Many folks probably heard of PM/EMR vendor iMedica when Misys announced that it had licensed iMedica’s product and would sell it under the Misys MyWay nameplate. That put the company on the map, but it seems go be gaining visibility on its own. CEO Michael Nissenbaum has the reputation for being able to deliver and for being a straight shooter, so when a reader suggested interviewing him, I asked and he agreed.
Let’s start with a little bit about yourself and about iMedica.
I’ve been in the industry for 10 years, going back to my days at Millbrook Corporation back in 1998. They had a great product, but it had been driven off the cliff financially. It took about three to six months to put it back together, and then we enjoyed five consecutive years of 85% compounded revenue growth, profitability, best-of-breed selection in the marketplace.
The end of that story was GE came in and offered my directors a price. They were interested in exiting. They made good money. It migrated the Millbrook team to GE. Most of us stayed there for a year, year and a half, and then started looking around. GE was not the entrepreneurial environment that we had at Millbrook. GE had a different culture than we had.
I was contacted by two investors who had a significant equity interest in the iMedica Corporation. iMedica, at that time in 2004, was already a six-year-old company. Charlie Koo, the founder, had, during his PhD dissertation, convinced 18 physicians at Stanford to, instead of building a template-driven EHR, to build a chief complaint-driven EHR. Those Stanford physicians compiled about 1,000 chief complaints and then associated 400,000 clinical terms with those complaints. That provided the unique speed into the application.
Charlie and his team built the product out for EHR. It was very fast. It had the replication features which are now the patient record to cache onto the tablet. Not only the single record, but you can determine every record for everyone I’ve seen in the last 90 days and will see in the next 30. You set the parameter. It gave the physician incredible mobility on the tablet PC.
Charlie’s target market, though, was the 50-doctor and larger groups. As you and I both know, two things are required to claim that market. The first is the capital to sustain yourself through the committees, the consultants, and the “we’re not sure if we want to do anything right now” decisions. The second is having another 50-doctor group so that you have a reference account.
Charlie was able to get one account up and running, a 62-doctor practice in California, but it was late in the game and he ran out of money as well. Good product, good technology – at least the investors saw that. They decided to look around for a different management team, which got to me.
I had some individuals take a look at it on my behalf. I’m not technologist; I’m a finance guy. They came back and said, “It’s Microsoft-based.” They thought it had a lot of potential. On June 13, 2004, I came over to iMedica and was followed over the ensuing months by some others who joined me from Millbrook and at GE: Neil Simon, Daniel Popp, Lonnie Cordell.
We were very fortunate that, in September 2004, literally on our doorstep, Sanofi Aventis wanted to get out of the practice management business. They had a team of developers right there in San Jose. We were in Mountain View, California at the time, which is just a stone’s throw away. They were willing to give us the code if we would just support their existing client base, which I think were eight practices. So it wasn’t any type of bonanza.
So, all of a sudden, we had an EHR team and a PM team and were able to begin the integration of those products into a single database application offering both PM and EHR in a .NET environment. As any other software development goes, the first 90% of the time, the last 10% took the other 90% of the time. We found ourselves about a year behind in getting the product to market from our original date.
We came to market and the company we took over, iMedica, had, I think, 12 clients. Today we have well over 300 practices ranging from single doc to over 62; from single sites to over 17 sites; multiple specialities. The only thing we really don’t do are oncology and ophthalmology, but everything else is in our portfolio. We’ve continue to grow over the last three years at over 100% per year.
So you joined iMedica and they had the existing EHR product?
They had an EHR engine. It was a great documentation engine, but there were other parts of the EHR product that weren’t in the product. It was an incomplete EHR, at least when you look backwards from today. At the time it was pretty complete, but as we are seeing with CCHIT and other requirements in the industry … things that we didn’t even think are required by the EHR and we now have in the application.
Why do you think Misys decided to license your product and how to you think that decision has worked out for them so far?
They represented to us that they decided to license our product because of the underlying technological architecture upon which our product is built. For Misys, they looked around in this marketplace and nobody had the structure that was as flexible and as strong as what our development team had built. They believed they could take that and continue to leverage it into their market. So, that was the differentiator up front.
Misys is many multiples the size of iMedica, so the obvious question would be why wouldn’t they build their own? Usually you buy someone else’s technology because the market won’t wait for you or you don’t have the capability.
Their EHR has some traction in the marketplace, but it’s not a single database application with either their Tiger or Vision application. So yes, they saw the time-to-market being a hurdle in front of them if they tried to build.
Second, they had purchased Amicore. They bought the remnants of that product, if I recall correctly, in 2005-6. They were supposed to come to market in late 2006 or 2007 with this single database application. They missed that date. Just anecdotally, from what I heard, it was going to take a significantly longer period that they anticipated to bring that product to market. Then they had the change of management and I’m sure the new management had different objectives and different strategies.
I know there was some equity consideration as part of your licensing arrangement, but I think most people said, "Why didn’t Misys just buy the company outright?"
We weren’t for sale outright. We had no desire to sell the company at the time.
Everything is for sale at the right price and Misys certainly has the deep pockets.
They do. Again, we think our value will continue to accrete. Again, we’re growing at 100%+ per year. We will continue to grow 100%+ this year even without any Misys involvement. With the Misys involvement, the numbers go up considerably.
Why didn’t they buy us at the time? At Millbrook, we think we left money on the table by selling too early. And while we have no plans of selling presently, when the time is right, we want to make sure that we get full value for our investors. They’ve been very good to us.
Is there any agreement that gives them the right to purchase more of the company?
There’s absolutely no agreement which allows them to buy any more of the company in any preferred mode. If we went out to raise capital at any time, they would have the same rights as any other shareholder.
Is the version they sell under the MyWay nameplate the same product or did they fork it off?
It’s the same source code. The source code is ours. If you go to the About button on Misys MyWay, you’ll see iMedica.
Then what value is Misys adding, other than they’ve got a big footprint and a lot of sales people?
They claim they have 110,000 physicians. They claim 85% of those do not have an EMR. That’s a heck of a business right now, going back and getting your existing installed base captured with an EMR. I don’t think any of us in the business have 85,000 EHR sites and or EHR physicians today.
Wasn’t that the same argument for their hooking up with Allscripts? Now they’ve got products from two competitors confusing their own customer base. How do you think it will shake out?
I haven’t been privy to the conversations in Raleigh. They are having discussions between Misys and Allscripts. We’ve been talked to once or twice. The MyWay product has been exhibited at their analyst day in Raleigh and got a great reception. They continue to sell it aggressively and we think it’s part of the portfolio going forward.
How it plays into the Allscripts portfolio, I really don’t know. I heard that they were supposed to bring an application to market and that’s, anecdotally, in the fall on a single database. They still had their challenges with Version 11 on their TouchWorks, their HealthMatics product. It looks like a single database is really still two different products integrated together.
You’re fully competing with both companies and will continue to do so with the combined company?
Tooth and nail until somebody notifies me otherwise.
Why would prospects buy the product from Misys instead of the company that develops and supports it?
You’d probably have to ask the few that I know that have bought it from Misys. Usually it’s continuity. They have an existing Misys contract and maybe Misys is having special deals. When we go toe-to-toe with them, we’ve been very aggressive, they‘ve been very aggressive, and fortunately, knock on wood, we’ve prevailed and we plan to continue doing so, even in light of the Allscripts acquisition.
Surely Misys will have to make a bunch of sales to get back the millions of dollars they paid.
I think they are well on their way of reaching the numbers they need. From all reports we’ve seen and heard, they continue to do very well with Misys MyWay and the product in the marketplace. They had their fiscal year end. I read the press release. They talked nicely about the Misys traction which they received. I don’t have the figures or number of units and other distribution channels. It seems like they’re meeting their plans.
Were you the only company they approached, or are there others they would have struck a deal with?
We understand that they approached a great number prior to coming to see us. Whether they did as deep a dive as they did in our house, I’m not sure, but we had Misys people camped out for the better art of a week or week and a half.
I promise that’s the end of the Misys discussion. We had to get that out of the way.
It’s not an issue. I’m very comfortable speaking about it.
In the KLAS reports, the iMedica PRM product is not listed. Why is that and does it impact your marketing?
Sure, it impacts our marketing. Our PRM 2008 product went generally available in April. It’s the product we’ll come to KLAS with in December. We did not have it installed in enough locations in time to qualify for the June book. You need 14 sites for each different group in KLAS and we were just getting all those up and running and getting their interfaces tuned.
We wanted to have, not just 14 in each … I’d like to have enough in each that it gives us a representative sample, because you only get the first level of confidence at 14. By August 15, every one of our practices will be on the newest version. We’re migrating practices every night now.
It will be the first time since we took over that we’re going to have all practices singing off the same song sheet with regard to versions. That’s going to give us the ability to address issues more effectively; to bring featuring functions to market that will enhance their environments. Up until this point, there were practices still sitting on the PRM 2006, 2007, and 2008 release candidate. That was a really hard environment to bring to KLAS. So now we’re going to have one product in a universe that will be highly satisfied. We think we can be a very competitive in KLAS.
I meant to ask you about the number of employees.
We have just about 105 employees today. The bulk of them are in Carrollton, Texas, I would say 55 to 60. The rest are sales people and training personnel and they are scattered geographically around the United Sates. If anybody is looking to come to Carrollton, Texas in a support role or to become a trainer, we’re looking for them. That’s a plug. Can they send resumes to HIStalk?
Sure, why not? We’ll hook you up.
I think we actually found a trainer recently through you. You didn’t know you had that feature, did you?
We continue to grow. We continue to be selective as to who we bring on board. Interestingly enough, about 40 ex-Millbrook people have joined us around the United States in development, implementation, and sales. Somebody actually said we’re putting the band back together, but this time we’re playing a different tune – EHR and PM.
This is slightly off topic but I can’t resist asking the question. You’re someone who was entrepreneurial and went to GE. Now you’re back out of that environment. For you and those 40 people who bailed, what made you not want to stick around?
You know, that has been raised to us a number of times. While GE is a phenomenal institution, many of us felt that we spent more time fighting internally than we did fighting our competitors. Whether it was resources, product direction, technologies, getting contracts done – the bars that were set internally by the different functions sometimes made it more difficult to do work internally than getting done internally than getting contracts done externally.
In an entrepreneurial environment, everybody is focused on “Let’s take this to the next level.” You have payroll to make; you have commitments. There’s just a nice, healthy tension in an entrepreneurial environment, whereas at GE, there would be people who could live in that house for an extremely long time not having to make a payroll; not having to make the commitments; and it made it very frustrating for those of us that came out of the entrepreneurial environment.
I always say that GE is the place where good products go to die. Would you say that, in general, your direction with the product would have been different from theirs?
You know, that’s five or six years of hindsight, so I really don’t know. We had been looking at a skunkworks on EHR. At the time that we sold Millbrook, we had over 50 partners and 18 of them were EHRs. It would have been very easy to reach out and embrace one of them to come to a point where we are today, but that’s speculative at best.
Even at GE, the product and the market continued to grow, so we had a very viable business. I think if you’re in a nice trajectory, don’t walk away from it. Again, it was more the board that did this than anyone on the management team.
So we’re enjoying it. The company comes to work each day with a passion of getting out a great product. We maintain our Millbrook mantras of never letting a physician office fail and hugging the physician — God knows they’re being beaten up by everybody else in the market — and to make sure at the end of the day they have an excellent experience.
I think everybody recognizes that the EHR part of iMedica is really strong. Would you say the practice management aspect of your system is equally competitive?
You know, that’s a question that’s been raised over the last 45 days. Up until our 2008 release, our 2007 product lagged, I would say, the same level performance of performance as our EHR. But with our 2008 product, we will go toe to toe with anybody in the industry on the PM side. In fact, we will bury most of them.
The product has a tremendous report portfolio. It has great claims processing. My PM is doing what the PM is supposed to you. It has front-end claims and demographic activity, scanner capability. There are a few features that we’re going to continue to add, but as we’ve always said about our product, it’s a work in progress. It’ll never be done. We will have an upgrade coming out during the third quarter of this year, a service pack, and we’re already working on the 2009 product as we speak, which will have additional features and functionality and meet the CCHIT 2008 requirements.
Who would you say your strongest competitors are?
I would say we probably are looking at three significant competitors out there, the first being the Allscripts portfolio. Mainly on the lower end, which I think is the HealthMatics product. We run into them regularly. We have eClinicalWorks, although over the last four months, we have not seen them quite as much as we had previously. And then we see e-MDs in certain geographies.
Sometimes I list competitors and ask for some adjectives. Would you be willing to do that?
I’m not going to sit here and diss someone, but I’ll be glad to give it my best shot.
One that you probably don’t run across too often – Epic.
We don’t run across Epic too often. We see them in some environments where physicians have been offered Epic by a hospital. The interesting thing is that they are perceived as being a bit kludgy for a small physician office — overkill. That’s not surprising, because when you try to bring a large practice application down to the small market, sometimes there’s too much in it and it’s very difficult to maneuver with that product.
One of the marketing initiatives we have going on right now is called “Take a Tablet.” It’s different from anything else in the market. When you take a demonstration of our product, we put a tablet in your hand for a week, load it with the application; load it with 200 patients in a demo database, and give you an hour and a half of training and say, “Go play and here’s a number you can call if you have questions.” The application is so intuitive and the physicians get it so fast that they can look at an Epic, which is rather cumbersome for them, and with the nimbleness and the ease of use of our application, they tend to migrate more to ours.
I want to ask you a question about that a little bit later. What about Sage?
I really haven’t worked against them. Sage is the old Medical Manager. They have a tremendous installed base. The one deal I remember losing against them was because the nurses like the colors on the vitals screen. I’m going to have a hard time fighting that, but I really don’t know too much about their features and functions and haven’t seen them go head to head against us.
This might be a tough one: GE.
GE, we don’t really see that much in the EHR any more. We have started to replace them on the PM. We’re thinking that there’s an opportunity there for us. I don’t think GE has taken care of their customers to the extent that we’re able to.
And next on my list was Misys, but let’s separate that out as the non-MyWay Misys.
Well, I’m not sure what the non-MyWay Misys is. I know they just announced a big deal where they had their EHR and their non-MyWay EHR accepted at a very large practice. But I haven’t seen anybody buying Vision and Tiger lately. They’re buying MyWay.
What about Allscripts?
Allscripts is tough. They have a nice portfolio of products and they do a great job of marketing it. We think, on a functional basis, we can compete with them, but they are tough in the sandbox.
David Winn has done a great job of putting that company together over the last few years. They’re tough. They have a good product. I don’t think they have as big a footprint, although David is very imaginative and a good leader. We go toe-to-toe with them. Sometimes we win; sometimes we don’t.
What about eClinicalWorks?
They were tough early on. We’ve understood what they’re selling, how they’re selling it, to whom they’re selling it. They’re formidable, but I think when physicians drill down feature by feature; when they understand what they’re getting and what they’re going to be required to get, I think our total cost of ownership is equal to theirs and I think our product dynamic is better than theirs.
What about athenahealth?
We’ve only come up against athena once or twice. I’m an accountant by trade, a CPA. I find in a small practice with what they charge, it’s almost irrational to go with them. If you look at the total cost of ownership over five years, the physician could probably pay for his kids’ college education. If you look at the cost between our application and athena, obviously their business model is working well in some of the hospital environments, but I think long term, we will continue to grow our company and be able to go toe-to-toe with them.
We don’t see a whole lot of NextGen. We’re in the 1-to-10 market, primarily. NextGen, even though they play down there form time to time, really isn’t that big of a footprint and they’ve said that publicly. They do well in the larger practices and more sophisticated enterprise situations.
They’ve built a hell of a product and they’re a tough competitor. They are very expensive. If we can get to a practice to look at what we have versus what they’re looking at with NextGen, and you look at a total cost of ownership, the ability to modify our application on the fly versus requiring programming, help for templates and other items with the NextGens and the GEs of the world, I think we walk away looking very good.
Some of those that are very competitive on price. I’m thinking specifically of eClinicalWorks and e-MDs. Is it tough to compete with them on price?
I don’t think it’s tough. I mean, we’re all in the same ballpark. I can’t remember losing a deal because of price. You usually you lose a deal because of features and functions.
The market seems to be polarizing around two extremes, the doc buying a simple, functional system with his own money and hoping not to kill productivity, vs. the hospitals who will provide the systems, but who pick big, traditional applications. Will that continue?
I see a cycle that’s been in healthcare for years. Right now, it’s hospitals providing software to physicians under the Stark exemption. A year from now, when we have a new administration, God knows what the new rules are going to be. You and I both have seen it. We have seen centralization and de-centralization.
I think in our market, which is the 1-10 physician group, those physicians realize that owning their patient records, being able to touch that patient record on their server, is the biggest asset they have and that’s their livelihood. To stick it at or through a hospital is problematic. It could compromise their existence and, long term, bring their livelihood into jeopardy.
I think physicians are more independent than that. They’re seeing that. Hardware has come down so much and is so easy to use that you can stick a server in a closet, essentially. You don’t need an IT department when you’ve got five or six physicians. The only thing you probably need to do is change the tape once a day. So I don’t know whether that division continues, but I’d be surprised if we didn’t see something in the next 24 months to turn it around.
The New England Journal of Medicine article reinforced what everyone already knew, that physicians aren’t using EMRs. What will it take to get them to?
I can only attack this from two sides. Putting my CPA hat on, for a physician who wants it, it’s not an expense, it’s an investment. Yes, it’s disruptive. I like to tell physicians, “Go home tonight. Turn off the lights in your bathroom. Stand on one leg and brush your teeth with your left hand. That’s what it’s going to be like using EHR for the first 20 days. It’s doing something differently that you’ve done for the last 20 years, but you will come around to it.”
We have physicians older than 60 who have adopted and become the leaders in their practice on our applications. So it’s disruptive, but once you get through that disruption, it makes your life better. And there are really economic benefits to the practice, whether it’s PQRI or whether it’s higher average reimbursements because you’re getting higher E&M scores. At least in our system, we score out the E&M points. We do a recommendation of the level visit and all the physician has to do is concur and it’s supported. We’ve repeatedly seen throughout our installed base a significantly high single-digit increase in revenue per average visit.
You add PQRI to that, you add health and maintenance reminders that are established in the clinical environment, but then go to the front desk at the time of scheduling. If I’m calling in, I think I have a sore throat, and it comes up that I have not had my PSA in a year, it reminds me to schedule my PSA at the same time. That creates more revenue opportunities for the office.
You add those together, those are the hard dollars based on revenue streams. You suddenly aren’t looking for charts. I was at a practice in Baltimore who said 60 to 70% of one head count was utilized looking for charts in a five-doctor group. That’s insane. That goes away. So the economics very much are there.
People think of electronic medical records as something you just have or you don’t, but products obviously differ. What differentiates them today and what will that be five years from now?
This goes to the previous question: what is going to make life easier for a physician? It’s the ability to use an EHR to the extent they want. In that New England Journal article, it was interesting to see that some physician use it for documenting history; some use it for e-prescribing; some use it for orders.
One of the features we are bringing to market is, in fact, the ability to structure the EHR to the extent that the individual physician in a practice wants to use it. If I don’t want to do the histories or the physical exams on the EHRs but want to continue to do it by paper, I can do that, but I’ll do the labs, the health maintenance, the prescribing, the follow-up, all on the EHR system. I don’t think any of us to date have been terribly flexible to the requirements of the physician. I think we’re going to be taking a large step very shortly in that direction.
Could products could be improved to give physicians more information as opposed to capturing more information from them?
I think it’s very important. I don’t how familiar you are with our EHR, but it’s highly customizable, starting out with the one-page summary that the physician looks at before going into a room. There are many fields on it, but they set the hierarchy and they set what they want to see. It’s by physician, care team, or practice, depending on rights. That allows individual physicians to modify the entire knowledge base. It’s not template-driven.
This is what’s different. You can modify in four or five key strokes in about 8-10 seconds virtually anything in our system and therefore customize it to your needs. Up front, we put together common problem palettes. We have adaptive learning, so that once a physician sees a bronchitis patient; if they see them again it will say, “This is what you’ve done for bronchitis in the past.” The adaptive learning continues to grow and it becomes dynamic with the physicians’ use.
I think too many of the EHRs out there, as you said, are too rigidized in templates of, “This is what you have to do and this is how you have to do it.” And if a patient walks out the door and sticks there head back in and says, “By the way, I was playing softball this weekend I heard a pop in my elbow” after you’ve seen them for an upper respiratory infection, you suddenly have to scramble and start the examination all over again.
But when you’re chief complaint-driven, you just add the chief complaint and it will pull through all the pertinent items for a sore elbow. Again, we need to adapt the applications to the physician’s reality as opposed to expecting the physicians to stick themselves inside of the template. These guys are thinkers. They went to med school to become thinkers.
You emphasize in your marketing material that physicians don’t have to put a computer and monitor between themselves and the patient. What are your thoughts on that?
Our application was designed primarily for a tablet. There are no double clicks, there are no right clicks – it’s all tablet-driven. So our physicians do some of the work in the exam room and then, as any other physician, when it’s done, walk out and finish the note off to the side.
I know, from my personal experience, last time I saw my physician, she had three inches of paper sitting on her lap and while she’s talking to me. She’s leafing through 20 years’ of paper. How that is different from sitting down looking at a computer screen or a tablet? We may not like it because its not a personal and as warm as paper, but it’s the same thing.
That leads to an interesting question. Your physician doesn’t use electronic medical records, yet you still see that physician. How strongly should someone consider whether or not their own physician uses EMRs?
My physician’s practice purchased GE’s medical record before we had a product to show them. It has taken over three years for them to implement this application. When they implemented it, it lasted two weeks and then they were back on paper in her practice. So I didn’t have a chance to get into that one. I may have a chance, depending on GE’s future success or lack thereof.
Let’s talk about the Take a Tablet test drive program. What’s the response to that and how many folks make a decision based on that one-week trial?
It’s been phenomenal. It was predicated on the fact that we had about eight physicians in the last year that looked at us and said, ‘If I could try this, I could probably give you an answer.” Of the eight that tried it, seven of them bought it.
We were able to work a promotional deal with Fujitsu. Remember, our application is fully functional on a tablet because of the caching mechanism. This is not a partial; it’s not different application; it is the exact same application when you buy the program.
What we did is we put it out there with our demo database and we teach them how to chart. If they want to chart another 1,000 patients, we warn them not to do real patients because of HIPAA considerations. But if they just want to play and create patients, it can stand alone for the physician.
One of the beauties of that is our physicians are able to take their tablet with them — whether it’s to a nursing home, to the hospital, or anywhere else — and document the full patient encounter. Take a Tablet is nothing more than an extension of that. We’ve given them skeletal training, an hour and a half to two hours, and they get it in that time frame.
I’ve seen old physicians grab tablets out of our salespeople’s hands during demonstrations saying, “I can do this” and begin to document. It’s highly intuitive; it follows logic which they were taught in med school; it’s easily modifiable; and when they look at it and play with it, they adapt to it very quickly.
We have quite a few machines in the field. We have a waiting list for our machines and we expect it to continue to see success through this promotion.
What are your goals for the company for the next five years?
We just want to continue to grow this company and develop a world class product. We were able to do it at Millbrook with practice management. We were able to do it under the radar against 4,500 competitors. We continue to do it here. We have the resources. We’ve been able to attract great talent and we continue to attract talent. We think that we will evolve to be the market leader in the single database EMR space.
You go to work everyday, you do the best you can, and you hope somebody takes notice. We got some traction and as long as it keeps growing, I’m happy and so are my investors. They have a medical background. They’re not in this just for, “Let’s make a dollar.” I hate to use the words, but they don’t need it.
They’ve been very active since the 1970s in enhancing the quality of healthcare in the United States, so this is not something new for them. They see the ability to put a great EMR in the marketplace that enables the physician, empowers the physician, and allows then to practice better medicine. It’s their life’s work. It’s not just, “This is another investment we can make a dollar on.” Having that type of philosophy behind you allows you to do the right thing as opposed to the expedient thing.