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Archive for the ‘Microsoft’ Category

This morning we announced the release of our latest report: 2012 HIE Market Report: Analysis and Trends of the Health information Exchange Market. As we found in last year’s report, the HIE Market and the vendors that serve it continues to be a very dynamic.

In little over a year we have seen several vendors exit the market, several others enter and the acquisitions of Carefx by Harris and MobileMD by Siemens. We also saw Microsoft pull completely out of the clinical market by turning over all its HIT assets (except HealthVault) to the new joint venture with GE, Caradigm.

Yet in spite of all this turmoil, the market continues to see spectacular growth in excess of 40% in 2011. The big news with all this growth is that only a small portion of it is coming via the HITECH Act and the various statewide HIE contracts that were awarded. No, the big market that literally all HIE vendors are now targeting is the private, “enterprise” market. Healthcare organizations (HCO) of all sizes are now looking to deploy HIE technology to not only meet Meaningful Use requirements, but respond to the pending changes in reimbursement, moving from a fee for service model to one that is based on outcomes.

To be successful under these new payment models, HCOs must better manage operations and the complete care cycle of a patient across care settings. In a community of heterogeneous EHRs, HCOs are adopting HIE technology at an accelerated rate to unlock the data silos of EHRs across the community to enable higher quality of care.

Arguably, the 2012 HIE Market Report’s most significant finding is…

The healthcare sector is rapidly moving to the post-EHR era. The value of patient data is not in the data silos of EHRs but in the network that an HIE supports.

The report provides the most comprehensive overview of the market and what are the significant trends that are driving this market forward. The report also provides a deep dive review of 22 leading HIE vendors, including product capability assessment and market presence. This information, compiled through in-depth research and countless interviews, provides all HIE stakeholders with the most accurate view of the market today.

It is our sincere hope that the information contained in this report will contribute to furthering the success of HIE deployments in the future as we strongly believe that only through health information exchange (the verb) can we improve the quality of health delivered within a community and ultimately, the nation.

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Hunkered Down on HIE

Been pretty quiet here on the Chilmark Research site for the simple reason – we are doing one heck of a lot of research which you’ll be seeing the results of in the not so distant future.

Primary among those research efforts is the update to the 2010 HIE Market Report. The last report was extremely successful and highly regarded among those in the know. For example, a CEO from one of the top HIE vendors told us:

By far, Chilmark Research has done the best research on the increasingly critical HIE market – no one else has come close to providing the in-depth research that is contained in the 2010 HIE Market Report.

And it is not just the HIE vendors who appreciated the report as we sold quite a few to healthcare organizations who have been using the report to assist them in their strategic decisions and ultimately vendor selection process.

But the HIE market is evolving quite quickly and thus the need to provide a refresh of the report. For example, of the 21 vendors profiled in the last report, 7 will not show up in the next edition. Even with that change, there are more entrants into what has become a lucrative market (albeit still relatively small) and in the 2012 report we will have in-depth profiles of 22 HIE vendors.

To give you some brief insight into the report, following is the intro to Chapter 3.

“The more things change, the more they stay the same.”

This French proverb accurately characterizes the state of the HIE market and the vendors who serve it. In last year’s report we commented on how the market was becoming increasingly crowded and competitive. We profiled 21 vendors in that report and a third of them did not make it into this report. Some exited the market (ICW, MedPlus, MEDSEEK, Misys, PatientKeeper, Telus), others acquired (Carefx and MobileMD) and then there is the folding of the HIE assets of GE and Microsoft into the new entity Caradigm. This year we have 22 vendors profiled including: Caradigm and Microsoft (still difficult to know what will become of their joint assets, but we provide some guidance), Harris, who had acquired Carefx, Siemens, who picked up MobileMD and some new entrants including 4medica, Certify Data Systems, the young start-up GSI Health and HealthUnity. We even broke from tradition, if you can call one year a tradition, and profiled one of the leading EHR vendors, Cerner, who contrary to prevailing EHR vendor wisdom, or at least strategy, is creating an open HIE platform.

The market is as competitive as ever with a monumental shift towards the enterprise market. Some vendors have been serving this market all along, others, whose focus has been the public market are to varying degrees of success making the transition to the enterprise market. But despite this overwhelming shift to the enterprise market, the HIE market remains no less mature than it was last year. The solutions on offer vary significantly and in our interviews with vendors, consultants and end users we found a market that really has not defined a clear set of requirements for the HIE. There is always the ubiquitous desire to facilitate orders, referrals and distribution of results but beyond that, the needs of a given HCO can vary greatly, which has subsequently led to continued market confusion as to what an HIE is and is not.

With this report, Chilmark Research once again has applied its deep research methodology (see Appendix B) to provide a clearer picture of where this market and the vendors who serve it are today and where it is heading. The profiles contained in this report are not meant to provide an exhaustive analysis of each vendor’s solution and business strategy. Rather, their purpose is to provide a concise overview of leading HIE solutions in the market today, their strengths and weaknesses, what sector(s) of the market that the vendor has had particular success in and provide insight as to an HIE vendor’s future direction. Armed with this information, the reader will gain a clear picture of currently available solutions enabling one to create a short-list of those worthy of more in-depth internal review and follow-up for their own HIE initiatives.

In our opinion, we are slowly but surely beginning to enter the post-EHR era. The U.S., federal government’s push for physician and hospital adoption of EHRs, via the HITECH Act, appears to be having the intended affect. The recent Robert Wood Johnson Foundation study published in the April 2012 edition of Health Affairs has physician adoption and use of EHRs now at 57 percent. But the value of those electronic patient records is not in the data silo of a given EHR, but in how patient data can be aggregated and used to facilitate care coordination across care settings and subsequently improve the quality of care a patient receives. This is the province of the HIE and where the real value of electronically recording a patient’s health will reside, not in the silo of the EHR, but in the network of the HIE.

Please bear with us and our lack of frequent posts. We are working hard here at Chilmark Research, which can make it a challenge to find that extra bit of time to write for the public. Once the HIE Report is released (next week), we should be getting back to a more regular schedule of posts to this website. Stay Tuned.

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Let you in on a little secret. February happens to be the month in which I was born. So to celebrate, I’m giving you dear readers a birthday gift. For the month of February you can get a free copy of the full report: iPHR Market Report Analysis & Trends. Be forewarned that this report is dated (yes, it does have a profile of Google Health), having been published in May 2008, but trust you’ll still find some worthy tidbits contained therein.

Happy reading!

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Since its start in 2007, Chilmark Research has kept a fairly low profile as analyst firms go, focusing on a few discrete domains of healthcare IT (HIT). First there was patient and consumer engagement that led to the publication of our first report on Personal Health Records (PHRs). That first research effort led to a significant amount of consulting work and subsequently no reports published for broader market consumption until 2010. That year Chilmark research expanded into the mHealth domain, with the assistance of analyst Cora Sharma, and published the report: mHealth in the Enterprise.

In early 2011, Chilmark published what is arguably its most important, or certainly most popular body of research, a report on the Health Information Exchange (HIE) market. It was this report that clearly cemented Chilmark Research as a well-respected analyst firm providing unbiased, objective, and in-depth research on the domains it covers.

But there was a problem. By and large the vast majority of this work was done by one individual, myself, the founder of Chilmark Research. Over the course of 2011, particularly during the fall when a significant number of consulting assignments came in the door, I quickly came to the realization that I needed help. I was reaching burnout and the model needed to change.

What’s New:
In 2012, Chilmark Research is launching a subscription service called the Chilmark Advisory Service (CAS). This service will provide subscribers one of our annual market research reports (an updated HIE report is forthcoming, others in the works), a number of other content deliverables and direct access to Chilmark Research analysts for specific inquiries. More will be forthcoming regarding this service but encourage you to contact us directly (info @ chilmarkresearch dot com) if you wish to learn more immediately or schedule a meeting at HIMSS to discuss this service further.

Our research agenda for 2012 will look quite similar to our past work for we strongly believe these are the most important topics in healthcare IT today:

Patient & Consumer Engagement
Why it’s important: As the industry migrates to reimbursement models based on outcomes and providers take on more risk, it will become increasingly important to truly engage the patient and their loved ones as part of the care team. Also, in highly competitive markets, providers will be seeking new approaches to not only engage consumers, but build loyalty.

What we’ll be covering: Patient/consumer engagement and outreach strategies of both providers and payers including patient portals (Stage 2 meaningful use requirements are key market driver), telehealth, privacy & security (including consent management) and new models of care & outreach to not only improve consumer/patient satisfaction but improve outcomes.

mHealth
Why it’s important: No doubt about it, the growing ubiquity of smartphones and how they have become such an integral part of our lives (we store family pictures there, we record our expense reports on them, we answer emails, etc.) and an ever growing number of consumers are doing mobile searches to answer health-related questions. Couple this with near saturation of physician adoption of smartphones and the growing use of touchscreen tablets by providers, it is not too hard to imagine a future where mHealth becomes the touch-stone for provider-patient engagement.

What we’ll be covering: Primarily address consumer-centric and clinician-centric mHealth Apps, how the market is developing, what is being adopted and used and why, and lastly, what is the trajectory for this rapidly evolving, ever changing market.  Currently, we are in the midst of producing a report (ready by HIMSS’12) that takes a close look at mHealth Apps for provider-patient engagement.

Health Information Exchange
Why it’s important: The HIEs being put in place today are the fundamental infrastructure, “the pipes,” that will enable one, be it clinician or consumer, to create a true longitudinal, patient record which will lead to safer, more effective care (at least basic logic points to such). These pipes will also allow researchers, public health officials and others to perform advanced analytics on this clinical data that can lead to better, more effective and responsive care. Lastly, as we move to new outcomes-based reimbursement models, HIEs will become an absolute necessity for virtually all medium to large size healthcare organizations.

What we’ll be covering: As mentioned above, last year’s HIE Market Report put Chilmark Research firmly on the map as a firm providing unmatched coverage of this market. We have every intention of keeping that title. First off, we will be releasing an update of the HIE Market Report (target HIMSS’12 release date) with in-depth profiles of some 25 vendors. Second, we are launching a major research project in early February on end users’ experiences and future strategies for their HIE deployments. We have much more planned for this market, but that is a very good start!

How We’ll Do It:
As mentioned previously, I had some help, but not enough and certainly not enough to launch a major expansion of Chilmark Research. To address this issue I went out and found some incredibly bright young people (always believed in the adage, surround yourself with people smarter than you) to join Chilmark Research. They are:

The returning Cora Sharma who’s research use to be the mHealth domain but has now moved to Patient & Consumer Engagement Strategies & Tools.

The former Washingtonian who has returned to his New England roots, Naveen Rao. Naveen’s research focus will be HIE & analytics/BI domains.

And last but certainly not least, my son, John Moore III who in addition to leading an mHealth start-up of his own, will be focusing his research efforts at Chilmark on, you guessed it – mHealth.

Brief bios on these three stellar additions to the Chilmark Research team are over in the “About” section of this website.

I do not hire readily (learned my lessons there long ago) and have been very judicious in choosing only those who show significant promise. I have no doubt in my mind that with some mentoring, these three have the chops to become some of the finest analysts in the industry and the credibility that Chilmark has established in the market will continue to grow.

Speaking on behalf of the Chilmark Research team, we look forward to continuing to provide this vitally important industry that impacts us all with the critical research that is needed to help guide it forward in the successful adoption and use of IT to truly improve healthcare delivery. Each of us are very passionate about this issue, it is a mission for us and through our research we intend to make a positive impact.

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It is almost becoming the norm to say that it has been another tumultuous year in the healthcare IT market. Market consolidation, pushback on timelines, growing chorus from IT departments that enough is enough against the backdrop of the political circus in Washington and across the land as we prepare for the 2012 election year. If 2011, was a bit bumpy, believe we will see craters in the road to HIT enlightenment in 2012. But we’ll save that discussion for our future predictions for 2012 post, which we hope to get to next week. (Editor’s Note: Don’t hold your breath though, if the snow flakes are flying, we’ll be on the slopes next week.)

Today’s post takes a look back on 2011 by reviewing our predictions earlier in the year and assessing where we hit the mark, where we missed and if there is such a thing, where we came close. So without further adieu…

1. MU Initiatives Move to Tactical 
Hit This did come true as meaningful use, while still top of mind for the CIO, is not top of mind for others in the executive suite who are now looking at how to compete in the future as reimbursement models shift from fee-for-service to value-based contracts.

2. C-Suite Strategy Focuses on New Payment Models 
Hit An admittedly “softball” prediction, this was a natural fall-out of prediction numero uno. And yes, the consultants are making out like bandits as we predicted they would helping senior execs figure out their future competitive strategy.

3. RCM & Charge Capture Systems Require Overhaul 
Miss By and large, most vendors in this sector have not done a whole lot yet as they await to see how the market develops. With most healthcare organizations struggling to get the basics done (e.g., meet MU requirements, ICD-9 -> ICD-10, apply analytics, etc.) we are not seeing big demand from customers and subsequently, not a big push by vendors.

4. Mergers & Acquisitions Continue Unabated
Hit Another “gimme” of sorts for we had this prediction in 2010 and it was a “hit” and need only look at this market with its some odd 300+ EHRs to choose from, everyone wanting to call themselves at HIE vendor (last we checked, HIMSS listed some 189 HIE vendors alone), countless other HIT solutions to see that this market is far from mature. But arguably the biggest news in 2011 was Microsoft’s capitulation that despite the billion dollar plus investment, it wasn’t cut out or the clinical market and dumping its HIT assets into a new joint venture with GE. What we are also seeing is some rationality return as valuations have moderated. This may have led to Thomson Reuters’ recent decision to not sell-off its healthcare division – no one was willing to pay the high price tag they had on this property.

5. Federally Funded State Initiatives Struggle
Toss-up There has been some progress and there are those that would vehemently argue that Beacon Communities, RECs and state HIEs are moving ahead briskly. But then again, we do get some disturbing reports that all is not progressing as once envisioned, one might even go so far as to say some of these programs are beyond just struggling, but clearly going off the tracks. We’ll reserve judgment until we see clear evidence of such pending disasters, which will likely be prevalent, but highly distributed.

6. Changing of the Guard at ONC
Hit Not long after we posted our 2011 predictions, Blumenthal announced his resignation from ONC. We could not have been more prophetic if we tried.

7. Physicians will continue to go Ga-Ga over the iPad and the fast-following touchscreen tablets much to the chagrin of CIOs.
Hit Enabling physicians access to health information systems via their hand-held mobile devices, including touch-screen tablets is still a struggle for most organizations. At first, IT departments turned to Citrix as stop-gap measure, but the UX was far from ideal. In our recent research we found many an IT department still struggling to address this issue. mobile enablement of physicians is a top priority.

8. Apps Proliferate: Consumer-facing First, Private Practice Second, Enterprises Dead Last
Hit In hindsight, another admittedly easy prediction to make. What may be a more interesting prediction is when will mHealth Apps really become a truly viable market? Does the profitable exit of iTriage/Healthagen, which was picked up by Aetna portend such? By our standards, no. Go back to our recent post from the mHealth Summit for more in-depth analysis.

9. The Poor Man’s (doctor’s) HIE Takes Hold
Miss We thought that the Direct Project would quickly take hold and see rapid adoption among smaller physician practices and those organizations looking to “connect the last mile” to small affiliated practices in their network. Not happening yet though the current administration is doing its best to push this technology by requiring all state designated entities that are standing up statewide HIEs to include Direct in the strategic operating plan.

10. Analytics & Business Intelligence Perceived as Nirvana 
Hit, kind of… 
In retrospect, not even sure this was really a prediction but simply more of a statement as to where healthcare organizations are headed with their HIT investments. We have a long ways to go, though there is certainly no lack of vendors that now are touting some form of analytics capabilities. Our advice, tread carefully as most solutions today are half-baked.

11) The Buzz at HIMSS’11? Everything ACO! 
Miss 
While some vendors were discussing ACO enablement at the 2011 HIMSS, the vast majority were not with the key focus continuing to be meeting Meaningful Use requirements. As mentioned in previous prediction, we see MU as a tactical issue with the strategic issue being: How do we leverage IT infrastructure to support communities of care? Maybe at HIMSS’12 we’ll see more discussion of this issue, but we’re not holding our breath.

This may have been our best year yet with our predictions having only 3 clear misses out of 11 predictions made. Granted, some of those predictions were not exactly the most profound or shall we say big stretches, but we do take some satisfaction in really nailing a few.

And while we intend to provide our own 2012 predictions, no time like the present to begin the process. So we ask you dear reader, what is your 2-3 top predictions for 2012? Will Todd Park stay on at HHS? Will forced budget cuts decimate HITECH? Will the Supreme Court’s ruling on ACA have any impact on HIT spend by either payers or providers? Will mHealth Apps such as WellDoc’s for diabetic care finally receive a CBT code thereby accelerating adoption of such tools?  We look forward to your input.

And of course we wish everyone a Joyous holiday season and wish you and yours continued good health in the new year to come.

Home for Christmas by Thomas Kinkade

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Today, GE and Microsoft announced a joint venture (JV) that will lead to the formation of a new company (NewCo) targeting the clinical healthcare market sector. The NewCo will be located near Microsoft HQ in Redmond, WA, start with roughly 700 employees and combine the remaining Microsoft clinical products, Amalga UIS and the former Sentillion products Vergence and expreSSO with GE’s eHealth and Qualibria suite. NewCo’s new CEO will be GE’s Michael Simpson, who has been heading up the combined Qualibria-eHealth group since earlier this year after a re-org at GE. Along with this announcement, Microsoft’s Health Solutions Group (HSG) leader, Peter Neupert stated that he’ll be retiring.

Combine the above announcement with Microsoft’s long anticipated sale of Amalga HIS, which went to Orion Health in October, and you are left with Microsoft completely pulling out of the clinical market. Sure, they’ll claim to be still in healthcare by directly selling their horizontal products (e.g., SharePoint, MS Office, various server products, etc.) into this sector and having a stake in this JV, but it is also exceedingly clear that Microsoft will no longer have any direct involvement in this market, that will be left to GE. That being said, Microsoft did state that they’ll hang onto HealthVault, but even here, that is more likely a by-product of no one wanting to take on HealthVault rather than Microsoft’s strong desire to continue to try and build a viable, revenue generating entity out of it. Do not be too surprised if, in a year’s time, HealthVault falls to the wayside much like Google Health did this year.

During our briefing call with Microsoft and GE we learned the following:

Core to NewCo’s objectives is to leverage the joint assets of Microsoft and GE to build out an entirely new platform that will focus on four key areas to begin with:

  • Clinical surveillance to identify such things as infection outbreaks within an acute care facility before they run rampent.
  • Population health management to facilitate care management processes, which is a productization of work GE has been doing with Geisinger as part of the Keystone Beacon program.
  • Reduce hospital readmissions by leveraging analytics to identify patients at risk and initiate appropriate interventions.
  • Facilitate transitions in care, which like reducing hospital readmissions, is something that is on the mind of every senior healthcare executive we talk to.

These four target areas are nothing new or inspirational as just about every vendor we talk to has some program in place or under development to address these four areas as well. The product roadmap does not have much hitting the market until 2014.

Financial terms were not disclosed but our guess is that Microsoft contributed IP and the development team behind these products. In return, they will receive some sort of royalty stake in future sales. GE will lead the new organization, contribute its Qualibria/eHealth IP and GE sales and marketing will take the product(s) to market. Thus, most sales and marketing folks and other support staff in Microsoft’s former Health Solutions Group are being shown the door, which is unfortunate as we head into the holidays.

A couple of things come across as a bit ironic. First, Microsoft executives time and again stated that they knew what they were getting into when they entered this vertical and that it would take patience to build a viable presence. So much for patience. Second, Microsoft sold off the Amalga HIS product as many a potential HIT partner was wary of partnering with Microsoft as long as Microsoft had under ownership an EHR. Now what does Microsoft do, it joins in partnership with a struggling HIT vendor in the acute care market. Will any of the other major or even second tier HIT vendors partner up with the GE/MSFT NewCo – don’t bet on it.

The announcement also raises more than a few questions such as:

What becomes of Microsoft’s existing HIE contracts, particularly the one they pulled all the stops out to win, the Chicago HIE which is now under development?

What becomes of Microsoft’s recently announced relationship with Orion Health? Will Orion now be partnering with NewCo, which is essentially GE?  GE, with its own HIE solutions targeting enterprise accounts, is a direct competitor to Orion.

What becomes of HealthVault Community Connect, which combined Amalga with HealthVault and SharePoint? Is this now a dead product or will NewCo simply use the Centricity patient portal?

As you can probably tell by the tenor of this piece, we’re not a big fan of this announcement and are disappointed that Microsoft has decided to fold-up its tent and retreat. Unlike the legacy HIT vendors in this market, Microsoft could lay the claim to some neutrality and potentially build-out an Amalga-based ecosystem platform. But business is often not kind to those that have an altruistic bent and in this case Microsoft simply made a clear-cut business decision to unleash an asset that was not meeting internal metrics despite what some believe may have been an investment in excess of $1B in the last 5 years to build-out HSG.

Once again, another company with grandiose plans to change healthcare has quietly walked away leaving this market to the incumbent HIT vendors. We also do not see strong prospects for the future build-out of a robust ecosystem of partners on the combined Amalga-Qualibria platform that NewCo proposes as there are too many competitive issues that just get in the way. We could be wrong on this one, but our guess is that NewCo is likely to struggle as much as Microsoft has in the past for relevance in this fractious HIT market.

Addendum:
Sean Nolan, chief architect for Microsoft HealthVault, provides his own view on this JV announcement. While his view differs from ours on the implications and future of this JV and HealthVault, one thing we do hope that Sean proves us wrong on, is the future success of HealthVault. We would love nothing more than to see it succeed but at this juncture, we remain pessimistic. 

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Acquisition fever has set in and they’re dropping like flies, independent HIE vendors that is. Earlier today, Siemens announced its intent to acquire enterprise HIE vendor MobileMD. So in little over a year we have seen IBM snag Initiate, Axolotl fall into the hands of Ingenix/United Health Group (Ingenix is now known as OptumInsight), Medicity tie the knot with Aetna, Harris pick-up Dept of Defense clinician portal darling Carefx and Wellogic, a damsel in distress, being rescued by Alere. Elsevier also announce an intent to acquire dbMotion for a whooping $310M, but nothing came of that other than a substantiation of the rumor that dbMotion was being shopped.

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.

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