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July 26, 2012 News 9 Comments

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7-26-2012 9-40-39 PM

Quality Systems Inc. (NextGen) reports Q2 numbers: revenue up 18%, EPS $0.26 vs. $0.32. The company also eliminates future guidance, apparently burned in this case by impending deals that didn’t close by the expected dates. CEO Steven Plochocki blames the drop in net income on fewer higher-margin software system sales. Shares dropped 33% (Nasdaq’s biggest percentage loser of the day) on the news to their lowest price since November 2008, dropping the company’s market cap to under $1 billion. In the conference call, President Scott Decker said the loss of long-term client HMA was caused by HMA’s lack of resources to roll out its product, and said HMA won’t replace NextGen completely but that HMA wasn’t contributing all that much revenue anyway. The company says it will move more work to India to reduce costs. It also predicts that Meaningful Use Stage 2 and ICD-10 will take out a bunch of its competitors. When asked about pressure on hospital-owned practices to move to competitive products, Scott Decker said he wasn’t worried about Cerner, Siemens, or Meditech, but Epic is “a challenge for us like it is for everybody in the market” that “causes a little bit of pain.” Above is a one-year share price chart, with QSII in blue and the S&P 500 in red.

Reader Comments

7-26-2012 6-56-59 PM

From Winning: “Re: Microsoft. It will sign now business associate agreements with partners for Azure storage and core services (their cloud offering). That means Microsoft will shoulder some of the burden of ensuring HITECH and HIPAA compliance in the cloud. Hosting costs are high for a startup like us since HIPAA requires the database to be logically separated from the Web server, meaning we need at least two servers. That’s not cheap with .NET/MS SQL. The value proposition from a major player like MS Azure is pretty high. I wonder if we’ll see more of this from other vendors?” I appreciate that update. I would have put in a little plug for Winning’s company to return the favor, but I was running too late to ask if that was OK. The topic might make a good Readers Write if he’s inclined to write one. That’s a nice move by Microsoft.

7-26-2012 7-44-44 PM

From Jonathan Grau: “Re: AMIA 2012 Annual Symposium. We’re in Chicago this year from November 3-7.” Jonathan, VP of corporate relations and development for AMIA, keeps me in the loop about their activities. I couldn’t help but notice that five of the seven conference sponsors are also HIStalk sponsors (CAP, FDB, IMO, Philips, and nVoq).

7-26-2012 8-04-07 PM

From IT Director: “Re: Cerner downtime. Just so you know, it lasted about six hours … and you didn’t hear it from me.” According to the purported Cerner communication attached, a Cerner network administrator received an error when trying to update DNS records via the management console, so he or she made the change manually and inadvertently deleted a DNS zone while doing so, an unfortunate change that was then replicated to all servers. Anything using that zone was instantly hosed, and the tools needed to fix the problem were also not available because of the error. They had to restore the file from backup and replicate it manually to all the controllers.

From Doc Down: “Re: Cerner downtime. I’m a doc at a Cerner remote hosted site. We got our first e-mail about a ‘performance problem’ at 12:45 p.m. and the downtime was resolved at 5:35 p.m. In between, we got an e-mail that referred to some sort of DNS issue, but it was a bit confusing to understand what actually transpired. We got one message saying it should be fixed by 4 p.m. then another saying it would be fixed by 5 p.m. We have the read-only product for use during downtimes, but that couldn’t be accessed either. We recently moved our inpatient physician documentation to electronic, so reverting to paper with no access to anything recent was a nightmare. Don’t know anything that could have been done any differently on the hospital end, but it would be nice if Cerner would be transparent and describe to organizations and interested users what really happened as it doesn’t inspire much confidence. Unanticipated things do happen, but I’ve personally been unimpressed by the software or support. Though I have met a few topnotch Cerner folks, most seem fixated on selling us new modules, consulting and programming devices, etc.” Downtime is going to happen despite best intentions and known ramifications, but I’d be concerned that the read-only option, which exists solely for that eventuality, didn’t work.

HIStalk Announcements and Requests

inga_small This week’s HIStalk Practice includes a statement from former e-MDs CEO Michael Stearns regarding his recent firing. Epic, Allscripts, and eClinicalWorks lead other vendors in the number of ambulatory EHR attestations. ONC says the total cost of ownership of an in-house hosted EMR is less that the SaaS option. A Florida ACO uses Craigslist to recruit physicians and offers up to $100,000 a year in shared savings. Julie McGovern of Practice Wise points out a few considerations for practices moving their applications to the cloud. When you pop over to HIStalk Practice, click on an ad or two because you might find a sponsor offering a solution that will make your world better. And sign up for the e-mail updates because it could be the only way I know you care. Thanks for reading.

On the Jobs Board: Manager Systems Development, Database Administrator, Services Implementation Project Manager.

The HIStalk vital signs consist of measurements that you can actually influence: number of readers, number of e-mail subscribers, and the vitality of reader interaction in the form of comments and news tips. That means that you get to control our electronic destiny, which makes you a pretty powerful force with which to reckon (cue some tears-inducing Sarah McLachlan heartfelt warbling to move you to action). Actions that will stave off our eventual demise include (a) signing up for my spam-free e-mail updates, so you’ll be the first to know when I dig up some incredibly juicy industry gossip or random sophomoric humor that I can’t resist sharing; (b) electronically mate with Inga, Dr. Jayne, and me on Facebook, LinkedIn, and all that truck; (c) peruse the fun Resource Center, where you can search and navigate through a bevy of benevolent sponsors who crave your electronic attentions just as much as I do; (d) use the Consulting RFI Blaster to … well, that one’s pretty self-explanatory; (e) get off your figurative couch and out here on the healthcare front lines with us and participate with your comments, insight, or anonymous tips (e-mail works, but so does the nauseatingly green Rumor Report button glaring spitefully from the right side of the page); and (f) play a few rounds of Sponsor Roulette, scrolling the page and randomly clicking the ads to your left to see where you land, assured that it will be among friends since only the cool companies sponsor HIStalk instead of the boring alternatives. Inga, Dr. Jayne, Sara McLachlan, and I appreciate your participation in our continued non-flatlining. Every day we wake up and the page is still displaying is a good day.

Speaking of the three of us working in healthcare day jobs, Dr. Jayne’s healing talents were required for an encore shift in her local hospital’s ED, meaning she didn’t have time to contribute this time around. I suppose saving lives and all that stuff is a good enough excuse to let her slide this time.

Acquisitions, Funding, Business, and Stock

7-26-2012 6-06-14 PM

Compuware releases Q1 numbers: revenue down 2%, EPS $0.05 vs. $0.08, beating consensus earnings expectations of $0.04. Revenue for the company’s Covisint business unit grew 27% to $21 million.

7-26-2012 6-07-17 PM

McKesson announces Q1 numbers: revenue up 3%, adjusted EPS $1.55 vs. $1.27, beating expectations of $1.49. Revenue in Technology Solutions was up 4%, with adjusted operating profit of $109 million.

7-26-2012 6-24-27 PM

Clinithink secures multi-million dollar investments from Finance Wales and existing investors to fund ongoing technology development and establish the company’s US operation.

7-26-2012 6-25-15 PM

Cerner reports Q2 numbers: revenue up 22%, adjusted earnings $0.59 vs. $0.44.

7-26-2012 9-21-03 PM

CPSI announces Q2 results: revenue down 6%, EPS $0.75 vs. $0.72.

7-26-2012 6-26-51 PM

Facebook’s first earnings report wasn’t so hot, with revenue increasing 32% to meet expectations, but growth was the slowest in 18 months and the company doesn’t appear to be monetizing heavily increasing mobile usage very well. Shares dropped 9% Thursday and are down another 11% in after-hours trading Thursday evening. In the mean time, shares in Facebook-dependent game maker Zynga (FarmVille) continue their toilet orbit after a bleak Q2 earnings report, knocking another 40% off the share price and dragging shares down to 70% less than their December IPO price to the embarrassment of idiotic stock pickers who somehow thought Zynga had a real, sustainable business instead of a hyper-annoying fad with a low barrier to entry.

The CEO of HealthStream says the education and HR technology company may move into related healthcare business such as long-term and behavioral care.


7-26-2012 9-45-17 PM

Cedars-Sinai Health System (CA) chooses Health Care DataWorks to provide a clinical data warehouse and analytics solution.

The Commonwealth of Virginia’s Department of Medical Assistance Services awards HMS a contract to provide a customized Medicaid fraud and abuse detection system.

Norton Healthcare (KY) contracts with CSI Healthcare IT to provide 100 resources for the second wave of its Epic activation.


7-26-2012 6-29-04 PM

Healthcare analytics company ArborMetrix appoints former Covisint VP Brett Furst as CEO.

7-26-2012 6-33-44 PM

The Commonwealth Fund, a private healthcare-focused foundation and think tank, names former National Coordinator David Blumenthal MD its next president, effective January 1, 2013. He is chairman of the organization’s Commission on a High Performance Health System. Blumenthal will replace Karen Davis, who announced previously announced plans to step down at the end of the year.

7-26-2012 7-26-35 PM

Luther Nussbaum, retired chairman and CEO of the former First Consulting Group, is elected to the board of consulting firm MedSys Group.

Healthcare billing and payment systems vendor Zepherella names David Bond (A4 Health Systems, Allscripts) as EVP of sales and marketing.

Announcements and Implementations

St. Francis Medical Center (CA) and O’Connor Hospital (CA) go live on iSirona’s device integration solution that connects medical devices to their QuadraMed EMR.

7-26-2012 6-43-06 PM

Transitional care provider Remington Medical Resorts (TX) goes live on HealthMEDX Vision at all of its Texas facilities, including rolling out a paperless environment that allows physicians to work from iPhones or iPads.

7-26-2012 7-07-51 PM

The new Palomar Medical Center (CA) will open next month, a 288-bed, $956 million “hospital of the future” that has been under construction since December 2007. Space was pre-built to allow expansion to twice the number of beds if needed.

In Australia, New South Wales completes the initial phase of the rollout of TeraMedica’s Evercore imaging exchange in 12 hospitals.

Government and Politics

HIMSS proposes language for inclusion in the Democratic and Republican National Committee party platforms in support of HIT to improve healthcare efficiency, quality, and outcomes:

“In order to improve the quality of healthcare for all Americans while reducing costs, the Party will continue its strong support for the rapid, nationwide adoption of Health Information Technology including electronic health records and secure health information exchange capabilities.”


The Ventura County Board of Supervisors (CA) approves an additional $5.75 million for its $41 million Cerner EHR implementation, which is scheduled to be operational at two county hospitals by July 2013

Compared to physicians, physician assistants, APRNs, and RNs spend more time online for professional purposes, use smartphones more during patient consults, and more frequently access pharma or biotech Websites.

A Milwaukee newspaper article notes that Wisconsin hospitals are charging victims of sexual assault up to $1,200 for the cost of collecting evidence to identify and prosecute their attacker. Sometimes insurance pays, sometimes the hospital knows to bill the government fund that was set up to cover the cost, but in some cases the patient ends up getting stuck with the bill.

A Harvard health economist says that 90% of the country’s economic growth over the past 10 years got sucked up by increased healthcare spending, but the CEO of Marshfield Clinic says at least some parts of the Affordable Care Act (though he declined to guess which ones, but IT is mentioned) will eventually slow the increase. As I always say, everybody’s for reducing excess costs as long as they don’t personally have to take a pay cut.

Weird News Andy found this story, in which Mayo Clinic apparently fired a pediatrician who wrote a Arabic blog post advocating female circumcision. Mayo says female genital mutilation not only has no medical justification and thus can’t be performed in its facilities, but is also considered a felony-level child abuse crime in the US.

The University of Missouri School of Medicine will use a $13.3 million HHS grant to create electronic dashboards that will allow physicians to get a quick read on how individual patients or groups of patients with a single condition are being managed. The project has been christened LIGHT2.

Kiplinger’s Personal Finance ranks Madison, WI as the best city for young adults, with UW-Madison and Epic helping push it to the top. Rounding out the Top 5 were Austin, Boston, Washington DC, and Denver.

It really bugs me when PR-seeking hospitals decide to magnanimously waive their bloated, cost-shifted charges for high-profile victims. Three Colorado hospitals say they won’t charge victims of the Dark Knight shootings, some of whom had no medical insurance, for their care. I’m all for generosity, but I like it better then it’s less self-serving and selective. I’d rather they take it out of their executive salaries instead of just pushing the cost onto those who have insurance and less-publicized medical problems. Everybody struggles to pay for their healthcare, and fuzzy accounting like this isn’t helping.

In Canada, Eastern Health fires a nurse for inappropriately accessing and sharing the records of 122 patients. She’s the fifth employee the hospital has terminated for privacy violations so far this year.

Some bored newspaper folks apparently decide to check whether former HHS Secretary (and former lobbyist and current Senate candidate) Tommy Thompson ever had a VeriChip implanted in his arm as he said he would in 2005 when he joined that company’s board. Answer: no. His reason: hospitals didn’t buy the technology to read the chips, so the company tanked. He sure was pitching it hard on Squawk Box back in the day, but he’s a politician after all.

Sponsor Updates

7-26-2012 7-38-14 PM

  • Software Testing Solutions will have an active presence at the Sunquest User Group conference August 6-10 in Scottsdale, AZ. STS will demo Version 4 of its Test Manager product; CEO Jennifer Lyle (above as your HIStalkapalooza co-host in Las Vegas) will conduct an automated testing cost justification session on August 8; and the company will offer its popular Breakfast with the Puppies event on Thursday to collect donations (which the company will match) for Home Fur Good, a Scottsdale-based no-kill shelter.
  • Santa Rosa Consulting is named to Modern Healthcare’s Best Places to Work in Healthcare for 2012.
  • Trustwave and Microsoft partner to support additional Web server platforms, including Microsoft’s Internet Information Services and Nginx.
  • Certify Data Systems earnsMajor Player distinction in IDC Health Insights’ HIE vendor assessments report.
  • Consulting firm ESD (your gracious HIStalkapalooza sponsor last time) earns a Healthcare’s Hottest award recognizing fast-growing established healthcare companies. ESD also was named by Modern Healthcare as one of the Best Places to Work in Healthcare for 2012, the second year in a row.
  • Prognosis participates in this week’s Texas Healthcare Trustees Annual Conference in San Antonio.
  • NextGate’s continued growth requires a second move into larger space in Monrovia, PA.
  • The Huntzinger Management Group reports significant growth in 2012 as it helps organizations address regulatory compliance issues, changing reimbursement models, and IT demands.
  • MedAssets heads to San Antonio next month for the AHRMM 12th Annual Conference..
  • Wellcentive introduces Provider Benchmarking capabilities within its Advance Outcomes Manager solution.
  • Macadamian CEO Frederic Boulanger is selected as a Quebec finalist for Ernst & Young’s 2012 Entrepreneur of the Year in the Technology and Communications category.
  • FTI Consulting signs a five-year licensing agreement with Streamline Health for its OpportunityAnyWare business analytics and patient financial services solutions.
  • NextGen Healthcare selects Health Language to provide standardized terminologies within its ambulatory product suite.
  • Culbert Healthcare Solutions publishes a white paper on centralizing patient access and revenue cycle functions.


Mr. H, Inga, Dr. Jayne, Dr. Gregg.

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Currently there are "9 comments" on this Article:

  1. Re: Quality Systems comment following earnings report: “The company says it will move more work to India to reduce costs.” Having served in two corporations that routinely attempted this maneuver with decidedly mixed results, it is frustrating to me that Wall Street still buys “ship it overseas” as best practice. In my experience, lines of control suffer, communication suffers, and in the end the customer suffers. I wonder how a NextGen shop feels reading this news. Let’s not forget that one company’s improved margins come at the expense of supporting societies that generally do not offer the same opportunities or protections as the U.S. Offshoring validates lower standards of living and disequitable societies. I also wonder what it would do to US Unemployment if some significant percentage of IT Jobs that have been outsourced returned here. Although my company is relatively small, we have made a strategic decision to keep all of the management, administration and monitoring of our fast-growing cloud services in the U.S. I hope we can get a trend started.

  2. The Aurora tragedy is so sad and to see it marketed by pseudo-news channels and used in political campaigning is so sad. I’d be infuriated if I were part of the community.

    Sometimes there just isn’t a good explanation for what a sick mind does. Not in Norway, not in Colorado. Not where they have strict gun laws, not where they don’t. Not where they have great community mental health services and not where they don’t.

    Mental health and pathological human behavior have been with us since the dawn of time and will be with us till the lights go out.

    Condolences you who have suffered loss and also to those of you who have had to deal with the aftermath.

  3. Cerner’s quarterly numbers were pretty impressive, would have thought there would have been some comment about those figures…there was plenty about the downtime. They’re doing something right.

  4. Chernew is one of the smarter people in health care and one person I love to hear speak on healthcare. Healthcare costs are already putting real pressure across the boards on state and local budgets especially for the cost of retirement health benefits for which almost no government authority in the US has begun to set adequate provisions for in the future.

    Funny though how the US Post office though is being forced in Congress though to magically setting aside 75-years worth of projected retirement spending to force an artificial crisis (no private company in the US has to do this nor any gov’t authority), prevent the US Post Office from closing branches and distribution centers, and then increasing calls for ‘privatizing it’ so that prime real estate which the US Post office occupies in downtown in the US can be sold-off at fire-sale prices and leased out by private money with an instant return of 50-100% on the sale price.

  5. HIPAA requires a server to be distinct from its database? I’m pretty positive that it doesn’t, although somebody’s interpretation of it might say that.

  6. Cerner tells MU that their availability target is 99.999%. They could get there with ZERO downtime in a little over 70 years!

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