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Misys Sells Off Sunquest, CPR, Exiting the Hospital Systems Business

July 22, 2007 News 17 Comments

Lots of Misys news to report as announcements are made in London:

  • The so-called Diagnostic Information Business, i.e. Sunquest, is being sold to Vista Equity Partners for $382 million. That includes pharmacy, lab, and radiology systems.
  • The Misys CPR hospital clinical system is being sold to QuadraMed for $33 million.
  • Rumors are that Misys will introduce an open source, EMR-related product (along with other open source products in its banking divisions).
  • Vista will try to market Misys EMR as part of the deal.
  • Both new owners have agreed to support the Misys Connect strategy.
  • UK rules require Misys shareholders to approve the transaction.


  • From QuadraMed’s announcement of the CPR purchase, it appears that Quadramed’s motivation was known weaknesses in its own Affinity clinical offferings, particularly for larger hospitals: integration and CPOE.
  • Misys bought CPR from Per-Se (as Patient1) for $30 million in mid-2003 and spent a lot of money ($20 million?) tinkering with its technology underpinnings. So, QuadraMed gets an even better fire-sale price than Misys got originally, although with a few more layers of accumulated tarnish. It’s now nearly 20 years old with few installations.
  • Misys CPR was once a great product, but it has languished for many years under two unfocused owners.
  • Current KLAS rankings: CPR # 6, but notably one notch ahead of Cerner Millennium and two above GE Centricity Enterprise (Affinity had much higher numbers, but too few installs.) Lab: a strong #2 (good job, Sunquest.) Pharmacy: mid-pack, but too few customers to score officially. Radiology: #3 of a four-horse race, but once again the last-placer was Cerner. In other words, if you believe KLAS, QuadraMed gets an instantly competitive clinical product line for $33 million.
  • QuadraMed CEO Keith Hagen is familiar with both products: before becoming CEO, he was with QuadraMed and left for Misys (although he was involved in their transaction services, not software).
  • One rumor is that the old Sunquest name will be revived. I like that idea.
  • Misys took on 200 Per-Se employees when it bought CPR. I can’t imagine very many are left. Ramping up staff isn’t something QuadraMed has done a lot of, so that will be a challenge (as will trying to move the office from Tucson if that’s part of the plan – QuadraMed struggled with that in moving everyone to Reston a few years back.)
  • Vista is the same private equity company that bought Surgical Information Systems in February 2006.

Reader Comments

“Affinity was not designed for larger, multi-facility organizations and lacked technical infrastructure to support needed enhancements. Their interfaced, acquired pharmacy product was never going to work. CPR has an excellent integrated pharmacy system and an OK lab solution. Much deeper nursing and CPOE capability. However, CPR is hard to install and most of the knowledgable staff are long gone. It needs to be configured for out-of-the-box installation.”

“I need some help, as a business-ignorant techie. Misys just sold of PLX (Pharm, Lab, Xray) to an investment firm. CPR is probably going to QuadraMed based on another rumor. What I don’t get is this: Verne keeps telling us that Hospital Systems is making money and keeping areas like Physician Systems (that he said is bleeding) afloat. Why sell off the very unit that is keeping the other units afloat? I just don’t get it.” Misys Myopia is an interesting phenomenon caused by bringing over a bunch of Medic people who never bought into the inpatient thing and just assumed their gravy train had endless track in front of it. The old, unprofitable product line wasn’t Sunquest or CPR, it was the ambulatory business, but they couldn’t see that. The cash cow has been sold for a low price to try to plug a few of many lifeboat holes. While this strategy isn’t a bad idea, they need to show far more brilliance and vision in trying to save the only remaining business than they did deciding to sell this one off.

Mr. HIStalk’s Cheap Seat, Hastily Thought Out Conclusions

  • CPR was always a better product than the market acknowledged. The problem was the incompetent vendors selling, installing, and supporting it (Health Data Sciences, then Medaphis/Per-Se, then Misys). Several years ago, when I last looked side by side (casually) at all the available products (except Epic), I ranked it #1. Very nice user interface, great for physicians and nurses.
  • Affinity Clinicals are pretty good and, despite technology criticisms (MUMPS and Cache’, not much different than the original CPR technology). Epic is obviously a poster child to prove it’s sellable despite the nuts and bolts. Still, QuadraMed’s purchase of Australia’s Detente Systems never really worked out – nobody does real integration via that route and McKesson is much better at convincing a gullible market to the contrary than QuadraMed ever was.
  • QuadraMed paid $4 million for Detente in 2004. It paid $14 million to get Tempus Software the same year, a much better investment.
  • Affinity Clinicals are best suited for small- to mid-sized hospitals, while CPR’s few customers seemed to indicate a big-hospital preference. Keith Hagen’s video statement about the announcement clearly says they’ll offer both products. That’s been tough for those who’ve tried it before – trying to merge cultures, technology, and sales is a lot harder than just hanging a new name on it.
  • I don’t know how many good clinical product people are left at QuadraMed since Affinity Clinicals were doing pretty much nothing. Ditto CPR. Who’ll be involved? It had better be folks with clinical backgrounds who can come up to speed quickly.
  • Misys management seemed almost openly contemptuous of the Diagnostic Information Business, but the sales announcement painted a far rosier picture, with margins of nearly 30%. Need proof they didn’t get it? How about this from the press release: “The Diagnostic Systems business has been run largely as a stand-alone operation, and therefore will experience minimal impact in day-to-day operations.” In other words, Misys was adding no value whatsoever and, most probably, actually hampering that division from succeeding due to its own corporate- and division-level bungling. And even then, it was bringing home big profit margins.
  • Misys is selling the former Sunquest for slightly less than it paid: $404 million in 2001. Not much value-added there.
  • Misys Connect never amounted to much and will be irrelevantly straddled across three companies. The only remaining assets of Misys Healthcare, i.e. the physician systems, will have to make it on their own with fierce competition. Divesting the other businesses will let them focus on trying to salvage that struggling product line.
  • Misys finally acknowledges that, grand proclamations about its vision aside, it lacked the execution and vision to play in the hospital market. It’s first and foremost a banking software company that happens to own a troubled physician practice software division hanging on for the ride. It has finally gotten ride of one of its two unaligned albatrosses.
  • QuadraMed has had its share of rough rides, too: wildly faulty acquisitions, survival without vision under Larry English, the slow and painful demise of Affinity, and what looked like a wise retrenchment into the company’s only strength: the HIM product and service market. Will the market accept their re-emergence into acute care clinical systems?
  • The industry needs another strong clinical systems player, with the odds going down by the minute that a GE-retooled Carecast will be it.
  • Tucson employees of Misys, as Gerald Ford said, your long national nightmare is over. Your were already an abused step-child, so it can’t get much worse. The announcements proved what everyone suspected: Misys Healthcare didn’t respect its only successful product lines and the people producing them.

Post Your Thoughts on HIStalk Discussion

Since I have to work for a living on Monday, I won’t necessarily be able to post HIStalk updates as any news breaks and to get your comments online quickly. Post here! You can bet that Misys, QuadraMed, Vista, investment analysts, and everybody else in the industry wants to know what you think.

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Currently there are "17 comments" on this Article:

  1. Interesting that the Misys sales take place a month after Jim Malone joins as the new CFO. He had been CFO at Trizetto, a company which he helped to right over 3 years, and had left Trizetto for a huge pay packet at Misys (where he was also given a board seat). Prior to Trizetto, he had been CFO at IMS Health. My guess is that Misys management prefered to wait for Malone’s advice before final decisions were made.

    My hunch is that Misys, which is primarily a financial software company, would not have hired Malone had they not had other plans in US HCIT or related businesses. Malone and successful acquisitions in this space go hand-in-hand. I predict more to come. There is certainly one company he knows better than all the others, and that’s Trizetto itself (which has yet to replace Malone as CFO…hmm).

  2. More on Trizetto and Misys. New Misys CEO Mike Lawrie had previously been a partner at ValueAct capital. Guess what: ValueAct had bought 12 million Trizetto shares in December 2004 from Malone’s previous employer IMS Health, 9 months after Malone joined Trizetto (this was before Lawrie had joined ValueAct). Malone’s efforts helped to triple the value of ValueAct’s investment, which they liquidated in 2006. This is, undoubtedly, one of the reasons why Lawrie holds Malone in such high regard. No surprise, then, that Lawrie hires Malone a few months after taking over at Misys.

    So, the top two people at Misys know everything there is to know about Trzietto. Does that mean they want to buy it. Not necessarily. It may not be part of the new Misys strategy (although I have doubts about the whole ambulatory shtick). However, if there is value in TZIX, and if it fits with Misys’ strategy, and if Jeff Margolis wants to partner up again with Malone and Lawrie, could see some action on that front.

  3. Mr. Histalk: I left it out, but this would not be the first time a company where Malone was CFO acquired Trizetto. In fact, the Margolis/Malone relationship goes back to 2000, when Trizetto and IMS annouced a merger. The deal ultimately didn’t pan out, but that is how IMS ended up with 12 million Trizetto shares.

    Legally, the deal was structured so that Trizetto would be the acquirer. The reality was that IMS would have been in control.

  4. First off, there are no CPR staff in Tucson, that was resolved months ago with layoffs both in US and India. All CPR staff are now re-centralized back in Santa Barbara.

    Misys could never get the ball rolling with CPR, the transition to QuadraMed should be seemless. Keith Hagen should be familiar with the product as you indicate, he had his hand in causing many failures at Misys, now he gets a thrid time at bat.

    Misys stepped into an arena that it had no right being in. They never did realize where the cash was coming from. But now they have until October to count backwards from 404 million to 382. Somewhat the same scenario as losing a winning lottery ticket.

  5. This makes the hiring of Mike Etue a bit more confusing. Etue is a hospital guy that had been in charge of customer operations back at SMS and at Eclipsys. I don’t get the move to SVP of Sales for a physician software company in a crowded landscape. Unless…Misys has targeted somebody to acquire…in the hospital vendor space, or the Brits believe that we’ll have a screwed up single payor healthcare system once Billary is elected and want to be out of the HIS business and focus on physician EMR adoption.
    Either way, it never ceases to amaze me how stupid these companies are. No wonder HIT is what it is today. That Holy Grail will never be delivered.

  6. CPR staff do not work in Santa Barbara either. They’re in San Bernardino, all of the ones that are left anyway…

  7. This is a good day. Misys never figured out that the diagnositc users were where the profits came from. They just used them to support the loosing physicain business. Now they will really take a dive. Which they deserve. At the opening of the national meeting Vern didn’t even acknowledge the lab,rad, or pharm users. The president of the hosp user group put on a good face and said Vern didn’t realize that those users were still at the meeing. Misys never saw those users even though they paid his salary. He is only the last of those in

  8. I have watched with much amusement for the last two years as the desert dwellers from Sunquest lament over the “imagined injustices” that have befallen them since Misys bought Sunquest in 2001. During that time I never felt compelled to jump into this fray until now. The ridiculous idea that Sunquest was the only successful or profitable business in the Misys portfolio only proves that the Sunquest long timers have let the desert sun warp their thinking.

    The phyician segment at Misys was a great business with a very healthy client base and an impressive recurring revenue stream when Misys made the acquisition in 1997. Despite the business challenges, the Misys physician products are no less marketable than “flexi-lab”. The difference is that the Misys Raleigh employees have continued to adapt to the realities of the market instead of sitting in Tucson lamenting the fate of their woefully antiquated product.

    God bless Vista Equity Partners. They bought a very good, very neglected product. But sadly, they bought an employee group that is not willing to accept that the heyday is over and that to achieve any semblance of success again, they will have to stop blogging here, be at their desks at 5pm (for a change) and actually create a marketable product.

    If you wish hard enough and click your ruby slippers together, it will be just like it was in 1988.

    Good luck with that. But if all else fails, log on here and blame your new owner. It seems to make you lot feel much better.

  9. I agree DonewifMisys – the physician group has provided their share of the profits. Could it be that some of the issues with Misys had to do with the fact that these two groups were never able to achieve the desired synergy to make things happen? Was each division like a family that had too much sibling rivalry (the answer is yes.) There were some great leaders (Marc Winchester comes to mind) that were visionary enough to know that success required more leveraging of strengths, but, sadly lack of execution on many fronts (including across the pond) led us to where things are today.

  10. DonewifMisys:

    Funny how the Sunquest did *great* with all of those
    sun-warped thinkers, but Misys somehow couldn’t do
    the same. Also funny how the parking lot only started
    emptying early sometime *after* Misys took over.

    It couldn’t be that the fault lay with Misys management
    rather than with the desert-dwellers, could it?

  11. Isn’t Winchester now in the process of building a new business here in the US? It has something to do with diabetes care. Isn’t it another UK backed one?

  12. …for DonewifMisys. Sunquest was never valued for more than the revenue it could produce. The last few years have been 1 big revenue call, cutting every possible expense to make that call. When people left they were not replaced so we circled the wagons tighter and did more with less, improving that revenue call even more. We are lean and mean and have always been ready to go; we were just waiting for some serious leadership with a vision. With a new owner in the wings we now have that. Don’t look behind you because; in fact put your goggles on as you will be eating our dust.

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