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Conglomerate Vendors 101: Healthcare IT Customers Carry Little Weight with Corporate Toe-Dippers

January 30, 2008 Editorials No Comments

Inside Healthcare Computing has graciously agreed to make previous Mr. HIStalk editorials available from its newsletter as a weekly “Best Of” series for HIStalk. This editorial originally appeared in the newsletter in October 2006. Inside Healthcare Computing subscribers receive a new editorial every week in their Electronic Update.

I doubt most Misys Healthcare customers are following the company’s corporate drama as it plays out in England. They want to go private. Wait – no, they just want to sell it to someone! The CEO will lead a takeover group. Hold on, he just resigned! Their board chair is optimistic about their prospects. Shhh … did I just hear him say the company’s software was old and non-competitive?

Healthcare makes up about a third of the Misys portfolio. Within that, the lineup is a salad bar of old, mixed-heritage applications from Per-Se, Medic, Amicore, Payerpath, and Sunquest. Sometimes the blended family gets along, but often they don’t (and I’m speaking both technically and culturally.) If you know of any healthcare IT conglomerates where any of the above isn’t true, that makes one of us.

Why did a British financial software company get into the US healthcare IT market in the first place? Well, let’s just say it wasn’t a noble desire to better humankind. From their website, “The main objectives were to reduce the Group’s exposure to a single market (insurance) and to increase its size in an already consolidating software sector.” That’s about as passionless as an accountant’s nimble calculator fingers determining the net present value of three dinners with Myra the secretary vs. the potential payout.

With just two software sectors, Misys is focused, at least compared to bigger conglomerates that dip 1% of their corporate body (a toe) into the healthcare waters. Since Misys is the only company actively considering deconstructing healthcare IT out of the soup, what can we learn?

  • The best way to make money as a conglomerate is to break it up into parts that are usually worth more than the whole and are more affordable to prospective bidders.
  • Conglomerates often reduce corporate value unless they can harness some elusive benefit in supply chain management, reproducible management excellence, or marketing.
  • Conglomerates are fine until you want to sell to someone else who doesn’t share your love for some of the corporate children.
  • Product investment matters more than that impressive brand name. You may be getting free milk every day, but at some point, you better start saving up for a new cow.
  • In most cases, button-down corporate management saps out the innovation that made formerly independent companies interesting and successful in the first place.
  • Healthcare IT divisions of big companies live and die by the quarterly (or twice-yearly) numbers. Ambitious division executives will sell their souls to avoid being called out as company laggards among their peers.
  • Healthcare IT customers carry little weight with toe-dippers. Are GE brass more worried about the flat-lining former CareCast or sagging toaster sales at Wal-Mart? Does patient safety come up in Siemens corporate meetings as often as power generators?

Just about every outcome suggests that Misys Healthcare will be carved off and sold. If you’re a foot soldier, hang in there at least long enough to see if the change benefits you. If you’re a suit, well, Misys publicly labeled its healthcare unit as underperforming, which isn’t a highly valued resume bullet for the new owners. If you’re a customer, anything or nothing could happen, but you’re stuck either way. If you’re a prospect, there’s a lot of uncertainty ahead, so act accordingly. And if you’re a vendor focused only on healthcare IT, especially if you’ve resisted the urge to cash out by going public, I say thank you.

This editorial is copyright-protected by Algonquin Professional Publishing, LLC., publishers of Inside Healthcare Computing. Please do not copy, forward, or reproduce this material without prior permission. To obtain permission or for more information about Inside Healthcare Computing’s reprint policy, please contact the Customer Service Department at 877-690-1871 or go to http://insidehealth.com/ihcwebsite/reprints.html.

Mr. HIStalk’s editorials appear each Thursday morning in the subscribers-only version of Inside Healthcare Computing’s E-News Update. To subscribe, please go to: https://insidehealth.com/ihcwebsite/subscribe.html or call 877-690-1871.

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