Part two of a two-part series (Access part one):
The numbers are staggering: Chicago-based Allscripts will borrow $577 million to free itself from majority control by British IT developer Misys and then execute a $1.3 billion stock swap to buy Atlanta-based Eclipsys. But whether the megadeal proves to be a good move for the two companies depends on how well—and how quickly—they are able to integrate their systems, one analyst notes.
“If they perform really well, this strengthens them, because this is what the market wants, inpatient and ambulatory,” said Adam Gale, president of healthcare information technology market watcher KLAS Enterprises, based in Orem, Utah. “But can they deliver it? That's a whole other question. I guarantee you that is heavy on their minds.”
For its part, Eclipsys has a “very good inpatient clinical system” that's “fantastic” on computerized physician order entry, Gale said. Allscripts, meanwhile, enjoys the largest mind share among physician groups looking to purchase an ambulatory-care electronic health-record system, he said, with one or more of Allscripts' four EHR models typically on the short list for personnel making IT purchasing decisions for physician groups.
“They have a huge marketing footprint,” Gale said. But Allscripts also has stumbled in customer-satisfaction scores recently, Gale said. “Their Enterprise EMR is for the large end of the market and it's been historically very good, but in the last 18 months, they went from an A-minus to a D-plus.”
Still, Gale said, “I think they'll be able to create a good, tight interface” between two of the companies' most popular systems, Allscripts' Enterprise EMR and Eclipsys' Sunrise Clinical Manager.
One potential customer relations minefield is deciding which of the six ambulatory EHRs the combined company will keep—Allscripts has four, Eclipsys has two—and how it will transition customers. Fortunately for the new company, Allscripts “has been doing a great job moving Misys customers” over to its Allscripts Professional EHR for smaller practices, Gale said.
Phil Pead, Eclipsys' president and CEO and the new chairman of the combined companies, said that in response to their customers' requests, the companies already have a good head start in building interfaces between the two top-end EHR systems. Pead said the company should have an integrated offering by the time the acquisition deal closes this fall.
Pead also said the new Allscripts will leverage the experience Eclipsys has gained running its own data center in Mountain Lake, N.J., particularly in providing IT services to smaller hospitals that now have difficulty running their own IT systems as independent entities.
“We think remote hosting is a very big part of our future,” Pead said.
But the long-term prognosis for many smaller, community hospitals is that “they're acquisition targets,” Pead said. For many of them, future IT services will be provided through alliances with their larger hospital counterparts.
“I don't see those guys surviving,” Pead said. “They're going to be part of a larger marketplace” by partnering with larger “hub” hospitals that will host the software applications used by the smaller community hospitals, he said.
Allscripts' purchase of Eclipsys is subject to the approval of both companies' stockholders at meetings expected to take place in September, Pead said.