Allscripts: Debacle or silver lining?
April 30, 2012 in Medical Technology
CHICAGO – After what turned out to be a sea-changing Q1 earnings meeting April 26, which saw the ejection of its board chairman and three other board members reportedly quitting in protest, Allscripts on Monday moved quickly to begin to right the ship, with the announcement of a new chairman.
Dennis Chookaszian, who has served on the Allscripts board since September 2010, will take the helm on the board of directors. He was formerly the chief executive and chairman of mPower Inc., a financial advice firm focused on the online management of 401(k) plans.
[See also: Allscripts in skid mode as shares plunge, chairman ousted]
Some Allscripts customers say they are concerned about the recent chaos, but they believe Allscripts founder and CEO Glen Tullman will be able to move the firm forward.
“What I see bodes well for the future,” said John Bosco, CIO of North Shore-Long Island Jewish Health System, Allscripts’ biggest client. “In the end, it will enable Glen to make the changes that are needed.”
“We’re the largest Allscripts customer by orders of magnitude,” said Bosco. “Allscripts is our go-forward partner.”
[See also: Customers have high expectations for Allscripts]
Indeed, North Shore-LIJ has invested $400 million to connect 15 hospitals, 2,500 employed physicians and 8,000 affiliated physicians. Allscripts touted the intiative when it announced the initiative two years ago as “the largest EHR program in the New York metropolitan area and one of the largest in the nation.”
William Spooner, CIO of Sharp Healthcare in San Diego, says Sharp’s user executives are nervous about the recent chaos at Allscripts – and about the lower-than-expected financial results reported for Q1. (Unrelated, Allscripts CFO Bill Davis, is leaving for a post outside the healthcare sector, triggering analysts to downgrade Allscripts stock from “buy” to “neutral.”)
“I am concerned as well,” said Spooner, “yet my role is to steady the ship, maintain perspective and consider contingencies. Glen is severely challenged yet a strong leader. Stay tuned for a hot summer.”
Back in June 2010, Allscripts merged with Eclipsys, a deal that gave Allscripts, which had played solely in the ambulatory space, access to the hospital market. At the time, Tullman said, it’s what Allscripts customers were pleading with him to do. Eclipsys, with its Sunrise Enterprise EHR, seemed like a good fit.
Spooner and others said then that the proof would be in execution.
“I think that as these two organizations combine their market strengths, it will translate into new, highly integrated services and products,” Michael O’Rourke, CIO of Denver-based Catholic Health Initiatives said at the time of the merger.
Many expressed high expectations then, but the merger does not seem to have turned out as they hoped.
In Bosco’s view, the two companies underestimated the differences in culture between Allscripts and Eclipsys. “They could not have been more different in terms of culture,” he said, adding that the removal of chairman Phil Pead from the board and the stepping down of three other directors might now pave the way for Tullman to put his plans into action.
“All are still pushing hard, and it’s a tough road, but they are focused on long-term success,” Bosco said. “I think there’s a silver lining.”
Allscripts also annnounced the board has authorized management to repurchase an additional $200 million of the company’s outstanding shares, bringing the total amount authorized for stock buybacks to $400 million.