H.I.S.-tory

by Vince Ciotti

© 2013 by H.I.S. Professionals, LLC, all rights reserved.

Episode #115:

McKessonPart 4 = HBOC

A 1980’s scan from Walt Huff himself:Standing: left = Tom Muller, center = John Lawless, right = King Deets, right front = Jim Napier. Seated = Walt Huff

HBOC’s Product Line Grows• By the late 70s, HBOC’s MEDPRO has swept the mid-sized

hospital data collection market with over 200 clients, but the Four Phase mini was just about maxed out. Even super-techie Bruce Barrington was reluctant to add more of the missing pieces to it (like LIS and financials) and still keep up rapid response times.

• In 1975, HBOC scored one of its biggest contracts with Humana, who hired Urban Gerber from Perot to install MEDPRO in its 30 hospitals. When Humana acquired American Medicorps in 1978, they now had scores of hospitals running SMS’s shared financials to convert, so Walt & Co. set up a subsidiary in Louisville to start writing a mini-based financial system headed up by Urban. Urban brought in Bill Brehm from SMS as his partner (see episode 22 at hispros.com).

Gerber-Brehm and Associates• Urban & Bill’s eponymous firm started writing their financial

system on a Four Phase, but it just couldn’t handle the batch-processing challenges, so after some fitful “4φ” mini starts, they settled on an HP3000 box, a more powerful minicomputer.

• They called their new system the “Integrated Financial & Administrative System” or IFAS for short. The pilot hospital was the Sisters of the Holy Cross, a large MEDPRO client, who insisted on demos showing progress each month before making their next payment. When the system was finally completed, Walt merged the “secret” GBA subsidiary into HBOC, and now the combined package of MEDPRO and IFAS let HBOC compete with all the other mini vendors with clinical and financial systems like DCC, JS Data, SAI, etc.

Adding Apps, But Losing People• As much as adding IFAS to its portfolio helped HBOC grow, 2 of

the firm’s original co-founders departed around the 1981 IPO:– Bruce Barrington – the programming maven who wrote most

of CRASH (HFC), SHIS (HPC) and MEDPRO, left HBOC and in 1982 formed Clarion Software in Pompano Beach, Florida. Clarion Professional Developer (CPD, aka Clarion), allowed PC users to rapidly create programs without the add-ons like data bases required by conventional development tools, similar to what was provided by minicomputer vendors like Four Phase.

In 91 Bruce licensed a compiler from Jensen & Partners International (JPI), and in 1992 he merged Clarion & JPI, re-named them as TopSpeed Inc., serving as Chairman. Clarion evolved through many releases over the years (just like HBO!). Bruce is 2nd from the left in this rare photo of him at a Clarion users group.

Another Departure• The third member of the original founders, Dick Owens, also left

around the time of the IPO. Dick and his wife Hootie were from Missouri with humble backgrounds, and moved to Peoria where Dick joined OSF in 1960, working for DP Manager Urban Gerber. He became expert in internal hospital operations and headed up installations of CRASH & SHIS. When Bruce left OSF to start writing MEDPRO, he asked Dick to join him. "With only a small house and one car, it was a big risk," remembers Dick. His dad told the family that "this would either make me or break me."

HBO sure “made” Dick and he spent his time after early retirement on philanthropic endeavors. "Angels in tennis shoes," says a lifelong friend. "You would never guess they were wealthy people. They loved to give…but never wanted any thanks.” Dick sadly passed away in 2003, and his wife pledged $2 million to build OSF’s “Owens Hospice Home.”

And a Third Vet Leaves• Walt’s own words on Urban: “Gerber then became disenchanted

at HBO and left to start Gerber-Alley. And you’re right he died way too early. He was a friend and a good competitor.”

• Another HIS-Talk reader recalls Urban, who passed in 1984:– “I recently stumbled upon your H.I.S.-tory articles when I was looking for

information on Urban Gerber. I knew Urban when I worked at a Humana hospital back in the mid ‘70s and he was the Corporate IT Director. I found your article interesting for a number of reasons. For one, I later worked at a hospital system in Knoxville, TN, that used the IFAS system and I never knew of Urban’s involvement in its development. Also, I currently work at a system that still utilizes The Precision Alternative (TPA). I was aware of Urban’s involvement with that application since it started as a Gerber-Alley application and later purchased by HBOC. Urban was certainly one of the most enthusiastic IT guys I have ever known and always seemingly full of energy. It is a shame he left us as young as he did.”Wayne Carney , Executive Director - Patient Financial Services Baptist Health, Louisville, Kentucky wcarney@bhsi.com

While Another Pioneer Joins• The acquisition of IFAS from Gerber-Brehm was only the first of

numerous acquisitions by HBOC in the 1980s. The next in a wave of both mini and mega-deals involved another HIS-tory pioneer:

• Ralph Korpman - a pathologist working for Technicon in the 1970s, who left in 1976 to found his own LIS firm called Medical Data Corporation (MDC) in Loma Linda. Lab was one of the few gaps in MEDPRO as LIS modules (microbiology, AP, blood bank, etc.) were very complex and were purchased from specialty vendors in the 70s, like Meditech (their HIS = 1980s). Walt & co. bought MDC in 1981 after the IPO gave HBOC deep pockets.

• Korpman stayed with HBOC as a consultant (official title was “Chief Scientist”) for a few years, and his MDC system was renamed “ClinPro” by HBOC. He left to form Health Data Sciences in 1983, whose UltiCare pioneered the use of CRTs at the bedside.

Correction• My (again) sloppy writing

confused folks last week:– Dan Mowery from

McKesson introduced me to many HBO veterans, including:

– Dan La Benne – who provided me with many inside stories and the classic pictures of the trailer, Walt’s first desk, and this gem on the right about many other HBO folks who earned 5-year awards in 1981:

Mega-Merger #1• In 1985, HBOC consummated two deals

that greatly increased its product line and market presence. The first was:– Amherst Associates – a consulting

giant whose hospital management expertise was reflected by Modern Healthcare rating them in 1984 as the largest healthcare consulting firm outside of the accounting industry (viz: “The Big Eight”). The addition of Amherst’s experts led to the creation of HBOC’s TrendStar system for:• Cost Accounting, Decision

Support, and Executive Information Systems (EIS)

Mega-Merger # 2• HBOC expanded beyond the world of minis with this next

acquisition: Mediflex, whose MediPac accounting system was the leading software vendor in the lucrative IBM mainframe world.

• Mediflex was the IT subsidiary of Medicus, a leading facilities management (FM) firm in the 70s. The developed MediPac in COBOL on VSAM files at Evanston Hospital in IL, a major FM client of theirs. When Mediflex went public before HBOC’s acquisition, I remember reading with dismay how their listing gave a financial arrangement with Evanston Hospital that provided for a ≈$75K payment for every site visit they conducted:• A caveat emptor even for today! Do you

ever ask that question on a site visit??

A Much Bigger HBOC• The addition of Amherst and Mediflex made HBOC a giant that

suddenly challenged HIS industry leaders like SMS and McAuto. Their product line now covered the full range of beds & apps:– Turnkey Minicomputer-Based systems:• MEDPRO and CLINPRO – which were renamed MEDSTAR

and CLINSTAR when they switched from 4φ to DG minis• IFAS – financials running on the powerful HP3000 minis• GALAXY – small-hospital HIS running on Four Phase minis

– Inhouse & Remote Processed Mainframe systems:• MEDIPAC – financials eventually renamed HealthQuest

– PC-based systems (by the end of the 80s):• TRENDSTAR – evolved out of Amherst & Medicus’ Cost

Accounting, DSS and EIS systems, that started on shared DEC minis and IBM mainframes respectively (got that?).

New Management Team• Walt made room for a number of new executives from the two

acquired companies, shown below in Dan’s photo from 1985:

HBO’s Rapid Rise• By the end of the 1980s, the combined products & people of

HBOC, Amherst & Mediflex catapulted them to the #2 position in the HIS industry in annual revenue, per my calculations below:

Merger-Mania Continues• Next week we’ll trace HBOC’s rash of mergers in the

1990s, leading up to their biggest deal of all when tried to acquire McKesson at the end of the decade (yes, Virginia, HBOC tired to gobble them up first!):– 1994 = IBAX – the combo of IBM and Baxter with

several HIS pioneering vendors subsumed within

– 1994 = Serving Software – hospital resource management– 1995 = ALS - one of the earliest & largest LIS specialists– 1995 = FDC – Amex’s IT division comprised of SAI & McAuto– 1995 = Pegasus – the Smart Medical Record was an early EMR– 1996 = CyCare – a leading Practice Management vendor in CA– 1997 = Amisys, Enterprise Systems and Nat. Health Enhance.– 1998 = Imnet – imaging precursor to Horizon Patient Folder