The Wall Street adage is buy on the rumor, sell on the news and that was certainly half the case for Chicago-based health information technology vendor Allscripts.
Just after midday Friday, the Bloomberg business news services published a story based on undisclosed sources that publicly traded Allscripts was considering selling itself via a leverage buyout. Allscripts' common stock jumped by just over 14% to close at $12.42 a share, up from $10.88 the day before.
Allscripts spokeswoman Ariana Nikitas would neither confirm nor deny that the company is looking for a suitor.
Citing “competitive reasons,” Nikitas said, “We do not discuss rumors or speculation, one way or the other.”
The big challenge lately with Allscripts, a survivor of the dot-com boom of the late 1990s and its bust 2000, has been realigning itself after major acquisitions.
In 2008, U.K.-based Misys acquired nearly a 57% stake in Allscripts, which briefly resulted in a name change to Allscripts-Misys Healthcare Solutions.
Then, in September 2011, Misys divested itself
of most of Allscripts-Misys, the company changed its name back to Allscripts, and it remained to acquire full ownership of Eclipsys Corp., a $1.3 billion deal announced earlier that summer.
At the time, the acquisition of Atlanta-based Eclipsys—a developer of hospital EHR systems, which had a highly regarded computerized physician order entry system—gave Allscripts an entry in the hospital EHR market.
Allscripts CEO Glen Tullman remained in that position
with the merged companies, while Eclipsys President and CEO Philip Pead stayed on as board chairman. That arrangement lasted until April of this year
when Pead was ousted and three other board members resigned on the losing side of a power struggle.
One of those departing board members was Edward Kangas, a former Eclipsys board member and chairman of the board of Tenet Healthcare Corp., a major Eclipsys customer.
All three companies, Allscripts, Eclipsys and Misys, were veritable collages of acquired companies, 43 in all, according to one stock analyst's recent count.
Another problem is that the hospital EHR market is beginning to cool
as many hospitals have chosen their IT partners in the wake of passage of the American Recovery and Reinvestment Act of 2009 and its EHR incentive payment programs, which launched two years ago this fall.
Only three of the top 10 vendors of so-called “enterprise” EHR systems had net gains of larger acute-care hospital clients in 2011, according to the Orem, Utah, health IT market watcher KLAS Enterprises. That assessment was based on surveys of more than 1,600 U.S. hospitals with 200 or more beds, according to KLAS. Allscripts won two new clients in that hospital market segment, according to KLAS, but lost three hospitals to other vendors. Meanwhile, its chief rivals in the hospital clinical IT market, Epic Systems, and Cerner Corp., had market share gains that year while CPSI, which specializes in sales to small hospitals, had also had a net gain of one larger hospital.
Based on its survey respondents, KLAS said Allscripts' clients were struggling with a difficult upgrade to its latest version of a hospital EHR configured to meet federal meaningful-use certification criteria under the EHR incentive payment program. But KLAS also said that while Allscripts' EHR clinical users had historically given its hospital product high marks, satisfaction ratings for its Sunrise Clinical Manager EHR “have drifted downward as clients struggle with upgrades.”
And while the hospital market is a challenge for Allscripts, it sits solidly and enviably in the No. 2 position in ambulatory care among physicians a who have met meaningful-use targets and been paid under the Medicare EHR incentive payment program, according to data supplied by the CMS and the Office of the National Coordinator for Health Information Technology.
Through the end of May this year, Allscripts's 8,233 meaningful users account for 11.6% of the 71,183 physicians and other eligible professionals in the CMS/ONC database who had been paid under the Medicare EHR incentive payment program. Allscripts trails only No. 1 Epic Systems, with 22.7% share, but it is well ahead of No. 3 eClinicalWorks at 8.5%. Allscripts, however, ranked seventh in the CMS/ONC database of complete EHR vendors of hospital systems with just 5% of the 1,027 hospitals that had become meaningful users, well behind No. 1 Epic at 21% and Cerner 20%.