An Exclusive Interview with Tom Skelton, CEO of Misys Healthcare

Misys Healthcare Systems has been discussed endlessly on HIStalk and in the mainstream press recently as its parent company struggled through a variety of unexpected and sometimes self-inflicted wounds. Words, especially those purporting to be from Misys employees, have not always been kind.

Given the not always flattering comments, I was somewhat surprised to receive an e-mail from CEO Tom Skelton, saying in part, "As your readers are interested in the events around our company, I would like to give you an opportunity to hear my perspective. We appreciate the enthusiasm and concern for the healthcare industry that readers of HIStalk and other blogs show and hope to add our perspective."

I give Tom credit for volunteering to be interviewed and I appreciate the opportunity to spend some time with him.


Misys chair Sir Dominic implied that Misys Healthcare is an underperforming division, particularly in the low-end physician EMR segment. What are your thoughts on that?

I don’t believe he called it underperforming. There was a press release that was issued with guidance about the first quarter. That wasn’t a quote from him, but probably was taken off our press release. The press release mentioned that, in the first quarter, we had seen some softness in the low-end physician space.

Has that changed?

The key for us is to put the recent past behind us. If you look at what we’ve been through since June 1 since speculation occurred about the MBO, we haven’t been able to say much of anything at all. We’re thrilled to be focused on business and able to make customers happy. It has been a time of tremendous uncertainty, with pressure on both the customer base and employees. Lots of other people are telling our story and, as the leaders of the business, we can’t speak.

What do you think about the appointment of Mike Lawrie as CEO?

The appointment of Mike Lawrie is tremendous. He understands markets, business, and the competitive landscape. He understands how to install big systems. He's customer-centric and is the kind of guy this business needs.

He held a videoconference with senior teams this week and he will be in Raleigh next week, getting to know some of the staff. The message he delivered was strong and passionate. That kind of enthusiasm combined with knowledge is a good thing.

What do you think the investment in Misys by his former equity firm means? Is it a vote of confidence or a signal of an unwelcome takeover to come?

We probably have to go with what they said. They have confidence in Mike, looked at our assets and portfolio, and know healthcare is a great place to be. They said it was not a preamble for any kind of bid. That won't stop the speculation, but clearly that's not what their intent was, according to what they've said.

Do you think the company will sell off Misys Healthcare, and if so, where would you like to see it end up?

Mike has drafted a letter that will go out to customers tomorrow. In it, he reaffirms the commitment to the product lines how important healthcare is to the business. Speculation has been going on for awhile, but never backed by anyone making decisions at Misys. We're getting good investor feedback from Mike's hiring. 

The market perception seems to be that the company doesn’t understand anything but the old Medic business. KLAS numbers for “Executives Interested in You” is below average for all the hospital products. That’s your customers talking – what do you say to them?

First of all, I don’t think the KLAS rankings show that. The CPR product was unranked when we bought it and then came in afterward at #12 only because we installed another site. Since then, we’ve moved from 12th to 5th. Some pieces are strong, some not as strong. We’ve had to go out and meet a lot of people since Richard Atkin came on board. We have meetings with customers twice a year. Focusing on that single indicator doesn’t tell the whole story. Certainly we can do some things better, but I wouldn’t focus as much on that.

Does the company have much turnover, especially in management, and why are you bringing in so many people from companies outside healthcare like SAS and John Deere?

I don’t have statistics, but the bulk of the team here has been promoted from within. The senior team has people who were brought in from both inside and outside of healthcare. One was from Blue Cross Blue Shield, which we consider healthcare. One was from Alaris and GE Medical. We have people with backgrounds locally selling other than healthcare. That provides diversity in your senior team. If everyone thinks the same way, it’s a greater challenge.

It seems like you bring in a lot of locals instead of recruiting nationally like I'd expect of a company your size.

We run a healthy relocation program, I don't have statistics, but to say that a sizeable chunk of the managment team were hired locally is inaccurate.

The company seems to be divided into geographic and product camps that don’t get along very well. How do you fix that?

I think when a company supplements its organic growth with acquisitions, that brings on a set of responsibilities. You must make the appropriate commitments. For example, we opened a new facility in Tucson. Those people were working in an old bank that was not designed for a software company. We took a long-term lease and put 550 employees in a new facility. We have to treat them the same as the 800 in Raleigh. We have to focus on communication.

I have no disappointments. There's always work to be done. The market continues to move. We have people working on different pieces of the portfolio who need to understand how those pieces add value to the whole. For example, our lab offering brings the value of the outreach component, reaching into the ambulatory community from hospitals and helping them achieve what they want from interactions with physicians and patients.

You bought the CPR product at a fire-sale price because it had been neglected and wasn’t selling. How has Misys improved the product and how many have you sold?

The first thing we did was to move to a commercially available database. The product underpinnings go back a long way. Complete redundancy and safety was important. We worked with InterSystems to move to Cache'.

We've done a buildout of the user interface and functional pieces, especially in radiology, laboratory, and workflows associated with physicians and nurses. It has kind of a worfklow engine. Everything that drives workflow has gotten the bulk of our attention.

Since we acquired it three years ago, we've sold four new implementations in North America. Per-Se hadn't done any for several years prior to our acquisition. We've started to have some nice success in the community hospital segments and in the integrated medication management portion, one of the true closed loop medication management modules in the industry.

Alll vendors claim they have closed loop, even when it's clear they don't. Can you compete against Cerner and McKesson?

I think our product stacks up extraordinarily well against Cerner and McKesson. Medication managment is an area we consider ourselves to be at least even in and ahead of most.

Four sales is better than none, but it doesn't sound like that's enough to feed the development engine.

We knew we’d go through an investment phase. We made the decision strategically when we acquired the product to put R&D and services around it. It was part of price we had to pay. It was not a surprise. We would like to see more deals.

When you're in a selection, what's the most common reason you don't win?

The biggest challenge is that we weren’t known as a company specializing in hospital enterprise systems. We were doing work to build that, but then we had to go on radio silence for some time. That didn’t help us. We have work to do. We're retooling the distribution channel to make sure it has skills and materials to compete successfully.

That sounds like Lean Six Sigma talk. What will the customer see as the end result of your LSS project?

It's an interesting piece, a tool in our toolkit. We've trained people in that, along with change management, and helped upgrade the skill set of the management team. If you look at where business has been and where it has to go, 98% of our revenue came from practice management and administrative systems in the physician's office when I took over in 2000. Now, 45% of revenue is from clinicals in all venues of care.

It's important that we have a broad-based toolset that supports our culture and management's efforts to move things forward. I know that someone mentioned Project Gandhi in a posting. We could have a discussion about the choice of name (laughs) but what it's about is training management.

I don't hear much about the former Sunquest lab systems product line.

It's not as sexy as it was awhile back, but the lab business is very healthy. Clearly it's one of our largest and most successful installed bases. As you look at what’s happening with communities -- ambulatory EMRs, data sharing, along with our combination of Vision, EMR, lab, home health, and lab outreach -- they're all starting to converge. That’s our Connect strategy.

Do you think the physicians you have working on CPR have enough industry recognition and experience in enterprise clinical systems to make the product credible?

I would say that, if the information you have is that the physicians we have working on the CPR product are not experienced in enterprise clinicals, that’s not accurate. We can always use more talent, but if you think we’re off center, I’d say not.

How will you compete with ambulatory EMR companies that have more modern technology and lower prices?

It’s not about price, it’s about value. Companies have come out with newer technologies who don’t have to respect an existing customer base and who come in at a different point in the life cycle. I'm confident they’ll find that the service levels that are being demanded will rise.

The people who buy from you when you’re new aren’t those constituting the entire market. We’ve got 300-400 people the field providing local service and 24x7 support is important. Holding an annual user group meeting for 2,000 attendees is important. Some of the things we’re doing with interoperability will be important. The value of the ambulatory EMR is minimal unless you get it talking with other systems.

Jonathan Bush said the exact same thing when I interviewed him. How do you see the market transforming?

We see EMR adoption in three phases. Now, it's used in individual offices. In the second phase, we'll use information, standardize it, and improve the quality of care. In the third phase, we'll use data proactively to do health management and disease management. That’s what the government has in its gunsights for 2014. Our goal is to get the EMR out there to allow docs to talk to other docs and hospitals. We use IHE, the latest standards, and a federated model. People can assign permissions to allow data to go where it needs to be when it needs to be there. Information can flow through the system in a natural workflow within the application.

Is Misys Connect a strategy or a product?

Connect is a strategy and Misys Connect is the product that supports it. 70-80% of the information captured comes from outside the hospital. How do we get people online, and then, as the government wants to know, how will they talk to each other?

Will RHIOs last or are they a stepping stone?

RHIOs are a vehicle for information sharing. They make use of a new, disruptive technology. Remember that the EMR is a disruptor, which is why people won’t invest. There's a steep adoption curve. We need to get out there and look two or three years down the road. RHIOs have critical role to play. They'll do some experimentation that will result in some successes and some lessons learned. That's the nature of being a pioneer. Where there are successes, the industry will build on that. Will see doctors banding together in IPAs sharing info. Hospitals will sponsor systems to share info. We'll see lots of models for that.

What's your five-year plan for the products and the company?

If you look at Stark changes, the industry, and pain points, we’re well-positioned to help. We have a big footprint of 110,000 physicians. Stark changes will shift funding from one product we have to another. Ambulatory EMRs are at the top of our agenda and probably everyone else’s. When I visit hospitals, that’s what they’re dealing with –- getting physicians on EMRs and connecting them throughout the community and interacting with them.

We also see work happening around home care. With the number of discharges, work done in the home, and the outcomes from home care, we anticipate strong demand there as well. Within the hospital, we'll see genomics, lab outreach, and growth in documentation. It’s about the core clinical processes and making sure they’re linked and the entire patient care record is made available where it needs to be.

People ask, "Do you build new products or do you just buy things?" We told people awhile back that we needed to ratchet up the rate of innovation. From 2000 to 2003, we released eight products and acquired one. From 2004 to 2007, we'll have 34 major releases. We've made a significant investment in time, money, and resources. The rate of innovation as a whole is stepped up and Misys is proud of our adaption to that.

Who do you admire in the industry?

Nurses. If you look at what’s going on in this healthcare system and the burden that nurses carry and the way they’re compensated, they are key to every clinical implementation. They're working with doctors and delivering care to patients. They are insightful and have a unique perspective. I'm not biased at all that my 19-year-old is a nursing major ... well, maybe a little (laughs.)

I'd also like to say, if any of the folks from Misys are reading -- it's been a very challenging six months. It's unusual that what we've gone through was done in a public light. We have 2800 great people and I say thanks for the support. It means a lot that they make the business go and keep the customers happy.

Do you read HIStalk?

I have to. Otherwise, could I have sent you an e-mail? (laughs)

Lots of companies have marketing handlers, so I figured maybe someone coaxed you ...

We don't have marketing handlers. We're just this small company in Raleigh, North Carolina (laughs.) Absolutely I read it. I like your op-ed pieces like the one that caught my eye that had our name in it. I think you exercise the freedom in an interesting way and it plays a valuable role.