It would at first seem, if not a case of a minnow swallowing a whale, then perhaps a trout taking on a salmon.
Electronic prescribing software developer Wellinx, which has no more than 1,600 doctors using its script-writing software in the U.S., bought electronic medical record vendor Purkinje of Canada, a firm that claims 3,000 EMR installations.
Two brothers -- one of whom is a financial whale, indeed -- brought this seemingly lopsided deal to a close.
Tom Doerr, M.D., is a University of Chicago Medical School graduate who still practices part time as an internist when not attending to duties as the chief medical officer and board chairman of Wellinx.
His brother is L. John Doerr of the Silicon Valley venture capital firm of Kleiner, Perkins, Caufield & Byers, who Forbes magazine crowned "the king of Sand Hill Road," referring to the Menlo Park, Calif., thoroughfare where tech VCs cluster. Forbes ranked him No. 1 on its 2005 "Midas" list of the top 100 IT dealmakers.
"The dominant owner of Wellinx is John Doerr," his brother said in a telephone interview after the merger was announced last week.
Tom Doerr, while practicing at Esse Health, a 70-physician primary-care practice based in unincorporated St. Louis County, Mo., wrote the first edition of the Esse Prescribing Guide, a paper-based decision-support tool.
He and Charles Willey, M.D., president and chief executive officer of Esse Health, co-founded Wellinx in 1999. Esse retains less than a 5% ownership interest in the IT company, Tom Doerr said.
The new company will be called Purkinje, named for Jan Purkinje, a Czech physiologist who discovered the fibers that unite the brain and the heart, but its headquarters will remain in St. Louis. Purkinje was founded in 1978.
Wellinx's Bryan Dieter will remain CEO. Fernand Taras, M.D., president and CEO of Purkinje before the merger, will continue to lead the Canadian division of the new company from its Montreal offices, Doerr said.
The merger will fill gaps in both companies' product lines, Doerr said. Purkinje's EMR didn't have the decision-support e-prescribing tool that Wellinx has, while Wellinx didn't have an EMR. In talking with payers to line up financial support for physicians as an inducement to adopt e-prescribing, most payers insisted on the combination, Doerr said.
"We think that we need to have the payers help us on the sales side and we have some cautious optimism about this," he said. "We'll have the integration of the e-prescribing and the EMR in about three months. Then we'll be off to the races." Plans also call for interfacing the EMR to a practice-management system developed by Wellinx and interfacing it with other popular back-office systems.
Doerr said he looked at more than 100 EMR systems prior to partnering with Purkinje. He said he was impressed by the company's large base of installed systems and its longevity. For larger groups, Purkinje plans to sell software licenses to the new EMR/e-prescribing system, Doerr said, but it will also offer the system to smaller groups and solo practitioners using an application service provider, or ASP, model, with Purkinje providing data storage and tech service.
"I think that's going to be the solution for the very small doctor office," he said. "We'll keep the client servers for our larger physician groups because they'll want to control the data."
Payers, who will derive a large share of the financial benefits from physician use of an e-prescribing tool and an EMR integrated into a computerized practice-management system, should also share in the expense of helping physicians install and maintain the systems, Doerr said.
"I think it's going to require a compelling economic proposition for doctors and I don't think that's coming very soon for most e-prescribing companies," Doerr said.
"Billing-services companies usually charge between 3% and 7% of a physician's practice revenues for their work." But Doerr said, "We think we can sell the whole system for that cost. There is a lot of potential for advanced capabilities with payers that could induce them to provide that support."