Tag Archives: EMR

SPI Digital Health: Western Australia and Tasmania Begin their State-Wide EMR Journeys

Following in the footsteps of other Australian states, Tasmania and Western Australia (WA) recently provided details of their plans to implement state-wide electronic medical records (EMRs) for the first time. 

Earlier this month, the WA government said an A$100M (US$65M), first phase state-wide hospital EMR rollout would include a digital medical record with single sign-on technology and virtual desktop infrastructure at around 80 public hospitals.  

This first phase is part of an A$1.2B (US$782M) digital infrastructure and public hospital capacity upgrade programme in Western Australia. There is, at this stage, no indication of when the first phase contract will go out to tender or be awarded. 

WA’s announcement comes weeks after Tasmania issued a request for proposals (RFPs) for its first state-wide EMR and ambulance electronic patient record. The A$150M (US$97.8M) first phase will, the state government said, be rolled out over four years. It is part of an A$475M ($309.6M), decade-long digital health programme on the island. 

The Signify View 

It was only a matter of time before WA and Tasmania embarked on their journeys towards state-wide EMRs. Signify Research described in this recent Insight how the move to state-wide contracts was shaping the Australian EHR market in 2023, and confirmation that these states are now moving forward reinforces our view. 

The seeds of WA’s EMR plans were sown in 2019 when the state government published its digital strategy vision. A state-wide EMR lay at the heart of this vision, and the state government has set a July 2029 target to have a ‘functional’ system in place. Implementation will take place in four phases, although it is unclear at this stage when vendors will be invited to submit requests for proposals (RFPs) for the first phase contract. 

Tasmania’s story is similar in many ways. The government in Australia’s second-smallest state published its digital health transformation strategy 18 months ago and, as in WA, a state-wide EMR is a central pillar of this. Tasmania, however, has higher aims: it sees an EMR as being the key to creating the first fully-integrated healthcare system in Australia. 

Land of Opportunity 

Tasmania’s goal to establish the country’s first fully-integrated healthcare system is bold but viable. The state’s current system is rudimentary, with most health record inputs still done manually. There is no installed EMR base on the island, although there is a basic patient database that was implemented more than a decade ago by iSOFT (which later became CSC, DXC and now Dedalus). Tasmania has just four large state hospitals, 14 regional hospitals, seven private hospitals and 144 primary care practices with fewer than 1,000 GPs in total. 

Contrast this with other, much more populous states in Australia, like New South Wales and Victoria, which have various iterations of EMR systems spanning more than a decade in some cases. In Tasmania, with a population of little more than half a million, putting in place a system that seamlessly connects hospital and primary care EMRs should therefore be relatively achievable. But, as state-wide EMR deployments in other Australian states have demonstrated, there are clear challenges. 

Inflation’s Curse 

One immediate challenge facing both WA and Tasmanian rollouts is inflation, which ran at 7% for the year to March. Although it is starting to ease, inflation will impact project budgets, scopes and vendor margins. A$100M (US$65M) in WA and A$150M (US$97.8M) in Tasmania will not stretch far in the current high inflation environment and, in other state-wide deployments elsewhere in Australia, funding top-ups have been needed.  

In WA, another challenge is its sheer geographical size. It is the country’s largest state by some distance, and so state-wide EMR implementation in often remote hospitals presents immediate logistical hurdles. Once the EMR is in place, providers in WA face the additional challenges of patient engagement, especially in remote communities that lack good communications networks. 

Muscle Flexing 

Despite their relatively modest value, the contracts in WA and Tasmania will be seen as another good opportunity for international vendors to flex their muscles and experience on state-wide programmes. In WA we’d expect to see the usual cast of contenders to include Epic, Oracle Cerner, Altera, and, InterSystems and MEDITECH, all of whom have experience (both good and bad) on Australian state-wide contracts. These names will probably also be in the frame in Tasmania, but there could also be interest from Telstra, in partnership with Alcidion, a UK-based data aggregator and Dedalus, which also has a sizeable Australian footprint. 

Any involvement by Telstra would be significant in the sense that Australia’s leading EHR vendor (by revenue) has never been involved on a state-wide contract, focusing instead on individual hospital, ambulatory and long-term care markets in Australia where it is the undisputed market leader. Given Tasmania’s goal to create Australia’s first fully-integrated system, and without the ‘baggage’ of legacy EMR systems in other states, Telstra might see this a good opportunity, particularly with its portfolio of integrated care and PHM offerings. 

Among the other vendors who will be competing in both WA and Tasmania, Oracle Cerner may feel it has a point to prove, having lost out last November to arch-rival Epic on a massive triple-digit-million dollar contract in New South Wales. This 220-hospital contract includes the replacement of nine legacy Cerner and Orion Health EMRs and six Cerner and Dedalus (legacy DXC) patient administration systems. Oracle also lost out to Altera in Victoria on a large health information exchange (HIE) project. 

Signify Research stated last month how Altera would need to leverage its position in both Victoria and South Australia (where it is rolling out its Sunrise EMR and PAS solutions) to grow its business elsewhere in the country. WA and Tasmania could be a route forward, 12 long years after winning its Sunrise EMR deal in South Australia. 

InterSystems, which is delivering the first phase of its A$259M Acacia EHR system state-wide in the Northern Territories is also competitively placed on the two new state contracts up for grabs. 

The principal challenge for all vendors in Australia is how to compete with Epic, which continues to gain share in the country at others’ expense. While winning the big New South Wales contract from Oracle Cerner is arguably Epic’s most audacious move in Australia, there are also parallels between Tasmania and its state-wide contract in the Australian Capital Territory (ACT). Like Tasmania, ACT is relatively small in size and population, and at A$151M the contract size is similar to Tasmania. It is reasonable to assume Epic will be in the running both here and in WA. 

Death Knell? 

Although there has been no state-wide EMR procurement in WA or Tasmania until now, there has been intense competition to win new EHR contracts in both states, particularly as hospitals build on the functionality of legacy PAS solutions. EMRs have been procured via individual contracts with hospitals and local health networks. A different set of vendors tend to compete for these smaller acute contracts. For example, Telstra Health, Altera (specifically via its Australian-acquired operation Core Medical Solutions), InterSystems, InfoMedix and Alcidion. In the move to state-wide EMRs in WA and Tasmania, smaller vendors could be left out in the cold unless they partner up (e g like Telstra and Alcidion), particularly in the public hospital market (there will still be opportunity in the private market). 

Greenfield Opportunities 

By global standards, Australia is a relatively small, yet mature EHR market, where administrative and operational EHR implementations are advanced, and a transition to clinical systems and data integration and information sharing is now driving growth. 

The fact that WA and Tasmania are only now moving to state-wide contracts is a bit of a throwback to several years ago when the first state-wide EMRs were being established in other states. International vendors have not found state-wide implementations easy given integration and localisation challenges, but these experiences will be valuable now. Telstra, too, may feel it is time to flex its muscles and local knowledge for the first time on state-wide implementations, with Tasmania the obvious option.

Signify Premium Insight: The Buyers Looking to do a Deal for Dedalus

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Private equity investor Ardian is reportedly weighing the sale of Dedalus, in a deal that could value Europe’s largest Electronic Health Record (EHR) vendor at $3.3bn.

While reports remain unconfirmed, financial investors and strategic bidders alike could be interested in the Italian software company, with both its health records and imaging IT activities offering tantalising possibilities.

Such a sale represents an unexpected change in strategy for Ardian given Dedalus’ recent acquisitive appetite. The vendor has, after all, acquired numerous businesses since being bought by Ardian in 2016, with AGFA’s HCIS business, predominantly driven by its Orbis product line, which included a proportion of that vendor’s imaging IT segment, DXC’s EHR Business, Swiftqueue, GSG and Dobco Medical Systems among others. Such a spate of acquisitions has left Dedalus with a full, if not yet fully integrated, portfolio, offering any prospective owner a heady mix of opportunity and challenge alike.

While some speculators will focus solely on Dedalus as an EHR vendor, this is a mistake, given that, as this Premium Insight highlights, the company’s imaging business also brings a considerable amount of intrigue to the deal.

The Signify View

The European EHR market is, in a word, messy. Dedalus’ acquisitions mean that the vendor can lay claim to the largest share of this fragmented market, but it has also left the vendor with a bristling portfolio of brands, many of which hold only very localised potential and were primarily acquired to access their customers. There are, however, some brands that have broader bases, such as AGFA’s Orbis business, which was purchased in 2019, and brought strength across France, Austria, Switzerland and, in particular, Germany. In addition to greater international reach, the AGFA purchase also included that brand’s imaging IT, IMPAX products, which are closely tied to its EHR tools in select markets such as the DACH region. This inclusion brought with it more customers and the opportunity to sell its freshly acquired imaging IT capability to its extensive EHR customer base.

By taking AGFA’s legacy imaging IT tools, which were, at that company at least, being superseded, revitalising it as an enterprise imaging solution, with the prospect to integrate other capability such as Dedalus’ digital pathology tools, the Italian software firm has the potential to offer a well-rounded and competitive imaging IT platform. Integration between these disparate aspects are not yet problematic for the vendor, as the adoption of a multi-ology enterprise imaging strategy has been slow in many of Dedalus’ key markets. Further, despite the fact this imaging IT portfolio is not yet as sophisticated as some alternatives on the market, its large European installed base, the upcoming tranche of sizable imaging IT contracts up for renewal, and procurement rationalisation across the region means it constitutes a lucrative aspect of a deal predominantly based around EHR.

Dedalus is the market leader in the EMEA region, but there is a very long tail of vendors which have carved out their own corner of this fragmented market

The Delivery of Digital

This in itself is also likely to be beneficial. In some European markets such as Italy, Germany and France, there has recently been increasing impetus and investment to drive digitisation (e.g. the German Hospital Futures act (KHZG), Le programme HOP’EN in France and Gara Sanità digitale in Italy). These initiatives will be primarily focused on the transition to a more coherent, consolidated approach to medical records. However, as this area enjoys substantial investment for digitisation, it is likely to act as a precursor to further e modernisation in other areas, such as enterprise imaging. This will allow Dedalus to utilise its hospital installed base to increasingly promote its enterprise imaging offerings and capitalise on this transition across the business.

Such opportunity in the very near future begs the question of why Ardian is looking to free itself of Dedalus, a particularly pertinent question given that it only acquired the firm six years ago and has been undertaking acquisitions under the Dedalus name as recently as March 2022. In fact, in the last seven months alone, Dedalus has made four acquisitions: Dobco medical, ix.mid, Swiftqueue Technologies and GSG.

Despite the ongoing investment in the company, and the opportunity Dedalus affords, the decision to sell from Ardian does make sense, given that, at a $3.3bn valuation, a sale still represents a sizable return for its private backer. This is, in part, a result of timing.

The Importance of Punctuality

Given the present opportunities in the EHR and imaging IT markets in parts of Europe, Ardian is selling a broadly capable business which legitimately offers very strong growth prospects. If the private equity firm was to continue to hold the company and invest further effort and resource into the continued development of its portfolio, these shorter-term growth opportunities for a buyer, would be missed. This is particularly true given the ‘stickiness’ of many of the areas in which Dedalus has capability, aside from EHR and imaging IT, which offer longer term returns such as digital pathology, precision medicine, pharmaceutical partnerships, and the broader data play. These areas are nascent, but as they grow could return significant and reliable revenues

Timing has also been important. As illustrated in our Electronic Medical Records and Imaging IT market intelligence services, both the EHR and imaging IT markets across Europe are mature and cost-competitive, but the funding being injected to aid recovery from the pandemic, digitalise healthcare as well as pent up demand, makes 2022-2025 atypical growth years.

The pandemic has also helped ensure that some potential buyers have the cash at their disposal to complete such an acquisition.

Who Wants It?

There are, after all, a number of different parties that could see possibilities stemming from the acquisition of the vendor. One of Dedalus’ chief European competitors, such as CompuGroup Medical, for example could entertain visions of more than trebling its EMEA market share at the stroke of a pen, it was after all reportedly eying up Agfa’s (now Dedalus’) hospital IT business several times in the past. Large international health vendors such as Siemens Healthineers or Philips might consider such a deal an opportunity to further expand their reach and increase their penetration at providers. Broader enterprise software providers such as Citadel group could eye the sale of Dedalus as an unmissable opportunity to aggressively stake a claim on the European health tech market.

While these are all possibilities, there are significant barriers that make them unlikely. A rival EHR vendor would, in all likelihood, be dogged by anti-competitive legislation, while the acquisition of a company as diffuse as Dedalus would only cause product rationalisation headaches for any equally sprawling competitor such as CompuGroup. A large international healthcare vendor may have the cash to seal a deal, but significant overlap in capability and challenges in integration make such a move unlikely. In fact, candidate health tech vendors such as GE and Siemens have moved in the opposite direction and off-loaded their EHR businesses over the last seven years. For other companies simply looking to increase their presence in the market meanwhile, the acquisition looks risky, in all probability rendering it unpalatable for all but the most committed.

Other People’s Money

Instead, by far the most likely acquisitor is another private equity firm. At a time when global geopolitical circumstances make healthcare appear a relatively safe haven for investors, a vendor with broad capabilities across a number of European markets represents a very attractive option.

A private equity firm would be able to take the bundle of brands that Ardian has assembled and undertake a comprehensive streamlining process to ensure all the newly acquired companies can form a complementary whole. What’s more, while undertaking this process of making the vendor more operationally efficient and driving margin expansion, and ensuring that Dedalus can capitalise on the ongoing digitalisation efforts in Germany and elsewhere, a new private equity owner can look to enjoy sizable and consistent revenues. While there is a drive towards digitalisation, and in imaging there are significant shifts toward joined up enterprise imaging solutions that expand far beyond radiology, these will not impact the market for several years, offering a new owner relatively stable returns for the immediate future. Given Dedalus can also lay claim to capability in numerous growing areas, from digital pathology to real world evidence courtesy of its GSG purchase and cloud-based informatics stemming from its Dobco deal, the Italian vendor also harbours significant potential for riding future waves of growth should an investor want to commit for the long hall.

The sale of Dedalus is far from a foregone conclusion. Reports have suggested that talks are in the early stages and may not lead to a deal, suggesting that Ardian is well prepared to pass if a potential buyer cannot come up with a bid that recognises Dedalus’ value. However, the last two months has seen a flurry of activity from would-be investors and now is the opportune moment for a deal to be done. Ardian can realise healthy returns and a private equity investor has the chance to ride a rising tide. A messy market or not, this is a deal for which there will be plenty of interest.

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This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here