Dear HISPros, “I am CIO at a large medical center with Sunquest in the Lab. What does this deal mean to me?”
A press release this morning announced the planned acquisition of Sunquest, a major LIS vendor, by an investment group headed by Huntsman Gay Global Capital LLC. It’s a complex transaction including Sunquest itself borrowing $655 million to “fund a dividend to existing shareholders, refinance $115 million of outstanding debt, and pay related fees and expenses,” according to Moody’s Investor Services. And I’m sweating paying $200 bucks for a new all-in-one printer!
The deal is about as tricky as evaluating the impact on clients and prospects of Sunquest, which has a history as convoluted as this transaction:
1979 – Formed by Dr. Sidney Goldbatt, MD, CEO as one of the pioneering “turnkey mini” vendors in the LIS market, running on DEC boxes. Targeted the large hospital market where the big bucks are, in contrast to “micro” vendors like Citation who targeted smaller hospitals (and dollars). Sid was the Pathologist at Conemaugh Valley Hospital in PA, and had the sense to move his start-up to Tucson, AZ (slightly better climate…).
1980s – Established itself as one of the leading LIS vendors along with arch-enemy Cerner. Our firm led a number of LIS searches between the two giants in the late ’80s, and these two giants duked it out viscously, both being as high in functionality as they were in price!
1990s – Cerner morphed into an HIS vendor with its Millennium suite, leaving the standalone LIS market pretty much to Sunquest, along with upstart Soft Computing and Consulting (SCC), a FL-based LIS with a much more modern architecture.
1996 – Sunquest went public, making millions for its executives, but setting it up for the vicious Wall Street cycle of 90-day performance pressure. The company and stock had good and bad years and quarters, until:
2001 – Bought by Misys, a UK-based giant as their first foray into the US HIT industry, and hardly the last. Misys bought more firms than Anthony has blog entries, until it eventually got indigestion and in:
2007 – Sold the LIS (Sunquest) division to Vista Equity Partners who took it private again under the original name of Sunquest.
The LIS market today is a shadow of its former self, as more and more large HIS vendors include an integrated LIS in their clinical suite (Cerner of course, but also Epic, Eclipsys, McKesson, Siemens, GE, etc.) Not that they’re better – quite the opposite, specialty vendors like Sunquest and SCC can shoot the lights off of these “Total HIS” vendors in a fair evaluation, so the decision is usually a political one. If the Pathologist has more influence, the hospital goes with a standalone. If the CIO has more clout in the C-Suite, the hospital goes “integrated” (I use quotes because many vendors merely interface under the covers to standalone LIS systems they bought anyway).
So Sid’s Gold mine (no pun intended) has shrunk quite a bit, as there are far less large hospitals in Sunquest’s large-hospital market sweet spot who buy standalone LIS systems today, and those that do seem to prefer SCC for its more modern architecture. To whit: our firm hosted “LIS Buyers Seminars” in the early 2000s, but gave up as fewer and fewer hospitals attended. Sunquest’s impressive $165 million in annual revenue is primarily software maintenance for its Lab, RX and RIS modules from giant hospital clients like Henry Ford, Cleveland Clinic, and UPMC.
So the impact on the market should be marginal unless you are CIO at one of the large hospital Sunquest clients, in which case this might be a good time to talk the Lab into finally getting “integrated.” As for Huntsman Gay, I wish them more luck than Misys and Vista Equity Partners in trying to make money off of one of the oldest products, companies and markets in the business …