Covisint Dips into Clinical Apps with DocSite Acquisition

On Monday, Covisint announced that it had acquired DocSite. Yesterday, we were finally able to catch-up with Covisint VP Brett Furst to get some background on the acquisition.  Following is what we learned and our assessment.

Some Background:
Covisint was orignally founded by the Big Three auto makers to assist them with their supplier relations and procurement strategies.  To meet the needs of these automotive companies and their need for strict intellectual property (IP) control and secure communication with their supply base, Covisint built a very robust communication platform with strong, federated identity and security management.  Not too surprisingly, these security features lend themselves quite well to the need to communicate health data securely across a network, thus Covisint’s move into these sector several years ago. Today, Covisint is the technology behind the Southeast MI HIE, my1HIE and the Minnesota HIE.

Covisint’s HIE platform can be broken down into two core pieces: ExchangeLink and AppCloud.  ExchangeLink is the the technology backbone for Covisint’s providing the fundamental building blocks for an HIE including messaging, Master Patient Index (MPI) Record Locator Service (RLS), portal, etc.  ExchangeLink has also been architected and positioned to serve in a Platform as a Service (PaaS) model with application programming interfaces (APIs) that are shared with third party partners to create a rich ecosystem of applications that can potentially be deployed within a given HIE. Covisint has been working closely with the American Medical Association to build out this PaaS model and the the third party vendors are found within what Covisint has branded as their AppCloud.

To date, Covisint has relied heavily on its third party partners within AppCloud to provide the various added functionality that a client may need within the context of an HIE with Covisint providing the basic plumbing via ExchangeLink.  With the acquisition of DocSite, a subtle change to their strategy has occurred.

The Acquisition:
Covisint has only made three acquisitions to date in the healthcare sector.  The first was ProviderLink in 2006, a small (30 employee) company that had a healthcare-specific messaging workflow solution. ProviderLink was picked up for $12M. The second was another backoffice infrastructure play, Hilgraeve, which Covisint acquired in 2008.  Hilgraeve had HyperSend PDX which facilitated data exchange between practice management systems and EHRs as well as importing data (labs) into an EHR.  Again, more of a backoffice solution to further strengthen ExchangeLink and its applicability to the healthcare sector.

DocSite, which has been a partner of Covisint via the AppCloud, is primarily a provider of quality measurement tools such as PQRI but also has some other tools such as clinical decision support. DocSite is a clinician facing application that is designed to help an institution meet quality guidelines in support of pay for performance initiatives.  DocSite also offers a number of tools for quality reporting that are critical in the support of meaningful use requirements as well. Clearly, DocSite is not an infrastructure play as the last two acquisitions were and signals a change at Covisint that they will not rely strictly on AppCloud partners going forward.

Assessment:
The PaaS model remains a tough sell in the still immature HIE market and Covisint likely struggled to market this concept to state and local officals, as well as enterprises who are in the market for an HIE.  While ExchangeLink may be a fine platform, it is only that, a platform and there is really quite a bit more that organizations seek from their HIE vendor and these organization may have been reluctant to first need to create a relationship with Covisint, then secondly, choose from the among the AppCloud partners and set-up separate agreements with them. Simply too much to manage and this goes against the preferred approach of “having one throat to choke” should something go wrong. By itself, ExchangeLink was simply not competitive in this rapidly changing market.

DocSite looks to be a savvy acquisition as it brings a high value proposition to the table by addressing one of the most critical metrics in the healthcare sector today, measuring and quantifying quality of care delivered. The new meaningful use Stage 1 requires some quality metrics to be measured and reported. DocSite within the Covisint platform can meet that need, which will only increase in future Stages 2 & 3.  There is also the broader changes coming from the Healthcare Reform bill that will accelerate the transition to pay for performance/pay for quality.  Again, DocSite’s quality reporting/analytics will facilitate a clinician/institution in meeting those requirements.

It is likely that Covisint will accelerate its acquisition strategy to acquire other, small companies (DocSite has ~30 employees and 80 customers) that will be clinician facing to fill specific targeted niches (gaps) of its HIE platform. More broadly, HIE vendors as a whole will also increase their emphasis on providing quality reporting tools either through partnership or acquisition. For example, Care Evolution has a partnership with Thomson-Reuters and more recently, Ingenix, which has a host of reporting capabilities, acquired Axolotl.

In this rapidly moving market, there is one constant – Change. Stay tuned.