Immediate outreach to hospital customers by vendors involved in M&A activity is critical to the future of those relationships, said the vast majority of CIOs in the most recent healthsystemCIO.com Advisory Panel SnapSurvey.
Prompted by the acquisition of Eclipsys by AllScripts, the June SnapSurvey focused on CIOs expectations of their vendors during such an event, and asked them to reflect on past experiences.
Almost unanimously, CIOs expect to be contacted quickly and formally, usually by top management at the acquiring company. While it’s not critical on Day 1, CIOs also need to know if the products they currently use will be supported or sunset, and the timeline for any major changes in the status quo.
Almost 80 percent of CIOs said they weigh the likelihood of whether a vendor will be bought (or buy) in the next five years before entering into a relationship. Though many said this was difficult, if not impossible, to determine, most said stability was important to them, and the uncertainly brought into the picture during an M&A event was not something they looked forward to navigating.
When asked about their experiences with vendor M&A, 39 percent said the vendors in question handled the situation well, with 29 percent recalling a poorly handled acquisition. That poor handling usually involved weak outreach, deceptive or unclear communication, and insufficient product support and maintenance.
Finally, when asked directly about the prospects of a united Allscripts/Eclipsys, the majority, 52 percent, said the deal would wind up being good for both companies. The next highest percentage, 23, thought it was a better arrangement for Eclipsys. 19 percent thought it was good for neither, and only 6 percent said it would turn out better for AllScripts.
(SnapSurveys are answered by the healthsystemCIO.com Advisory Panel. To see a full-size version of all charts, click here. To go directly to a full-size version of any individual chart, click on that chart)
You Better Believe It!
- Not just yes, but hell yes. I have been through enough of these types of changes that I would prefer to avoid them if possible. I was the last combined deal of Allscripts and IDX right when GE bought IDX. It drove me to drink.
- We put clauses to protect us in our contracts to cover being sold or merged.
- Not five years, but certainly the idea of being bought/sold based on their current profile and in the next couple of years.
- This is a critical part of determining the strategic aspect of the selection. While it may never be known with certainty, this provides an opportunity to assess the M&A landscape and likelihood.
- It is definitely part of the due diligence. The fiscal health of the vendor is an important indicator of potential buyout opportunity. Also, private vs publicly traded can come into play.
- After this (AllScripts/Eclipsys), the answer is yes. However, knowing or even getting sales or someone on the exec team to fess up that a sale is possible, or is in progress, would be pretty hard to do (insider knowledge).
- Stability of a product line and ability to anticipate commitment to the product is an important factor.
- We evaluate the business philosophy of the company; especially small to mi-size companies. We think it is important to understand their direction and desires for their own growth. Mergers and acquisitions are often disruptive and result in changed goals and objectives of the acquired unit which eventually can affect the relationship for good or ill.
Something to Consider, but Hard to Predict
- To the extent it is possible to understand, this is an important issue to consider.
- 5 years is a long time in the technology world, so it would depend on the significance of the individual purchase. If there is a major impact to clinical/business processes, then it would be very important.
- It is a thought. Not one that you can do anything about, but you do think about it and how it may impact execution/implementation. Every vendor is for sale…it is the way of the HIT world.
- This was top of mind when we selected a vendor in the early ’90s. The Board was also concerned about the longevity of the company and their stability. In our case, they would only consider a vendor who had at least 3 or 4 installations within our state, ensuring we would not be left at the curb when new regulatory requirements were passed. Strength in numbers.
- The effect varies depending on how we view the company and product. A sold product with good customers is at lower risk regardless of a takeover. We tend to lean away from startups since their goal is to be acquired.
- I do factor in the vendor’s financial health, but the likelihood of being bought, sold, or merged is just too full of uncertainty. If it’s a healthy company, with a solid product and a good/growing customer base, then it’s a good bet.
- Yes, but your question implies this is something which can truly be determined and it can’t. So, it is a factor? Sure. But if I was that good at figuring out whether companies would be bought or sold why would I be working?
- It is a consideration, but the likelihood would not eliminate them from consideration.
- This is not really something that you have any way of determining (IMHO), you may have ideas or other intelligence, but the vendors will not share that information during the sales cycle.
Not an Issue to Worry About
- I have not usually included this element in my selection process.
- We consider this only if the company has an industry-perceived weakness.
All together now: YES!
- This is just common courtesy … and a plan of what the impact may be. They know this during due diligence, why not be more honest with the customers.
- I want to be contacted just before the merger (if possible), so I can plan accordingly.
- I want to be contacted, and generally this happens. It’s better to hear it from the horse’s mouth.
- It is very important to understand the short and long term implications of these mergers on our individual organization.
- I will frequently contact vendors in advance of a merger or acquisition just to get more information so that communications within our organizations can occur appropriately.
- I would expect a form letter or call to discuss.
- This is extremely important.
- If you have a true “partnership,” and the vendor is reputable, they will be proactive with their communication to existing customers.
- I expect to be contacted by both the seller and acquirer. The communication process impacts the customer acceptance highly.
- In this day and age, communications is SO quick. I had a message from Glen Tullman received in the wee hours of the morning regarding the Eclipsys/Allscripts merger and then the public releases about an hour later. Time compression has made it all almost simultaneous.
- Yes, and in fact I believe vendors should give their prime customers early notice, ie, prior to public announcement.
- The sort of contact should be realistic with one’s customer profile. But, yes, I expect a call. With Allscripts/Eclipsys, I got four.
- This is very important; I also need to know of any potential change in strategic direction or realignment of the support team.
- Notification would be my expectation; and that has been the case (in most cases).
- I would want to know the reasons for acquisition along with short term and long term impacts to me.
- Whenever you only hear about it from the news, it reflects the lack of customer-focused service …but again, even the employees sometimes don’t know what the sale or acquisition really means.
- This is very important. We want reassurance that they are still there for us or, if not, what the transition plan and timeline will be.
The Good
- McKesson (surgery/EMS, and Lab/???)
- The acquisition of VasTech by Lawson was handled very well. They contacted us before and then went to lengths to assure us that we would still be handled by the same people.
- When we purchased our document imaging solution, it was from IMNET. They were later bought by HBOC who was then purchased by McKesson. I have to say, the folks at IMNET stepped up and communicated the migration plans, offered us plenty of face time and provided assurances we could feel comfortable with. I do wish we were still with IMNET and not McKesson, but it’s not like McKesson is horrible. It’s just that IMNET was that good.
- In my 20 years, there have been many; HBOC, Allscripts/Misys; PerSe, Lawson, etc.
- A decision support company was bought by a large vendor and the communication was handled very well. I also remember some that were not.
- Nuanace acquisition of eScription. Allscripts acquisition of A4.
The Bad & Ugly
- When Triple G was bought by GE, it was a nightmare. It was a surprise and then the good people at Trip G left and GE had no idea how to support or implement the product.
- A legacy departmental system was the object of acquisition. The new owner gave repeated assurances that the product would be supported, but in the end we were cut loose. It seemed obvious from the start this would happen since the acquiring company offered a competing product. We prepared for the eventuality, but I would have felt a good deal better about it if there had been honesty and transparency. And, by the way, the experience eliminated the offending company from further consideration.
- Emageon -> Amisys -> Merge…. The company currently being referred to as “Emergisys” has handled their acquisitions very poorly.
- The integration of CPR into QuadraMed was a mess. The communication around that acquisition and the impact on the Affinity product line was a train wreck.
- You didn’t give us the choice of mediocrity. Most recent was purchase of our identity management system by Sun who was then purchased by Oracle. We’ve spent millions on scripts and adaptation on a product we now expect to be sunsetted. Argh.
- All of the above. With the amount of merger/acquisition activity we see, the handling of it comes in all flavors. We’re glad when it works well. I can remember one extreme – not well – that impacted a lot of customers – when a giant bought a large scale HIT company and little in the way of communications/direction occurred for six months.
- The Eclipsys buyout of TDS. It was very difficult to get information from Eclipsys on what the buyout meant for the longevity of the TDS product.
Cut Them Loose
- Yes. Avega/MedAssets. Deinstalled. Never recovered our money, either. We decided it was not worth the legal efforts to pursue.
- The vendor did not perform as agreed upon in the contract and we parted ways. It was not pretty, but not horrible.
- GE Centricity enterprise
- Let go of a blade server vendor after they were acquired and the services and response took a nose dive.
Coming Soon …
- Not yet, but that may be coming soon.
- No, but have come very close.
- Not yet.
- No, but have decided not to further invest in that vendor.
Many Questions to Be Answered
- On the one hand, similar technologies (Web-based, service architectures) and the apparent opportunity to create only the second integrated platform spanning the ambulatory and acute environments is hugely attractive. The struggles: both have had to “integrate” parts and pieces (Eclipsys more than Allscripts) and Allscripts’ none-to-successful upgrades and difficulties (which we’ve experienced) with some of the Misys platforms, and the industry track record in general really give one pause….
- You didn’t give me the option I wanted, which was “not sure at this point.”
- Not sure what to think about it, but merging their various products together and converting old customers off of ones that will not be supported with ones that will is going to be complex, especially for the customers.
- It can be good for both. It will depend on how the merged management team executes on the vision.
- This can be good, so long as the companies do not get distracted from their delivery obligations, especially HITECH-compliant software and solutions for current customers.
- It really depends on where they take the combined companies, and if they listen to their current customers rather than the folks in marketing.
I Don’t Get It
- I don’t really understand it, quite honestly.
- A partnership would have been better. They will spend all their time trying to merge organizations and products instead of improving on core products, especially with ARRA timelines. I would not want to be a customer of either company right now.
- Eclipsys will prove to be an albatross for AllScripts. They have a limited inpatient-based system – albeit a high quality CPOE/clinical offering – but little integration with other critical applications – limited market. I expect this merger to go the way of the Time Warner/AOL deal: it looks good on paper.
Eclipsys Needed It
- Eclipsys has been floundering and seems to have lost its vision. Its customer support and product direction has suffered.
- This may stabilize Eclipsys’ roller coaster management. I worry about Allscripts being distracted by the transition. I’m concerned that neither company has done very well in integrating acquired products.
Good Deal!
- I like the deal and believe all will be better for it.
- This improves marker share for both and can fill a void in the industry.
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