Our Take: Allscripts to sell its hospital business segment for up to $700 million
Allscripts Healthcare Solutions has agreed to sell the net assets of its hospitals and large physician practices business segment to N. Harris Computer Corp., a wholly owned subsidiary of the Toronto-based holding company Constellation Software, for $670 million in cash to be paid at closing and potentially another $30 million if the business segment performs well during the subsequent two years.
Based in Chicago, Allscripts provides hospitals, physician practices, and other health care entities with health information technology solutions, including practice management, financial management, and electronic health record technology.
The following solutions are among the specific assets that Harris Computer will be buying: Sunrise, Paragon, TouchWorks, Opal, Star, HealthQuest, and dbMotion.
Of note, Allscripts will retain ownership of its Veradigm segment, as well as its Practice Fusion and Professional segments.
“We think this transaction maximizes focus as well as future opportunity for our clients, our more than 7,500 associates, and our shareholders,” Paul Black, CEO of Allscripts, said in the press release announcing the deal.
The transaction, which is subject to regulatory approval and customary closing conditions, is expected to close in the second quarter.
Our Take: Allscripts continues to streamline its business operations.
About a year and a half ago, the company sold its CarePort care coordination segment to a different health software company, WellSky, for $1.35 billion. That was just a few months after selling EPSi, its hospital financial decision support business, to Strata Decision Technology for $365 million.
And last August, Allscripts sold its precision medicine platform, 2bPrecise, to AccessDX Holdings for an undisclosed sum.
Revenue from Allscripts’ hospital and large physician practices business segment has decreased in recent years, and the segment has been losing clients as well. Given that Allscripts has a much smaller share of the EHR market than Epic or Cerner (5% vs. 31% and 25%, respectively, according to KLAS Research), it makes sense to sell off those assets rather than continuing to compete against the heavyweights in that arena.
Regarding the assets it’s selling, Allscripts picked up the Paragon EHR product, along with the Star and HealthQuest revenue cycle technologies, in 2017 when it bought McKesson’s Enterprise Information Solutions portfolio for $185 million. At the time, Allscripts said it would continue to offer Paragon as an integrated EHR and revenue cycle management solution for small hospitals while using its Sunrise platform for larger organizations.
Opal is a digital health record used in hospitals in Australia, Touchworks is an EHR package developed for large, multidiscipline physician practices, and dbMotion is an interoperability solution that lets organizations share data.
Regarding the assets it’s keeping, Allscripts paid $100 million to acquire Practice Fusion in 2018; the Practice Fusion EHR technology is designed for small, independent physician practices. Allscripts’ Professional EHR is intended for solo practitioners and mid-size multispecialty practices.
It’s Veradigm, AllScripts’ payer and life sciences segment, that appears to be the main moneymaker, with solutions such as ePrescribe, eAuth (for electronic prior authorizations), and eChart Courier (for patient records requests). Veradigm just signed an agreement last week with the Social Security Administration that will allow the government agency to electronically request and receive EHRs through eChart Courier.
By automating these functions, the SSA will “reduce patient health record retrieval time from weeks or days to just minutes for millions of patient-authorized requests,” Veradigm noted in a press release.
Veradigm’s revenue for the most recent quarter was up 8.9% compared with the same quarter a year ago, while revenue for the hospitals and large physician practices segment was down 2.3%. Rick Poulton, Allscripts’ president and CFO, said during an earnings call with analysts that the Veradigm provider platform added approximately 500 new practices and 5,600 prescribing physicians during the quarter.
What else you need to know
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Health Care Value Through The Lens Of Patients’ Well-Being. Health Affairs, 3.1.22
U.S. Public Health Law — Foundations and Emerging Shifts. NEJM, 3.3.22