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Monday Morning Update 6/11/07

June 9, 2007 News 3 Comments

From Scot Silverstein: “Re: DHIN funding. Are you sure about that? The link does not work and I can’t find any other news stories via Google news.” The WMDT story has been pulled from their site, but it said: “The Delaware Health Information Network, funds for nursing expansion and Medicaid were also eliminated.” No mention on the RHIO’s site, but then again, the newest information there seems to be from early 2005 (ironically, most RHIOs have bad, outdated websites).

From TG: “Re: company dividends. Don’t be fooled. A growth company that issues a dividend is basically throwing its hands up and saying, “I don’t know what to do with the cash. Acquisition unlikely, our product is good enough, we don’t see need for infrastructure or human capital expansion, or any other real needs.’ I am reticent to call slower growth in this strong market, but when I see this action and it continues, I always bail on the stock, as it’s 95% a sign of slowing growth. You IT guys really need some business fundamentals. Great site!” You don’t have to convince me – that was Inga quoting someone else. I’m as old school as you. Growing companies borrow money, not rebate it to shareholders (who would vastly prefer growth instead of a few pennies.)

Speaking of RHIOs, Northeastern Pennsylvania RHIO has failed. Ironically, the organization didn’t even have the $26,000 needed to seek IRS non-profit status. It had a shrinking board and, like most RHIOs, little financial or community support. The only guy quoted as sorry to see it go was a vendor selling stuff to it. I’ve been saying all along that this would be the year that RHIOs started to fall like dominoes. Just seven months ago, the HIMSS RHIO Cheerleading Team claimed this particular RHIO was “gaining momentum,” apparently in the toilet-downward direction once the state’s money was gone.

Correction: I said earlier that Hoboken U. Medical Center was in NY. That was my fingers talking; everybody knows Hoboken is in NJ.

This won’t make the sales brochures: want to deliver lower quality diabetes care? Get electronic medical records. If you believe a new study, anyway. Main gripe: how do you define whether a practice has EMRs and how it uses them to tie that to outcomes? Still, I don’t doubt the article’s conclusion: buying an EMR alone doesn’t improve medical practice (no different than CPOE or any other clinical system, in other words.) It ain’t the size of the pencil, it’s how you write your name.

Former SMS’er Kermit Randa joins SIS as SVP of sales.

Cool new website design: Medicity. I see many vendors freshening up their sites with newer design practices.

David Brailer gives up his last non-enrichening position: vice chair of AHIC. I’m sure he had no choice, really, once he decided to cash in as a fund manager.

Latest news in the UK’s HIT love triangle: IBA is considering suing CSC and Connecting for Health after CSC blocked its bid to acquire iSoft. OK, I’m officially at the “I don’t care any more” phase of this story.

News, rumors, something newsworthy since darn little seems to be happening: e-mail me, or use the confidential Rumor Report form to your right. 

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Currently there are "3 comments" on this Article:

  1. Gosh TG…”You IT guys really need some business fundamentals.” I am crushed…as Mr. HISTalk pointed out, I am the one who posted this, not him. And, believe it or not, I am an MBA, and not just another pretty IT face (in fact, IT is not my expertise!) Anyway, we are in agreement…NextGen has a bunch of cash, is closely held, has a relatively advanced product. They don’t have have a better user for their cash and/or can’t figure out a better use. My new best friend Zach stated that more R&D might be too costly, and, that the main stake holders have the most to gain from dividends (which all makes sense to me.) Readers, I have a fragile self-image, so limit your slamming to Mr. HISTalk…

  2. No worries, Inga. TG was referring to Zach, I think. I agree with you. They should use their resources to create a better company instead of paying off investors in celebration of the one they have.

  3. For what it’s worth, I raised the issue of QSI having no better use for the capital in my response to Inga:

    “Companies pay dividends for a number of reasons. Two of the foremost are 1. To return retained earnings to shareholders when the company believes that it cannot find a better use for the capital, and 2. To raise the share price if the company thinks its market valuation is too low. My guess is that QSI’s circumstance is the former.”

    Unfortunately the entirety of my response could not fit into the paragraph or so allowed. The full text is posted here: http://zachmortensen.net/2007/06/07/qsi-dividend-analysis.aspx

    The excerpt that Inga posted deals with the reasons why a software company might arrive at the point where R&D is no longer a good investment of its resources. This issue is poorly understood in the industry and merits further discussion.

    And as TG pointed out, regardless of the reasons behind the dividend, it clearly signals the end of the company’s growth phase for the aforementioned reasons.

    ZM







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