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The Health IT market is consolidating. E-Clinical Data Management demands all but force R&D, as well as post-market prescription and OTC product surveillance, into digital domains. Robust database applications are needed to support these applications and systems. Oracle, Microsoft, and SAP are the three dominant players in the space.
Oracle has been on a steady acquisition spree for some time and has just strengthened its position further. The Oracle Health Sciences (OHS) unit, created in 2008, acquired safety and pharmacovigilance specialist Relsys (makers of Argus Safety) in April 2009. Past Oracle acquisitions of Siebel Systems (Siebel Clinical CTMS - Clinical Trial Management System) complimented the Oracle Remote Data Capture (RDC) application that is widely used for Electronic Data Capture throughout the industry.
Today, Oracle announced the $685 Million (€507m) acquisition of Phase Forward, the leader in the EDC market, having as much as 70% market share, including as many as 15 out of 20 of the top pharma and biotech. More companies use Phase Forward's EDC applications than use Oracle's RDC applications. However, the landscape has now changed. This move adds Phase Forward’s broad range of EDC, CTMS, and other key products to Oracle’s existing offering, thus elevating its position profile in a market that Forrester Research recently predicted will be worth $26 Billion before the end of 2010.
Combined with Oracle's seamless integration of leading sales CRM software (Salesforce.com) and visual Business Intelligence (Hyperion), Oracle has widened the gap in the eClinical space. In order to keep up, Microsoft will certainly have to consider either building a new application in-house, or buying one of the 3-4 other products on the market that currently have any significant market share. Other players in the EDC space include Meditata Systems (Makers of Rave), OmniComm Systems (Makers of TrialMaster), TrialStat (owned by Indian giant, Jubilant Organosys), and Perceptive Informatics (A Parexel company) Clinphone/Datalabs EDC and CTMS applications. Another potential target is Aris Global (perhaps the #1 competitor of Relsys; makers of ARISg safety and pharmacovigilance software). Similarly, SAP will have to take a hard look at the industry as well. The result could be a bidding war for the last remaining players in what was a fragmented EDC landscape.
Novella Clinical, a North Carolina -based eClinical Contract Research Organization (CRO), has been using Phase Forward EDC software for over a decade. Having demonstrated successful cross-platform integration resulting in smooth and seamless global operation, impressive ISO compliance validated by world renown Underwriters Laboratories, and being named to the Deloitte Fast-50 list of the 50 fastest growing companies, Novella is the paradigm example of integrative workability and the gold standard of eClinical quality. Many companies seek to do what Novella has done. The components of their successful Health IT platform offering is a great model regarding what can be developed next.
Accordingly, safe bets for the next waves of acquisition likely focus squarely on the makers of Electronic Patient Reported Outcomes (ePRO) software, and makers of Electronic Medical Records (EMR), Electronic Health Records (EHR), and Personal Health Records (PHR) applications. Leaders in the ePRO space include InVivo Data, PHT, and eResearch Technology (ERT). In fact, based on Phase Forward's July 2009 acquisition Maaguzi, it would appear Oracle is already poised to be in the ePRO space. Along the health record lines, Microsoft already has a strong edge in the EMR/EHR/PHR space. For Oracle to capture significant market share, it would likely need to target a company like Madison, Wisconsin -based Epic Systems, or perhaps even go after Cerner, another market leader.
For SAP, the uphill battle will be even steeper. Any decision not to yield market share will require expedited aggressive acquisition and integration efforts. While some high level integration consultants say that SAP products are more advanced, the fundamental lack of leading applications specific to healthcare currently leaves them almost entirely out of the market.
Benjamin Williams, Senior Vice President and Chief Information Officer (CIO) of Catholic Healthcare West (CHW; owners of the Mercy Hospitals in the Sacramento region), is in his third year of technology implementation, consolidation, and integration at the organization's 42 hospitals across California, Nevada, and Arizona. He oversees business intelligence, clinical information systems, and the entire IT infrastructure. This includes oversight of Care Connect, CHW's EHR system. What is Care Connect? The names often seem to come out of left field. It is a uniquely branded and customized version of Epic software.
Further investigation reveals what most already know, the EMR space is even more fragmented than EDC. There are many more players, and many more uniquely branded products. Even the iconic General Electric is in the space. GE Healthcare owns Centricity, an enterprise class EMR application in use in over 200 hospitals around the country. Both Centricity and Care Connect have been used by Providence Healthcare hospitals in various locations. Providence is regarded much like CHW. They have approximately 35 hospitals in their system.
Perhaps the newest and most interesting market participant is a company called Eclipsys. The Atlanta, Georgia -based company has just unveiled its new Sunrise 5.5 enterprise class EHR suite. According to the company, this new version includes an open architecture platform designed to improve the exchange of data between the various layers of software technology being used inside an institution, while simultaneously lowering the total cost of license or ownership. Furthermore, the new solution is said to include smart alert functionality, embedded clinical documentation interoperability by way of of industry-standard vocabularies that allows for smooth data exchange, enhanced documentation of allergies, intolerances and other adverse events that affect patient quality of life, as well as their uniquely branded clinical analytics technology that helps make complex data easier to understand and use.
Ultimately, that's the goal. Make data transferable, visible, able to be understood, and able to be used, all while being securely protected from malicious misuse and public view. Pine Bluff, Arkansas -based Jefferson Regional Medical Center will be the first Eclipsys client to deploy Sunrise 5.5 perhaps as soon as next week. Surely many eyes will be monitoring changes in efficiency, quality, and cost management. Positive results may lead Eclipsys near the front of acquisition target lists.
Interestingly, Kaiser recently completed its system-wide national deployment of ambulatory and in-patient EMR on March 2, in Vallejo. The systems are live in every location, including 21 hospitals in Northern California alone. Kaiser uses Epic. Their system is customized and is called Health Connect.
The last of our major regional healthcare service providers is Sutter Health. Sutter CIO, Jonathan Manis, is an industry veteran with over 20 years of healthcare IT leadership experience, and a background that includes education at the United States Naval Academy and the Naval Postgraduate School in Monterey. With Sutter, he oversees over $1 Billion in IT infrastructure. Given that sutter will spend perhaps as much as halfa billion dollars between now and 2015 on system-wide EHR implementation, Sutter CEO, Patrick Fry, says Manis' experience is crucial to Sutter's continued success. Sutter uses Epic software.
Clearly, all eyes should be on Epic. If the Sacramento valley and the Northern California region are any indication, Epic is to EMR what Phase Forward is to EDC: the gold standard. While CHW, Sutter, and Kaiser may compete for patients, members and service utilization, they all agree on one thing: the goals of technology implementation are clear: increase efficiency, reduce administrative processing time, expedite critical information availability, reduce medical error, increase communication, lower costs, and improve the quality of care that people in the community receive. Looking at Oracle's acqisition of Phase forward, a well-known and highly regarded industry veteran opting to remain anonymous says the following, "This provides an opportunity for better integration into the majority of backbones for data warehousing throughout the healthcare sector. It's good for Phase [Forward] and it's great for Oracle, who, by the way, has been calling themselves an eClinical software and service provider for months." It is with this in mind that market consolidating acquisitions must be carefully examined, because compromising any of the above is rarely - if ever - in the public interest.