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Acquisition
EISof
Exec
utiv
e Su
mm
aryHow many ways can you slice and dice the McKesson brand and properties (taking
one from Lexmark’s playbook)? It wasn’t too long ago that McKesson entered an agreement to merge its information technologies division with Change Healthcare, a revenue cycle management vendor (which seemed like a smart move). Then the announcement came that they would peel o� their Enterprise Information Systems (EIS) business, which includes: Paragon (EHR), STAR and HealthQuest (revenue cycle management), lab solutions (Lab Analytics and Blood), and OneContent.
In theory, M&As make a lot of sense, but the unintended consequences put what should be matches made in heaven at risk of going sideways. For example, how does a company, Allscripts in this case, avoid getting distracted from making meaningful improvements to their native products? With how unpopular acquisitions are among providers, how do you avoid making them feel like they play second �ddle to the bottom line? And, how do you integrate the two brands, solutions, and customers together? These challenges take what makes sense on paper and throws it in the wind.
In our recent research, we reached out to McKesson customers, Allscripts customers and the market at large to get a read on their feelings, perception and intentions around the announcement, and gathered insights on the following:
• Customer and non-customer awareness of the acquisition• Perceived impacts of the acquisition among both customers and
non-customers• Likelihood that customers of Allscripts and McKesson will stay with them
after the acquisition is �nalized• Impact of the acquisition in attracting new customers• Customer ratings (NPS) for both Allscripts and McKesson• Open text reasons for customer ratings• Allscripts’ and McKesson’s relative strength or weakness in the
marketplace• Open text reasons why customers of either vendor are replacing them• Providers views of the acquisition in open text format
Only time will bear out the relative success or failure of the acquisition. Sometimes taking over a stalled brand or line of products, can improve circumstances for customers…and other times, they are just along for the ride, at least until they’ve had enough and decide to get off the bus.
Note: As always, we are extremely grateful to our participants of this study. Your willingness to offer your candid perspective on these topics offers insights into the area that matters most regarding M&As—improving the customer experience.
For more information about this report and our premium content, email Contact Jeremy Bikman at [email protected].
EIS
Dem
ogra
phic
s
Manager of IT
HIM Director
Director of IT
Finance Director
Billing Director
Finance Manager
Director of Patient Care
CFO
CIO
VP of Finance
Overall
by Organization Type
31%
23%17%
6%
9%
4%4%
3% 2%2%
Integrated Delivery Network (IDN)
Physician-Owned Practice
Standalone Hospital
8%
22%
59%
59%
n=158
Acq
uisi
tion
Aw
aren
ess
32%
10%
8%6%
13%
14% 16%
1 2 3 4 5 6 7
Based on a scale of 1-71= I had no idea this was happening7= I’m watching this very closely
Are providers aware of the acquisition?
As is usually the case, major acquisition news in HIT rarely reaches the majority of providers as they don’t have the time or interest to keep up on these events. To add to this e�ect, vendors involved in an M&A, are careful not the rock the boat with their customers. As a result, inadequate outreach to customers is the norm.
Breakout by Customers and Non-Customers
Acq
uisi
tion
Aw
aren
ess
Not Familiar Following Closely
CU
STO
MER
S O
F BO
THN
ON
CU
STO
MER
S
37% 34% 29%
37% 23% 40%
44% 36% 21%
36% 44% 20%
Aware but not watching closely
McKesson customers are rightfully watching the acquisition closer (40%) than Allscripts customers and non-customers, as it stands to impact them more than any other party.
Perc
eive
d Im
pact
Breakout by Customers and Non-Customers
Perceived Impact
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
Cus
tom
er In
sigh
tLikelihood of Retaining Customers Long-Term Due to the Acquisition
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
Mar
ket I
nsig
htDoes the acquisition impact the likelihood of attracting new customers?
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
Alls
crip
ts a
nd M
cKes
son
Rati
ngs
(NPS
)Allscripts and McKesson Ratings (NPS)
Reasons for Allscripts and McKesson Ratings
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
Posi
tion
in th
e M
arke
tpla
ceAllscripts and McKesson Win/Loss
Allscripts and McKesson Contracts “At Risk”
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
AVAILABLE IN PREMIUM
REPORTContact Jeremy Bikman at
Posi
tion
in th
e M
arke
tpla
ceReasons Allscripts and McKesson are Losing Business
“Uniform platform. Merger/Acquisition” -CMIO
“The facilities I manage are part of a national healthcare system, all of the other facilities except for 12 currently use Cerner and we are expecting our national team to instruct us to switch to Cerner so that we are all using the same system.” -Manager of IT
“Lack of maturity and usability of current product. Physician satisfaction” - CIO
“McKesson is behind. Does not look like a smart choice moving forward” -Director of IT
“The particular one we have is going to be obsolete and no longer be supported.” -Manager of IT
Add
itio
nal C
omm
ents
Abo
ut th
e A
cqui
siti
on
“Combining Paragon, as the only true integrated, Microsoft SQL-based, Hospital and Ambulatory HIS on the market, with a solid vendor that focuses exclusively on HIT, is a win-win for the healthcare industry.” -CIO
“McKesson was losing and continues to lose ground on EHR systems to Epic and Cerner. They are withering on the vine. This acquisition will help them solidify their position in the market.” -Vice President of Finance
“Allscripts may focus on their own EMR and how those products that I have with McKesson will interact with them rather than on the McKesson products as a whole.” -Director of Information Technology
“Almost always acquisitions prove to be nothing more than buying up competing products in order to grow customer market shares. Just like Cerner buying Siemens, we were told they would support it and yadda yadda, here we are on Cerner after having to drop much more cash than we should have been required to” -CIO
“There will not be that many new EHR changeovers, new hospitals aren’t being built that quickly to make much of a market. The only McKesson product that I am familiar with is Paragon and it is antiquated .It will take in a big bag of money and a lot of time to �x that.” -Manager of Information Technology
“I don’t see Allscripts as a major player in this space anymore and the acquisition will likely further stress the enterprise. Perhaps in combination they can cobble together a suite of tools, but integration will likely be clunky at best for some time.” -CIO
“I do not see that McKesson brings anything bene�cial to Allscripts, other than more users. McKesson’s products are very di�erent from Allscripts current products and so will further dilute their e�orts to bring quality products forward.” - CFO
“Bene�ts remain uncertain at this time. In general, feel that the impact of the sale will be neutral in the near to mid term for customers with products from the EIS group at McKesson. In the mid to long term, could be bene�cial to existing Paragon customers as it may provide an additional path if unsettled / dissatis�ed with current Paragon roadmap given Allscripts portfolio, particularly in the ambulatory setting. For Allscripts, would expect immediate bene�t given growth in customer base.” -CIO
Additional Comments About the Acquisition
