17. Next Mini

Pioneer- From the same

amazing year that brought us SMS and Meditech…

But first…• Some feedback from last week’s HIS-tory installment, which

featured Meditech. Bill O’Toole, founder of O’Toole Law Group of Duxbury, MA, and a regular contributor to HIStalk, sent this email:

– Vince, loved the newest installment. I'm sure you don’t remember this, but the pathologist from Cape Cod Hospital is my father. I recall vividly my Dad being upset with Meditech one night. We went into his lab late that night to try and fix something or other. Well, long story short, my father was not pleased with their response. He communicated with Meditech by typing into a line connected to a printer in a closet at Meditech, loaded with a box of the old green-bar paper. So the good doctor types in 22 divided by 7 (VC: piece of cake, er, pi…) and sent it to the Meditech printer. The next day he got a call from Meditech howling that he owed them a full box of paper!!

• If you have more to add (or subtract!) from these HIS-tory episodes, please email me at:

vciotti@hispros.com

Early “Total HIS” Mini Vendor• As we saw last week, Meditech started as an LIS niche

player in 1969, grew to add a full suite of clinicals (Orders, Results, RX, RIS…) in the 70s, added financials in the 80s.

• Our second mini pioneer started out with a much bigger vision: to develop a total HIS based on hospital input.

• The man behind this start-up is easily one of the best known and most respected mavens in the HIS industry:

• Sheldon I. Dorenfest, of “SIDA” fame, which was also one of the first HIS consulting firms and source of HIMSS Analytics.

• This man’s contributions to the industry could take a full HIS-tory installment in itself, so we’ll just cover how he formed one of the earliest minicomputer vendors whose successor firm still runs in scores of US hospitals 40 years later!

Compucare• Great name: amalgam of “Computer” and “Care!” What

was different about Compucare versus other vendors?• Back in 1969, Sheldon started Compucare originally as a

shared system, just like SMS, McAuto, and scores of Blue Cross and state hospital associations were doing…– To grow Compucare quickly in the highly competitive market of

shared systems, he first explored the possibility of buying another fledgling shared system called EDS (Executive Data Systems) based in Cedar Rapids, Iowa.

• Presaging his later and most famous business success as a consultant, he gave EDS so much advice on how to improve their struggling shared system, that they improved it enough to not sell it Shelly, but continued on for many more years!

Plan B• So now what to do to make Compucare a success?• Sheldon next had a vision that reflects his roots as both

an MBA, CPA, and Assistant to the President of the Hospital Division of Abbott Laboratories : – Back in the early days of HIS, many hospitals attempted to “roll

their own” through inhouse, self-development, initially based on IBM and “Bunch Group” mainframes, but spreading to minicomputers too as they grew in popularity in the late 60s.

• Needless to say, many of these early homegrown systems in the 60s were taking far longer than hospital CFOs (who were responsible for “Data Processing” back then) had either the patience or budget for. DP Managers & their stressed staffs tried their hardest, but hospital apps just took a lot of time and money to program…

• The solution? As easy as clicking for the next slide:

Facilities Management! (FM)• A concept whose proverbial time has come in the ‘70s:

– Professionals would take over DP, in one of two ways:• Providing a DP Manger who reported to the outside firm, and was

responsible for managing the staff, time and budget of the project.• Taking over the entire DP staff, who all became employees of the outside

firm, and had to deliver to keep receiving their paychecks…

– Best of all, by forming a firm specializing in FM in hospitals, Sheldon was able to share code developed at one site with that developed at another site, portioning out the work.

• Hospital “A” worked on ADT, Hospital “B” did Billing, “C” did AR, etc.

– Sort of a “shared system” for software…

• For hospital execs, it was the ideal panacea:

- Outside professionals managed the daunting work of DP, so the hospital CFOs “only” had to worry about minor details like patient care and financial survival in this challenging post-Medicare/Medicaid world…

(Aside)• (Pathetic how hospitals back then gave up on running

DP/IT themselves, and paid FM firms to do it for them.• We moderns know that FM would never work today:

– Such firms merely add their profit margin to current salaries– They shuffle their people among clients to keep them happy– Their contracts have few if any penalties for poor service– Their employees are not as loyal to your hospital & mission– DP/IT today is a hospital “core competency:”

• EHRs & CPOE are patient care!)• If only we could go back in a time machine

and have warned those poor pioneers that no hospital would fall for paying outsiders to do what they should manage themselves…

• They should have outsourced their planning!

Sales Success, Delivery Challenges…• For the first few years, sales came rolling in, as CFO after

CFO saw this FM approach as the answer to prayers:– Far better than telling the Board they were giving up, selling

their hardware box, laying off the staff, and going shared.– And with a convenient target to blame now when things went

wrong: the outside FM firm’s DP Manager and/or staff!• However, even Compucare’s pros were still

human, and ran into the same problems:

- Writing code for even “simple” systems like Census, Billing and AR was hard in the challenging world of healthcare…• Insurance proration, late ADT input, etc.

- Let alone the new world of clinical apps…- Orders, Results, LIS, RX, RIS, etc.

• Plus “sharing” code among disparate hospitals…

Irony 101• The biggest challenge Compucare faced was with clinical

applications, like Orders, Results, Lab, RX, etc.• As we saw with mainframe self-development, most

hospital mini shops started with financial apps like: – AR & Billing (those Medicare 1453s, 1483s 1483s and 1554s1554s)

• How to get the clinical apps needed?• In 1973, Shelly struck a deal with a

another fledgling firm in Boston who claimed to have a dynamite suite of clinical apps they were developing for client hospital in Cape Cod…

• You guessed it: Meditech!• So now Compucare had a “Total HIS!”

Exeunt stage left…• After overcoming these challenges, Shelly (ever the

pioneer!) left in 1975 to form another daring venture: – SIDA, one of the first and most successful HIS consulting firms.

• Leaving Compucare in the hands of Ron Aprahamian- Under Ron’s tutelage, Compucare concentrated

on Date General minis, with bundled turnkey software & installation comprising a “Total HIS.”

- Along with a host of competitors also developing turnkey mini systems, Compucare sold like hot cakes in the late 70s and early 80s.

- In 1985, Ron sold Compucare to supply-firm giant Baxter, who had bought up several other mini vendors: Dynamic Control (Delta) and JS Data(Alpha), plus a mainframe option (Omega).

- In their g{r}eek world, Compucare was “Sigma.”

But wait, there’s more!• Baxter paid $73M for Compucare, a huge sum in those

days, reflecting just how promising mini systems were.• So Ron could have taken his money and retired right?• Wrong! This story gets even more incredible:

- Baxter joined forces with IBM to form IBAX, and re-named all their acquired products:

• JS Data (Alpha) became Series 3000

• DCC (Delta) became Series 4000

• Mainframes (Omega) became Series 5000- Since they were out of numbers, IBAX sold

Compucare (Sigma) back to, guess who?- Ron AprahamianRon Aprahamian, in 1987 for about $30M!

- Let’s see, sell the firm for $73M, buy it back for $30M, that leaves a profit of…

We’re Baaaack…• Well, if you can do it once, you can do it twice…• So Ron, with the help of other gurus like Ransom Parker,

COO, and Christine Chapman, R&D VP, started building a whole new system to replace Sigma.

• They called it “Affinity,” and it featured:– ANSI-standard MUMPS (shades of Boston?)– Open-architecture through a UNIX OS– RISC hardware (the latest in mini boxes)– Full suite of financial & clinical apps

• Needless to say, Ron was open to offers…– And got one in 1998 from QuadraMed for 2.7M shares!

• QuadraMed had also acquired dozens of smaller firms…

Where are they today?• Sheldon

– After selling SIDA’s “3000” data base to HIMSS, Shelly went on to become CEO of The Dorenfest China Healthcare Group based in Shanghai, “actively investing its skill, technology and capital in in well defined projects to help China to improve its healthcare system.”

• Ron– No moss grows on this man! He has since been:

• Chairman of the Board of Superior Consultants• Independent Director of First Consulting Group

• QuadraMed- Affinity went on to be implemented in about 200 hospitals at its peak, and is still running in scores of sites to this very day. It has since been complemented by QuadraMed’s acquisition of Misys’ “CPR” E.H.R.,--- but that’s a story for another installment of HIS-tory.

Muchas Gracias!• For input to this week’s episode:

– Ed Gavin – former McAuto sales rep and AA guru, who worked at Compucare in the ‘80s, before joining our consulting firm.

– Sheldon Dorenfest – who took valuable time off from his hectic travel schedule to/from China, whose HIT market he finds much like the US back in the 50s and 60s!

• For input to next week’s episode:– David Pomerance – former hospital CFO in

Florida, who built a system on an IBM System 3 mini for his hospital that was so good, he sold it to 250 more hospitals!