Ingenix Buys Picis

Many of you must have seen the announcement this morning: Ingenix acquired Picis. In a previous life, I was a management consultant and through that experience, I have some familiarity with M&A. It's always interesting to investigate the back story that's never included in a press release.

On the surface, the acquisition makes sense if you believe analytics will quickly evolve beyond its current claims-data world. That certainly seemed the trajectory of the industry until recently. However, many observers believe that Stage 1 Meaningful Use (MU) will dominate the Healthcare IT agenda for the next few years [1] and I tend to agree with them. If  that's true, then Ingenix may have moved too early and made a bet that would not pay out for quite some time. Also, the commentary on HISTalk suggests revenues at Picis have grown less than $7M over the past few years and that the "$1B in 3-4 years" comment in the press release is dubious at best.

My personal impression is that Ingenix has made a speculative bet in the hopes that this merger will make sense a few years out. Part of the rationale may be the belief that if they pick up Picis before the stated synergies are operational, they may be striking a bargain.

As with most acquisitions, time will tell.

>>>UPDATE: Since I posted this, I came across this analysis from ZDNet that suggests this acquisition could be a positioning to improve Ingenix's ability to sell consulting and coding services. From the article:

But Ingenix hopes that its presence in the ER and ICU can give it an entree to sell consulting services and coding resources, as well as a play in the growing area of Health Information Exchanges (HIEs) — moving EHRs among hospitals and doctors under the emerging NHIN Connect standards.

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[1] There are some notable dissenters who believe MU is not all it is cracked up to be

EMR or EHR?

EMR (Electronic Medical Records) and EHRs (Electronic Health Records) refer to two very distinct concepts. Unfortunately, government officials, vendors, respected journalists, and consultants have used these terms interchangeably in order to refer to EMRs.

HIMSS Analytics provides clarity on the meaning of these terms:

• Electronic Medical Record: An application environment composed of the clinical data repository, clinical decision support, controlled medical vocabulary, order entry, computerized provider order entry, pharmacy, and clinical documentation applications. This environment supports the patient s electronic medical record across inpatient and outpatient environments, and is used by healthcare practitioners to document, monitor, and manage health care delivery within a care delivery organization (CDO). The data in the EMR is the legal record of what happened to the patient during their encounter at the CDO and is owned by the CDO.

• Electronic Health Record: A subset of each care delivery organization’s EMR, presently assumed to be summaries like ASTM s Continuity of Care Record (CCR) or HL7 s Continuity of Care Document (CCD), is owned by the patient and has patient input and access that spans episodes of care across multiple CDOs within a community, region, or state (or in some countries, the entire country). The EHR in the US will ride on the proposed National Health Information Network (NHIN). The EHR can be established only if the electronic medical records of the various CDOs have evolved to a level that can create and support a robust exchange of information between stakeholders within a community or region. While some forms of early EHRs exist today in limited environments, it will be difficult to establish effective EHRs across the majority of the US market until we have established clinical information transaction standards that can be easily adopted by the different EMR application architectures now available.

John at "EMR and HIPAA" argues that this distinction is irrelevant and that these terms will always be used interchangeably. He writes:

"My favorite in the EMR world is when people go crazy if you use the term EMR and not EHR. Let’s just get over it. The doctors I talk to really are. They use them interchangeably to mean everything that you might technically consider an EHR."

What do you think?