September 3, 2007

1. Misys Invests in Small Practice PM/EMR Vendor

Facts and Background

Misys Healthcare of Raleigh, NC announced on Monday that it will license practice management and electronic medical records systems from iMedica, which has offices in California and Texas. Misys will pay $8 million for minority ownership in the company and $5 million in licensing fees. Misys will announce specific offerings in November, including a Application Service Provider (ASP) hosted service for physician practices. Misys had previously announced that its own small physician practice offerings were not competitive.

Opinion

It's a good thing Misys had some cash to temporarily buy its way out of its recurring market fumbling. Misys PLC has already dumped the rest of its healthcare line, leaving it with main focus (UK banking and financial software) and US physician systems. It has lots of competitors in this country, many of them far better in functionality, modern technology, and price. Unfortunately, unless Misys can tweak the 1+1=2 equation, their offerings still aren't likely to be all that attractive either.

Musings

• Any lingering doubts that Misys hasn't innovated much of anything since it bought Medic should be satisfied by this unimaginative, desperate bid to become relevant in a robust market that's passing the company by.
• iMedica was already in trouble, well-placed sources say, and desperately needed the cash infusion that only an unsexy old dowager like Misys would throw its way.
• Misys pulled its low-cost ClearPractice ASP offering, based in the largely unsuccessful Amicore product, earlier this year before it even reached the market because of technical challenges (rumored). This is another (final?) chance to get one to market.
• Misys will have to become McKesson-like in its deft marketing fictionalizing that a competitor's product, by virtue of having been bought by Misys, is now a worthy, integrated offering as one of many in its stable of old warhorses. Don't count on it. Misys brings little to the table except a lot of sales staff and money (which, if iMedica is any good, may be enough, however).
• Misys better find a way to add value beyond just reselling iMedica's product. Customers won't see much of a premium in that, and those margins won't support the big-company overhead that drags Misys down.
• Misys paid nearly $1 billion for Medic Computer Systems in 1997, apparently attracted by its large customer base and unconcerned about the age and competitiveness of its systems. It's a strong possibility that the company's investment has significantly eroded under its management.
• Misys said it needed to quickly resolve its non-competitive small practice situation. That's not exactly a strong indicator of sound strategic planning. McKesson and GE have gotten away with nameplating a science fair of other companies' systems, but mostly by methods that won't work for physician practices. Can Misys?
   

2. DoD Gives FDA Access to Patient Data for Drug Evaluations

Facts and Background

The Department of Defense announced last week that it will allow the Food and Drug Administration to review electronic medical records of its 9 million military personnel and their families. FDA will use the information to spot problems with prescription drugs and learn more about how they work.

Opinion

It's good that FDA is looking to broaden its information beyond small-scale drug company studies. However, it was not clear whether military personnel have a choice. 

Musings

• Under the current administration, FDA isn't doing much watchguarding anyway.
• Big Brother keeps digging deeper into areas previously off limits, like wiretapping. This one should drive privacy zealots crazy, especially since it doesn't even have the national security excuse.
• Critics have argued that FDA is secretly turning itself into the largest of drug manufacturers through the Reagan-Udall foundation. If that's even a remote possibility, having unfettered access to personal electronic medical records is not a desirable scenario.
• This seems like a really bad idea. If FDA wants to study larger populations, it should have to make such a request openly and not convince DoD to hand patient information over without consent or external oversight.

3. MedAssets Announces IPO Plans

Facts and Background

MedAssets, Inc., of Alpharetta, GA, a group purchasing organization which also provides software and services to improve hospital cash flow and profitability, has filed IPO plans, hoping to raise up to $230 million. Its underwriting group is large, with Morgan Stanley and Lehman serving as lead underwriters with Duetsche Bank and Goldman Sachs as joint book-runners.

Opinion

The company has been on an acquisition tear, buying decision support vendor Avega, revenue cycle software vendor MD-X Solutions, and revenue cycle software vendor XactiMed in the past few months.

Musings

• MedAssets is losing money, although losses are narrowing.
• The most recent six months' revenue was $108 million, up 20% from 2006.
• That's an impressive lineup of money guys taking the company out.
• In an uncertain financial market, the company's IPO would be more predictable if it was actually profitable..
   

4. Indian BPO Companies Acquire Two US Medical Billing Vendors

Facts and Background

Firstsource Solutions of Mumbai, India announced this week that it had acquired medical billing and collections company MedAssist Holding of Louisville, KY for $330 million. MedAssist's most recently reported annual revenue was $99 million. Also announced this week was the acquisition of Atlanta-based Zavata, Inc. by Apollo Health Street of Hyderabad, India for $180 million.

Opinion

India likes the BPO business and is happy to have a foot in the US healthcare door.

Musings

• If you haven't read Thomas Friedman's The World is Flat, this might be a surprise. Indian companies are moving up the business food chain from cheap call center and programming labor to full business process outsourcing.
• MedAssist was flipped by private equity firm RoundTable Healthcare Partners, which bought controlling interest in 2003.
• If it can be done remotely by telephone or Internet, it can (and will) be done from low-cost countries. Healthcare's high administrative costs make this a no-brainer.

5. UK Cerner Users Gripe

Facts and Background

UK newspapers report "chaos" as the Barnet and Chase Farm Hospital NHS Trust becomes the first London hospital to implement the Cerner Millennium patient administration system in late July.

Opinion

One thing you learn from following stories like these: everybody in the UK has a fiercely partisan political agenda that obscures mere facts. New systems always start with unhappy users, so quoting them endlessly or describing long lines or heartbroken patients who had to reschedule an appointment is pointless. Still, there's probably a lot of inefficiency in trying to turn software written for US hospitals into something appropriate for UK hospitals.

Musings

• One hospital user was quoted as saying the software was "long-winded." Wonder what that means?
• Nobody likes change, but reporting it as meaningful news is silly. It wouldn't be here in Brev+IT if it hadn't been such a boring HIT week.
  
  

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