Microsoft partners with Athena Health…what does it mean?

What does a tech behemoth do when it becomes clear it can’t chase nimble innovators anymore?

Microsoft’s Office and Windows empire can only grow incrementally at this point, and may yet decline with the emergence of cloud-based alternatives. Having reluctantly purchased a Mac, I can now understand the quality difference is huge, and I doubt Microsoft could ever catch up. But the sheer scale of the healthcare IT market has roused the Beast from Redmond to action. When Andre the Giant walks toward your street, you’d better pay attention!

Keep in mind that the governmental-regulation intensive world of healthcare IT is qualitatively different from what economics textbooks refer to as the “free market”.  As an apocryphal French bureaucrat supposedly said: “that may work in practice, but it will never work in theory.”

There is no level playing field here, and the historical principle of small, clever, innovative companies out-maneuvering the corpulent giants of yesterday is probably a fantasy for this domain. Mergers, acquisitions, and partnerships are the less risky path to market-share growth. Only the most powerful companies have the vast war-chest and legions of lawyers, analysts and lobbyists to compete for the insanely big bucks and shape the regulatory and competitive environment more to their liking. But what is the upshot of the Microsoft-Athena alliance for the rest of us? My contacts at www.softwareadvice.com have some timely analysis that bears examining:

What does this mean for ambulatory care EHR adopters? Not much for now, but it could pave the way to a much bigger collaboration between the two industry giants. Instead of acquiring EHR vendors as we discussed in April, Microsoft could be dipping its toe in the water by partnering instead. Partnering requires much less risk and is often the first step towards a larger move such as an acquisition.

From Athena’s standpoint, the partnership is a great opportunity to work its way into other organizations using Amalga. It’s a no-brainer and a win-win. For Microsoft though, the choice of Athena as a partner is surprising for a few reasons:

• We would still expect any Microsoft partner to possess the characteristics that we outlined in April of a lucrative acquisition target: large market share, scalable products, and .Net architecture.
• While Athena is a big brand and its system is scalable, it doesn’t have nearly the user base of bigger firms such as Allscripts or eClinicalWorks.
• The SaaS model provides zero synergy with SQL Server and Windows Server sales.

However, Athena’s commitment to cloud computing could prove to be attractive as Microsoft has been criticized for being late to the cloud party.

What is Microsoft’s strategy for getting deeper into the healthcare IT game?

My friends at Software Advice, a web site that profiles electronic health record software, forwarded me a really interesting article about what the “Beast from Redmond” is up to as it hungrily eyes the multi-billion dollar healthcare information technology sector. I am not at all convinced they are going to make good on their efforts. Their core competencies in Windows, Office, and server products do not make them obvious candidates for dominating the EHR /EMR markets, though the SQL Server product line I believe to be robust enough to support EHR/EMR applications on top of it. On the other hand, the contracts for building EHR/EMR systems are so lucrative, and the regulations around their deployment so vast, it might be that only the few companies with the resources to lobby regulators and politicians, and to put up capital and resources to secure multi-year commitments with hospitals (and their third party vendors of legacy and proprietary applications) can compete.

Earlier I analyzed the efforts of Dell to penetrate the EHR/EMR space, and the article I am excerpting below performs a similar, though more in-depth, analysis of what we might expect to see from Microsoft’s efforts in this sector.

from http://www.softwareadvice.com/articles/medical/microsoft-emr-it%E2%80%99s-not-just-a-matter-of-when-it%E2%80%99s-a-matter-of-who-1040510/

Setting its sights on the medical market, Microsoft is starting to squeeze its way in with a few smaller acquisitions and developments of its own, mainly Amalga and HealthVault. However, these current medical offerings are on the periphery of the market and do not really target the sweet spot: electronic health records for physician practices. An intelligent acquisition of a large EHR player would provide a key piece of the puzzle for Microsoft’s entry into the medical market.

Acquired by Microsoft in 2006, Amalga provides information connectivity and interoperability to large healthcare networks. It is the primary Microsoft healthcare offering in the industry at this point, although it is not available in the United States. Microsoft may be planning to offer it domestically, as it did with Navision Damgaard, or may be looking to acquire a domestic vendor to complement it. Regardless of Microsoft’s strategy, Amalga still would not address the physician practice EHR market.

On the other end of the spectrum, HealthVault is a patient-managed, centralized health records solution. It is essentially designed to be a reference point for consumers, not a substitute for medical records. If Microsoft were able to introduce an EHR to the market and enable its users to make records accessible to patients, labs, specialists and pharmacies via HealthVault, then they would really be on to something. This synergy with its other products would just be an added bonus to having its own EHR.

So what would Microsoft prioritize as its key acquisition criteria when evaluating EHR targets? They would certainly want target vendors who possess the following:

1. Large market share and name brand recognition. Microsoft usually likes to be the largest name in the business, so they would definitely want to sell a “big-name” system with which most buyers are already familiar.
2. A scalable product for small and large practices. Microsoft would need to be able to cover a wide range of medical customers. While its bread and butter is always in the small and mid-size market, they would want scalability into the largest organizations.
3. A .Net architecture to drag along infrastructure sales. Reinforcing the position of .Net in the medical software marketplace would be important because it would drive further sales of Microsoft infrastructure while squeezing out Unix, Oracle and IBM.
4. An established, indirect sales channel. Microsoft historically favors selling through partners, including the existing Dynamics dealer network. An EHR vendor with a large dealer network would provide Microsoft an easily transferable sales channel and process.