H.I.S.-tory by Vince Ciotti

Episode #79: NextGen Part 1

© 2012 by H.I.S. Professionals, LLC, all rights reserved.

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6th of Today’s Leading HIS Vendors• This week we begin the 6th episode on today’s

HIS vendors: NextGen, whose 2011 annual revenue places them right behind Meditech:- $3.2B = McKesson, née HBOC = Walt Huff, Bruce Barrington, & David Owens - $2.2B = Cerner, still run by Neal Patterson, co-founded with Cliff Illig- $1.7B (est) = Siemens, née SMS: Jim Macaleer, Harvey Wilson & Clyde Hyde- $1.4B = Allscripts, née Eclipsys, also founded by Harvey Wilson of SMS.- $1.2B = Epic. Gee, I have to wonder, just who was it who founded them? - $900M (est) - GE Healthcare, née IDX/PHAMIS: created by Malcolm Gleser- $545M = Meditech, still run after all these years by Antonino Papallardo- $353M = NextGen: née Quality Systems Inc. founded by Sheldon Razin- $174M = CPSI, founded by M. Kenny Muscat & Denny P. Wilkins (who??) - $170M = QuadraMed, née Compucare, founded by Sheldon Dorenfest- $160M = Keane, parent giant by John Keane, but HIS div. built by Ray Paris - $110M = HMS (Healthcare Management Systems), Tom Givens & John Doss- $70M (est) = Healthland, formerly Dairyland, founded by Steve Klick

A Complicated Family History• Actually, I wish the HIS-tory of NextGen was as

simple as that graphic on the title slide implied!• In fact, it is the convoluted story of a half-dozen

assorted HIS vendors over the past 4 decades.• Time doesn’t allow the full story of all the firms

acquired such as H.S.I. and P.M.P. of Hunt Valley…• So we’ll just cover the 4 biggest of the “Previous-

Gen” firms that got acquired/merged over time and that have the most impact on hospitals today. In chronological order of their founding, they are:- QSI, founded by Shelly Razin way back in 1973- Sphere, founded by Florian Weiland in 1984- Opus, founded by Rhoads & Beck in 1987- IntraNexus, founded by Rick Opry in 1992

A Bit “Long In The Tooth...”• The story of QSI takes us way back 4 decades ago

and into another niche in HIT systems: dentistry.• QSI’s founder, Sheldon Razin, cut his teeth (so to

speak) in technology at MIT where he got his BS in math (ironic that he didn’t meet Neal Papallardo and company there or he might have joined Meditech!), then started working for Rockwell International. • He next formed Quality Systems in the early 70s,

with $2,000 of his personal funds, developing software for commercial and space applications.

• Selling space systems was hard as pulling teeth, so he tried simpler systems for dentists, whose practices then were as paper-driven as hospitals

• We won’t drill-down any more into dentistry as my annual exam is coming up and I get nervous…

Growth, IPO & First Acquisitions • There must have been a large cavity

in the dental system market which Shelly filled rapidly, capping QSI’s success by going public in 1980 (that’s him in the middle on left).

• QSI’s market cap (right) grew equally well preparing the firm for a number of subsequent acquisitions and mergers, starting in 1996 with:

- Clinitec – which was formed by Pat Cline (pictured on the left) and Bryan Rosenberger (both since retired in 1993 to sell software for converting MD practice’s paper charts into electronic medical records, at a time when the term EMR didn’t even exist yet!

Next Target…• QSI next set its sights on a Practice

Management System (why doesn’t anyone ever use the simple acronym “PMS”?) to complement Clinitec’s EMR for physicians.

• The firm they targeted was led by a talented individual who is still with QSI to this very day: Tim Eggena, pictured above. His brief bio:• 1990 graduate of Auburn S.C. where he started in the College of

Business as a finance major, but ended with a degree in MIS.• His first job was in nearby Atlanta at… (are you ready for a

shock?) some local software firm named “Gerber-Alley”!

• What a small HIS world, no? Anyway, Tim tired of G-A’s green-screen, mini-based HIS and joined a group of young G-A programmers meeting on weekends to design a system for the red-hot PCs flooding the market. The group fizzled ≈1993…

Birth of: • Tom knew the CIO at Bayfront Medical Center in St. Pete, FL, and

she inquired about a PMIS (yeah, I’m chicken too...) for PCs.• Tim and Steve Puckett (CTO today) formed MicroMed Healthcare

Information Systems to write a scheduling system in Windows (probably 3.1 – back then Gates was still stealing ideas from Apple’s for Windows ‘95……), which went live at Bayfront in 1994.

• Through word of mouth, MicroMed sold several more practices and started building their total PMIS: Reg., Sched., BL and AR. Tim and Steve needed capital to continue growing and debated an IPO, being acquired, or merging with a larger firm. The answer:

• QSI acquired them in 1997 as their PMIS, to combine with CliniTec’s EMR to create a total solution, which they named around 1999 as “NextGen.”

Next Week…• So that’s how QSI started in dentistry

software, and ended up as a leader in the physician practice market with their “Next Generation” combination of CliniTec and MicroMed

• So what’s this got to do with Hospital Information Systems you ask?

• Stay tuned for next week as we cover the three HIS vendors QSI acquired next that now make NextGen as major a player in the HIS market as in PMIS:- Florian Weiland’s Sphere- Tim Rhoads & Fred Beck’s Opus- Rick Opry’s IntraNexus