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McKesson Sells Ambulatory EHR Assets to e-MDs

March 10, 2016
by David Raths
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Could acute-care health IT product line be next?

McKesson Business Performance Services has agreed to sell several of its ambulatory EHR assets to e-MDs. Included in the sale are McKesson Practice Choice, its cloud-based EHR; its Medisoft and Lytec MD server-based EHRs; and Practice Partner, its practice management software.

Austin, Texas-based e-MDs, which is a strong player in the EHR market for smaller physician practices, said that existing e-MDs clients and the McKesson clients who use these products would benefit from working with a company whose primary focus is software and services for small- to medium-sized practices. The combined company’s products and services are projected to be used by nearly 55,000 providers nationwide.

The deal followed closely on the heels of 20-year-old e-MDS hiring a former McKesson executive as its new CEO. Prior to joining privately held e-MDs in February, Derek Pickell was the CEO of Convergent Revenue Cycle Management Inc., where he managed the strategic direction, financial and operational performance, as well as the sales and marketing for the Healthcare Division. Before Convergent, he was the vice president and general manager of McKesson Provider Technologies. In this role, he was responsible for the success of the physician office-based software and revenue cycle outsourcing business.

"This acquisition is key to both our growth and diversification strategies," said George Kase, partner with Marlin Equity Partners, the financial backers of e-MDs, in a prepared statement. "The purchase is in line with our strategy to complement organic growth by making selected strategic acquisitions. It also offers economies of scale allowing us to extend the e-MDs brand into new areas not previously available."

In 2015, Marlin purchased e-MDs and merged it with MDeverywhere, an existing Marlin portfolio company and provider of revenue cycle management services and credentialing for physicians. A 2014 profile in the Austin Business Journal noted that e-MDs had more than 200 employees at the time.

The sale of the ambulatory EHR assets has some health IT industry watchers asking if McKesson could also be looking to exit the acute-care space as well.

For instance, David Chou, who is a former CIO at the University of Mississippi Medical Center and now a consultant, posted a video of himself on Facebook saying he thinks there also will be a shakeup on the in-patient side.

In 2014, KLAS Research executive Colin Buckley told Healthcare Informatics that McKesson’s Paragon Clinicals was a system to keep an eye on. McKesson had named it as their go-forward, integrated product over its Horizon platform, but Paragon was lacking vetted ambulatory and ED systems. In addition, community hospital customers then reported that service had slipped a bit over the past year and that McKesson has been distracted with larger customers. McKesson was aware of the issue and was seeking to address it, he said.

Many hospitals decided not to replace their legacy system for the initial stages of meaningful use, but understood they must upgrade soon. For Meditech and McKesson, it raised the question of how many of the hundreds of hospitals on their legacy systems would move to their newer version. “In Meditech’s case, a good portion feel that moving to Version 6 is a natural progression for them,” Buckley said at the time. “On McKesson’s side, we see a fair number of Horizon customers committing to Paragon, but also a fair number that are taking a wait-and-see approach. They are hopeful Paragon will be an affordable path forward.”