1970’s Shared Revolution

– Shared Medical Systems (SMS) – the shared success story, which lives on today as Siemens.

– McDonnell-Douglas Automation Company (McAuto) – St. Louis, MO, the #2 shared giant.

– Tymshare – Cupertino, CA, which acquired MDS (Medical Data Systems) from Bob Pagnotta.

• IBM’s SHAS marked the start of the next major epoch in HIS-tory: the explosion of shared systems in the 1970s. Most hospitals still open in the US today at one time or another processed their data via a shared system, probably from one of the following vendors:

– GE – yes, that GE, the same one that made your refrigerator, was an pioneer and major player among 70s shared systems with their “Medinet” system.

– Blue Cross/Blue Shields – in scores of states, processing dozens of hospitals each, many running SHAS like MI, but some writing their own systems too.

– State Hospital Associations – many states ran their own shared systems, eg:– CHART – Cooperative Hospital Application of Remote Teleprocessing in

NY, that ran a pioneering shared system for about 20 up-state hospitals.

Shared Medical Systems

- Who was Dr Clyde Hyde in the want ad? One of the 3 founders of SMS, along with Jim Macaleer, CEO, and Harvey Wilson, of later Eclipsys fame.

- All 3 were ex-IBMers, stellar performers in IBM’s Philly office, who sold every large hospital in town a 360. Clyde left SMS early in the 70s…

• The “King Kong” of shared systems has to be SMS. This chapter of HIS-tory is somewhat personal, for it is the story of how I got into the business back in 1969, when, by serendipity, I answered the want ad below at the placement bureau of Temple University.

– The biggest sale Jim & Harvey pictured on the left ever made was to a Wall Street investment firm that advanced them $5M in start-up funds. That $5 Million investment eventually generated many Billions as you’ll see! Each man brought their own unique skills to the start-up firm:

– (Big) Jim = take-no-prisoners boss & fearless leader– Harvey = greatest salesman in HIS-tory, & later CEO– Clyde = clinical visionary of sharing ECG analysis

Pennsylvania Roots

Why would 3 hot IBM-ers leave “Big Blue” and risk everything on a risky start up? Two reasons:

1. Entrepreneurial Spirit – Whenever asked by a “newbie” about just how big he envisioned SMS growing, Big Jim always answered: “As big as IBM.” It’s the essence of capitalism: we can do it! That’s the same spirit that’s inspiring Verona today…

• Many people think of King of Prussia as SMS’ early roots, but it actually started at Ross & Royal Roads in nearby Bridgeport, PA, where a cheap storefront housed SMS in a low cost strip mall, next to a Deli. This Google image shows the location today:

2. Stock - the same profit motive that inspired IBM to write SHAS, motivated SMS’ founders, whose goal from day one was to take SMS public in an IPO. How can we “moderns” relate to it? For you hospital not-for-profits, here’s the hard math:• When I joined SMS in 1969, their stock was (over) valued at a penny a share. Jim

and Harvey were generous, and gave promising employees a few hundred shares to motivate us for the long hours and intense effort it would take to succeed.

• SMS eventually went public in the mid-70s, the stock took off, split many times, and that penny value soon became several hundred dollars per share! So a “X” hundred shares split into “Y” thousand shares, times “Z” hundred $s per share!!!

SMS Made SHAS Work!

– Pictured at the right is Tony Sammartino, first operations manager over our leased 360; the lady is a model from an agency – boy did we gawk!

– Tony Sam went on to hold many positions in SMS, most notably as Customer Service Center Mgr, handling innumerable hospital demands/requests

• Jim & Harvey lured dozens of IBM’s best & brightest with these stock options, and they did the impossible: they made SHAS work! The many bugs and gaps in the programs were fixed and plugged over many long nights and weekends by a bevy of SMS superstars:

– Other stalwarts on the left included Jim Carter, VP of Ops, who SMS recruited from California BC/BS, an early SHAS pioneer. Jim’s afro was especially daring at early SMS, considering Big Jim was bald!

– On Jim’s right is Karl Witonsky, Technical VP over all programming and hardware; Karl had a brilliant mind and charming personality, a rare combination in the high-tech world of the 1970s! Karl is now with Francisco Partners, as major HIS VC firm today.

Dizzy Climb to the Top• High Points: mainly sales successes by Harvey and his incredible team

of ex-IBM sales superstars: John Marshall, Ron Dixon, etc.– Daughters of Charity = sold a dozen large sites w/inhouse 360s!– NYCHHC = dozen of the largest hospitals in the US, a huge win!– “Merger” with American Hospital Supply’s “ISD” which netted:

• Four competitors: CA’s “CB2,” Michigan’s HCS, Texas & Georgia’s BC/BS

• Low Points: in truth, SMS almost tanked several times as well:– June 30, 1970 “Regionalization” near-miss!

• Programmers expanded SHAS’ hospital code field from 1 to 3 digits so we could handle more than 36 clients. The system didn’t come up for days…

– ≈ 1972 = almost ran through the initial $5M…• Just turned the corner and hit the black with few $s to spare…

– 1973 = UNIFILE: “breakthrough”…• Brilliant concept, but almost brought the 360 to its knees…

There both highs and lows in SMS’ HIS-tory:

New products in the 70s

• Financial Management System (FMS):– Sexier name than SHAS, included home-grown:

• Payables, Materials, Payroll, and Personnel• Designed by Tony Mirigliani, a 1401 pioneer.

• Hotter I/O: the crude 1050 card readers & character printers gave way to “SCC” high-speed terminals & IBM 2770s with CRTs!– Microfiche: ended heavy & costly green-bar paper shipments…

SMS added many apps & goodies to SHAS:

UNIFILE:SMS’ programmers saw MRI’s “System 2000” at a TX seminar, and came back inspired to build a new on-line data base data base system with real-time (not batch) transaction processing and a customer-controlled report writer!However, slow 360 system response times killed it…

Other SMS “Super Stars” of the 70sSales & Marketing:• Harvey (HJW) eclipsed (???)

many hero VPs under him, eg:– Ron Dixon, John Marshall,

Jim Hall and Bob Fetters…• He also hired/stole the “best

& brightest” reps from IBM:– Ken Mansfield, Randy

Harper, Scott Holmes…– Dick Davis almost sold 10

NY/NJ hospitals in one year!• Even “promoted from within”

turning IDs (Installation Directors) into sales stars, eg:– Kurt Lambert & Bob Flippin

• Pictures are from SMS’ 40th reunion just held in King of Prussia in October, 2009:

Techies/Service:• Tony Sam & Jim Carter

- Data Center & CSC• Mike Mulhall

-Install VP, HIS guru…• Ken Shumaker

- Genius, Unifile father…• Phil Jackson

- Created ACTIon…• Tony Sam

- Master of all trades!• Brian Kenny

- Programming guru• John Keyser

- Kept the lights on!

How Successful Was SMS?• Check out the math:

– When I started in 1969, we had ≈10 hospitals, 30-odd (sic) employees, and annual revenue of a few million dollars.

– When I left 10 years later in 1979, SMS had several hundred clients, over 400 employees, and annual revenue of ≈$100M.

– By 1990, SMS had grown to almost 1,000 clients on both shared and minicomputer system products (our next HIS epoch), several thousand employees, and annual revenues of over $400M.

– In 2000, when bought by Siemens for about $2B, SMS had over 7,000 employees, and annual revenue of $1.2B

– Today, SMS’ revenue is buried in Siemens ≈$100B Euros worldwide, so we estimate their annual revenue as ≈$1.5

– So, add up the 40 years of annual revenue and it’s a

staggering $22 Billion Dollars!!!!$22 Billion Dollars!!!! And it all started at Ross & Royal Roads, next to a Deli…

– No wonder Jim & Harvey are smiling:No wonder Jim & Harvey are smiling: