For the base five years, the team of Claude Roy and Marc Brunet have been quietly building a solid Canadian success story in the North American health care technology sector.
Showing posts with label health care. Show all posts
Showing posts with label health care. Show all posts
9/30/09
Healthscreen (MDU.V) Adds to Its Network
MDU increases the size of its physician network by nearly 6% with an agreement announced this morning with East GTA Family Health Group. It should be noted that this is the first buying group that is selecting the entire suite of Healthscreen services and solutions, which could represent significant increases in revenue and earnings for the Company for FY 2010. See the press release.
| Healthscreen Selected by East GTA Family Health Group | |
| TORONTO, ONTARIO--(Marketwire - Sept. 30, 2009) - Healthscreen Solutions Inc. (TSX VENTURE:MDU), Canada's premier provider of physician practice enhancement services and electronic medical record (EMR) software, today announced that it has been selected by the East GTA Family Health Group to deploy its HS Practice software suite to its more than 300 family physician members. The software suite will include a full complement of billing, scheduling and electronic medical record software. Once complete, this agreement will represent by far the largest Family Health Group to purchase and implement EMR software in Canada. "We are very excited to have been selected, and we are looking forward to working with the East GTA Family Health Group and its IT Committee to assist its doctors in delivering the highest quality health services, while improving the efficiency of their practices," said Justin Belobaba, President and CEO of Healthscreen. About Healthscreen Solutions Healthscreen Solutions (www.healthscreen.com) provides a comprehensive suite of practice enhancing products and services to increase physician productivity and revenue while reducing costs and improving patient care. The Company's portfolio includes billing and scheduling software, electronic medical records software, CallerMD which assists physicians in managing a range of uninsured medical services, PrevCareMD which helps physicians earn supplemental income by achieving government-set preventive care targets, and HealthAlert which allows physicians to help their patients in managing complex healthcare issues. Healthscreen's and its partners' services and software are used by over 8,000 full-time physicians who are responsible for the health care of more than seven million Canadians. (C) 2009 Healthscreen Solutions Inc. All Rights Reserved. All other trademarks and trade names are the property of their respective owners. Disclaimer: Forward Looking Statements This press release contains information that is forward looking information with respect to Healthscreen within the meaning of Section 138.4(9) of the Ontario Securities Act and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements about future revenues or profitability, including the estimated timing of profitability, and any other statements regarding Healthscreen's future expectations, beliefs, goals or prospects are or involve forward-looking information. Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including risks and uncertainties relating to government regulation and funding in the healthcare industry, financial and capital market risks, technology development and adoption, Healthscreen's ability to maintain its competitive position and effectively implement it's acquisition strategy, liability for software malfunction, management of growth, and length of sales cycles. Additional risks and uncertainties affecting Healthscreen can be found in Healthscreen's 2008 Annual Report and Management's Discussion and Analysis for the Fiscal Year ended September 30, 2008 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Trading in the securities of Healthscreen should be considered highly speculative. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. |
| CONTACT INFORMATION: Healthscreen Solutions Inc. Justin Belobaba President and CEO 1-866-534-DOCS ext. 7015 ir@healthscreen.com www.healthscreen.com |
| INDUSTRY: Computers and Software - Software, Medical and Healthcare - Alternative, Medical and Healthcare - Healthcare |
6/5/09
Game-Changer Startup Alert: Phybridge and the rebirth of the twisted pair.
Most who follow this blog anticipate updates about publicly listed technology Companies. Going forward investors are likely to see a select few earlier stage private tech startups profiled. The criteria for such a profile is simple: potential game-changers.
Phybridge is an early-stage startup (and graduate of the UofT's Accelerator incubator) located in Mississauga that has developed technology that makes twisted pair copper (essentially the phone line) a viable Internet Protocol-based (IP) high speed data network.
Introducing VoIP over twisted pair. The first killer application is to enable Voice over Internet Protocol (VoIP) with a single point of convergence to the data network in the server closet. Until Phybridge's introduction of Uniphyer a few weeks ago, there was no simple and cost effective way for enterprises to repurpose twisted pair to deliver the productivity benefits of converged IP-based communications.
ROI is unbeatable. Although the benefits of VoIP are clear from a productivity standpoint, the ROI of migrating from digital telephony to VoIP is often impaired by the costs of upgrading facilities to CAT5/6 cabling, and by the ongoing expense of managing data throughput priorities in order maintain (or at least come close to) the quality of voice service and reliability that clients have become accustomed to via digital switched telephony. Broadband networks will only become more clogged with SaaS applications and streaming media over time, so VoIP QoS is likely to remain at risk. Business disruption during VoIP deployment is a significant issue because it could take days or weeks to recable and tune. By contrast, deployment of the Phybridge solution could take, literally, minutes. For proof, check out this video.
Intrinsic network redundancy. The data network itself represents a single point of failure risk in the case of network disruption. Not only are data systems down, but so are communications systems; essentially a company is "out-of-business" for as long as the data network is down. For many 24-7 enterprises, this is an untenable risk. By repurposing the twisted pair for VoIP, it becomes an intrinsically redundant parallel-but-connected network for communications. In addition, the Uniphyer solution also provides power to the handset, which makes the network even more redundant in the case of a power outage to the data network.
Who cares? Telecom vendors. Since the introduction of VoIP about a decade ago, Cisco Systems (CSCO) has chewed into about 25% of telephony market share at the expense of telecom gear and phone service vendors like Nortel (NT) (no explanation required here), Avaya, and Mitel among others. A good portion of the other 75% of the remaining market is at risk as big switches deployed at the beginning of this decade come to end-of-life. Needless to say, the entire telecom ecosystem is beginning to take notice of what Phybridge is doing. With the current plug-and-play Uniphyer appliance, telecom vendors can extend the life of switches that would otherwise become irrelevant, while extending the life of a previously considered obsolete network, and delivering new revenue streams to telecom services vendors that Cisco cannot otherwise access. Copper becomes viable again.
Who cares? Anyone in a concrete building. Of the 75% of the telephony market not yet tapped by Cisco, a significant portion is simply unable to take advantage of VoIP and related converged services because it is cost prohibitive to upgrade networks. In particular, the health care sector is watching developments at Phybridge closely. Hospitals throughout North America constructed prior to this decade do not have adequate cable infrastructure for VoIP deployment, and hospital administrators do not want to disturb the nastiness that is behind most of the walls, including (believe it or not) asbestos. Although healthcare services could benefit greatly from VoIP, there has been no plausible way to upgrade. Similarly, class "C" buildings, heritage buildings, hotels, and other institutions (schools, colleges, governments) have been unable to effectively upgrade. Until now. In partnership with Phybridge, phone services vendors now have a wide swath of previously closed market open to them. And Cisco can't get at it.
Can Phybridge fulfill its promise? Among Canadian technology startups, conditions for success are particularly brutal because they are often under-capitalized as domestic investors remain fixated on resources and commodities. Even among technology investors, telecom is not sexy, as most investors (and this blog) are focused on high profile technologies such as SaaS, mobility, social networking, broadband, and virtualization. There is even less sexy in twisted pair, which could be a source of skepticism among jaded investors previously burnt by failed telecom investments. That is, until one digs into the problem and discovers a multi-billion dollar greenfield opportunity with a sense of urgency.
Management has horsepower and a track record. The founding partners John Croce and Oliver Emmanuel (the brain behind the solution) have managed to scrape together somewhere north of $1 million from friends and family earlier this year. Currentl operations are very lean with a monthly burn rate of less than $50k. The business potential associated with the technology has managed to attract heavy-hitter senior management from Avaya including Steven Fair, who led the approximate $200+ million annual sales organization in Canada and was, for a time, interim President. John Croce himself has generated significant returns for shareholders with previous successful start-up ventures in financial service and real estate. He has a track record of proven success.
Channels blooming. Recently, the company has also been busy signing up significant distribution partners including Jenne and Westcon among others. In discussions with management at Jenne ( a +$100 m operation in Ohio), it has already educated hundreds of resellers who immediately "get it" and are already beginning to sell into the US market.
The labs are surprised. Interestingly, the solution has also been "fast-tracked" into the labs of many of the major telecom vendors in North America. The initial response from the labs is to be "blown away", because most thought a solution similar to Uniphyer to be impossible.
References are real. Beta customers so far have been impressed with the ease of deployment and the quality of service. For one client in Ottawa, several dozen endpoints were migrated to VoIP and brought live in less than 90 minutes from start to phone calls.
Scaling risk should be noted. Operationally, the Company has outsourced manufacturing of the appliances to China for its first clients and partners. Investors should take note that there could be some short-term working capital risk associated with its growth potential. Within a few days after official release, the Company already has a sales funnel for Uniphyer valued in excess of $5 million. The company has the sales horsepower on board to close, which could create a parabolic growth curve.
Over time, (actually as soon as possible) the Company expects to license the intellectual property to telecom vendors in order to maximize margins, and to improve scalability.
Clear path to exit; but will shareholders get maximum value? With the amount of interest shown in the technology by telecom services vendors throughout North America, there is likely a clear path to future exit for shareholders. The seminal nature of the technology has attracted early executional horsepower, so there are strong indicators that the company may be able to fulfill its latent potential. However, the big question will be whether the company can be capitalized to the point where it can maximize success and shareholder value before it gets taken out. John Croce has done it before, so there is good chance that he can do it again. Smart investors should take note...and begin pounding on his door.
Disclosure: I own shares of CSCO, although I do not own shares of any of the other companies mentioned in this post.
Phybridge is an early-stage startup (and graduate of the UofT's Accelerator incubator) located in Mississauga that has developed technology that makes twisted pair copper (essentially the phone line) a viable Internet Protocol-based (IP) high speed data network.
Introducing VoIP over twisted pair. The first killer application is to enable Voice over Internet Protocol (VoIP) with a single point of convergence to the data network in the server closet. Until Phybridge's introduction of Uniphyer a few weeks ago, there was no simple and cost effective way for enterprises to repurpose twisted pair to deliver the productivity benefits of converged IP-based communications.
ROI is unbeatable. Although the benefits of VoIP are clear from a productivity standpoint, the ROI of migrating from digital telephony to VoIP is often impaired by the costs of upgrading facilities to CAT5/6 cabling, and by the ongoing expense of managing data throughput priorities in order maintain (or at least come close to) the quality of voice service and reliability that clients have become accustomed to via digital switched telephony. Broadband networks will only become more clogged with SaaS applications and streaming media over time, so VoIP QoS is likely to remain at risk. Business disruption during VoIP deployment is a significant issue because it could take days or weeks to recable and tune. By contrast, deployment of the Phybridge solution could take, literally, minutes. For proof, check out this video.
Intrinsic network redundancy. The data network itself represents a single point of failure risk in the case of network disruption. Not only are data systems down, but so are communications systems; essentially a company is "out-of-business" for as long as the data network is down. For many 24-7 enterprises, this is an untenable risk. By repurposing the twisted pair for VoIP, it becomes an intrinsically redundant parallel-but-connected network for communications. In addition, the Uniphyer solution also provides power to the handset, which makes the network even more redundant in the case of a power outage to the data network.
Who cares? Telecom vendors. Since the introduction of VoIP about a decade ago, Cisco Systems (CSCO) has chewed into about 25% of telephony market share at the expense of telecom gear and phone service vendors like Nortel (NT) (no explanation required here), Avaya, and Mitel among others. A good portion of the other 75% of the remaining market is at risk as big switches deployed at the beginning of this decade come to end-of-life. Needless to say, the entire telecom ecosystem is beginning to take notice of what Phybridge is doing. With the current plug-and-play Uniphyer appliance, telecom vendors can extend the life of switches that would otherwise become irrelevant, while extending the life of a previously considered obsolete network, and delivering new revenue streams to telecom services vendors that Cisco cannot otherwise access. Copper becomes viable again.
Who cares? Anyone in a concrete building. Of the 75% of the telephony market not yet tapped by Cisco, a significant portion is simply unable to take advantage of VoIP and related converged services because it is cost prohibitive to upgrade networks. In particular, the health care sector is watching developments at Phybridge closely. Hospitals throughout North America constructed prior to this decade do not have adequate cable infrastructure for VoIP deployment, and hospital administrators do not want to disturb the nastiness that is behind most of the walls, including (believe it or not) asbestos. Although healthcare services could benefit greatly from VoIP, there has been no plausible way to upgrade. Similarly, class "C" buildings, heritage buildings, hotels, and other institutions (schools, colleges, governments) have been unable to effectively upgrade. Until now. In partnership with Phybridge, phone services vendors now have a wide swath of previously closed market open to them. And Cisco can't get at it.
Can Phybridge fulfill its promise? Among Canadian technology startups, conditions for success are particularly brutal because they are often under-capitalized as domestic investors remain fixated on resources and commodities. Even among technology investors, telecom is not sexy, as most investors (and this blog) are focused on high profile technologies such as SaaS, mobility, social networking, broadband, and virtualization. There is even less sexy in twisted pair, which could be a source of skepticism among jaded investors previously burnt by failed telecom investments. That is, until one digs into the problem and discovers a multi-billion dollar greenfield opportunity with a sense of urgency.
Management has horsepower and a track record. The founding partners John Croce and Oliver Emmanuel (the brain behind the solution) have managed to scrape together somewhere north of $1 million from friends and family earlier this year. Currentl operations are very lean with a monthly burn rate of less than $50k. The business potential associated with the technology has managed to attract heavy-hitter senior management from Avaya including Steven Fair, who led the approximate $200+ million annual sales organization in Canada and was, for a time, interim President. John Croce himself has generated significant returns for shareholders with previous successful start-up ventures in financial service and real estate. He has a track record of proven success.
Channels blooming. Recently, the company has also been busy signing up significant distribution partners including Jenne and Westcon among others. In discussions with management at Jenne ( a +$100 m operation in Ohio), it has already educated hundreds of resellers who immediately "get it" and are already beginning to sell into the US market.
The labs are surprised. Interestingly, the solution has also been "fast-tracked" into the labs of many of the major telecom vendors in North America. The initial response from the labs is to be "blown away", because most thought a solution similar to Uniphyer to be impossible.
References are real. Beta customers so far have been impressed with the ease of deployment and the quality of service. For one client in Ottawa, several dozen endpoints were migrated to VoIP and brought live in less than 90 minutes from start to phone calls.
Scaling risk should be noted. Operationally, the Company has outsourced manufacturing of the appliances to China for its first clients and partners. Investors should take note that there could be some short-term working capital risk associated with its growth potential. Within a few days after official release, the Company already has a sales funnel for Uniphyer valued in excess of $5 million. The company has the sales horsepower on board to close, which could create a parabolic growth curve.
Over time, (actually as soon as possible) the Company expects to license the intellectual property to telecom vendors in order to maximize margins, and to improve scalability.
Clear path to exit; but will shareholders get maximum value? With the amount of interest shown in the technology by telecom services vendors throughout North America, there is likely a clear path to future exit for shareholders. The seminal nature of the technology has attracted early executional horsepower, so there are strong indicators that the company may be able to fulfill its latent potential. However, the big question will be whether the company can be capitalized to the point where it can maximize success and shareholder value before it gets taken out. John Croce has done it before, so there is good chance that he can do it again. Smart investors should take note...and begin pounding on his door.
Disclosure: I own shares of CSCO, although I do not own shares of any of the other companies mentioned in this post.
2/17/09
Stimulus Packages and Healthcare...A Checkup on the Eve of the $787 Billion Federal Stimulus Package
On November 13, 2008 I wrote a blog entry called Obama and Healthcare Technology regarding the potential for an Obama Healthcare plan to benefit some publicly-listed Canadian healthcare technology vendors in the future. At the time, there was speculation that the new President could allocate up to $100 million towards health care initiatives during his first term. During the 96 days since that was written, a lot has happened...and a lot has changed. What a ride!
First, the raging worldwide economic recession has forced the new administration to ratchet up the stimulus spending initiated by the outgoing Bush regime. The immediate economic crisis, and continued intransigent partisanship has forced the Obama White House to re-prioritize programs and requisite spending. The impact is a more honed healthcare budget focused on Electronic Health Records (EHR), and related network infrastructure. The total bill for this initiative encapsulated in the $787 Billion U.S. Stimulus Package is $19 Billion, or 2.4% of the total package and 6.1% of new spending in the package. The U.S Government plans to spend $63.50 per U.S citizen, or $165 per household, to computerize all health records within 5 years. (Source for population data: US Census(2006))
The last 96 days has been pretty eventful in Canada, also. The deepening recession almost brought down the minority government and has resulted in a $64 Billion Canadian Government Stimulus Budget with $0.5 Billion or 4.1% of all immediate infrastructure spending allocated to Electronic Medical Records (EMR). For clarity EMR and EHR could be referred to interchangeably, so I will choose to use the Canadian definition for the rest of this post.
By comparison to the American package, the Canadian Government is budgeting $14.90 per capita in immediate spending towards EMR, or $40.20 per household.(Source for population data: Statscan Census (2006)).
Notwithstanding the per capita spending levels, the focus of spending has an impact on the list of potential winners among Canadian healthcare information technology vendors. Previously, small and mid-capped vendors with significant U.S market exposure were speculated to benefit mostly from spillover effects of U.S. healthcare spending on technology. Example Companies that I referenced on November 13th included Logibec (LGI-TSX), CGI (GIB.A-TSX), and Systems Xcellence (SXC-TSX). Although these vendors should still experience some spillover benefits in the U.S. market, another group of healthcare vendors engaged directly in the EMR space are likely to experience more direct benefit. With U.S. government spending focus on EMR, along with the unexpected and immediate Canadian budget allocation, smaller vendors with footholds in the sector should be positioned to capitalize. Again, capital is the operative term.
As stated in earlier posts, the Canadian technology sector is suffering from poor liquidity, and micro-cap public entities are struggling to fund growth, often with weak balance sheets. The EMR market may be indicative of this struggle. Several public micro-cap EMR vendors including Medworxx (MWX-TSXV), Nightingale (NGH-TSXV), and Healthscreen Solutions (MDU-TSXV) stand to benefit directly from Canadian federal spending on EMR. However, these entities may require future growth capital to take advantage of the federally accelerated domestic opportunities. As well, as stated in previous blog entries, this is a sector that could benefit from consolidation because, combined with small regional privately funded Companies, there may be as many as 50 healthcare software vendors vying for between $1.5 billion and $2.0 billion in potential annualized domestic EMR revenue. Clearly, the space is highly fragmented, and few would have the scale to compete effectively for U.S. market share. Consolidation would create scale, which could potentially create more liquidity (if the consolidators were to be public) and shareholder value. Essentially, the sector could benefit from fewer, stronger players competing in the domestic niche with more robust potential for U.S. expansion.
Business models matter. Investors interested in benefitting from focus on the sector should consider how vendors plan to scale. Investors should take heed of the Medcomsoft failure, a vendor with seemingly outstanding technology, but with a poor commercialization strategy. At risk of dating myself, I was involved in a plan (by the Canadian banks) to leverage smart health cards to help create central EMRs in the early 1990s. That concept failed, and since then and despite the nearly universally understood potential benefit to stakeholders, EMR has struggled to gain acceptance in the health care industry. It is easiest to blame a lack of political will, and professional arrogance among healthcare professionals for the collective lack of success in creating effective EMR. However, the main issue may be that previous business models have generally failed to align interests among stakeholders. The numbers seem to support this. Dr. Alan Brookstone and Greg Pothan issued a study in August 2008 with the following data:
Of 23, 292 Specialist and General Practice (GP) Doctors surveyed at the end of 2007, 70% still used paper-based medical records despite over a decade of effort by vendors to move Doctors towards electronic EMR. Even among those converting to EMR, most do not fully embrace the switchover because 16.7% use a combination of paper and electronic medical records. Only 13.7% of those surveyed have switched to fully electronic records (remember this is after more than a decade of effort). Those Doctors are benefitting from greater efficiencies which decrease wait-time by 38% compared to paper-based doctors, and by 62% compared to combo practices. Electronic EMR doctors can also benefit from servicing 41% more new patients annually than paper-based Doctors. With a well-documented Doctor shortage, which leaves between 4 million and 5 million Canadians without access to a family Doctor, the federal government recognizes the potential benefit of scale and through-put associated with electronic EMRs. Notwithstanding, based on these data, there is a lot of room for domestic market penetration.
Circling back to business models that matter, if Software-as-a-Service (SaaS) works for the enterprise, it should work for the GP. In general, Doctors do not want an IT professional on staff, nor do they want to be database managers. In general, the resistance to EMR has not been about professional arrogance, it has been about practice management. At this point, the likely winners in the space are those that make EMR adoption transparent, easy, and economically beneficial. Solutions with the least friction should win. This probably means that business models offering SaaS and outsourced EMR with minimal upfront investment, integration, training, and maintenance should win. Vendors with this model already deployed should be early consolidators. Vendors that can adopt this model quickly could be secondary consolidators. Investors need to recognize the models as they consider the space.
To summarize:
First, the raging worldwide economic recession has forced the new administration to ratchet up the stimulus spending initiated by the outgoing Bush regime. The immediate economic crisis, and continued intransigent partisanship has forced the Obama White House to re-prioritize programs and requisite spending. The impact is a more honed healthcare budget focused on Electronic Health Records (EHR), and related network infrastructure. The total bill for this initiative encapsulated in the $787 Billion U.S. Stimulus Package is $19 Billion, or 2.4% of the total package and 6.1% of new spending in the package. The U.S Government plans to spend $63.50 per U.S citizen, or $165 per household, to computerize all health records within 5 years. (Source for population data: US Census(2006))
The last 96 days has been pretty eventful in Canada, also. The deepening recession almost brought down the minority government and has resulted in a $64 Billion Canadian Government Stimulus Budget with $0.5 Billion or 4.1% of all immediate infrastructure spending allocated to Electronic Medical Records (EMR). For clarity EMR and EHR could be referred to interchangeably, so I will choose to use the Canadian definition for the rest of this post.
By comparison to the American package, the Canadian Government is budgeting $14.90 per capita in immediate spending towards EMR, or $40.20 per household.(Source for population data: Statscan Census (2006)).
Notwithstanding the per capita spending levels, the focus of spending has an impact on the list of potential winners among Canadian healthcare information technology vendors. Previously, small and mid-capped vendors with significant U.S market exposure were speculated to benefit mostly from spillover effects of U.S. healthcare spending on technology. Example Companies that I referenced on November 13th included Logibec (LGI-TSX), CGI (GIB.A-TSX), and Systems Xcellence (SXC-TSX). Although these vendors should still experience some spillover benefits in the U.S. market, another group of healthcare vendors engaged directly in the EMR space are likely to experience more direct benefit. With U.S. government spending focus on EMR, along with the unexpected and immediate Canadian budget allocation, smaller vendors with footholds in the sector should be positioned to capitalize. Again, capital is the operative term.
As stated in earlier posts, the Canadian technology sector is suffering from poor liquidity, and micro-cap public entities are struggling to fund growth, often with weak balance sheets. The EMR market may be indicative of this struggle. Several public micro-cap EMR vendors including Medworxx (MWX-TSXV), Nightingale (NGH-TSXV), and Healthscreen Solutions (MDU-TSXV) stand to benefit directly from Canadian federal spending on EMR. However, these entities may require future growth capital to take advantage of the federally accelerated domestic opportunities. As well, as stated in previous blog entries, this is a sector that could benefit from consolidation because, combined with small regional privately funded Companies, there may be as many as 50 healthcare software vendors vying for between $1.5 billion and $2.0 billion in potential annualized domestic EMR revenue. Clearly, the space is highly fragmented, and few would have the scale to compete effectively for U.S. market share. Consolidation would create scale, which could potentially create more liquidity (if the consolidators were to be public) and shareholder value. Essentially, the sector could benefit from fewer, stronger players competing in the domestic niche with more robust potential for U.S. expansion.
Business models matter. Investors interested in benefitting from focus on the sector should consider how vendors plan to scale. Investors should take heed of the Medcomsoft failure, a vendor with seemingly outstanding technology, but with a poor commercialization strategy. At risk of dating myself, I was involved in a plan (by the Canadian banks) to leverage smart health cards to help create central EMRs in the early 1990s. That concept failed, and since then and despite the nearly universally understood potential benefit to stakeholders, EMR has struggled to gain acceptance in the health care industry. It is easiest to blame a lack of political will, and professional arrogance among healthcare professionals for the collective lack of success in creating effective EMR. However, the main issue may be that previous business models have generally failed to align interests among stakeholders. The numbers seem to support this. Dr. Alan Brookstone and Greg Pothan issued a study in August 2008 with the following data:
Of 23, 292 Specialist and General Practice (GP) Doctors surveyed at the end of 2007, 70% still used paper-based medical records despite over a decade of effort by vendors to move Doctors towards electronic EMR. Even among those converting to EMR, most do not fully embrace the switchover because 16.7% use a combination of paper and electronic medical records. Only 13.7% of those surveyed have switched to fully electronic records (remember this is after more than a decade of effort). Those Doctors are benefitting from greater efficiencies which decrease wait-time by 38% compared to paper-based doctors, and by 62% compared to combo practices. Electronic EMR doctors can also benefit from servicing 41% more new patients annually than paper-based Doctors. With a well-documented Doctor shortage, which leaves between 4 million and 5 million Canadians without access to a family Doctor, the federal government recognizes the potential benefit of scale and through-put associated with electronic EMRs. Notwithstanding, based on these data, there is a lot of room for domestic market penetration.
Circling back to business models that matter, if Software-as-a-Service (SaaS) works for the enterprise, it should work for the GP. In general, Doctors do not want an IT professional on staff, nor do they want to be database managers. In general, the resistance to EMR has not been about professional arrogance, it has been about practice management. At this point, the likely winners in the space are those that make EMR adoption transparent, easy, and economically beneficial. Solutions with the least friction should win. This probably means that business models offering SaaS and outsourced EMR with minimal upfront investment, integration, training, and maintenance should win. Vendors with this model already deployed should be early consolidators. Vendors that can adopt this model quickly could be secondary consolidators. Investors need to recognize the models as they consider the space.
To summarize:
- Some small-cap and mid-cap healthcare software vendors should still benefit from the U.S. stimulus package, however the focus on EMR may limit some of the benefits compared to the original $100 million healthcare technology plan contemplated by the Obama Administration soon after the election.
- The Canadian stimulus budget should offer healthcare software vendors that are focused on EMR solutions more immediate domestic market opportunities than contemplated last fall prior to the budget.
- The current $1.5-$2.0 billion potential annual domestic EMR market is gaining momentum, although it is highly fragmented and under-capitalized, with possible consolidation required for scale.
- SaaS and/or outsourced EMR business models are likely best aligned to the remaining 86.6% of GPs yet to adopt EMR fully.
- Saas and/or outsourced EMR vendors with high margin recurring revenue are also possibly the best candidates as market consolidators.
- Domestic EMR vendors with scale and solid balance sheets could gain access to the U.S. EMH market directly, or through partnerships.
- Multinationals that may soon take notice in Canada include IBM (IBM-NYSE), and Microsoft (MSFT-Q) among others.
There is a lot of discussion regarding EMR, and a lot of blogs on the subject. I find Canadian EMR particularly informative.
I do not own shares of any of the public Companies mentioned in this post, nor do I receive compensation in any form from those Companies, or from Canadian EMR.
11/13/08
Obama and Healthcare Technology
The Obama presidency is probably the most anticipated since Reagan. He has instilled a sense of hope in the world even as it sinks into the most severe economic recession since, well, the beginning of the Reagan era.
The man has a lot to do, although he is running out of levers even before he enters office. However, lets assume that he is able to do what he says he can do and he finds $100 billion or so to initiate his healthcare program. Is there a spillover effect that benefits Canadian IT vendors in the healthcare sector? Possibly. As I outline below, it depends on political will. Notwithstanding, I would argue that those Companies that are already in the US market and employing Americans may benefit most.
Throughout his campaign, Obama stated that one of the cornerstones to his healthcare plan was an investment in information technology. His objective is to find ways to consolidate medical records and to improve access by both health care workers and patients to consolidated medical information on every American securely.
Clearly the capacity and the capabilities already exist to do this. Most major internet portals and especially social networks have gathered significant amounts of data about hundreds of millions of people in a fairly short period of time. SaaS providers have been building sophisticated permission and privacy algorithms for years, so secure access to private information should be a no brainer. In fact, since the early stages of the commercial internet, the technical capability has been there to establish centralized healthcare databases that could help improve doctors' access to and understanding of a patient's health situation. There has been limited political will.
The medical and pharmaceutical lobbies are among the most powerful in the United States. For decades, doctors have been resistant to information technology to the point of intransigence. Underlying this resistance has been suspicion and a "doctor knows best" attitude that has resulted in failure for many initiatives. Let's assume that Obama can instill the political will - so far he seems capable.
There are a few Canadian IT vendors that already derive a good portion of business from the needs of US hospital administrators and pharmacies including CGI Group (GIB.A.TO), Systems Excellence (SXC.TO) and Logibec (LGI.TO) among others. All three generate cash, have relatively strong balance sheets, are net income profitable and have footholds into the US healthcare sector. Systems Excellence and Logibec are healthcare pureplays and are more sensitive to conditions in the healthcare sector. Both are acquisitive, and I expect that they will continue to make strategic acquisitions as the US healthcare system undergoes its upgrade.
As Obama begins to formulate his plans, keep an eye on SXC, LGI and GIB.A because they could each be positioned to gain incremental upside. The underlying risk is that the AMA and the pharma lobbies impede Obama's progress once he enters office, which would, in turn, reduce the potential for incremental upside for these Companies.
The man has a lot to do, although he is running out of levers even before he enters office. However, lets assume that he is able to do what he says he can do and he finds $100 billion or so to initiate his healthcare program. Is there a spillover effect that benefits Canadian IT vendors in the healthcare sector? Possibly. As I outline below, it depends on political will. Notwithstanding, I would argue that those Companies that are already in the US market and employing Americans may benefit most.
Throughout his campaign, Obama stated that one of the cornerstones to his healthcare plan was an investment in information technology. His objective is to find ways to consolidate medical records and to improve access by both health care workers and patients to consolidated medical information on every American securely.
Clearly the capacity and the capabilities already exist to do this. Most major internet portals and especially social networks have gathered significant amounts of data about hundreds of millions of people in a fairly short period of time. SaaS providers have been building sophisticated permission and privacy algorithms for years, so secure access to private information should be a no brainer. In fact, since the early stages of the commercial internet, the technical capability has been there to establish centralized healthcare databases that could help improve doctors' access to and understanding of a patient's health situation. There has been limited political will.
The medical and pharmaceutical lobbies are among the most powerful in the United States. For decades, doctors have been resistant to information technology to the point of intransigence. Underlying this resistance has been suspicion and a "doctor knows best" attitude that has resulted in failure for many initiatives. Let's assume that Obama can instill the political will - so far he seems capable.
There are a few Canadian IT vendors that already derive a good portion of business from the needs of US hospital administrators and pharmacies including CGI Group (GIB.A.TO), Systems Excellence (SXC.TO) and Logibec (LGI.TO) among others. All three generate cash, have relatively strong balance sheets, are net income profitable and have footholds into the US healthcare sector. Systems Excellence and Logibec are healthcare pureplays and are more sensitive to conditions in the healthcare sector. Both are acquisitive, and I expect that they will continue to make strategic acquisitions as the US healthcare system undergoes its upgrade.
As Obama begins to formulate his plans, keep an eye on SXC, LGI and GIB.A because they could each be positioned to gain incremental upside. The underlying risk is that the AMA and the pharma lobbies impede Obama's progress once he enters office, which would, in turn, reduce the potential for incremental upside for these Companies.
Subscribe to:
Posts (Atom)