That does not leave many small, independent HIE vendors that have some traction left in the market. Following is our list of such vendors and what might become of them:
4medica: A relative new comer to the HIE market, 4medica will be profiled for the first time in the upcoming HIE Market Trends Report which is scheduled for release in early 2012. 4medica is quite strong on lab information exchange. Future: 4medica still remains under the radar screen as it completes its platform to truly serve all HIE needs. Once that process is complete, the company is likely to gain increasing attention and will be acquired in 18-14 months.
Care Evolution: Privately owned and self-funded, founder has every intent to stay independent. As he has told us on more than one occasion, I’ve already made plenty of money and this is not about cashing out to the highest bidder. Future: Everyone has a price but this company may be one of the last to fall into the arms of another.
Certified Data Systems: Appliance (think small router with embedded HIE functionality) HIE vendor that has close, yet non-exclusive partnership with Cerner. Would not be surprised if they struck a similar deal with Epic as Epic struggles to connect to EHRs outside its system. Future: Fairly new to the HIE market but gaining traction. Will stay independent for next 12-18 months, after that, anyone’s guess.
dbMotion: One company already made a bid, but pulled back, thus pretty clear this company will be acquired, question is how much and we suspect it will be significantly less than what Elsevier was planning to pay. Future: If price is right, could be acquired at anytime.
HealthUnity: Small HIE vendor from the Pacific Northwest that made a big splash when with Microsoft (Amalga UIS) they won the big Chicago HIE contract. Future: With Microsoft cozying up close to Orion, HealthUnity will be looking hard for other partners and/or to be acquired. Will give them 12-18 months as an independent.
ICA: Another small HIE vendor that has had a few wins here and there but will come under increasing pressure from larger, better funded HIEs. Future: Likely to be acquired in next 6-12 months, maybe even earlier.
ICW: InterComponent Ware is a German HIT company and a sizable one at that with over 600 employees. To date, ICW has a very small presence in the US HIE market so an acquisition, if there were one, would have little impact. Future: Their foreign ownership, size and interests in several health related markets make them an unlikely candidate for acquisition.
InterSystems: Arms dealer to all, InterSystems Cache and Ensemble are widely used in the market and the company has built upon these core technologies to get into HIE market. Future: Fiercely independent and senior team is basically the same since founding this company will remain independent.
Kryptiq: Having signed a strong partnership deal with Surescripts, Kryptiq is unlikely to be interested in any acquisitions talks. Future: Will remain independent for time being and if Surescripts’ Clinical Interoperability solution gains significant traction, Surescripts will likely acquire Kryptiq outright.
Orion Health: New Zealand-based, privately owned with good prospects in markets beyond America’s shores, this company will likely want to stay independent (future IPO) unless of course a very large software company (think IBM, Microsoft, Oracle etc.) gives them an offer they can’t refuse. Future: Will stay independent.
Getting back to the Siemens/MobileMD deal…
While we have not had an opportunity to talk with either Siemens or MobileMD (will provide follow-on update once we do) here are some quick take-aways:
Siemens has chosen to buy. This is unlike other EHR vendors who have either built their own HIE solution (athenahealth, eClinicalWorks, Epic, NextGen) or have partnered with others (Allscripts, Cerner, GE).
Existing partner doesn’t cut it. Siemens has an existing partnership with NextGen for ambulatory but NextGen’s HIE is a closed system. This prevented Siemens from being able to leverage this partnership to serve their client needs, which most often includes a multitude of EHRs in the ambulatory sector to interface with.
Lacked sufficient internal resources. By buying into the market, Siemens has signalled that it does not have the development resources to respond quickly enough to customer demand (not too surprising, Siemens has been struggling in the North American market for sometime). This also signals that they could not find the right partner outside of their NextGen relationship, which is a tad puzzling as we are quite sure they paid a premium for MobileMD.
Paid a premium. We estimated MobileMD sales in 2010 just shy of $8M in our 2011 HIE Market Report. HIE vendors are selling at a premium, even second tier ones such as MobileMD. Assuming industry average growth in 2011 (we peg it at 30%) that would give MobileMD sales of ~$10.5M for 2011. We put the final strike price for MobileMD at $95-110M.
Existing MobileMD customers relived. Unlike the acquisitions of Axolotl and Medicity, which both fell into the hands of payers, MobileMD is going to a fellow HIT vendor which must assuage the fears of more than a few MobileMD customers and prospects. Siemens intends to keep MobileMD whole, bringing on-board MobileMD’s president and founder, again contributing to continuity.
ADDENDUM: Please excuse our lack of posting on industry trends in a more frequent manner. Like many in the healthcare sector, Chilmark Research is struggling to keep up with demand and recruit top-notch resources. We seem to have hit our stride in this market, are receiving countless engagement inquiries and engaging in most of them. All good problems to have, but you dear reader are the one who ultimately suffers from our lack of posts. Thank you for your patience to date and know that we are doing our best to keep you informed with some of the best research and analysis of this critically important and meaningful market.
Great update & overview! Looking forward to your 2012 report!
I am expecting McKesson & a few other large players to get involved in the feeding frenzy!
Curious to see how the non-profit / state driven HIEs do once the acquisition dust has settled…
Paulo
Thanks for the comment Paulo. Actually, McKesson is already heavily in the HIE game with RelayHealth, one of the leading HIE solutions in the Enterprise HIE market. As for those non-profit, state/public driven HIEs… When the dust settles, only a few will actually remain for most just do not have the skills & capabilities to provide sufficient value, especially in highly competitive markets.
You are welcome.
I was thinking that McK & other large health services corps are likely to begin acquiring bolt on value add services beyond the basic data gathering/reconciliation/exchange features such as real time data analysis, population analysis, MU (& other) Reporting, consumer facing engagement tools, communication enablement tools (Provider to Patient, Provider to Provider, Patient to Patient, etc) & the list goes on…
I agree that few (if any) will remain on the non-profit/state side. For now they are providing the value added service of aggregating local data which will make it easier for private corps to buy later…
Thoughts on Covisint? They were one of the names I was expecting to see on your list of indies.
Covisint, as part of the much larger Compuware is an HIE that I don’t see in play for an acquisition, thus not included in this list. Same goes for HIE vendors such as RelayHealth, which is owned by McKesson.
How is the open-source movement fairing in all of this?
Not too well. Mirth did get in on the Harris deal for FL, but Harris basically won that contract for political reasons (their HQ is in Melbourne, FL) and of course, open source usually requires a significant amount of services, which orgs like Harris, just love. Misys had an open source HIE solution as well but that has not really gone anywhere either.
Long-term, see adoption of open source HIE solutions as falling into one of two camps:
1) Supported/promoted by service centric organizations that look to leverage.
2) Niche organizations with strong, independently minded IT staff/resources that like doing their own thing, controlling their own destiny. Identifying them is pretty easy. Look for those orgs that are likely using a home-grown EHR or one built with open source tools as well, say a commercial form of VistA.
Regarding Epic acquiring Certified Data Systems: I think it unlikely. Judy Faulkner, Epic’s CEO, has a policy of developing their own solutions. Epic already has their own external, point-to-point solution, Care Elsewhere, which can interface with state HIEs.
Historically, Epic tries to not play favorites with their partners and vendors. For example, Epic encourages their customers to license medication data from either First Data Bank or MediSpan, unlike Cerner, which sells their own Multum database and OEMs to Med3000 customers.
-Mickey Piette, UC-Davis Medical Center
Hello Mickey,
Certainly didn’t mean to infer Epic/Judy would buy CDS as you are correct, they like to build their own solutions. That’s not to say Epic wouldn’t partner with someone like CDS for Epic Elsewhere is vaporware and will likely remain so for the foreseeable future. At some point, customers will scream loud enough and Epic will have no choice but to respond. There are numerous HIE vendors today that are having “deep” discussions with Epic shops for they have come to realize that Epic does not play well with other EHRs.
Do you have any thoughts on MMRG (My Medical Records Global) which is a company that seems to have a worldwide footprint as their goal. Thanks, Sid
RE John’s reply: True, I agree that Epic doesn’t play well with other EHRs, but a clarification: Epic _is_ live with their first Care Elsewhere partners as of summer/fall 2011.
The first customer live was Fairview in MN with the now-defunct Minnesota HIE. See http://www.mnhie.org/. Now http://www.hiebridge.org/.
The second customer is OCHIN, with the Social Security Administration (SSA) using NwHIN. See announcement at http://www.ochin.org/services/hi/
The third customer is Multicare with the VA and DoD using an NwHIN model. See announcement at http://healthit.hhs.gov/portal/server.pt/community/healthit_hhs_gov__nhin_exchange/1407
its impossible to believe that Siemens paid 100m, or almost 10x upon exit for a company with pseudo-decent technology and only 10m in annual revenues.
just sayin.
It may indeed sound impossible, but remember that both Axolotl and Medicity received similar evaluations. Also through our sources, we had learned some time ago that MobileMD was actively “being shopped” and they wanted a pretty penny for their technology.market presence, which was quite distant to Axolotl and Medicity. But when you are in a position like Siemens, with few buy choices available to you and you really want to get in on the action, you hold your nose and jump.