Allscripts' pending acquisition of Eclipsys makes sense but has perils, according to several consultants specializing in helping providers select information systems.
Ambulatory vendor Allscripts needed a hospital vendor partner to more successfully compete with Epic Systems, Cerner, Meditech and other companies that offer ambulatory systems to hospitals for their employed and/or affiliated physicians. Further, ambulatory rival NextGen Healthcare Information Systems entered the hospital market in the past year.
So this acquisition, which was long-rumored, makes sense, says Peter Butler, president of Hayes Management Consulting Inc. in Newton Center, Mass. "But they'll have a lot of work to do to get the two platforms to work together in a meaningful way," he adds. "They've got to get it done quick."
Whether Allscripts has a coherent strategy remains a question mark, Butler says. He thought Allscripts' earlier acquisition of electronic health records software from Misys meant they were going after the small physician market. Now he's wondering if that's abandoned and they're going after the hospital market. "It makes me wonder if they have a clear strategy or is it a moving target internally?"
As hospitals work to tighten relationships with physicians, in part by helping them meet electronic health records meaningful use requirements to qualify for incentive payments, Allscripts like other vendors is scrambling to get the business. "Allscripts is a strong presence and Eclipsys' only weakness was its balance sheet," says Vince Ciotti, principal at HIS Professionals Inc. in Santa Fe, N.M. But the combined companies face building a staggering amount of interfaces among disparate products, he adds.
The reality though, is that the stimulus-funded push for meaningful use of EHRs will close in 12 to 18 months as providers seeking to get full incentive payments scramble now to automate. So, Ciotti expects Allscripts during the next year to focus on its marketing brochures, PowerPoint presentations and other proposals to get business in the door, and worry about interoperability later. All Allscripts has to do is a good job of selling and they'll have about two years to build interfaces. Had Allscripts bought Eclipsys last year, "it would have been awesome," he adds.
Ciotti speculates that Eclipsys last year wanted too much money to sell, but now sees a bust coming by 2012 after most providers going after stimulus money have already made their EHR purchases.
Consultant Michael Mytych believes Eclipsys' marketing efforts haven't matched the quality of its products. Consequently, the combination of Allscripts marketing expertise with Eclipsys' technical acumen will be a good fit, says Mytych, principal at Health Information Consulting LLC, Menomonee Falls, Wis.
But the combination won't result in an integrated clinical record anytime soon, during a period when Epic is winning deal after deal because it can demonstrate an integrated record, Mytych notes. Allscripts will make money off the deal because anything CEO Glen Tullman touches turns to gold, he adds. "But at the end of the day, hospitals are looking for that integrated, or at least consolidated, record."
The industry will see more of these buys this year as vendors posture for business opportunities and some realize their EHRs--even if CCHIT-certified--won't meet meaningful use requirements, predicts Steven Lazarus, president of Boundary Information Group in Denver. "Many CCHIT systems are not built on relational databases and won't meet meaningful use criteria without new architecture." Consequently, acquiring vendors will be looking for market share and to boost their implementation expertise.
The Allscripts-Eclipsys combination could face a legal roadblock soon. The San Diego law firm Robbins Umeda LLP is seeking to represent any Eclipsys shareholders who believe the sales price is too low. The firm specializes in merger-related class action shareholder lawsuits.
An Allscripts spokesperson says the company understands the integration challenges ahead, but the two vendors have worked together to integrate shared clients on several occassions.
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