Hoping to gain a strong hold over the growing electronic medical record/practice management market, Allscripts' plans to merge with Misys Healthcare Systems, but the two might have a harder time than they expect.
Physicians, long the customer base dragging its feet on EMR implementation, want an integrated system that combines scheduling, and clinical and billing practices"it has to be seamless," said Paul Tang, vice president and chief medical information officer at the Palo Alto (Calif.) Medical Foundation and past chairman of the board of the American Medical Informatics Association.
The two former competitors face a challenge in meshing their businesses, because they have two different operations selling in the same sector, Tang said. Allscripts and Misys Healthcare will have to develop a common database to integrate their products if they want to improve the patient experience, he said. "That's the goal."
If they are successful with that integration, the deal could create a strong player in the ambulatory information technology sector, according to Michael Krouse, chief information officer and system vice president at OhioHealth, Columbus. Misys Healthcare is known for having a "solid" practice-management business among physicians who also want an EMR component, but have to go to a different vendor. Allscripts, which has that EMR, "in essence has purchased a ready-made clientele," Krouse said.
Under terms of the agreement, Misys Healthcare's London-based parent company Misys will pay $330 million to shareholders of Allscripts, Chicago, and take a 54.5% ownership stake in the new company. Allscripts' management team will continue to lead the new company, to be named Allscripts-Misys Healthcare Solutions. Executives said they hope the deal closes within six months.
Through the merger, Allscripts and Misys Healthcare will have a presence among one in three doctors in the U.S., Glen Tullman, Allscripts' chairman and chief executive officer, said during a March 18 conference call outlining the deal. The hope is to leverage the companies' network of emergency departments and discharge and billing operations, he said.
There is room for cuts where the two operations overlap. Bill Davis, chief financial officer of Allscripts, said the company expects to realize $15 million to $20 million in cost savings over the first year after the deal closes by eliminating some operations, such as discretionary marketing, research and development, and some facilities. The total cost of business integration is estimated between $7.5 million and $10 million over the first year after the close, he said.
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