Home » Time Capsule » Currently Reading:

Time Capsule: Misys Lesson: Mama, Don’t Let Your Vendors Grow Up to Be Conglomerates

October 28, 2011 Time Capsule No Comments

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in October 2006.

Misys Lesson: Mama, Don’t Let Your Vendors Grow Up to Be Conglomerates
By Mr. HIStalk

mrhmedium

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? What’s that smell? Shareholder torches burning outside the castle door!

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 in which 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 Web site, “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 unemotional as an accountant’s nimble calculator fingers determining the net present value of three dinners with Myra the secretary vs. the potential passion-filled payout. At least they were honest.

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 are we learning from their troubles?

  • 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 more prospective bidders.
  • Conglomerates often reduce corporate value unless they can harness some elusive benefit in supply chain management, reproducible management excellence, or marketing, which few can.
  • Conglomerates are fine until you want to sell to someone else who doesn’t share your unconditional love for some of the uglier 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. Long-term planning goes out the corporate window.
  • Healthcare IT customers carry little weight with toe-dippers. Are GE brass more worried about the flatlining 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, Misys publicly labeled its healthcare unit as underperforming, which isn’t a highly valued resume bullet for the new owners, so you might want to beat the traffic out. 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.



HIStalk Featured Sponsors

     







Founding Sponsors


 

Platinum Sponsors


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold Sponsors


 

 

 

 

 

 

 

 

 

 

 

Reader Comments

  • Elizabeth H. H. Holmes: Last provider to produce their challenge coin gets to explain that COVID is real, and yes they should have been vaccinat...
  • IANAL: If the insurance company maintains the same standard of what is medically necessary, then won’t eliminating prior auth...
  • JustAnIntern: How dense do you have to be as an administrative group to send out a "commemorative coin" to staff, knowing there is sev...
  • Sheryl Zarozny: Don Great article and as a former IDX customer it was great to work with you....
  • Brian Too: I believe that Cerner at Intermountain Healthcare was considered a success, no? It is my impression and assumption that...

Sponsor Quick Links