Quote Of The Year

Timeless Quotes - Sadly The Late Paul Shetler - "Its not Your Health Record it's a Government Record Of Your Health Information"

or

H. L. Mencken - "For every complex problem there is an answer that is clear, simple, and wrong."

Saturday, October 21, 2006

How Did iSoft Get into So Much Trouble?

The main news from iSoft’s Annual General Meeting last Tuesday is that the company is in discussions with possible suitors to be purchased and hopefully re-financed and stabilised. Unless a suitable suitor can be reasonably quickly located there is a real risk that many iSoft customers could find themselves “on their own” from an IT perspective. This would be a major distraction from the provision of patient care in those organisations and possibly even cost more than just money and inconvenience.

Anyone with any familiarity with the Health IT industry will be aware that this is not the first time there has been the need for merger and acquisition activity to bale out Health IT providers and regular readers will remember I pointed out the need for commercial due diligence as part of the vendor selection process a week or so ago.

Isoft’s history, from its web-site, is interesting.

2005
Acquisition of Novasoft Sanidad S.A.
2004
World-wide strategic alliance with Microsoft
2003
Merger with Torex plc
2002
Acquisition of Revive Group Limited
Acquisition of Paramedical Pty Limited
Acquisition of healthcare business of Northgate Information Solutions plc
Microsoft global launch partner, and the only European software partner for the Windows XP Tablet PC launch
2001
Dedicated offshore development business established in Chennai, India
Acquisition of ACT Medisys Limited
Acquisition of Eclipsys Limited and Eclipsys Pty Limited
2000
Full listing on London Stock Exchange
1999
Only Microsoft SQL Server 7.0 launch partner in UK health
Acquisition of CSC’s Australian healthcare systems business
1998
MBO by senior executives to create iSOFT
1994
Founded a healthcare information systems business within KPMG

What I see in this history is a company founded by some Health IT consultants that took advantage of the dot.com boom to conduct an Initial Public Offering and used the resulting funds to grow by acquisition of a range of smaller Health IT companies.

The Management Buy Out was worth just £12m, but within six years the Manchester-based IT group had won a £300m contract and pushed itself to the brink of the FTSE-100 with a market cap of £950m. It’s now only £100m.

Of note, early on, is the purchase of the CSC Australian Healthcare Systems business. This purchase was of the support contracts for NSW developed hospital systems, among other things. These systems were at least a decade old at that stage and would hardly have been an ideal base to build a modern Health IT business.

The acquisition of at least five different companies to provide a hospital solution would have posed a very substantial integration task to have iSoft offer a coherent hospital system solution and, as far as can be told, that task has not, nor will never, be achieved. What iSoft has attempted, instead, is to continue to sell products from their acquisition phase with the promise that customers who purchase now would be able to transit to a newly developed seamless product based on modern and highly advanced technology.

To stay afloat and support the development of the new product – termed Lorenzo – iSoft has used the maintenance fees from the older products in both the purchased and newly installed legacy product base (products such a iPIM etc). The problem with this is that they find themselves support multiple patient management, laboratory and other clinical systems – all of which consume available skills and resources.

Lorenzo has been in planning and development since 2002/3 and is now not expected to be ready for implementation until 2008, if ever.

What has gone wrong with the Lorenzo development? Among the factors I would consider to be important are the following:

1. The technical architecture, when Lorenzo was planned, was quite “bleeding edge” (Microsoft .Net and SQL Server etc). Successful Health IT developers typically stay well to the back of the bleeding edge and are very technically conservative to assist with stability and reliability.

2. The complexity of developing a full function, fully integrated modern Hospital Information System was probably underestimated. The successful systems in this space have typically taken very large sums of money to develop and have required input from a large number of clinical experts working with software developers. The use of remote development in India may not have been as effective as it could have been.

3. The need to provide an upgrade path from products that were still being sold to the planned Lorenzo may have made development more difficult.

In addition to the technical and development complexity facing the company there is also a sense that there was at least some overselling of what had actually been achieved. My personal experience with an iSoft Lorenzo demonstration (late in 2005) certainly persuaded me the product was no where near ready for implementation, and would not be when my client needed it. It took some very pointed questioning to have this fact made clear.

The following press release also could be suggested to be a trifle exaggerated!

“7 July 2006
iSOFT successfully delivers to 29 hospitals in one weekend

In just one weekend, iSOFT has installed patient management and clinical systems at 29 hospitals and health sites across Australia and New Zealand for four different health organisations.

The roll-out of iSOFT’s i.PM patient management solution to Greater Western Area Health Service (GWAHS) in NSW continued with 17 new sites going live. Calvary Healthcare Group at Hurstsville NSW becomes the ninth site within Little Company of Mary Health Care to go live with i.PM, completing phase two of its national roll-out.

In New Zealand, i.PM was installed and went live at three hospitals and one health centre as part of the contract with the West Coast District Health Board.

Waikato District Health Board in New Zealand was supplied with new advanced clinical functionality to its HealthViews electronic health record system for 250 users across seven sites to produce detailed clinical documents. Also, 500 users within the Mental Health ‘SMART’ programme can now access the documents in line with its goal to improve reporting of mental health cases across the district.

”This represents a significant commitment of our skill and resource capability over this period of time,” said Nigel Lutton, iSOFT’s Managing Director, Australia and New Zealand. “Given all of the systems went live on time and with high levels of success, it is a testimony to the skill and experience of not only our iSOFT staff, but also the customers that we have worked in partnership with to achieve these milestones.

“This not only demonstrates our significant industry commitment, but also shows the commitment of our customers to achieving healthcare improvement through the smarter use of information technology.”

iSOFT Project Manager Linda Gracie says West Coast DHB was a “dream” site: “I have never worked with customers that were so willing to take responsibility for the project and work hard to achieve their goals. This project was a true collaboration and a joy to work on.”

Wayne Champion, West Coast’s Chief Financial Manager, agrees. ”The dedication and professionalism of iSOFT’s people is impressive,” he said. “The company constantly hits some very demanding project milestones.”

The latest roll-outs at GWAHS bring the total number of hospitals there using i.PM to 35, with another 18 due shortly. The area health service is confident it will see the benefits of its IT investments in continuing decreases in the time patients spend waiting for elective surgery or emergency department treatment.

“Ready access to patient details and theatre appointments, for instance, is vital in minimising waiting times,” said GWAHS Chief Executive Dr Claire Blizard.

Meanwhile, West Coast DHB has also committed to using iSOFT’s clinical systems, with the first implementations due in August.”

I, for one, know of no patient management software, for something worthy of the name hospital, that can be installed on a weekend!

All in all the sad thing in all this is the bad name the likely failure of iSoft will give the Health IT industry and the additional work that many already stretched clinicians will have to undertake to make good replacements and so on.

One can only hope the new owners make the needed transitions as painless as possible.

The lessons from the post a week or so ago on how to avoid a "software lemon" seem even more important with the apparent failure of iSoft. It can happen to you!

David.

4 comments:

Trevor3130 said...

Good one, David.

A software company with a strong alliance with Microsoft could be in a tricky situation. MS will be looking for pioneers to get their new version up and running in health care. But Vista will require hefty investment in new hardware. Vista is being touted for its security features, and that begs the question of what is wrong with their existing XP, etc.

So, if a company is unable to "sell" the latest MS systems, will MS just stand by?

Why would MS want to buy into hospital software?

Anonymous said...

As a former iSOFT UK employee, I could see that the writing was on the wall and jumped ship. The senior management is completely incompetant and doesnt have the ability to manage the sort of growth that occured.
Lorenzo was vapourware for a long time and existed only as a front end that could inter-op with iPM & iCM both legacy products. Equally lots of the products that were generating revenue were legacy and through purchases.
I'm amazed that iSOFT have not gone bust.

Anonymous said...

Well put David. It is a shame that iSOFT finds itself in it's current predicament. I know for a fact that they certainly had the vision, the knowledge, opportunity and the customer committment to make Lorenzo a premiere system to meet the vast majority of healthcare IT needs. Unfortunately, somewhere during their short and explosive expansion the executives lost focus (greed? arrogance? ignorance? take your pick!). As for management, Senior management was largely inept (poor to no communication? over-inflated egos? personality conflicts? poor professionalism? take your pick!!); middle management (or lack there-of)... more interested in territorial definition than managing. You'd be forgiven for thinking they were a pack of dogs pissing arround and defining their boundaries! And as for the poor drones on the ground, they lacked the direction and guidance they so desperately needed and are subjected to a "hero culture" in it's most extreme form. It is no wonder that productivity and efficiency is so poor for the amount of effort the poor SODs put in! So "How Did iSoft Get into So Much Trouble?" hmm... I wonder.

jBee

Anonymous said...

http://www.youtube.com/watch?v=qOeX5UChCBg