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Industry Watch

January 1, 1998
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[Industry Watch]

Burgeoning healthcare IT vendor QuadraMed Corp., Larkspur, Calif., announced its intent to acquire healthcare decision support company Medicus Systems Corp., Evanston, Ill., for approximately $45 million. Medicus shareholders will receive $7.50 cash or .3125 of a QuadraMed share for each share of Medicus common stock they own. Within a week of the announcement, QuadraMed Corp., purchased 54.8 percent of Medicus’ outstanding shares from about 10 holders, said QuadraMed CFO, John Cracchiolo. "This allowed us to gain control of the company immediately."

A key target for QuadraMed is Medicus’ 1,200 installed customer base. QuadraMed will support both companies’ product lines until they are integrated into a best-of-breed solution, Cracchiolo said.

QuadraMed has experienced remarkable 1997 revenue growth--posting third quarter results 109.4 percent over third quarter 1996. QuadraMed’s stock price dipped slightly after the acquisition announcement, however, its value was up nearly 400 percent from $6.50 per share in June to over $25 per share in November. Medicus posted 1996 revenues of $31.1 million.

HBO & Company had a busy fourth quarter with acquisitions of National Heath Enhancement Systems, Inc. (NHES), a Phoenix-based medical call center developer, and AT&T’s British healthcare division. The $90 million NHES agreement gives HBOC a 750-customer installed base with the call center products.

HBOC made another position statement in the United Kingdom with the $33 million purchase of AT&T Specialist Healthcare Services Division which provides the ClearNET electronic commerce service to Britain’s National Health Service. The deal also expands HBOC’s payroll processing services with TotalCARE, a remote payroll processing services group for National Health Service trusts.

Advanced Health Corp., Tarrytown, N.Y., purchased the assets of Bukstel & Halfpenny’s Dr. Chart Clinical Information System and other related software for approximately $4.5 million in cash and equity, with financial considerations for future product sales. Ed Bukstel and Charles Halfpenny, founders of the Conshohocken, Pa.-based company, joined Advanced Health to run the new subsidiary.

Medical and surgical supplies manufacturer, Hollister, Inc., Libertyville, Ill., launched an information systems division by acquiring majority ownership of Waltham, Mass.-based Clinical NetwoRx and its ambulatory care medical records system, Clinical Master. The deal provides Clinical NetwoRx with a large capital base to expand sales and marketing efforts and product development, said Clinical NetwoRx spokesman Paul Campaniello. Terms of the deal were not released. Hollister, a privately held company with 2,000 employees worldwide, is expected to augment the Clinical NetwoRx venture with other acquisitions.

SOFTBANK Service & Support Consultants, Foster City, Calif., started a cross-industry program to certify IT vendors’ quality of service for internal and external support operations. Twenty-one companies have signed on to develop the benchmark criteria. Initial sponsors include HBO & Company, IDX Systems Corp., Lawson Software, Oracle Corp., Sybase, Inc. and Xerox Corp. The certification will cost companies between $15,000-$50,000, depending on their size and the number of support centers audited. Organizations will bear a logo from the Software Support Professionals Association (SSPA), and will be required to recertify on an annual basis.