Cheers to 40 years! Celebrating four decades of 3M Health Information Systems – Part 4

Nov. 8, 2023 / By Richard Averill, MS

This fall marks 3M Health Information Systems’ (HIS) 40th anniversary! A lot can happen in 40 years, so we invite you to take a journey with us as some of our long-serving 3Mers share their favorite memories, stories and reflections on the last 40 years of 3M HIS. 

Our people make the big things happen, and we are thrilled to share their personal stories, experiences and successes over the years. Read on to find out what happened when 3M and Health Systems International joined forces. 

Name: Richard Averill  

Job title: Senior vice president, clinical and economic research, 3M HIS  

Years at 3M: 25 years at 3M, 53 years in health care policy research 

Can you tell us more about your role and background? How did you become a 3Mer? How long have you been with the company?  
I was at Yale from 1972 to the early 80s where I was director of health-related research at the School of Management and oversaw all the diagnosis related group (DRG) development working with John Thompson, Bob Fetter and Ron Mills. Health Systems International (HSI) was founded to develop operational systems based on DRGs. In 1983 the DRG-based Medicare Inpatient Prospective Payment System (IPPS) was implemented. The Centers for Medicare & Medicaid Services (CMS) awarded HSI the contract to maintain and update the DRGs. I was president of HSI for a while but ultimately decided to focus on new product development.  

Throughout 1983 through 1990, HSI and Code 3/3M were competitors. IPPS greatly increased the value and demand for coding and grouping products. Generally, Code 3 was viewed as a premier coding product, and HSI was viewed as a premier DRG grouping and payment product. In 1990, 3M purchased HSI and integrated the Code 3 and HSI products. Suddenly 3M HIS had a premier coding product, DRG grouping product and payment determination product as well as strong government relations, which greatly enhanced its reputation. When the HSI acquisition occurred, I became senior vice president for clinical and economic research (CER) at the combined Code 3/HSI business. 

At 3M HIS, I oversaw all the grouper-related regulatory product research from 1990 through 2015. In 2016, I retired and formed my consulting firm, The Hesperium Group. To this day, I continue to work with 3M as a consultant to do research and public policy related work. 

What do you like the most about working at 3M HIS? 
Well, there’s no question that it’s the flexibility that 3M HIS has given to CER to build new products, to test those products in real world government applications and to really understand how we could assist government agencies to bring more value, whether that value is lower expenditures, better quality or some combination of the two. 3M HIS had the willingness to take on development efforts, especially in the regulatory area where any kind of return on investment has a long horizon. 

For example, the development of 3M™ Potentially Preventable Complications (3M PPCs) and 3M™ Potentially Preventable Readmissions (3M PPRs). CER realized that a focus on value was coming and we needed to build products that sought to strike a balance between cost and quality. I think the willingness of 3M HIS to take a longer horizon look to be involved in the regulatory arena and develop products that won’t necessarily have a return for a substantive number of years is one of the unique and positive aspects of working at 3M HIS. 

How does 3M HIS stand out from other organizations? 
HIS understands the regulatory environment, how to talk to regulators, how to deal with them and how to try to anticipate what their needs are going to be. 3M HIS understands this better than many other companies and my hope would be that we continue to leverage that understanding. It takes an investment to develop products, do proof of concept, to be out there in the real world and try to understand what works and what you could do to make it work even more effectively. In essence we combine good public policy research with practical product development. 

What do you see as your most impactful contributions since joining 3M?  
 I played a key role in getting the Outpatient Prospective Payment System (OPPS) in 2000 and ICD-10 implementation in 2016, which had a national impact. In both reforms, 3M had the CMS contract to develop key components of the systems and made an investment in developing compatible products ahead of the implementation date. However, the implementation dates kept getting postponed and it was an intense time, but when they were finally implemented, they were a big success. 

These two achievements had the highest stakes and we played a major role. Being a part of getting both of those national implementations done and then reaping the rewards once it happened was a huge accomplishment that ultimately had great benefits not only for 3M HIS but for the health care industry. 

A 40th anniversary is a big milestone. What do you hope for the future of 3M HIS? Health care IT? In what ways do you expect to grow or see potential? 
The reality is that health care costs are going to keep going up. So, there is no question that there is going to be a demand for working closely with regulators to try and understand how we can increase value, lower cost and improve quality to get some degree of control over the cost spiral. To the extent that 3M HIS is prepared to play a role, is willing to develop products that address those rising costs, is willing to do proof of concept projects with individual state Medicaid or with individual commercial insurers and is willing to lay the foundation for a bigger implementation, hopefully at the national level, there are great opportunities for HIS. 

We are honored to feature a few individuals who are a part of a fantastic group who have shared their expertise and talent to help 3M HIS thrive over the years. Click here to read more stories of 3Mers as we celebrate 40 years of 3M HIS! 

Richard Averill is a principal at The Hesperium Group. He was formerly the senior vice president for clinical and economic research at 3M Health Information Systems and continues to serve as senior health care policy advisor to the company.