Robert Gleeman talks with Peter Durlach, VP for Nuance's Healthcare Division

This is a transcript and audio interview with Peter Durlach, Senior VP of strategy and marketing for Nuance's Healthcare Division. This follows up on the Medical Voice Recognition forum discussions about the differences between Nuance Dragon Medical and other (cheaper) versions of Dragon.

Click the play button below to listen to this interview.

The following is a transcription of our interview.

Robert Gleeman:  This is Robert Gleeman with EMR Update. I'm talking today with Peter Durlach. Peter is the senior VP of strategy and marketing for Nuance's healthcare division. Thank you for being with me today, Peter.

Peter Durlach:  Thank you, Robert. Thank you for inviting us for this interview.

Robert:  Now, as you know, we've had some heated discussion on EMR Update, in particular the sub‑forum on medical voice recognition. And I want to talk with you and maybe add some information to the debate. Maybe we can clear a few things up.

Peter:  Sure. I'd be happy to.

Robert:  First of all, how is Dragon Medical different from the other versions of Dragon NaturallySpeaking? And maybe you could go through the product family and give us a little background.

Peter:  Sure. I'd be happy to. And there's a long history of the Dragon product, as many of your folks on your blog know.

So, historically, Dragon had a number of versions that ranged from some very basic consumer versions called Essential, Standard, Preferred, up to a version called Professional. And then, there were a couple of more vertically focused versions, one for medical and one for legal.

When you got to the Preferred and up, most of the differences ‑ not all, but the vast majority of the differences ‑ were in the high‑end, vertical solutions, the medical and legal, really limited to just the medical vocabulary, or what's called the language model, that shipped with the product. And this is the part of the system that includes the words that the user is likely to say and what the probabilities of those words are when they talk about whatever it is they're dictating about.

So, that was the historical difference between the products. And about a year and a half ago, when Nuance really started to focus on the medical market, we bought a company called Dictaphone back in March, 2006, and there's been a significant investment.

In the medical business, we decided ‑ and a lot of us were new to the company at that time ‑ that we really needed to add a lot more functionality and differentiate the medical from the other products, because we were getting a lot of requests for that, and also we felt the current differentiation, just being a language model, was not a very good way to segment the products. So, with version 10, we've made a lot of effort to start that process.

Robert:  Who currently uses Dragon Medical, and who should consider using it?

Peter:  Our best estimate, based on the data we have, is that we have over 70,000 clinicians of one flavor or not. They tend to generally be physicians, but we also have PAs and nurses and other folks that use it, across public, private, and government settings.

I'd have to say that it's both inpatient and ambulatory, but more than 50 percent is certainly in the ambulatory setting. So, it's really designed, primarily, for physicians, but again, other caregivers, who are dictating clinical documentation, either into an EMR or into Word or some other system that they're using in their daily basis.

Robert:  I understand that some physicians were, or still are, using the consumer version in a medical setting. I also understand there have been changes in functionality with the recent announcement of Dragon Version 10 offerings, both medical and non‑medical. Some doctors have concerns around the cost for Dragon Medical, as compared with the lower cost of the consumer version. Why has the cost gone up so much on the medical version?

Peter:  With version 10, actually, the cost of Medical has not changed. We made a change about, I believe it was November of last year, when Dragon Medical, we changed from $1299 single‑user list price to $1599. With Dragon Medical 10, there have been no cost changes, but the issue that some of the folks have expressed on your blog really have to do more specifically with some of the differentiation that we've done.

Some of the angst, specifically, has been the decision that we made to block dictation into a set of electronic medical records applications in the non‑medical versions of the product. And that's where I think some of the situation has arisen. I had a chance to read some of the blog entries on your system and on mine and catch up with that, so I'm relatively familiar with what has been said there and what the issues are.

So, the reason we did that was part of this effort to really start to differentiate the products, by both primarily adding new capabilities into the medical version, but also focusing on how we differentiate with the other products. And I know there's been a lot of angst about this, so I just wanted to give a couple data points from our perspective. I don't think it's necessarily going to answer the concerns of everybody, but I think, at least hopefully, people understand why we did it.

I also want to apologize, because part of what was supposed to happen ‑ and it did in many cases, but I noticed, on your blog, at least in one case it didn't ‑ that when Dragon 10 non‑medical versions were shipped, they were supposed to clearly state that we had done this blocking of the EMR in the non‑medical versions, and to make sure that everyone knew that before they had a chance to upgrade. I know, I've talked to a lot of physicians who did get that warning and made a decision, based on that, about what to do.

I noticed, again, in your blog, that at least one person, possibly two, had not got the warning. And that's really our mistake, and we apologize for that, because we did not mean to surprise anybody or kind of catch them off guard by that.

But, in terms of the decision to do it, first of all, let me just put this in context from our perspective. From a recent study in "The New England Journal of Medicine" this year, about 83 percent of physicians in North America don't use an EMR. And within the 17 percent that do, it's estimated that only about four to five percent use the EMR for the clinical documentation part of the process, for a CPOE or some other part of the system.

So, what we decided to do, as a result of the fact that, to make Dragon Medical really work extremely well with our EMRs, we really had to put a lot of effort into optimizing it to work with them, working with partners like Allscripts and Epic and Cerner. And we made the decision that the low‑end products, really going forward, should not have that functionality that was a really high‑end capability that we thought was appropriate for the medical versions.

And I know, in your blog, a number of folks have objected to our posting, using Microsoft Office and the various versions enclosed in that suite as a justification. And although we thought it was a relatively good analogy, we wanted to give another analogy today. Within the Adobe Photoshop example, the prices for that suite range from as low as $150 to $200, all the way up to $2500.

Robert:  Yes.

Peter:  And at the low end, they have a version basically for the consumer to take photos and make some basic edits, store and add some edits to the photos, and upload them for family members. And that's a couple hundred bucks.

At the high end, they specifically target features that they don't turn on in the low end, for really much more professional print/interactive/web/film editing, specifically for that higher‑end user.

So, for us, it's similar to that situation, where, in the high end, for us, the ability to really optimize your dictation in the EMR, for that still relatively small subset of the population, we felt was a reasonable thing to do from our perspective. We don't expect everyone to agree with that, but that was the rationale.

The other part that we have in terms of the cost differential is we put a lot of money into this product and we subsidize kind of the very low end of the product line, which can be gotten for as low as $99 to $199. We really need to be able to create a variance of price points along the value curve to make it a business sense. And although we're not trying to pick on doctors, but we are trying to put a lot of added value and focus on that we think the benefit is for physicians and why we think it's a fair price.

We also did get feedback from many customers that they tried the non‑medical versions and dropped using the product because they were not happy with the performance, the accuracy, et cetera. Now, that's not to say that everyone's unhappy. I know there's certainly users out there that are on Dragon Preferred and Professional and get very good results. So, it's not a blanket statement. But, we certainly have seen that in our studies as to the customer feedback on how they perceive their performance based on the different versions.

But, by no means are we asking someone who's on a non‑medical version, if they want to move to medical, to have to pay anywhere near the full retail price as if they were a new customer coming in from scratch.

Robert:  Bringing that up, do doctors have any options if they want to keep using the non‑medical versions in a medical setting?

Peter:  Yeah, absolutely they do. A couple of options they have ‑ again, most physicians today don't dictate into an EMR. So, if they buy the non‑medical versions of Dragon 10, or upgrade, they're going to be fine anyway.

For those that do, including the folks that were on your blog that were upset, there are a couple of options. One is they can continue on with their current version that they have. We support prior versions, goes back for two previous releases. So, whether they're on version eight or 9, we'll continue to support that. They also have the ability, again, as I said, if they want to upgrade but they're dictating into Word or something else, to go ahead with that.

So, we're not stopping them from using the product in any way. The only thing that we're really trying to say is that if you want to upgrade to Dragon 10, and you do dictate into an EMR, you really should consider moving to the medical version. You don't have to, but we think it's a good move, for a lot of reasons. And we've tried to make the cost not so prohibitive so that people feel that they have to pay a lot more money than they've already paid for their non‑medical version.

Robert:  Speaking of cost, you hear a term called "return on investment," or ROI, spoken about quite often with software. What results can users expect, and when can they expect to get results?

Peter:  We've done, over the last 12 months, a reasonable number of studies on productivity, both kind of formal studies and informal. And based on the data that we've gotten that have to do with lower transcription costs if the physician is used to using traditional transcription, versus handwriting, increased reimbursement and higher physician productivity versus pointing and clicking through a more traditional, template‑based EMR.

At the current prices, the list prices of our products, the full‑blown Dragon Medical, no‑discount, no‑small‑package version, at $1599, our average return on investment is under three months, which is pretty amazing in the software industry. I would challenge most people to find a product that produces an ROI in that kind of time frame.

Now, a number of your readers are going to say, "Yeah, but I can get that with the non‑medical version." And that's really what the question is. And I would argue that, although you can get, to some degree, that same return, if you really look at the capabilities of Dragon Medical 10 versus the non‑medical versions, the increased accuracy and productivity that we can provide to the physician, we believe that there is a pretty significant enhancement in terms of return on investment with one of the Dragon Medical versions versus the non‑medical.

On the reimbursement front, we are just concluding a study with a large, well‑renowned clinic here in the East Coast. And based on a controlled study that they have done, what they're seeing is that the physicians are 25 percent more productive at documenting care with Dragon than without. And then, in terms of increased reimbursement, using Dragon Medical, and the language model that's included in that specifically, on average, their data's showing that the average physician can increase their reimbursement roughly 500 to 2000 per year per physician.

So, again, if you compare that against the cost of the product, that's incremental to any savings they might get from any reduced transcription or reduced physician time spending within the EMR pointing and clicking.

Robert:  What is new with version 10 that wasn't offered before?

Peter:  We've done a number of things. In addition to rebuilding the language model to increase the accuracy of the system, we've also added very unique medical formatting rules directly into Dragon Medical that were not there in the same degree before. So, formatting rules for prescription writing or the way diseases are described is all automated, so the physician doesn't have to make those corrections or dictate in abnormal ways. And that's only available in Dragon Medical.

As a result of those two things and some core enhancements, the system has improved between Dragon Medical 10 and Dragon Medical 9. It's about 20 percent more accurate. And Dragon Medical 10, versus the non‑medical versions, is about 38 percent more accurate. And in terms of speed, all of the versions of Dragon 10 are about 100 percent faster than version 9. So, there have been some significant core‑performance improvements on that.

In addition, what we've done is we've really tried to optimize dictation in an EMR. So, what we've done is we've added, in the full medical version, a couple of key features. One is we've added specialized macros that can have variable fields in them.

So, if you're a physician dictating a common type of report, you can build a report with these variables in them and then quickly kind of dictate or tab through the variables to fill in the things that changes based on that patient encounter, versus having to dictate the whole thing or dictate standard blocks of text and then go correct the variable part of it. That's something we call Dragon templates, or macros with fields, which is a big capability. That's also in the Professional product, but we've really tried to optimize that in the medical.

The second thing that we've added that's only in the medical product is, often, in an EMR, clinicians will want to browse around the EMR to look for past notes or lab results while they're dictating. In the prior versions of Dragon, you were not able to do that. But, in Dragon Medical, you can actually move around the EMR, dictate in what we call Hidden Mode, and then come back to the relevant part of the note to insert your text. That's an important feature, again, for a person using an EMR.

The third thing that we've done is we've integrated our custom Power Mic, which is a hand‑held mic with a trackball, which really makes it much easier for the physician to navigate through templates, through an EMR, by voice. And although there are other microphones out there, from Philips and other ones, that provide conceptually similar functionality, we've really optimized that for use in the Dragon Medical products.

And there are a number of other features that are documented on our website and in our brochures, but those are some of the real highlights that we have.

One of the things that we'll be continuing to emphasize, though: we have some basic HIPAA supportive capability in the current version of Dragon 10, and we're making a big effort in the Dragon Medical product line, specifically, to enhance our HIPAA support, our encryption capabilities, going forward. So, over time, the Dragon Medical product's going to provide really significant, enhanced patient‑privacy capabilities that are not available in the non‑medical versions of the product.

Robert:  Well, Peter, this is all very interesting, but I have one final question ‑ the main question my readers want to know. What can doctors who bought the non‑medical version do if they want to use it with their EMR?

Peter:  Concretely, what people can do, just to be clear, we have two medical versions. We have a Dragon Medical Traditional, which has a list price of $1599, and a Dragon Medical Small Practice version, which is primarily for ambulatory settings with five physicians or less, for $1199. Those are the list prices that we have.

But, we have special promotions that we've referred to before that I just want to highlight here so people understand that we think there's a reasonable upgrade path that doesn't penalize people for being on a prior version of Dragon that's non‑medical.

If they're on a Preferred Version, and they would like to go to the SPE, the small‑package version, the list price of that promotion is $699. If they want to go from Preferred all the way up to the full‑functioning medical product, that's $1099. If they're on the Professional Version of Dragon and they want to go to the full medical version, that's $499.

We then have some very aggressive upgrades for prior medical version customers. So, for example, prior Dragon Medical version eight and nine customers can upgrade to version 10 for $249.

So, we think, given the added value that the product delivers ‑ much more than just turning off the blocking feature, but the other capabilities, with better accuracy, the Hidden Mode, the Power Mic integration, the automated formatting, and some of the HIPAA stuff to come ‑ we think those are reasonably fair prices, especially given the payback of the product.

Now, we know everyone's not going to agree with that. And I think, at the end of the day, everyone's going to have to make their own decision. As I've said, if a person doesn't feel that's worthwhile, they certainly have the option to stay on the current version that they have that's been working for them to date.

Robert:  Well, Peter Durlach, with Nuance, thank you very much. I appreciate you being with us at EMR Update.

Peter:  All right. Thank you very much, Robert.

End of Transcript