H.I.S.-tory by Vince Ciotti

Episode #71:

QuadraMed Part 3

© 2012 by H.I.S. Professionals, LLC, all rights reserved.

An “Affinity” for Sales!• We left off last week with how well Frank Pecaitis and his team

sold Compucare/QuadraMed’s Affinity HIS throughout the 90s, as shown by the annual revenue growth chart shown below:

• I hope this chart corrects the gaff of last week’s that had the slope reversed!

• But what a perfect segue to the next story

Ken Lay & QuadraMed• So how in the world did the Enron debacle

have a negative impact on an HIS vendor?• Ironically, while Ken Lay, Jeffrey Skilling,

Andy Fastow & Co. were cooking the books throughout the 80s and 90s, they used the same accounting firm as QuadraMed: Arthur Andersen, one of the very biggest of the “Big Eight” accounting firms back then.

• When Arthur imploded after the 2001 scandal went public, their audit clients were suddenly left without an “audited” set of financial reports, something NADAQ insists on for its publically held firms.

• Without an auditor, QuadraMed missed the deadline for filing and was de-listed...

So?????• What’s that got to do with the price of eggs? Well, if

you were down to your final vendor selection and your CFO asked about the financial status of your finalist vendor(s), QuadraMed had nothing to show you until they could find another audit firm. And their stock’s value had plummeted to pennies…

• Does that matter when selecting a vendor? Ask:– Allscripts – just a few months ago when their

stock tanked after missing earnings projections…– McKesson – whose stock value dropped $9B circa

1999 after their over-priced acquisition of HBOC– IBM – whose stock crashed in the early 90s…

• So QuadraMed sales took a nasty hit in the early 2000s, despite having a winning product, good implementations, great service, and happy clients.

Just How Good Were They?• Our consulting firm had QuadraMed in the finals at a number of

system selections in the early 2000s, and here’s how they fared in terms of demos, telephone reference calls, user documentation, etc., compared to several of their leading competitors back then:

• These 2002 scores are the results of users filling out detailed checklists that rate vendor demos, phone calls and documentation.

• Of course, no one is perfect, as these scores show, but Affinity did very well back then!

Road to Recovery…• The man who led QuadraMed out of these woods in the early 2000s

was Larry English, who was recruited from the insurance giant Cigna, which was formed from the merger of Connecticut General and INA.

• Larry faced a tough row to hoe, as the 27 acquisitions we listed for QuadraMed last week made its books a nightmare without Enron! It took Deloitte-Touche and BDO several years to get the $s right…

• One of the firm’s strong suits became the niche of Medical Records (HIM today), thanks to 2 encoders they acquired:- CodeMaster, and the- Encoder from Medicus.

• Both were combined in Oracle-based “Quantim.”

HIM Mavens• The chart below shows QuadraMed’s client base back in the early

2000s; the “PC” figures are primarily for their Quantim encoder, which roughly splits the HIM market with rival 3M’s “CodeFinder”

Re-Listed!• It took a several years of hard work by Larry,

Frank and the whole QuadraMed team, but they eventually got the firm back on Wall Street, this time on the American Stock Exchange. Larry’s triumphant announcement is captured in this photo on the right in August of 2004:

• The shot on the left is also courtesy of Frank Pecaitis, who gave their execs names:(Standing from left to right) = • Dean Souleles, Chief Technology Officer,• Bill Henderson, VP HIM (Quantim),• Suzanne Jenkins, VP Product, • Frank, Sr. VP of Sales, and on far right:• Mike Wilstead, President and COO.

From Rags to Riches To Rags To Riches…• Compucare/QuadraMed’s roller-coaster ride continued when

Larry English retired at age 65 in 2005. He was replaced by:• Keith Hagen, a 25-year industry veteran who had worked at:– Misys, Sunquest and some small start-up named Compucare…

• Keith returned to QuadraMed to find that Affinity was just not quite achieving the high level of an EMR & CPOE clients wanted.

• He faced the classic dilemma in IT circles: “build it” or “buy it?”

• Turning to his former colleagues at Misys, he found the answer in a system that is its own mini-HIS-tory, that we’ll take up next week, as we cover the third leg of the Compucare story: HDS