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Monday Morning Update 11/9/15

November 7, 2015 News 9 Comments

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Sheldon Razin, who founded Quality Systems, Inc. (NextGen) and has served as the company’s board chair for 41 years, retires. He will be replaced by board member Jeffrey Margolis, who is also chairman and CEO of Welltok and the founder of TriZetto.

Razin’s first QSI retirement came in 2000, when he resigned his president and CEO roles as a result of longstanding power struggle with activist shareholder Ahmed Hussein. Hussein resigned his own board position in 2013 with a parting shot in publicly announcing that Razin’s board involvement was damaging the company. QSII shares are trading at less than half their 2010 price and about the same as their value in mid-2005. Razin holds shares worth $150 million.

Reader Comments


From PM_From_Haities: “Re: Allscripts’ quarterly results. Don’t fall for anything less than standard accounting, which shows the company lost money in Q3. See here – no one ever adjusts EPS down.” I’ve always been torn by whether to report GAAP or adjusted earnings, but leaned toward the latter only because the big investment firms seem to favor excluding supposed one-time events that are under the company’s control such as stock compensation and restructuring costs. Allscripts turned its most recent quarter’s $5 million GAAP loss into a $25 million non-GAAP gain; the company hasn’t reported a GAAP profit since September 2012. The article eloquently describes why CEOs love less-stringent accounting measures that are similar to the “our patients are sicker” excuses that hospitals embrace in explaining objectively measured but unimpressive outcomes:

Insofar as CEOs and CFOs understand their job to be upholding the fragile psychological state of their shareholders by managing earnings in an emotionally supportive way, GAAP makes their jobs harder by sometimes requiring firms to issue financial statements that are not uplifting. But companies have a response. Because GAAP rules must cover a broad variety of circumstances, firms can usually make the argument that GAAP fails to comprehend relevant complexities. Everyone is special, especially when they miss earnings estimates.


From Lawn Dart Trauma: “Re: Main Line Health. Word is they’ve chosen Epic. They’ve always been Siemens – I’m surprised Cerner wasn’t able to keep them in the fold.” Unverified.

From I’ll Show You Mine If You Show Me Yours: “Re: Epic. I’m a director at a customer hospital. Our analysts are getting calls from Epic’s support representatives asking for our hospital’s operating margin. A friend of mine at Epic told me that Judy asked employees to get this information for all Epic customers. I suspect they’re trying to assess if there’s financial trouble at other Epic sites in the way of some recent news reports. It’s frustrating since the general sense I get from colleagues is that development and service of Epic’s billing applications have atrophied greatly with the outsized focus they’ve had on clinical applications and when Epic is opaque about how it spends our money. The slow reaction times in the past few years is galling when I go to UGM and see where most of the money has been spent. I enjoy the show one day a year in Deep Space, but the quality of the other 364 days is suffering.” Unverified.

HIStalk Announcements and Requests


It was a 60-40 split on whether customers or patients would be impressed with the respondent’s employer if they had inside information. New poll to your right or here: is the impact of private equity and venture capital firms on the health IT industry positive or negative?


Ms. W. from Texas was so excited to hear that reader donations had funded her DonorsChoose grant request for electronic quiz tools and math activity stations that she immediately emailed, “I cannot express the excitement and happiness that has consumed me. When I saw the email that said ‘funded,’ my eyes began to water. As a classroom teacher, I saw the struggles and have come out of pocket for so many other projects. It hurt that this was something I couldn’t provide them with. Then we were blessed by you. Your generosity will help so many students better grasp the concept of math.” Meanwhile, Mrs. S in Colorado says her fifth graders vie for the chance to use the math games and materials we provided, sending the photo above.

A reader who wishes to remain anonymous donated $500 to my DonorsChoose project, asking that I fund elementary/pre-school science and math classes. I applied various sources of matching money, including from my anonymous vendor executive, to fully fund these grant requests:

  • Two Amazon Fire HD Kids Edition tablets for Ms. Torres’ pre-K class in Dallas, TX.
  • Five physics STEM kits for Ms. Owens’ elementary school class in Indianapolis, IN.
  • Math manipulatives for Mrs. Johnson’s elementary school class in Tulsa, OK.
  • Four Chromebooks for Mr. Wild’s high school math classes in Kealakekua, HI (I deviated a bit from the donor’s wishes in choosing a high school project because available matching money made the cost nearly nothing).
  • Two refurbished iPad Minis for Ms. Desai’s elementary school class in Alvin, TX.
  • Hands-on STEM learning tools for Ms. Lam’s first grade class in San Francisco, CA.

Thanks to the following sponsors, new and renewing, that recently supported HIStalk, HIStalk Practice, and HIStalk Connect. Click a logo for more information.


Last Week’s Most Interesting News

  • MedAssets will be acquired for $2.7 billion by Pamplona Capital Management, which will divest the company’s group purchasing and consulting business and combine the revenue cycle segment with Precyse, another of its holdings.
  • Cerner’s quarterly report meets earnings expectations but falls short on revenue.
  • Meditech’s quarterly report shows the continuation of an ongoing slide in revenue and profit, with services rather than product sales making up an ever-greater percentage of total revenue.
  • Francisco Partners sells it Aesynt pharmacy robotics business to Omnicell for $275 million just two years after acquiring it from McKesson.
  • Quality Systems announces that it will acquire cloud EHR vendor HealthFusion for up to $190 million.


November 11 (Wednesday) 2:00 ET. “Trouble Upstream: The Underinsured and Cash Flow Challenges.” Sponsored by TransUnion. Presenter: Jonathan Wiik, principal consultant, TransUnion Healthcare. The average person spends nearly $15,000 per year on healthcare as deductibles keep rising. Providers must educate their patients on plan costs and benefits while controlling their own collection costs by using estimation tools, propensity-to-pay analytics, and point-of-sale collections. This webinar will highlight industry trends in managing underinsured patients and will describe ways to match patients to appropriate funding.

November 12 (Thursday) 1 :00 ET. “Top Predictions for Population Health Management in 2016 and Beyond.” Sponsored by Medecision. Presenters: Tobias C. Samo, MD, FACP, FHIMSS, CMIO, Medecision; Laura Kanov, BS, RRT, MBA, SVP of care delivery organization solutions, Medecision. With all the noise and hype around population health management, the presenters will share their predictions for 2016 and their insight into meeting the mounting pressures of value-based reimbursement and the tools and technology needed to manage care delivery.

November 18 (Wednesday) 2:00 ET. “Making VDI Secure and Simple for Healthcare.” Sponsored by Park Place International. Presenters: James Millington, group product line marketing manager, VMware; Erick Marshall, senior systems engineer of virtual desktop infrastructure, Park Place International. Deployment of a virtual solution can optimize the experience of clinician users. Attendees will learn how to address the evolving demands of security and mobility in clinician workflow to improve the quality of care.

Contact Lorre for webinar services. Past webinars are on our HIStalk webinars YouTube channel.

Acquisitions, Funding, Business, and Stock


From the Allscripts earnings call:

  • Recurring revenue made up 75 percent of the company’s total revenue.
  • Non-GAAP earnings removed $9.9 million in expenses for severance, work on the company’s unsuccessful DoD bid, and settlement of outstanding litigation.
  • GAAP earnings were reduced by $1.4 million to account for the company’s equity investment in NantHealth.
  • The company says that inpatient EHR competitors who are leaving the market (presumably McKesson and the former Siemens) give Allscripts more opportunities.
  • President and CEO Paul Black says TouchWorks and Sunrise will begin integration with NantHealth’s protocol and algorithm work within six months.
  • The company says it has under-penetrated its client base in services sales compared to “one of our large competitors” (presumably Cerner) and hopes to improve that.


Evolent Health announces Q3 results: adjusted revenue up 45 percent, adjusted EPS –$0.16 vs. –$0.31. Shares rose 13 percent on Friday, but are still down 20 percent from their first day of trading in June.



As a reader previously reported, Graham King, former president of Shared Medical Systems and McKessonHBOC, died last week at 75.

Privacy and Security


Hartford Hospital (CT) and EMC will pay a $90,000 settlement to the state for allowing an unencrypted laptop to be stolen in June 2012 from the home of the hospital’s contractor, EMC. Both organizations agreed to encrypt patient data and provide privacy and security training to employees.


Police officers who wear body cameras have to remember to turn them off when entering a hospital to avoid violating patient privacy, according to the Kinston, NC police department. The department says officers will otherwise be violating HIPAA, which isn’t true because police departments aren’t covered entities and therefore have no obligation to follow HIPAA requirements.


A Texas man pleads guilty to wire fraud for conspiring with others to pose as Cerner employees in order to sell hospital equipment and to defraud investors. The group registered a Cerner LLC corporate name, opened a bank account under that name, and registered Web domain CernerInc.com in selling a $1 million MRI machine to a Texas hospital, which the hospital reported to authorities when the real Cerner declined to help them install it.


CMS reinstates Faxton St. Luke’s Healthcare (NY) after it says it fixed ED problems that allowed a violent psychiatric patient to be  released without evaluation. He killed three family members hours later. The hospital changed its order entry system to make it easier to order mental health assessments, added a hard stop so that triage nurses can’t skip documenting suicide risk assessment, and ordered physicians with illegible handwriting to use dictation software.

A judge orders Geisinger Health System to provide salaries of its executives and doctors to the family of one of its medical residents who died of a brain hemorrhage while admitted to one of its hospitals. The family is suing Geisinger and wants the salary information to determine the value of the resident’s lost life. The health system has fought the disclosure of executive salaries, arguing that the information is proprietary and strategic.


A Bellevue, WA orthopedic surgeon sues a patient who posted an unflattering Yelp review of his work, saying she damaged his business and personal reputation. The patient’s also filed a complaint with the state medical board, but they dismissed it as lacking evidence of a violation.

The New York Times profiles a Nepal-based ophthalmologist nicknamed the “God of Sight” who developed a five-minute, $25 cataract removal procedure that he has used to restore the vision of 120,000 people. The doctor manufactures his own $3 replacement intraocular lenses to avoid the $200 cost of commercially produced ones. His success rate is the same as that of US doctors who use $1 million machines.


The Pensacola, FL paper profiles local businessman and philanthropist Quint Studer, who worked his way up through hospital administration to become CEO of Baptist Health Care (FL), a job he left to start consulting firm Studer Healthcare Group in 1998. He sold 70 percent the company for $217 million in 2011, after which it was sold to Huron Consulting Group for $325 million in January 2015.

Johns Hopkins BSN student Stephanie Olmanni, whose background includes education and experience in music and film scoring, creates a nice parody of Adele’s “Hello” that describes her frustration trying to wade through the bureaucracy of obtaining a California RN license. 

Sponsor Updates

  • TransUnion President and CEO Jim Peck is featured on the cover of The CIO Review.
  • Valence Health and Aldera share insights on risk-based healthcare landscape.
  • Health Catalyst ranks first among healthcare technology companies on the list of Utah’s 100 Fastest Growing Companies of 2015.
  • Winthrop Resources SVP Brad Swenson will present at the Virginia Hospital and Healthcare Association Annual Meeting November 11-13.
  • Xerox Healthcare wins the Best New Venture Award as part of Market Gravity’s 2015 Corporate Entrepreneur Awards.
  • ZeOmega places twelfth on the Metroplex Technology Business Council’s 2015 Fast Tech Awards List. The company also received MTBC’s Momentum Award for placing on the list five years in a row.

Blog Posts


Mr. H, Lorre, Jennifer, Dr. Jayne, Dr. Gregg, Lt. Dan.

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Currently there are "9 comments" on this Article:

  1. RE: PM_From_Haities Mr HisTalk is being a patsy by publishing comments from unknown anonymous posters, likely with agendas, regarding GAAP and non-GAAP earnings. Don’t be fooled by anything but CASH. Allscripts reported $81 million in free cash flow year to date – that is cash in the bank generated after revenues, expenses paid, capital expenditure CASH expended and CASH expended for capitalized software. Its the same as what you have left over after getting paid and paying everything you owe currently due and putting money aside for big expenditures. Stick to healthcare IT and stop positing and opining on what you do not know. And the stock went up 5.5% Friday – so instituional investors, who are expert in this area understand this.

  2. A lawyer friend of mine who works closely with police depts had to address the “are we a HIPAA-covered entity?” question with one. They determined that they were because the PD happened to run an employee health clinic as part of its organization. My friend recommended they split that off, which would have solved the problem, but for some reason they decided against it. Definitely an odd unintended consequence of HIPAA.

  3. The video about how hard is has been for Stephanie Olmanni to get a nursing license in California describes a difficult process. Luckily for this one applicant, she has an appealing alternative as a singer song writer! Strong Work!

  4. Re: Dr. Wu. Cash is certainly important, but so is debt. Allscripts has $655.00M in debt according to finance.yahoo.com. That pales in comparison to the $81 MM in cash they had as free cash-flow. It’s also tricky given Allscripts transition to managed services as there now becomes an expectation of on-going service so certain cash-flows and expenses may not line up as closely as a traditional software business.

    Also, let’s look at some facts. The fact is their net-operating cash-flow is-$5.1 MM for the last quarter 2015. It’s only the non-cash depreciation expense of $41 MM that causes them to have positive cash flow. The problem is depreciation is a very real fact of life. Machines, code, servers, buildings wear out. Also, they didn’t have $81 MM in free cash flow year to date. Their cash flow statement shows a beginning balance of $53.2MM in 2015 with an ending balance of $91.4 MM for 9 months. That’s roughly a $40 MM gain in free cash flow again against $655 MM in debt.

    Turns out that Mr. HisTalk has a soft spot, like most people, for facts and not manipulation. As I’ve mentioned earlier, I have no financial interests in Allscripts or financial position in Allscripts short or long nor do I have any financial interests in Epic, Cerner, or Athena.

  5. Re: Epic and Operating Margins – If only there was a way to look that up…..If Epic buys a subscription to AHD.com, they can determine precisely how their solutions impact client operating margin. They just might not like the answers.

  6. Re Epic asking customers for financial margins… This is follow up on a study by another that was showing Epic sites outpacing the industry with stronger margins and returns on investments as compared to other vendors.

  7. RE: Show me the money

    Please post a link to any data that you have to support your point that Epic sites have stronger ROIs than other vendor sites. Given how difficult it is to determine ROI of an EHR this seems like a tough assertion to back up.

  8. Why would anyone give Epic their non-public, financial data just freely? I’m sure if those hospitals told their board or executives that they were giving their non-public, financial information to a vendor for its own purposes (I get that there might be “support” related reasons), those folks might be pissed. Are none of Epic’s customers publicly traded? Wouldn’t that just be rife with conflicts of interest, potential insider-trading issues and all that fun stuff?

    Do other vendors ask this?

  9. You better believe that Epic should be asking about financial ratios. Epic used to track financial performance very closely in the early days, I assume operating margins was part of that. I know Days in A/R was a critical measure. For whatever reason, implementation got away from that, lots of customers had some real issues that needed Epic followup but it didn’t happen.

    Epic’s access and billing apps have had some real implementation issues,partially caused by customers installing model system without testing t, or the limited amount of changes that the customer put in. Some newer parts of the applications never got a solid implementation or support paradigm yet. Management in the billing and access apps has been questionable for quite some time- TS management for access hasn’t been bad, but other management has been problematic. Epic’s stealth layoffs in the past might not have helped any either.

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Reader Comments

  • Sam Lawrence: Except in this case, coding = medical billing, not development. Though the same warning may be true...
  • BeenThere: Partners will find the savings from their cuts of coders as fools gold. There are a lot of hidden costs running an outs...
  • JC: If there is not there can be. VistA has a reference lab interface that can create the manifests/labeling and such as we...
  • Tom Cornwell: Great stuff from Dr. Jayne as usual. One small typo, last sentence of second-to-last paragraph: should be 'who's' not 'w...
  • HIT Observer: What I find most interesting here, is people defending their common practices rather than truly taking this as invaluabl...
  • Bob: There's no incentive for the provider to spend time doing a price comparison for the patient. Nor is it a good use of th...
  • Peppermint Patty: Veteran - can you clarify what was "fake "? Was something made up (definition of fake) or did you disagree with Vapo...
  • Pat Wolfram: Such a refreshing article. Thanks -- there really can be a simpler version of an acute HIT implementation. But I do ...
  • Woodstock Generation: Bravo to HIStalk's Weekender recaps and other news/opinions. I read it first thing on Monday mornings..................
  • Veteran: #fakenews...

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