intelligent devices.

Illustrating what this future might look like was Ballmer’s show-stopper for the morning event, a video presentation previewing Microsoft’s “Project Natal,” a hands-free communication, entertainment and gaming experience built in to Microsoft’s gaming console Xbox 360 that’s “coming this year.” The computer can see people in front of it, essentially making people the controller through voice recognition and full-body motion capture that exactly replicates movements on the screen.

“It’s an easier way not only to play video games, but to actually control your TV set, whether you want to browse Internet, watch traditional TV or have a web call with grandma,” Ballmer said. “It reminds you just how far this stuff can be pushed.”

Ballmer also described how Microsoft’s is using its $9.5 billion research and development budget to make advances in its other product lines, including Windows 7, Microsoft Office, SharePoint and search engine Bing. (For more on the last of those products on other info from Ballmer's visit, click here.)

“Our R&D budget I think now is larger than any other company in any other industry in the world,” Ballmer said. “It speaks to the range of opportunities not just for us but for everyone in the information technology field over the next several years.”

Thoughts on health care IT innovation

During the morning’s event, Ballmer expressed how he’s been “struck” by what’s going on in Nashville in the IT field and in areas like health care, energy and education.

At a Nashville Health Care Council’s luncheon panel, Ballmer had the chance to weigh in on IT in health care with a group of industry executives that included Emdeon’s George Lazenby, Harry Greenspun of Perot Systems Healthcare Group and Glen Tullman of Allscripts Healthcare Solutions.

Asked why health care is referred to as a decade behind other industries in terms of technology transformation, Ballmer gave two reasons: A taxonomy issue in the industry means nobody knows what they’re buying and selling and because it’s a cottage industry where small practices don’t have the infrastructure for a full-time IT manager to implement systems that, largely, aren’t built for smaller enterprises.

“Why is this industry 10 years behind? Because the best of the IT industry can’t operate, buying and selling is confused, the target market doesn’t have capacity for IT, and that makes it a tough market to jump into,” he said.

The fact that so many health care providers operate in a small business environment is one reason Greenspun said he is concerned about the roughly $17 billion made available to fund providers’ investments in electronic health records. It’s going to be harder for those groups to adopt these systems early on and meet criteria to receive reimbursement.

But, he said, it’s a good thing the criteria are somewhat difficult to meet up front so that that providers are pushed to get over the “painful” part of using a new system immediately, rather than buying a system with good intentions that, over time, is never used to its full potential.

Tullman said he’s actually concerned that we haven’t set targets high or fast enough to get real results. One reason he thinks the industry is behind others in terms of innovation is not because a lack of technology, but that the issue is around changing human behavior in getting providers to willingly adopt and use these systems.

The good news is that health care reform is sort of a moot point for health care IT, because the Recovery Act funding is a separate, complete issue, Tullman said. He sees technology, though, as the “necessary condition for fixing the rest.”

Lazenby noted, “When we have the appropriate base of technology, innovation will happen.”