HIStalk Quotes
Misys Sells Off Sunquest, CPR, Exiting the Hospital Systems Business
posted 07/22/2007
Lots of Misys news to report as announcements are made in London:
- The so-called Diagnostic Information Business, i.e. Sunquest, is being sold to Vista Equity Partners for $382 million. That includes pharmacy, lab, and radiology systems.
- The Misys CPR hospital clinical system is being sold to QuadraMed for $33 million.
- Rumors are that Misys will introduce an open source, EMR-related product (along with other open source products in its banking divisions).
- Vista will try to market Misys EMR as part of the deal.
- Both new owners have agreed to support the Misys Connect strategy.
- UK rules require Misys shareholders to approve the transaction.
- From QuadraMed's announcement of the CPR purchase, it appears that Quadramed's motivation was known weaknesses in its own Affinity clinical offferings, particularly for larger hospitals: integration and CPOE.
- Misys bought CPR from Per-Se (as Patient1) for $30 million in mid-2003 and spent a lot of money ($20 million?) tinkering with its technology underpinnings. So, QuadraMed gets an even better fire-sale price than Misys got originally, although with a few more layers of accumulated tarnish. It's now nearly 20 years old with few installations.
- Misys CPR was once a great product, but it has languished for many years under two unfocused owners.
- Current KLAS rankings: CPR # 6, but notably one notch ahead of Cerner Millennium and two above GE Centricity Enterprise (Affinity had much higher numbers, but too few installs.) Lab: a strong #2 (good job, Sunquest.) Pharmacy: mid-pack, but too few customers to score officially. Radiology: #3 of a four-horse race, but once again the last-placer was Cerner. In other words, if you believe KLAS, QuadraMed gets an instantly competitive clinical product line for $33 million.
- QuadraMed CEO Keith Hagen is familiar with both products: before becoming CEO, he was with QuadraMed and left for Misys (although he was involved in their transaction services, not software).
- One rumor is that the old Sunquest name will be revived. I like that idea.
- Misys took on 200 Per-Se employees when it bought CPR. I can't imagine very many are left. Ramping up staff isn't something QuadraMed has done a lot of, so that will be a challenge (as will trying to move the office from Tucson if that's part of the plan - QuadraMed struggled with that in moving everyone to Reston a few years back.)
- Vista is the same private equity company that bought Surgical Information Systems in February 2006.
"Affinity was not designed for larger, multi-facility organizations and lacked technical infrastructure to support needed enhancements. Their interfaced, acquired pharmacy product was never going to work. CPR has an excellent integrated pharmacy system and an OK lab solution. Much deeper nursing and CPOE capability. However, CPR is hard to install and most of the knowledgable staff are long gone. It needs to be configured for out-of-the-box installation."
"I need some help, as a business-ignorant techie. Misys just sold of PLX (Pharm, Lab, Xray) to an investment firm. CPR is probably going to QuadraMed based on another rumor. What I don't get is this: Verne keeps telling us that Hospital Systems is making money and keeping areas like Physician Systems (that he said is bleeding) afloat. Why sell off the very unit that is keeping the other units afloat? I just don't get it." Misys Myopia is an interesting phenomenon caused by bringing over a bunch of Medic people who never bought into the inpatient thing and just assumed their gravy train had endless track in front of it. The old, unprofitable product line wasn't Sunquest or CPR, it was the ambulatory business, but they couldn't see that. The cash cow has been sold for a low price to try to plug a few of many lifeboat holes. While this strategy isn't a bad idea, they need to show far more brilliance and vision in trying to save the only remaining business than they did deciding to sell this one off.
Mr. HIStalk's Cheap Seat, Hastily Thought Out Conclusions
- CPR was always a better product than the market acknowledged. The problem was the incompetent vendors selling, installing, and supporting it (Health Data Sciences, then Medaphis/Per-Se, then Misys). Several years ago, when I last looked side by side (casually) at all the available products (except Epic), I ranked it #1. Very nice user interface, great for physicians and nurses.
- Affinity Clinicals are pretty good and, despite technology criticisms (MUMPS and Cache', not much different than the original CPR technology). Epic is obviously a poster child to prove it's sellable despite the nuts and bolts. Still, QuadraMed's purchase of Australia's Detente Systems never really worked out - nobody does real integration via that route and McKesson is much better at convincing a gullible market to the contrary than QuadraMed ever was.
- QuadraMed paid $4 million for Detente in 2004. It paid $14 million to get Tempus Software the same year, a much better investment.
- Affinity Clinicals are best suited for small- to mid-sized hospitals, while CPR's few customers seemed to indicate a big-hospital preference. Keith Hagen's video statement about the announcement clearly says they'll offer both products. That's been tough for those who've tried it before - trying to merge cultures, technology, and sales is a lot harder than just hanging a new name on it.
- I don't know how many good clinical product people are left at QuadraMed since Affinity Clinicals were doing pretty much nothing. Ditto CPR. Who'll be involved? It had better be folks with clinical backgrounds who can come up to speed quickly.
- Misys management seemed almost openly contemptuous of the Diagnostic Information Business, but the sales announcement painted a far rosier picture, with margins of nearly 30%. Need proof they didn't get it? How about this from the press release: "The Diagnostic Systems business has been run largely as a stand-alone operation, and therefore will experience minimal impact in day-to-day operations." In other words, Misys was adding no value whatsoever and, most probably, actually hampering that division from succeeding due to its own corporate- and division-level bungling. And even then, it was bringing home big profit margins.
- Misys is selling the former Sunquest for slightly less than it paid: $404 million in 2001. Not much value-added there.
- Misys Connect never amounted to much and will be irrelevantly straddled across three companies. The only remaining assets of Misys Healthcare, i.e. the physician systems, will have to make it on their own with fierce competition. Divesting the other businesses will let them focus on trying to salvage that struggling product line.
- Misys finally acknowledges that, grand proclamations about its vision aside, it lacked the execution and vision to play in the hospital market. It's first and foremost a banking software company that happens to own a troubled physician practice software division hanging on for the ride. It has finally gotten ride of one of its two unaligned albatrosses.
- QuadraMed has had its share of rough rides, too: wildly faulty acquisitions, survival without vision under Larry English, the slow and painful demise of Affinity, and what looked like a wise retrenchment into the company's only strength: the HIM product and service market. Will the market accept their re-emergence into acute care clinical systems?
- The industry needs another strong clinical systems player, with the odds going down by the minute that a GE-retooled Carecast will be it.
- Tucson employees of Misys, as Gerald Ford said, your long national nightmare is over. Your were already an abused step-child, so it can't get much worse. The announcements proved what everyone suspected: Misys Healthcare didn't respect its only successful product lines and the people producing them.
Since I have to work for a living on Monday, I won't necessarily be able to post HIStalk updates as any news breaks and to get your comments online quickly. Post here! You can bet that Misys, QuadraMed, Vista, investment analysts, and everybody else in the industry wants to know what you think.
comments (4)
1. curious_as_ever left...
07/23/2007 4:55 am
http://histalk.blog-city.com/conglomerate_hit_vendors_poor_track_record.htm
I expect the battle lines to be drawn between Cerner, Eclipsys, Meditech, IDX, and maybe Misys. Otherwise, it's all up-and-comers and crumb-pickers.
2. Ann Farrell left...
07/23/2007 6:12 pm
I'd put Epic in and take GE/IDX out (on hospital side). Also, expect some
other ownership changes by end of year.
3. Centisk left...
08/01/2007 4:11 pm
Misys Healthcare lacks visionaries and their pet vista based Physician
system and EMR integrated product put on shelf long back... It is matter of
time that their physician systems sold to competition or complimentary
company... Look for it...
