Does anyone know how the merger is going to affect EIS since EIS was not part of the merger? Do they plan to try to sell it off?
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This was in HealthDataManagment on June 28th.
McKesson starts to move away from health IT business
McKesson is exiting much of its health information technology product lines in a series of moves that have been expected since reports of change in the organization surfaced in early June.
McKesson today announced it is exploring “strategic alternatives” for its Enterprise Information Solutions product line, and observers say this represents the equivalent of putting out a “for sale” sign on its suite of hospital information systems.
These products include the Paragon hospital information system, STAR and HealthQuest applications for financial and supply chain management, and document management and coding products.
Strategic alternatives essentially means that the days for EIS within McK are numbered. It would typically imply that an investment bank has been engaged with a mandate to sell it off to the highest bidder.
Given that the EIS business is in a pretty sorry state from the perspective of competitive positioning and has lost out on a number of contract renewals, the sale would spell disaster for the employees. Considering also that Change Healthcare didn't care about the EIS portion, despite getting a financially sweet deal, only underlines the redlining that will follow any transaction. I'd strongly suggest polishing up that resume and getting job interviews lined up while the sale is being finalized.
It is highly likely that a traditional Healthcare IT business doesn't want to touch EIS and that would mean a likely sale to an Investment company (Private Equity etc.) that will streamline it, show some contract wins and make it attractive enough for a corporation to then purchase it.
With this sale though, McKesson is finally rid of one of the worst investments made in Healthcare - $14.5B for HBO&Co. (1999) + $1B in investor lawsuit (2005) => $1.25B (cash) + ~$2.5B (70% stake) in 2016 => easily a net loss of $15B in 2016 dollars.
Lots of overlap/redundancy between McK & Change...particularly with the revcycle groups. Seems the "synergies" are more like "overlap" and that's where a lot of cuts will probably come from.
It means if you are an EIS employee your assis grass and McK is the lawnmower.
Other McKesson Pharmacy Technology/clinical technology is staying with McKesson for now.
It's unfortunate that they couldn't even include EIS in the deal. Sad state of affairs there.
My guess is it will get sold off to someone like Meditech - someone who is in top 5 but needs a boost to compete with Cerner and Epic.
The complimentary BPS is out though and moving to Change. Interesting though, read an article that stated McKesson is only invested until company goes public (new merger company) and then they are out.
Everyone is merging in Healthcare these days.
I was wondering the same thing. We knew this was coming,, just weren't sure when.
What next? What about the other McK divisions?
Q: What are ‘strategic alternatives?'
A: When companies are doing well, they don’t normally look for “strategic alternatives.” Long before companies look for strategic alternatives, investors should look elsewhere.
The term strategic alternatives is somewhat of a codeword for a company trying to put itself up for sale. Typically, when a company’s management or its investors think the the firm needs to restructure itself in a radical way, it will announce it’s looking for alternatives. That might involve selling the company to a competitor that can find efficiency or taking the company private by selling to private investors or the management. Companies don’t get to this point overnight,