Misys Healthcare CEO Confers About M&As, Vendor Stability

Some recent mergers and acquisitions in the health-IT vendor market could be just the beginning of a long period of active consolidation as companies try to build comprehensive electronic health records, according to one vendor executive.

"We think there are some other big players that are going to jump into what is clearly an active market," says Tom Skelton, chief executive of Misys Healthcare Systems, the Raleigh, N.C.-based health-IT division of British software firm Misys plc. "I think we will see continued acquisitions. I think the major players will be going out and buying smaller players."

Skelton made these remarks in a Feb. 1 interview, the same day his firm announced a $49 million cash deal to acquire Payerpath (Richmond, Va.), a claims management software developer and healthcare transaction processor. "Payerpath has a lot of value," Skelton says. "It really is a nice adjunct to our business."

According to Skelton, Payerpath offers adds claims-scrubbing services and revenue cycle management to an existing Misys clearinghouse business, plus it brings Web-based practice management to Misys, a company without a lot of application service provider-type software.

This deal followed by less than two weeks the news that ambulatory EHR vendor Allscripts would acquire smaller competitor A4 Health Systems of Cary, N.C., for $272 million in cash and stock. Allscripts also announced that it would modify its partnership with IDX Systems in light of the fact that IDX recently was taken over by GE Healthcare.

A4 gives Allscripts a ready practice management and EHR product for small and mid-size group practices. Allscripts' TouchWorks already is adaptable for the smaller end of the market, but the Chicago-based company has been concentrating on the more lucrative large-group segment and on the ambulatory side of many academic health centers.

GE says it will honor the five years remaining on the 2001 alliance between Allscripts and IDX for the two companies to sell their products to each other's existing customers. Now, with A4 in the fold, Allscripts will be allowed to offer an integrated ambulatory EHR/practice management package to customers of IDX hospital systems.

In another major deal, Per-Sé Technologies (Alpharetta, Ga.) last year paid $665 million for the revenue cycle management division of NDC Health. (See http://www.health-itworld.com/newsletters/2005/08/30/15069.)

According to Skelton, all this current and expected future activity makes it incumbent upon healthcare providers to research their health-IT purchases carefully. "The consumer will be placing bets on something that is extraordinarily important to their business," the Misys CEO says. "I think the issue of vendor stability will start to really rise."
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