2017 HIS Vendor ReviewPart 4: “Small” HIS Vendors

© 2017 by H.I.S. Professionals, LLC, all rights reserved.

By Vince Ciotti & Elise AmesHIS Professionals, LLC

CPSI NTT Data Harris Medhost

“Small” HIS Vendors• Our HIS vendor review ends with four whose

2016 annual revenue is “only” $250M or less.– Three of these are privately held or small

HIT divisions of much larger parent companies, so we had to estimate their revenue past on past years’ experience.

– Most are a “family” of discrete sub-systems as illustrated on the right:

• This episode covers their:- Revenue HIStory over the years- Products & client base by bed size- Recent mergers & acquisitions- A surprise announcement from NTT!- Candid assessment of future prospects

• Computer Programs & Systems, Inc (CPSI) – re-branded as Evident last year, is back as CPSI, evidently proving something…

• Their revenue had dropped 11% in 2015 as part of the post-MU droop, but their acquisition of Healthland proved to be a boon:

• CPSI’s 2016 revenue increased by 47%, reflecting strong sales among ≈350 Healthland clients, earning them the #8 spot.

#8:

The CPSI “Family”• Like most other HIS vendors, CPSI has branched out into many

specialty markets to increase their annual revenue far beyond the core HIS comprised of an EMR, Ancillaries, RCM, & ERP (only Epic and Meditech stick close to their HIS knitting).

• CPSI’s family of products/divisions/brands now includes:• First acquired by Healthland in 2013, this major LTC player

has brought CPSI into over 2,000 facilities in 47 states.• Known simply as the “CPSI System” for decades, this new

brand name is CPSI’s core HIS, running on over 600 clients.• Leading HIS vendor in the CAH market, acquired for its

400+ client hospitals running on Classic, Centriq, APS and AHN.• Acquired by Healthland in 2015, this Revenue Cycle Management specialist runs BOs for hospitals & SNFs.

• CPSI’s consulting division, TruBridge also offer RCM management services as well as complete IT outsourcing.

CPSI RuralACO Program

• CPSI’s partnership with Caravan Health that claim to be running 23 ACOs in 32 states with over 17K physicians.

Below is the rough # of clients on Evident’s “Thrive” (formerly “The CPSI System”) and Healthland’s Classic, Centriq, APS & AHN systems:

Evident Client Base

We’re sure the

number of

clients will shift from

red to blue

rapidly!

• Rather than a complex array of products targeted for various sizes of hospitals, CPSI market strategy is relatively simple:

CPSI’s Products & Prospects

- They sell “Thrive,” period. - And primarily to small hospitals

(although they will rarely turn down a large hospital’s RFP…)

• According to CPSI’s press release in November of 2015, support the older Healthland “Classic” system runs out this year, whereas the newer “Centriq” system will be supported for ≈5 more years.

• So we’re pretty bullish on CPSI remaining on top of the small hospital market for some time, as their sharp sales team has direct access to the C-suite of hundreds of Healthland clients.

• By contrast, Cerner offers Millennium to larger hospitals & Community Works to smaller ones, Epic now has All Terrain, Utility & Sonnet for the 3 market sizes of hospitals, etc.

• Known as Keane for many decades, it’s hard to remember this relatively new name in HIS is selling the tried & tested HIS known as “Optimum,” with a full array of proven components:

- Suite of clinicals: EHR, CPOE, LIS, RIS, RX, etc. - Robust revenue cycle (formerly PatCom), with a

long track record going back to PHS in the 80s. - Solid ERP suite from ORMED, who sold them rights

to their system despite being sold to Harris… • Like Siemens & GE, their parent firm is an international giant

with billions (of Yen) in annual revenue, and their healthcare IT division includes many pieces beyond a pure HIS, including: - Long Term Care – in which they are an

industry leader over a thousand clients. - ≈200 clients on their Optimum HIS: mostly

financials, only ≈10 hospital EMR attests.

#9:

• Bit of a roller coaster ride since Keane sold to Caritor in 2007, who then sold to NTT Data in 2010. All 3 parents had billions in IT revenue in many other industries besides healthcare, so we’ve been estimating what slice their HIS $s comprised below:

NTT Data Revenue HIS-tory

(Y2K)

Caritor NTT Data

Keane

• In March of 2016, NTT Data shocked the industry by buying Dell’s IT consulting division for $3B. Dell was spending $60B for EMC, and needs these funds to help trim its $43B of debt…– Dell acquired Perot systems back in 2009 for $3.9B, so they’re

losing a bundle, but EMC is quite an enticing target.• The odd thing is what this does to NTT Data which will now be

both a “consulting” firm and an HIS vendor. Imagine a scenario where Dell/Perot consultants issue an RFP for a hospital looking to acquire a new HIS – would they send it to themselves? To other vendors?? Evaluate other vendor proposals???

• Many HIS vendors have “consulting” divisions that offer assistance during implementations, interim staffing, technical assistance, etc., but strategic planning, IT assessments, system selections and contract negotiations usually require objectivity…

2016 Game Changer?

• After reading our previous slide, just this month NTT Data, announced they were spinning off their HIS division into:

2017 Flash!

Funded by private investor GPB Capital Holdings, Cantata Health is now free from the giant Dell division that dominated their HIMSS booth in Orlando...

(Maybe the name counters the rumors of a “con-Tata”!?)• With Mike Jones as CEO leading about 250 FTEs, Cantata will

now sell and support NTT Data’s two core HIS systems:- Optimum – proven HIS system about 200 hospital clients,

mostly RCM, with less then 10 ONC EMR attestations... - NetSolutions – a leading LTC/SNF player with 1,700 clients

- Our prognosis is mixed: they’ll do well in LTC, but it will be tough competing with HIS vendors having a strong EMR and RCM.

• If you’re getting confused with the re-branding of vendor and product names, and the rash of M & As in the HIS market, we’re sorry but this one will give you an even worse headache!

• Our # 10 vendor in terms of annual revenue is Harris Healthcare, the new name that the N. Harris division of Constellation Software (not to be confused with several other “Harris” firms out there), has given their HIT division according to a VP at HIMSS. 2017... - Starting as Compucare in the 70s, they self-

developed the “Affinity” HIS in the 90s. - Bought by QuadraMed, who failed building

an EMR in the early 2000s, and sold to: - VC firm Francisco Partners who acquired CPR

from Misys/Per Se (née UltiCare from HDS)...- Still with us? Ah, the heck with it, lets just

look at what they acquired last year alone:

#10a: Harris Healthcare

- A leading ERP player, Ormed tried to crossover into the HIS field by acquiring CSS HealthTech in 2014.

- Picis is a major player in the Perioperative market (OR, Anesthesia, Recovery Room, etc.).

- Their PulseCheck is a leading EDIS product, and they also market a strong ICU/CCU system, as well as medical device dashboards.

- An OB/GYN physician practice EMR specialist.

Harris Healthcare 2016 Acquisitions

- CSS’ EMR failed to achieve MU2, so Ormed sold to Harris in 2016.- Their full suite of robust & affordable ERP apps (GL, AP, PR, HR,

Mat. Man., Cost Acc., EIS, DSS, etc.) runs in over 350 hospitals.

- “MetaVision” EMR for hospital ICU & anesthesia.

• QuadraMed’s revenue figures were public for about 25 years, so here’s a chart of how they grew handsomely during the 90s when hospitals were buying like crazy for Y2K, then dipped when they sold their huge Quantim HIM coding to Nuance in 2012.

• Parent Constellation has revenues in the billions, but we have to estimate Harris’s HIT revenue, which probably doubled in 2016 with the acquisition of Ormed, Picis, digiChart, and iMDsoft.

• Their 2015 acquisition of of NextGen’s Opus & Sphere gives them targets to sell Affinity & QCPR to…

Harris/QM Revenue HIS-tory

Y2K Quantim Sale 2016

M&As

Harris Healthcare Prognosis• The addition of so many specialty products to their core HIS of

Affinity and QCPR will enable Harris Health to score high on feature checklists of RFPs (Request For Prevarication).

• However, the need for numerous interfaces among these many products, each written in different programming language, data base and operating system, will make integration even harder than synchronizing the many slide shows, brochures, web sites, proposals, contracts, etc.

• Short term, they should do well selling to the NextGen HIS clients and specialty niches like Picis’ OR and EDIS. In the long term, it will be challenging for them to compete with more integrated vendors like Meditech & CPSI…

• Tied for #10 is MedHost, originally founded way back in 1984 as Health Management Systems. HMS was later acquired by VC firm Primus in 2007, who formed HealthTech Holdings as their parent company, and then merged them with MedHost in 2010.

- HMS grew rapidly by selling to small and mid-sized hospitals, and specialized in serving hospital chains also based near Nashville, like Community Health Systems, with about 200 hospitals in 29 states.

• Their forte for these chains was an ERP designed to pool cash payments from many hospitals into one central account, while centralizing AP, purchasing & materials as well – slick stuff! - MedHost was a long-term leader in the

EDIS field, and with a slick interface to HMS, they can now handle the many IP admissions from the ER very well.

#10b:

• Being privately held, we’ve had to estimate their revenue during these many years of acquisitions and mergers; the shrinking size of hospital chains like CHS (selling 25 sites) has probably reduced their revenue a bit, so we estimate them at ≈$160M in 2016:

• Adding Medhost EDIS in 2012 gave them a big revenue jump, but there have been few HIS sales outside of the chains…

Medhost/HMS Revenue HIS-tory

HMS

Medhost

• Their HIS client base is mostly smaller & mid-sized hospitals that hospital chains like CHS tend to acquire; included in the hospital figures below are ≈370 EDIS clients of mostly larger bed sizes.

Medhost Client Base

Acute Care Hospitals Non-acute Care Facilities

Recap• This episode ends our review of the leading HIS vendors for 2017,

based on their FY2016 annual revenue. Biggest news:– Re-packaging:• Epic now has 3 products: All Terrain, Utility and Sonata for

large, mid-size and small hospitals, and can run remotely.– Re-Branding:• Evident = CPSI again; QuadraMed = Harris Healthcare

– New entrants:• athena & eCW are now in HIS; NTT Data spun off Cantata

• Thanks to HIStalk for taking so much of their valuable blog space with our annual ramblings. In case you have any questions, comments, or you’re as confused as we are about any of this: - vciotti@hispros.com

eames@hispros.com 505.466.4958

413.329.6925