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QuadraMed Tries to Turn Corner


By Joseph Goedert, News Editor September 2007
Originally headquartered in California and now in Reston, Va., QuadraMed grew by acquisitions-more than 30-on its way toward being a one-stop shop for I.T. needs.

But it was too much too fast and the new century brought a host of problems. The company had to divest much of its businesses, experienced significant weaknesses in its internal financial controls, lost its NASDAQ stock listing, underwent several restructurings and leadership changes, and looked for but didn't find a buyer for what was left.

Recovery started in 2005 when the board realized QuadraMed had to succeed on its own and needed new management to do so. That's when Keith Hagen - a 25-year industry veteran with experience at Misys Healthcare Systems, Sunquest Information Systems and Compucare Corp. - was hired as president and CEO.

"I came in October 2005 and the company didn't have a clear corporate strategy, but rather only product line-oriented strategies" that resulted in each group having its own way of doing business, he recalls. Each product line, for instance, had its own sales force that sold just those products. As a result, implementation teams for different QuadraMed products being simultaneously installed at hospitals often didn't work together.

Hagen turned to Pam Arlotto, CEO at the corporate management consulting firm Maestro Strategies LLC in Atlanta, to help the company define its strategy.

They determined that QuadraMed had four distinct services-access and identity management, care management, health information management and revenue cycle management.

Their focus was on bringing together the product lines by improving integration and marketing the products as complementary to each other. Access and identity management software working with the registration application, for instance, enables checks that prevent a patient previously treated at a hospital from being registered as a new patient, which would break ties with the patient's existing financial and medical records. Tying together health information management and revenue cycle management products can ensure treatment is properly coded and the resulting fees are actually collected, Hagen says.

QuadraMed spent 2006 restructuring its businesses to match the new strategy of "one company, one way." Sales and marketing personnel were trained to promote all of the company's products, not just one line. The company restructured implementation projects so each site is treated as one implementation with one project leader, Hagen says.

The changes seem to be turning things around. While revenue of $125.2 million in 2006 was only marginally better than the previous year, QuadraMed earned $11.9 million after losing nearly $4 million in 2005. Sales bookings in 2006 rose 25%, which Hagen expects will start translating into revenue growth during the second half of this year.

QuadraMed laid off 37 employees, about 5% of its workforce, in early 2006. But with prospects brightening, it added 50 positions in January 2007.

The company is focusing on beefing up its Affinity Clinicals acute care electronic health records system, which has had only one sale since Hagen came on board. In addition, pay-for-performance management tools are being developed, and a surgical information system is in beta testing.

Further, QuadraMed in July announced it would acquire another acute care electronic records system to make it more competitive in the large hospital and integrated delivery system market.

The company expected by late summer to close its $33 million purchase of the Misys CPR product from Misys Healthcare Systems, Raleigh, N.C. The product, with 68 hospital clients, includes closed loop medication management, integrated laboratory and radiology functions, and data warehouse capabilities that larger organizations are requesting in their requests for proposals, Hagen says.

Affinity Clinical customers wanting the additional functionality will be able to upgrade to Misys CPR, which the company will rename.

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