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Medsphere Embraces Open Source Model


By Joseph Goedert, News Editor July 1, 2008

Hospital electronic records vendor Medsphere Systems Corp.’s decision to become a fully open source company could be a potential game-changer for the Aliso Viejo, Calif.-based company and possibly the hospital information systems market.

That’s the view of Mitch Morris, M.D., a principal in the life sciences and health care group at Deloitte Consulting, New York. He estimates that by making the full source code of its OpenVista clinical information system downloadable for free on the Web, hospitals could save 40% to 50% of their total cost of ownership for the system.

Under Medsphere’s new business model, it will not charge a licensing fee for the application or server source code. It will generate revenue by providing implementation services and support, says Rick Jung, COO. “It’s no longer the case that Medsphere sells a proprietary license,” he adds. “We’re trying to do as we say and say as we do. We’re trying to be as openly collaborative as possible.”

Bits and Pieces

Medsphere has always supported the open source movement to some degree. OpenVista, after all, is a heavily modified and commercialized version of the Veterans Administration’s VistA information system that has been available for free downloading for many years.

And Medsphere has, in bits and pieces, released some elements of its source code to the open source community over the years. In early 2007, for instance, it released the source code for an alpha version of a major upgrade of OpenVista, but use of the code was somewhat restricted. Now all of the developed code for the upgraded OpenVista — which now includes enterprise and remotely hosted versions — has been released with no restrictions.

Medsphere’s board has long debated how much of an open source company it should be. The vendor in 2006 sued co-founders Scott and Steve Shreeve after Steve posted elements of the source code on a popular Web site for open source advocates, and later fired them. Last fall, new leadership came to Medsphere, and the suit was settled with terms undisclosed.

The new business model is a bold decision that could give the company a chance for survival in a competitive market where it has yet to establish a firm foothold, Morris says.

If the model brings Medsphere many new clients and proves the company can make money without charging for software, that could pressure other vendors to follow suit, Morris says. “But if you look at the architecture of others’ closed proprietary code, it would be difficult for them to open it up and give it away,” he adds. “But I could see other vendors lowering their license fees to stay in the game.”

By putting its source code on the open market, Medsphere is permitting software developers, hospitals and others to download the clinical system and server source code and do with it as they wish.

Medsphere asks, however, that they communicate updates to the company so they can be shared with others, Jung says. Medsphere also may adopt ideas it learns from others. “What we’re doing with this release is saying, ‘We now truly are an open source company,’” he adds.

New Options

While hospitals may be tempted to get the source code and build, implement and support their own clinical information system, that won’t be feasible for many organizations, Morris says. “Many hospitals have strong I.T. departments but few have development shops.”

Medsphere is betting it can make a living doing implementations and support because it is the natural place for hospitals to turn. “Who better to help them than Medsphere?” Morris asks.

For most hospitals, doing all the work to use OpenVista would be a “big mistake,” says Vincent Ciotti, a principal with HIS Professionals LLC, a Santa Fe, N.M.-based consulting firm. Regardless of whether hospitals attempt the work themselves or contract with Medsphere or another vendor for help, availability of the open source software gives them another option for clinical software, he adds.

Ciotti suspects that some large consulting firms might attempt to compete with Medsphere for implementation and support services. For now, Medsphere’s actions are not an industry-changer, he adds. “I hope it starts a trend, but to be realistic, I don’t see a lot of vendors going this way. It will take years to catch on and become a major force, if ever.”

The clinical system and server source codes are available at www.medsphere.org.

(c) 2008 Health Data Management and SourceMedia, Inc. All Rights Reserved.

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