Allscripts-Misys Healthcare Solutions Inc.
The recession couldn't have come at a better time for Allscripts. The Chicago provider of electronic medical records systems already was looking forward to growth in 2008 as a result of a merger with Misys, a British provider of management software for doctors' offices.
The two companies' products overlapped well: When combined, they would have 160,000 clients, only 60,000 of whom were using electronic medical records. That left a market of 100,000 doctors who already had a relationship with the company.
Glen Tullman | Photo: Erik Unger
The September collapse of Lehman Bros. Holdings Inc. delayed the merger until October. But President Barack Obama's victory in November and his commitment to overhaul health care turned lemons into lemonade for Allscripts-Misys, which had combined pro forma revenues of $694.4 million in 2008.
Specifically, the economic stimulus bill passed in February contains $19 billion in incentives for doctors to begin using electronic medical records systems.
Only about a third of physicians' offices nationwide use such systems, largely because doctors bear the cost while patients and insurance companies realize most of the savings. The stimulus changes that equation with a carrot-and-stick approach.
Offices that adopt electronic medical records systems by 2011 receive up to $44,000 in bonus payments from Medicare. That's between two and three times the price of a typical system, says Corey Tobin, an industry analyst at Chicago's William Blair & Co. LLC, which is bullish on Allscripts.
The payments are spread over five years, and the amount is reduced for each year doctors delay beyond 2011. Physicians who don't get on board by 2015 will see their Medicare payments cut by 1% each year.
It's hard to blame CEO Glen Tullman, 49, for being giddy. "We've got a president who is stumping for our business and $20 billion in incentives targeted toward encouraging the use of our products," he says. "There are very few industries in America with a profile like that."
