Untitled Document

May 12, 2008

EnovateIT supplies custom computer wall stations, point-of-care carts, and articulating arms. Our mission is to create better patient care. We bring patients and caregivers closer by designing and facilitating effective solutions. Our integrated healthcare mobility solutions merge innovation, experience and technology to solve healthcare information needs from a single source. EnovateIT.

1. Dollar Menu Choice - One McDonald's Burger or Three MRGE Shares

Facts and Background

Shares of imaging vendor Merge Healthcare dropped to $0.35 Friday after the company issued its management discussion of its quarterly report. In it, the company disclosed that available cash dropped to $8.5 million on March 31 and that it has no credit facility, leading it to warn that it could be forced into bankruptcy on June 30 if funding isn't found.

Opinion

The credit market is brutal, prospects will avoid a teetering vendor like the plague, and the company can't finance the few options that might improve its position. Time for someone to pick the bones and see if there isn't something worth saving.

Musings

The company has lost money for nine straight quarters and is burning rapidly through what little cash it has left.
Merge dumped its businesses in France and China in March and April, but got no cash for either.
The company calls the situation a "liquidity crisis," but losing money for years caused that problem.
Merge says it still has $1 million of termination benefits to pay.
Merge bought imaging technology vendor Cedara for $393 million in MRGE shares in January 2005. Given that Merge's market cap is down to $12 million, someone (including those who sold Cedara in the first place) could pick it up for a song and possibly revive it without the baggage that Merge brings to the table.
Standalone imaging vendors are getting killed by big competitors and reduced imaging reimbursement in the US.

“Healthcare starts with SCI” – from web-based self service portals and online ordering to creating the front door experience with robust scheduling and pre-registration, SCI leads the industry with more successful installs than ALL other vendors combined. We are transforming the way healthcare providers deliver a 5 Star patient experience and accelerate their revenue cycle.

2. Kaiser Brags, Inpatient Lags - $4 Billion Buys EMR for Millions

Facts and Background

Kaiser Permanente announced Monday that all of its 8.7 million enrollees now have access to its HealthConnect ambulatory EMR. However, only 13 of 36 hospitals have installed the inpatient portion. Also announced was HealthConnect's cost: $4 billion so far and $1 billion per year in ongoing maintenance.

Opinion

$459 per enrollee upfront and $115 per year in maintenance costs? Now that Kaiser has leaped the largest hurdle in paying for HealthConnect, it has to show impressive results that make the investment worthwhile. Kaiser is currently tracking somewhere between $1 and $2.5 billion a year in net income, so a billion-dollar annual expense is a big leap of faith. Still, 25% of total cost isn't out of line at all for a system of its complexity.

Musings

Kaiser says that HealthConnect has improved efficiency. Considering that and the huge surplus, shouldn't enrollees seem some financial benefit, like maybe actually reducing prices to something near break-even?
Now that HealthConnect is fully rolled out for ambulatory patients, anything less than earth-shattering clinical and/or financial results will likely add fuel to the "EMRs aren't cost effective" argument.
$4 billion = $308,000 per Kaiser doctor plus $77,000 annually for maintenance. The maintenance alone is more than 15 times what eClinicalWorks costs, which isn't an apples-to-apples comparison, but it's still an interesting exercise in the law of diminishing returns.
That's a lot of net income to not be paying taxes on.

Sentillion, a company like no other. Since 1998, Sentillion has been revolutionizing healthcare IT with award winning, industry recognized identity and access management technology. Sentillion has successfully combined patented technology with a deep understanding of the healthcare industry to deliver the most comprehensive set of solutions for single sign-on, clinical workstation, user provisioning and virtualized remote access.

3. Can You Cure Me Now? Researchers Turn Cell Phones Into Imaging Systems

Facts and Background

Berkeley researches have developed technology that allows a cell phone to transmit medical images, potentially making medical imaging affordable to less prosperous nations. The study was published in the April 30 issue of a research journal.

Opinion

It's interesting what can be done when research is actually geared toward reducing costs, which would never happen with US-focused drug and device studies.

Musings

The researchers realigned the three components of imaging (data acquisition, image processing, and reading) so that image processing can be performed on a remote server, allowing the field component of data acquisition to be simpler and cheaper.
The only communications access needed is a cell signal, apparently not all that uncommon even in remote areas.
The entire data stream needed for a breast cancer image was only 6K.

Pring|Pierce executive search, specializing in the recruitment and development of exceptional talent in healthcare information technology. With 20+ years of experience in executive search and consulting, we specialize in providing leaders for early-stage, high-growth and mature companies in the healthcare information management market.