Wednesday, September 19, 2012

The Recently Concluded Listed Company Reporting Season Threw Up A Ripper in the E-Health Space.

The following was filed on the very last possible day of the reporting season by Global Health Pty Ltd. (GLH:ASX)
As I had the misfortune to own a few shares in the company a few years ago I thought I would have a browse of the Annual Report.
You can have your copy from here:
Unless I badly miss the mark this is an extremely sick little puppy we have here.
First we note:
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Revenues from ordinary activities down 21% to 4,148,000
Loss from ordinary activities after tax attributable to members up 194% to (658,000)
Loss for the period attributable to members up 204% to (657,000)
Dividends (distributions) Nil
Net tangible assets per ordinary security (0.63)¢ Prior Period (0.15)¢
Additionally we can note that the investment in support and maintenance has fallen while marketing costs have risen.
And guess what we are then told:
“Despite a 45% increase in sales and marketing expenditure to approximately $1.35M (2011: $0.926M) over the period, the expected return in new sales was not achieved.
The sales effort was directed to the business development of the Company’s:
  • MasterCare Shared electronic Medical Record,
  • ReferralNet connectivity platform, and,
  • LifeCard Personal Health Record;
to support the improved management of population health outcomes within geographical regions.”
The reasons were given as:
There were two major reasons for the lack of sales closure across the non-acute customer segment:
  •  the delivery of National e-health Infrastructure provided through government agencies was directed at vendors of GP software and trials at 12 “Wave” pilot sites. The 12 pilots were selected from 91 tenders submitted by Health Agencies. Global Health platforms were involved in 16 out of 91 submissions but  were not among the successful tenders. This effectively curtailed demand for our e-health platforms from the public sector;
  •  the government announced the establishment of 61 new Medicare Locals nationwide which replaced funding previously provided to 120 Divisions of General Practice. The new Medicare Locals, which are regional clusters representing General Practice, Specialists and Allied Health providers, were progressively operational from July 2011, January 2012 and July 2012. These new regional entities will determine demand for the Company’s eHealth platforms for population health. However, there have been significant delays in the time taken to confirm the new organizational structures and funding conditions. Consequently, demand for the Company’s eHealth platforms have slipped.
The level of sickness is clear from here:
“FORWARD OUTLOOK
Business development through organic growth is extremely sensitive to the pace and success of the government’s Health Reform agenda.
The operating profile of the Company has been adjusted to reflect the existing lack of scale and difficulty in engaging with public sector health providers especially given the poor outlook on the financial status of the three largest states – NSW, VIC & QLD and the general uncertainty of the business environment.
The results reinforce the Directors view that the Company’s lack of scale is the major impediment to improving shareholder value.
Consequently, the Company has engaged in preliminary discussions with a variety of parties to consider merger and amalgamation opportunities that can achieve the necessary tipping point in terms of scale that will rectify the current lack of shareholder value and enable EBITDA growth into the future.”
Translation - we are dead ducks and are up for sale to anyone who can help.
This view is rather confirmed by the fact that cash on hand as of June 30, 2012 was a fabulous $ 11,659.
I have to say this company really looks like a mining explorer. It has not much cash, is spending more than it earns and has taken over $20 million of funds from investors in its life. If ever something was run to pay management and staff salaries and not shareholders this is it!
It will be interesting to see what happens next. Pity they did not agree to be bought by iSoft a few years ago when it was rumoured that was on the cards.
The last point to be made about all this is just how damaging working with Government can be. It is clear at least part of the problem is government delay etc.!
Glad I sold out a good few years ago! Really pretty sad the way things have gone especially since at least some of their software seems to work pretty well.
David.

18 comments:

Anonymous said...

It's not clear to me that being purchased by iSoft would be helpful. Rumour mill says that iSoft is in a not-dissimilar position, just with a few more zeros.

Anonymous said...

It is annoying to see the impact of government interference on sales in a market where large multinational consulting companies with no medical expertise walk away with huge sums of money and deliver less than ordinary outcomes.

This has to be laid at the feet of the departments and their political masters manifesting their complete lack of concern or support for the local industry.

There are many local software companies that have suffered similarly from DOHA/Nehta's interference in the market and lack of concern for the local medical software industry.

I know a lot of people will say "oh yeah well that's business" and brush it aside with no sympathy.

But it is interesting to note that this company would have generated around $1m tax last year on revenue and wages plus employed local staff. I can't help recalling the famous $1 million a day speech from Nehta earlier this year. I wonder which day this company's tax was spent on.

What a complete stuff up the letting of this e-health work has been. When will we get some sort of audit into how and why this ?

Anonymous said...

Call me crazy, but I don't see why NEHTA should have any concern for or against the local software industry. There concern should be for eHealth solutions that help people.

Anonymous said...

While value creation and the substantial public expenditure of taxpayers monies are totally disassociated from each other in both the health and ehealth sectors, there is little to no room for profitable private enterprise to relentlessly create value in these sectors.

Current ehealth governance mindsets are “ideologically blocked" from understanding private enterprise and the value it can create within economies far more efficiently than the public sector can ever dream of, and while their heads are trapped in doomed 1970s socialistic style operating models, the public sector and its administration will continue to be an assault on the initiative and innovation latent and pent-up within the private sector.

Australia’s Health and eHealth sectors are currently NET tax taking ventures, in that they extract more from the economy than their comparable economic value creates and contributes back into the economy along with the nominal amount of taxes they pay, and while this remains the status quo, there will be no health reform but a continued increasing and adverse drag on the economy.

This results from a pure policy and governance failure for the administration of the healthcare and ehealth sectors, and the blame lays squarely at the feet of our elected political representatives and their supporting bureaucratic self-serving mandarins!

"Terminal Decline" (Khadra, 2010)

http://www.randomhouse.com.au/books/mohamed-khadra/terminal-decline-9781864711370.aspx

Anonymous said...

"Call me crazy, but I don't see why NEHTA should have any concern for or against the local software industry. There (sic) concern should be for eHealth solutions that help people."

Ignorance is both blissful and unbelievably unconscionable in this instance!

Explains it all really, nothing else to say or add for what's obviously and blatantly wrong with this picture.

Anonymous said...

Global Health should take on the only sensible strategy in this market. Look at what NEHTA is pushing and run as far away from it as possible and do something useful. They are expert at sucking in private companies, extracting as much information as possible and then screwing them behind their backs. Luckily NEHTA would not know a good idea when it was staring them in the face, so its never to late to run.

Everything about NEHTA is a case study in how not to do software. They need to be unfunded as they lash out at anyone who competes with them, especially if they actually succeed, and thats anyone who knows anything about health IT.

At some point this parrot will be identified as pushing up daisies. The stench is overpowering.

Anonymous said...

to Anon, 9/19/2012 09:32:00 PM
'there is little to no room for profitable private enterprise to relentlessly create value in these sectors. Current ehealth governance mindsets are “ideologically blocked" from understanding private enterprise and the value it can create within economies far more efficiently than the public sector can ever dream of"

Great, present the evidence for your statement and you will get the right attention for your proposal.

I suspect the only evidence for supposed value creation (in a sector that is supposed to support all Australians to receive quality healthcare) will point to company profits and shareholder returns.

Anonymous said...

"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"
Ronald Reagan

Anonymous said...

Ah the “Anti-Capitalist Mentality” rears its predictable head and demands evidence that private sector solutions are more effective and efficient than publicly funded and administered alternatives, without providing any evidence of their own to the contrary??

You only have to look yourself around the world since privatisation has provided greater value, more efficient and effective services across most industries since the 1970s to see the evidence for yourself first hand, unless you choose to maintain a state of complete denial that this indeed is the case?

But since you’re kind enough to ask, please indulge yourself on the following links and educate yourself at your own leisure!

The Anti-Capitalistic Mentality (Mises, 1956) (http://mises.org/etexts/anticap.pdf)

A Reading List on the Ills and Failures of Socialised Healthcare: (http://mises.org/daily/3737/)

Our very real medical crisis has been the product of massive government intervention, state and federal, throughout the century; in particular, an artificial boosting of demand coupled with an artificial restriction of supply. The result has been accelerating high prices and deterioration of patient care. And next, socialized medicine could easily bring us to the vaunted medical status of the Soviet Union: everyone has the right to free medical care, but there is, in effect, no medicine and no care.
(http://mises.org/daily/6099/Government-Medical-Insurance)

Private-Sector Healthcare Leads the Way (http://mises.org/daily/3233)
“With the socialization of the health care system through institutions such as Medicaid and Medicare and the regulation of the insurance industry (by restricting an insurer’s right of refusal: to exclude any individual risk as uninsurable, and discriminate freely, according to actuarial methods, between different group risks) a monstrous machinery of wealth and income redistribution at the expense of responsible individuals and low-risk groups in favor of irresponsible actors and high-risk groups has been put in motion.”
–Hans-Hermann Hoppe, Democracy: The God That Failed

Anonymous said...

It is an interesting philosophical question - is private or public health care better? There are advantages to both.

In a strictly pragmatic sense, the question is more one of whether there are really private business models here. So far as I can tell most things that happen in health care in Australia (including much of the software work) are ultimately funded by the govt. As such, it is legitimate for government to ask whether a single central system is more efficient than diverse individual systems.

I think the answer they currently have is that elements of this are infrastructure like - it makes no sense to have two healthcare identifiers, it makes no sense to have two central registries of documents. To the extent that having two of any of these just leads to paying twice for the same thing (and worse, then paying to connect the two) then from a govt (and taxpayer) funding viewpoing, go with the central option.

Other elements of the solution do rely on implementation at the user end, and those seem places where competition and innovation can lead to better solutions over time.

Bernard Robertson-Dunn said...

Anon said

"It is an interesting philosophical question - is private or public health care better? There are advantages to both."

What does better mean? What are your criteria for comparison?

" - it makes no sense to have two healthcare identifiers, it makes no sense to have two central registries of documents."

It might make sense if all the alternatives are worse solutions. I haven't seen a set of solutions or their comparisons against any criteria.

"Other elements of the solution do rely on implementation at the user end, and those seem places where competition and innovation can lead to better solutions over time.

What does better mean? What are your criteria for comparison?

If "better" cannot be defined and there are no criteria for comparison, then a big bang, one off, solution is impossible.

The only other approach is an evolutionary one. Lots of solutions most of which die off because they do not solve, or contribute to the solution of, the problem.

It might sound and seem a terrible way to move forward, and it is. The only advantages it has as a strategy are 1) all other strategies are much worse. and 2) it works.

I'll qualify that with: as long as enough resources are provided, over long enough and bad solutions are allowed to die quickly.

And one last observation, governments are not good at a) innovation b) picking winners c) adapting to change. What they can be good at is implementing large stable solutions effectively and efficiently - sometimes.

And bringing this back to the PCEHR:

->It's supposed to be innovative
->NEHTA has been trying to pick winners
->NEHTA is trying to invoke major change
->eHealth is not a stable environment
->There is poor, or no, technical leadership

Anonymous said...

I am just amazed that someone would object to private software innovation, with passionate people risking their own money and time to try and make a difference, cast as some sort of undesirable activity...

Meanwhile the fools at NEHTA and DOHA are lining the pockets of large consultancy firms, who have little knowledge, let alone passion and manage to extract millions for the public purse and deliver so little. They do so little so well however.

That someone is so scared of an individual making, at most a few million dollars for years of work, while happily allowing billions to be spent while delivering virtually nothing just shocks me. It does fit well with many personalities at NEHTA, who I am sure plot the downfall of private competitors. Alas for them, they are still such a joke. The lack of respect for Nehta's opinion must really be cutting. The passionate private players will play on long after the jig is up at Nehta, I welcome some overdue cost cutting. I can't imagine there are many, well any, of Nehtas executives who would be sought after by industry when this happens.

Anonymous said...

I won't stereotype about NEHTA/DOHA because there are hard working people in there at the lower levels, but the evidence of what the upper echelon has done is clearly there:

Large generic multinational consultancies -- hundreds of millions for nothing delivered.
Local small medical software companies -- bugger all money and a heavily distorted marketplace.

Someone at NEHTA/DOHA needs to have a bloody good look at themselves, and someone in government needs to ask why we paid so much money for what was delivered.

I am sure the politicians would be horrified to think they NEHTA/DOHA were anti local medical software small business.

The record speaks for itself, shame on them.

Anonymous said...

So, can I just say that some of these comments clearly come from those involved in the local software industry.

As someone working for a "large generic consulting firm" can I object on behalf of my colleagues to the characterisation of having little knowledge let alone passion. A lot of people worked very hard to get where we are, and there was no lack of passion. I can understand those who call into question whether it's a good idea (even if I disagree with them), but it's plain rude to insult people you've never met.

It isn't necessary to believe that other people are incompetent in order to believe that you yourself are competent.

Anonymous said...

That someone thinks they have done a good job, let alone value for money says it all. The money has been mostly wasted and what has been delivered is not value for money. That someone thinks it is worries me greatly!! I am sure the individuals involved are decent people, learning on the job, but they are a long way off the track in the weeds, at the taxpayers considerable expense.

Anonymous said...

Dear large generic consulting firm worker, you sound competent and altruistic- come and join us working where it counts for an honest wage- we need you! You may not be able to afford an expensive suit, but we will like you for who you are and what you do!

Bernard Robertson-Dunn said...

Dear large generic consulting firm worker, two things:

1 It worries me that you and some others on this blog think that hard work is something to brag about. IMHO, competency and good decisions are what matter, not how hard you work. It also worries me that you got where you did in your organisation through hard work and passion. I’d rather employ and work with smart, competent and efficient people than those who think that billable hours is what matters.

2. All the evidence I have seen leads me to the conclusion that this is a project well on its way to failure. Having reviewed a number of failed large IT system projects, the PCEHR has all the same signs as they did. My feedback on the ConOp said just that, but as far as I can see my observations have been ignored.

If this system fails, then I think that the community would be justified in feeling insulted. Large amounts of tax payer’s money will have gone to waste; money that may well have been better used doing something else.

If people’s privacy is compromised, they will be entitled to feel more than a little insulted. If patients’ health care is compromised I think they are likely to feel far more than insulted.

If any of these things eventuate, will you feel guilty? sorry? repentant? Or will you just feel insulted because some informed members of the public who, after all are helping to pay for this system, think you are not doing a very good job, even if you are working hard and being paid by the hour?

Quite frankly, I care more about the community and the patients being insulted and potentially harmed, than I do about you and your colleagues.

BTW, thank you for your posting. IMHO it’s more evidence to be considered when assessing this project. And IMHO, it’s not looking good.

And as always, show me evidence of success and I’ll change my opinions. I’ll also say sorry if I’ve unfairly insulted anyone.

Anonymous said...

"As someone working for a "large generic consulting firm" can I object on behalf of my colleagues to the characterisation of having little knowledge let alone passion."

Sure you can and I hear you.

But IMHO it does look like the taxpayer has paid over a hundred million dollars for a system that has a confusing interface cryptic error messaging, has no usable clinical content apart from flaky links to claims information which is not really clinical and very little industry buy in. It has an absolutely minimal number of patients enrolled and is costing the taxpayer another $47 million dollars to support for 2 years?

Can I object to that on behalf of everyone not at the trough and working in the local medical software industry?