HIE Market Consolidation

The Inevitable has Arrived

For: eHealth Initiative Webinar

Date: March 30, 2011
By: John Moore, Managing Partner
Chilmark Research LLC
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 Chilmark Research
 Founded in 2007
 Based in Cambridge, MA
 Chilmark’s Sole Focus is Healthcare IT
 Current Research Areas Include:
 Cloud Computing, Connected Health (biometrics, Clouds, & HIS),
Health Information Exchanges (HIEs), mHealth, Platform as a
Service (PaaS), Engagement Strategies
 Services Offered:
 Market Research - Adoption & Technology Trends
 Self-sponsored and client sponsored reports
 Strategic Advice
 Market landscape, trends, vendor viability, business plan
development, go-to-market strategies

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 Agenda

 Market Drivers
 HIE Vendor Landscape
 Consolidation
 The Good, the Bad and the Ugly
 What’s Next
 And How to Prepare

2011 HIE Market Report: Analysis & Trends

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 Significant, Unprecedented
Money Flowing Into Market

 Billions in Federal Funding

 EHR Incentives
 Establish State HIEs
 Beacon Grants
 Healthcare Reform
 New, Bundled Payment Models
(ACO)
 Shared risk/reward
 Manage transitions in care
 Business Alignment
 Align Affiliates to Mothership

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 HIT/HIE Waters Have Been Chummed

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 Multitude of Vendors Claiming They
Have the HIE Solution for You

 HIMSS’11 Lists 189

HIE Vendors
 Service Providers
 EHR Vendors
 PACS Vendors
 Tools Vendors
 ISPs
 Etc.
 Core HIE Vendors
 4 subdivisions

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 EHR Vendors:

 Target:
 Existing Enterprise
Clients
 Walled Garden
 Some Exceptions
 Examples:
 Allscripts, Cerner, eCW,
Epic, GE, McKesson
 Prognosis:
 Limited Traction for
Closed Systems

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 Service Firms

 Target: Public & Enterprise

 Slight edge to Pubic
 Focus on Service Play
 Partner for Software
 Play on Customization
 Large Firms Dominate
 ACS, AT&T, CSC, Dell,
IBM/PWC, Verizon, etc.
 Prognosis
 Success in Large, Complex
Environments

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 Core HIE Vendors

 Target all Markets

 Partner for Large HIEs
 Focus on Software
 Services Secondary
 Most are Small Firms
 Rapidly Consolidating
 Prognosis
 Increasingly Dominated by
Large Firms
 Resources to invest

These are the Targets for Acquisition

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 Nine Significant Acquisitions in 3 Years
Acquired Acquirer Details
2009 acquisition by Initiate to move beyond just MPI and
Accenx Initiate
provide a complete HIE offering. Now Initiate Exchange
Acquired in 2010 as move to combine Axolotl HIE platform
Axolotl Ingenix
with Ingenix’s analytics & reporting tools
Acquired February 2011 to strengthen Harris’s capabilities for
Carefx Harris Corp.
DoD & Florida HIE – services play
Acquired in 2010. Strengthens Covisint’s platform to address
DocSite Covisint
quality/analytics (PQRI reporting) needs of HIEs.
Acquired in early 2010, Lawson, strong in back office/admin
Healthvision Lawson
apps looks to expand into clinicals
Acquired in 2009, provides MEDecision with foundation for
HX Technologies MEDecision
HIE platform
Acquired in 2010 to combine Initiate’s best-in-class MPI
Initiate IBM
solution with IBM’s deep analytics & global sales force
Acquired by 4th largest health insurer Health Care Services
MEDecision HCSC
Corp, in 2008, link admin & clinical data
Acquired in late 2010, like other payers, link admin & clinical
Medicity Aetna
data in support of new quality-based payment models
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 Plenty of Future Targets

Company Ownership Notes

Care Evolution Private Low market profile, partner with Thomson-Reuters
Israeli company, decent technology, good for service
dbMotion Private
play, 30% equity stake by UPMC
ICA Private Good product, growing in certain sectors/regions
InterSystems Private Fiercely independent, broad HIT portfolio
Partnerships with Surescripts, GE & Sage. Surescripts
Kryptiq Private
does have an equity stake
UK parent, challenge gaining traction in US market,
Misys Public
parent may spin-out
Mid-market play, simple, low cost HIE, has a couple of
MobileMD Private
key accounts, good entry
New Zealand Co., good tech, talk of IPO, good target for
Orion Health Private
larger company, e.g. Dell, Oracle, etc.
Mobile play, good client base, burdened by heavy VC
PatientKeeper Private
investment

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 Consolidation: Good or Bad?

It All Depends…
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 Consolidation Brings Many Benefits

 Resources
 Investments in R&D
 Complimentary Apps &
Services
 Scale
 Distribution & Service
 Viability
 Stability & Support

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 Consolidation Can Bring Frustration

 Change in Priorities
 Focus Reflect New Parent
 Decreased Investment
 Partnerships Pulled
 Partners Become
Competitors
 Pricing Increase
 Cultural Change

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 Consolidation is Inevitable

 Market Moving too Rapidly

 Stretching Resources of Small Vendors
 Difficult to keep up
 Payment Reform
 Co-mingling of Data
 Analytics becoming crucial
 Pressure from Larger Vendors
 Difficult to Compete

Prediction: Consolidation Continues Apace for

Next 12-18 Months
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 What to Watch
 Keep an Eye on Partnerships
 Often Harbingers
 Why the Acquisition
 Strategy
 Synergies
 Does it make sense?
 Acquirer’s Acquisition History
 Successes, Failures…
 Changes in Management
 Significant Departures

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 “There are two kinds of fools.
One says: ‘This is old and
therefore good.’ And one says:
This is new and therefore better.’”
- Dean William Inge

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