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Misys Returns to its Roots

Misys Healthcare Systems didn't have to divest its acute care business lines, but divestment positioned the vendor to focus on its core competency of ambulatory care and dive into the small physician market


By Joseph Goedert November 1, 2007

The bottom line was that Misys was not effectively competing with the major acute care vendors, says Vern Davenport, executive vice president and general manager of the Raleigh, N.C.-based company. Davenport joined the company in February.

The acute care sector is "very demanding from a research and development viewpoint and very competitive," he notes. "For us to compete with those guys day in and day out required more investment than we were probably making."

So Misys recently sold its laboratory, radiology and pharmacy applications to San Francisco-based Vista Equity Partners, and its Misys CPR inpatient clinical system to QuadraMed Corp., Reston, Va. Once Misys Healthcare entered the acute care business via acquisitions several years ago, other companies in the sector viewed the company as a competitor, Davenport says. That made it tough for Misys to sell its ambulatory products in the hospital market, a market becoming more attractive with the rise of health care information technology donation programs.

Now, alliances with Vista Equity and QuadraMed will help Misys Healthcare sell its ambulatory products in the acute care market, he adds.

After getting out of the acute care business, Misys Healthcare in August aligned with iMedica Corp. of Carrollton, Texas, to target practices of five or fewer physicians. Misys Healthcare for $5 million licensed iMedica's electronic health records software to rebrand and sell as Misys' small practice product. It also invested $8 million in iMedica and got a seat on its board.

Misys Healthcare expects this month to unveil its small practice EHR, remotely hosted via the application service provider computing model. Over time, the company will enhance the software, including tight integration with its Tiger physician practice management application. The small physician market is the place to be now, Davenport believes. "If you look at EHR growth in the next four years, the majority of decisions will be in small practices." He adds, however, that the company will aggressively invest in its entire ambulatory product line.

With a renewed focus on the ambulatory market comes a new effort to improve service. "Before, we didn't properly invest in an infrastructure for support," Davenport acknowledges. Further, more resources are being put into beefing up Misys Healthcare's legacy EHR products. Workflow enhancements are coming soon, among other changes, Davenport adds.

Better focus and service, and EHR improvements, he hopes, will reverse poor financial performance in recent years.

Davenport, a veteran of Eastman Kodak's health division - now CareStream - and Shared Medical Systems/Siemens Medical Solutions, saw the need for big changes when he came to the company in February. "This had been a very distracted company in the 12 to 18 months before I came," he recalls.

Previous leaders had tried a management buyout to take the company private from its corporate parent, Misys plc of London. Further, Misys Healthcare never culturally or technically integrated its acute care, ambulatory, home health and claims clearinghouse divisions, so the divisions ran practically as standalone companies. "Each had its own leadership, sales, marketing and priorities," Davenport recalls. "The result of that is our growth had stagnated."

For instance, profit for Misys Healthcare after charges for restructuring, amortization and other items fell 1.6% in fiscal 2007 to $83.5 million, while revenue dropped 1.3% to $555 million. Improving support was an integral part of the reorganization, which focused on tearing down the silos that had grown around Misys Healthcare's various divisions over the years. Now, one senior executive is responsible for support for all products, and other individuals are responsible for sales, implementation and other specific functions companywide. Clear standards for measuring performance have been established.

Divestiture of the acute care business hasn't scared Misys Healthcare-which was created and grown via acquisitions-from considering more buys in the future, Davenport says. "It's fundamentally a part of running a good business to look at where opportunities and synergies exist."

The ambulatory I.T. market will continue to consolidate and considering acquisitions "absolutely" is a part of the vendor's future path, he adds.

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