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As one of the main vendors in the ambulatory EHR space, Allscripts has been getting a lot of calls since HITECH moved the market. But in a change from the past, those calls are not only coming from interested physicians, but from hospital CIOs who want to underwrite licenses for both owned and independent practices. As the vendor’s deal with North Shore Long Island Jewish attests, the sale of ambulatory EHRs is, more and more, moving through the hospital CIO office. To learn more about how HITECH is effecting the sale of outpatient EHRs, HCI Editor-in-Chief Anthony Guerra recently talked with Allscripts CEO Glen Tullman about where he sees the market going.
GUERRA: Let’s talk about the Misys/Allscripts merger. I’ll read you a quote I found which came out at the time: “Misys’s culture was a bit more buttoned down and customer-oriented than Allscripts’s freewheeling style.” I would think it was easy to innovate when you had a freewheeling style, but has that been dampened by the merger? How have the cultures come together?
TULLMAN: First of all, this is without question one of the most successful mergers that’s been done in healthcare. We have exceeded the market expectations in any number of ways. There were expectations put out there for cost synergies, we exceeded those, there were cross-selling expectations of us selling into the Misys base, we’ve exceeded those, and we have lost no senior executives that we wanted to retain.
We did this merger and only a few months later the stimulus was announced. Of course it positioned us extremely well, creating the largest customer base in healthcare. What a lot of people don’t know is that Misys, which used to be Medic, was founded by an entrepreneur named John McConnell.
GUERRA: He’s the one who said that quote.
TULLMAN: Yes. John McConnell also founded a company called Aid for Health Systems which we acquired a few years back. Those two companies were about nine miles apart in North Carolina, and when we put them back together, it was really two twins coming back together and getting to know themselves.
In terms of the culture, I think when a company grows, you want to keep some of the entrepreneurialism, some of that energy, and you want to add some process – that’s the balance you want. So we’ve tried to take the best people from both cultures, the best processes from both cultures, the best entrepreneurial traits from both cultures and blend them together, and I think so far we’ve done a pretty good job of that.
Now I can tell you there were people who initially predicted it wouldn’t go well, there were people who initially predicted we would be cutting a lot of jobs. We’re actually hiring at every one of our facilities around the country and around the world. The business is growing, and obviously we’re coming off of a very successful quarter. There is no question that each of the cultures has had to adjust to create a new culture, which is the best of both.
GUERRA: Do you technically report to someone with Misys in London?
TULLMAN: No. Allscripts is a NASDAQ traded company, completely independent. Our largest shareholder is Misys PLC which is a London-based company.
GUERRA: Did you have more freedom of action before the merger?
TULLMAN: I had a board of directors before. I have a board of directors now. They’re different directors, but at every company I run I have a different board of directors and those boards change over a period of time. As a CEO, and I’m not sure it’s different than most CEOs, we spend a certain period of time determining where the company needs to go in the future, and a big chunk of time with existing and prospective clients. Then you have to deliver the numbers.
If you do the first two well – determine the vision and spend a lot of time with your customers – the numbers take care of themselves. We’ve been fortunate that since the merger, each quarter we’ve delivered all the numbers and the expectations of the market, and that’s what a CEO gets paid to do.
So in terms of our ability to innovate and do the things we like to do, there’ve been no restrictions on our ability to do any of those things. Initially when Misys bought Medic, it was one, Misys, headed out of London. That’s why it didn’t work well. Two years ago or almost three years ago now, there was a turnaround team that came to Misys. That team was headed by an American named Mike Lawrie, and that turnaround team understood that it needed to be run very differently.
GUERRA: You mentioned you’re hiring for many positions. We’re supposed to be headed for a HIT worker crisis. What are you seeing?
TULLMAN: I think you raise something that will be an issue going forward. There’s going to be more and more demand as the market grows and accelerates, more and more demand for qualified people with experience. That said, if you had listened to our last few earnings calls, one of the things you would have heard was that we had “stockpiled some people.” When we did the merger, could we have eliminated more people? Probably. We didn’t do that. What we did was basically said to those people, “Hey, help us work on some of our initiatives, spend more time with customers, do a variety of different things.” Now, as the market’s starting to accelerate, we have those people already on board.
In addition, as I mentioned, we’re continuing to hire. Consequently, we are, from that perspective, getting a little bit of a choice of the people we want. I think it also helps that we’re regarded as a leader, we’re regarded as innovative, we’re regarded as entrepreneurial, so people want to work here, as opposed to some of the other companies in the market who I think are good companies, they just don’t have the same spark that we have.
GUERRA: How do you not succumb to the natural tendency to take on every deal that comes along? Do you have to be careful not to outstrip your resources and promise more than you can deliver?
TULLMAN: When you grow, you have to grow the right way and you have to find great customers. I mean, if you look at the announcements that we made, those are very, very strong relationships, they’re high-profile customers (#1) and (#2), the quality is important because healthcare is a small place, so you want to stay focused on your clients.
But growth is tricky because we’re adding people in advance of when we need them. We’re focused on building systems that will make our people more efficient, we’ll make implementations more rapid, so all of those are the components to growing a great company.
We’re very, very focused on two pieces I’ll mention. One is we’ve added some high-level management capability. First is Eileen McPartland who came from Oracle and SAP. She was with those companies and helped them go through their growth stage. She’s now our chief operating officer. Second is Diane Adams who came to us from Cisco. She joined Cisco when it had 4,000 people. They have 67,000 now. Diane was responsible for most of those people in her HR role. Coming to us, she has the opportunity to do it again.
So we’re building on the success we’ve had in every area by adding more experienced people who have been through growth, by investing record amounts in resource and development, by continuing to stay focused and close to our clients, and finally, by ensuring that we do what we say we’re going to do for those clients. That’s one big piece.
There’s another piece, and that is how do you create leverage? So, how are we going to go out and sell all these new physicians? Well, we created something called the Allscripts Distribution Network. We went to the best players in the market, folks like Henry Schein who have enormous sales forces and client representatives or client relationship managers. They’re in these offices every week. We have a strategic partnership with them. Cardinal Health is, again, another referred name in the industry. These are two of the most highly regarded names in healthcare. Both have become partners with us and their sales forces are selling our products now.
And so we went from having a few hundred salespeople to having well in excess of a thousand, and that gave us an expansion of capability, but it wasn’t just anybody selling the system. These are high-quality organizations, they’ve gone through our training and they’re tightly managed with us. So we have aligned objectives. So again, how do you grow? You invest in people, you invest in systems, you get the right partners, and last but not the least, you focus on your customers.
GUERRA: Whenever you enter into a deal, I would imagine want to make sure the customer is bringing the proper resources to the table. How do you handle that?
TULLMAN: That’s a very perceptive question. In some cases, a client’s objectives, goals, and budgets change after the deal is signed, so they can’t adequately pay attention to the project. I think, in those cases, you have to do a few things. One, first and foremost, you have to call it out. You have say, “We have a partnership, we both have to do our parts, and if one party doesn’t, it won’t work.” No vendor can do it all themselves and no client, of course, can do it all themselves. So first and foremost, you have to be honest.
Second, you need a relationship and you need a close monitor on the pulse, so to speak, of the project. Are we making progress? We have a program called the Executive Sponsorship Program. That’s where our executives all take on accounts where they are actually on those account calls, and I’m on account calls every other week. What I hear is there are real issues that come up with those accounts. But at the end of the day, you need client leadership, and by the way, you need executive leadership, you need physician leadership, and you need technical leadership.
When you go into an account and ask, “Who’s the physician leadership or who’s the physician leader?” and they say they don’t know or, “Who’s the executive sponsor?” and the don’t know, that’s an immediate indication of risk. You have to have a partnership to make these things work. It’s a big part of what we do, and that’s why I think it’s so important that we have the best people in the industry.
I sometimes get our salespeople mad when I say, “This is not about software, but getting people to use software,” and that means behavior change, which is everything about people. That’s why I’m proud to say we have the best people in the industry. It’s because they actually care. They understand the importance of this job, the importance of this responsibility we’ve been given – to transform healthcare – and they go out and they partner with our clients. It’s amazing the obstacles you can overcome when you have a strong vision and when you don’t care who gets credit for the win, and that’s what our people are well-respected for.