I have never quite understood the logic of some of the M&A's over past years by lab and medical software vendors. In some cases, Vendor A purchased Vendor B mainly to acquire the Vendor B client list. The apparent goal of A was to convert these clients, in time, to its LIS software. The scenario frequently did not work out in this way with the Vendor B lab clients hunkering down on their aging but familiar software and draining the resources of Vendor A to support it. Forcing the issue by sun-setting the B software only infuriated them more, causing them, in time, to flee into the arms of another vendor. John Moore who blogs over at Chilmark Research recently addressed the topic of acquisitions in relationship to healthcare reform (see: Healthcare Reform, Payment Models & Acquisitions). He launches his note with the following comment:
AllScripts’ acquisition last week of Eclipsys. NextGen, a traditional ambulatory EHR vendor whose parent, Quality Systems Inc. acquired Sphere Health Systems and Opus Healthcare Solutions to target rural acute care facilities.
He followed this up with the following predictions about the future:
Looking to the future, one has to wonder what will be the fate of those who remain in either ...the acute or ambulatory [healthcare software sectors]. Our quick assessment of a few of the ambulatory vendors…
athenahealth: athenaclinicals is new to the market and the company has an opportunity to tap its existing customer base. Short-term, they’ll stay independent but likely to be acquired in 3-5 years.
eClinicalWorks: Fiercely independent and will likely attempt to pursue a strategy similar to EPIC’s and grow organically and stay independent. Will make some niche app acquisitions where needed to accelerate time to market
It's interesting that he groups together eClinicalWorks and Epic. The first has a very strong position in the office EMR sector and the second serves as the EMR of choice for many large health systems. Both are privately held, relieving the founders of the need to please the financial analysts nor dress up their quarterly earnings. John describes them as fiercely independent and pursuing an organic growth strategy. By this I think that he means that they can add features/functions that are desired by their customer base, all of whom operate on the same, supportable software platform.There is no requirement to "integrate" heterogeneous systems.
What fascinates me about Epic is that an enormous hospital system like Kaiser would invest billions of dollars in software developed and maintained by a company that is privately held and thus controlled by a small circle of insiders. Theoretically, Epic could make changes to its business plan or product line that were not in the best interests of Kaiser. Alternatively, Epic could founder in a number of ways if something happened to micro-manager Judith Faulkner. Someone recently told me not to worry about such matters and that he was confident that there was a succession plan in place for Faulkner at Epic. I will assume that this is the case but I do wonder what such a plan would look like in order to provide sufficient assurances to the hospital executives whose jobs could be at risk due to the Epic relationship.
I totally agree with your opinion of M&A in health care software.
Posted by: dme medical billing software | February 13, 2011 at 08:23 PM
M&A in health care software can be just to eliminate competitor.
Posted by: medical billing software | February 13, 2011 at 08:19 PM