So Soon?

Mike Cannavo and I called it, so it seems. I now greatly fear the demise of AMICAS as we knew it, and it only took Merge about 12 hours to get the process started. My sources from deep within AMICAS, at many levels, are telling me things that scare me to death.

First, let's have an understanding on something. This is information given to me by people who are devastated by recent events. These are people who have been with AMICAS for years, people who love the company and put heart and soul into its products. These people ARE AMICAS. It is their proficiency that went for $250 Million, not a few disks of code. It was on the backs of these people and their expertise that the AMICAS stockholders collected an extra few bucks. Any attempt to punishing them (and there are quite a few) for contacting me would absolutely destroy whatever is left of the environment that built AMICAS into what it is. Or what it was.

I'm not providing any scoops here, as HISTalk has already begun to report the carnage:

From BestofBreed: “Re: Merge Healthcare. Laid off 80+ people Friday.” I heard that from more than one reader. The Amicas acquisition closed Wednesday, so they obviously didn’t waste any time addressing redundant positions. Steamin’ Pyle says rumor has is it that no years-based severance was offered to the expungees, meaning nobody is supposed to get it in the future.

A number of sources have told me of changes beginning on Thursday, the day after the Merge purchase was complete. Basically, the new owners have decided to impose the culture of the victor upon their spoils. I have heard the following, and yes, this is heresay as I was not present in the room to verify these items:

• Headquarters for the new Merge(d) operation will move to Chicago
• Research and development will move to Toronto (more accurately to the Merge/Cedara offices in Mississauga, Ontario)
• Support will remain in Daytona, Florida
• "Remote" employees are not part of the Merge approach. Those who must operate away from HQ are to keep in touch at all times via Skype
• Employees are to wear suits and peach colored ties
• The staff that is kept on will move to Chicago or Toronto as appropriate. Those who don't agree to make the move by next week will have essentially resigned from AMICAS/Merge.
• Six of the eight primary developers of AMICAS PACS (Version 6) are already gone
• An update for AMICAS PACS (MR2) could not be released as planned as the QA staff is no longer working for AMICAS

Let's look at some recent history:

• GE purchased Dynamic Imaging in October of 2007. There have been glorious announcements of the assimilation of the IntegradWeb GUI into Centricity, with the laughable marketing tactic of quoting high KLAS ratings for DI under the GE name. To date, almost three years later, there has not been a fully-functional installation of the hybrid product. One good PACS gone with the wind.
• Philips purchased Stentor in 2005. To date, almost five years later, there has not been a significant upgrade.
• Our new friend Merge's Fusion PACS is a rebadged eMed Matrix PACS, which came with the purchase of Cedara (which bought eMed in 2004). There have been some integral improvements over the years, although no major new release has come forth.

I had hoped the purchase of AMICAS, which was clearly made to acquire its PACS, would be different. Merge is justifiably proud of this new bauble, displaying it prominently on its website. If you drill down a little, you can even find a quote from yours truly on those pages.

But as I've said earlier, AMICAS is nothing more or less than the sum of its PEOPLE. $250 Million does not buy a pile of code, nor a lease on an office, nor a cute logo (I preferred the old green amoeba, personally), and it certainly does not buy the loyalty of the customers like me. It is supposed to buy the genius, the expertise, the good will, the soul of the company. Perhaps no single employee is indispensable, but en masse, the employees ARE the company. To impose onerous rules and draconian practices which are certain to drive off most of the folks that survived the first cut is simply ignoring the gem just purchased. It's like a kid at Christmas more enamored with the box than the expensive toy inside.

I have tremendous respect for the financial prowess of Messrs. Ferro and Dearborn. This purchase was one of the great moves in PACS history. You guys certainly know your way around business. However, you DON'T understand PACS like I do. My patients' lives depend on your software. Literally. From all appearances, you are in the process of dismantling the team that created it, apparently thinking that one bunch of IT guys is pretty much the same as another. If this were true, why did you buy AMICAS in the first place? You MUST recognize, before it's too late, that your new company needs its people to survive and to thrive. Please do what it takes to keep them on. If the New Merge is to prosper, to flourish as the largest small PACS company (i.e., not GE, Fuji, Philips, McKesson, et. al.), and to someday grow to a billion dollar enterprise, then you must make the best use of your $250 Million investment in the people of AMICAS. Discarding them like the old AMICAS stationery makes no sense at all. Bottom line is this: your actions are destroying AMICAS. If you don't reverse what you are doing, you have just flushed $250 million down the toilet. Don't do it to yourselves, don't do it to the AMICAS people, and don't do it to me and the other AMICAS customers.

A former Emageon employee reminds me as well that these Merge lay-offs and the AMICAS situation also included many decent and hard-working former Emageon and Camtronics employees whose efforts should not be forgotten.

I've been in touch with several members of the AMICAS Medical Advisory Board, and we are deeply concerned about the future of AMICAS PACS. I expect (and demand) that the existing product will be maintained for the foreseeable future. But without the AMICAS team behind it, the software will languish.  I would not be expecting a Version 7 for many, many years to come.

And if anyone should ask me whether or not to buy AMICAS PACS now, given the events of the past few days, well, do I even need to say it?

If anyone wishes to comment directly to Merge, there is a scheduled First Quarter 2010 Earnings Call set for Thursday May 6, at 8:30 A.M. EDT:

First quarter earnings results for Merge will be published before the earnings call. The public web cast will follow at 8:30 AM EDT. Investors can listen to the conference call live via telephone or over the Internet at Merge Healthcare Web Cast. To access the call via phone, investors can dial 800.221.2015 (US and Canada) or 706.634.2159 (International). The Conference ID Number to reference is 71224037. A replay via the Internet or telephone will be available shortly after the call at http://www.merge.com/investor/conferencecall.asp.

I'll see you there.

--------------ADDENDUM---------------

Dalai's note:  Here' Mike Cannavo's take... I'll let him have the final word...

Being a good parent means providing guidance for your kids without doing it for them, giving advice when they ask (and sometimes even when they don’t), being there to celebrate when they succeed and providing them with an ear to listen and shoulder to cry on when they fail. A good parent never ever says I told you so- but then I’m not your daddy so “I told you so.”

The Dalai and I have had a lot of concern about this deal and it seems rightfully so. I wrote a piece titled “Wall Street” nearly two months ago that the Dalai published and this “deal” has played out just like the movie. Greed is good, screw the little guy, screw the end users. So much from Wall Street has come into play in the past 48 hours:

Carl Fox: "I came into Egypt a Pharaoh who did not know."

Gordon Gekko: I beg your pardon, is that a proverb?

Carl Fox: No, a prophecy. The rich been doing it to the poor since the beginning of time. The only difference between the Pyramids and the Empire State Building is the Egyptians didn't allow unions. I know what this guy is all about, greed. He don't give a damn about Bluestar or the unions. He's in and out for the buck and he don't take prisoners.

Substitute AMCAS for Bluestar and there you have it….It’s all about money…You want heart and soul? Put on some Hoagy Carmichael because Merge has no heart and the AMICAS stockholders sold their soul to the devil for 15%. Fifteen freaking percent…but it wasn’t even not even that much because you had to factor out the $8.6M they paid Thoma Bravo to take a hike, so there’s another $0.23 or so off the top….plus commissions plus….Bravo would have been a better deal…and left the company alone as well…

The Dalai I have shed more blood and tears over this deal than we wanted to and subjected ourselves to ridicule from many inside and outside the industry….. trying to save a company from what we felt was sure disaster…yet in the end the only statement that mattered was this one….

Gordon Gekko: It's all about bucks, kid. The rest is conversation.

So if the rumor mill is correct, and we are both pretty sure it is given our industry contacts, AMICAS as we knew it is no more. RIP AMICAS 1996-2010. And that is such a pity…

The Dalai and I feel like Carl Fox did talking with his son Bud…

Carl Fox: He's using you, kid. He's got your prick in his back pocket, but you're too blind to see it.

Bud Fox: No. What I see is a jealous old machinist who can't stand the fact that his son has become more successful than he has!

Carl Fox: What you see is a guy who never measured a man's success by the size of his WALLET!

Bud Fox: That's because you never had the GUTS to go out into the world and stake your own claim!

[Long Pause]

Carl Fox: Boy, if that's the way you feel, I must have done a really lousy job as a father.

The size of his wallet….that’s what matters. Megalomania rules Merge now- move or become unemployed, we beat the drum, you march to it or march out the door. Thanks for everything…and for nothing. You are ours….

Gordon Gekko: What's worth doing is worth doing for money.

So the question becomes when will this madness end? How much is enough? Wall Street again answers it for us…

Gordon Gekko: It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.

So who wins? Mr. Ferro and company of course. Congratulations on a very very well played game…Seriously- you done good for yourself and your financial buddies. How good might take a while but I’m sure we’ll all see what the price on the soul of the company was worth to you all. Who loses? The 500 or so AMICAS end users, the PACS marketplace, the 80 or so people whose blood, sweat, and tears made AMICAS what it is…or at least was…

Gecko’s speech to the stockholders is the embodiment of what is wrong with the new Merge because they believe it…or at least leadership seems to…

Gordon Gekko: …….The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated…... I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.

I see how well it saved AMICAS- just like Merge got “saved” by creative financing as we watched a $28.00 share stock tumble down to $0.28. Watch closely people- the slice and dice comes next…First we slice and dice the people….and then the parts of the company.

Read back to the Dalai’s blog- March 10- Since You (Never ) Asked-

Both companies also can’t sustain dual ongoing research and development costs, dual sales forces and management teams, offices in two geographically diverse locations, etc. As soon as AMICAS bought Emageon the reality of consolidation hit the people at Emageon hard and heavy. I would venture to say the same will hold true here with AMICAS unless, and this is a very real possibility, that Merge already has a buyer lined up for some or all of AMICAS’ offerings. I would tend to say this is more than a distinct possibility, but then what do I know…..This also just what the economy needs- more people out of work- and just what I need too- more out of work sales reps playing PACS consultant until they can find a real job.

You can also read back to my first post on March 1^st titled Wall Street. More of the same prophecies… Just call me Notstra-freaking-damous…I have wonder how many AMICAS stockholders really read it…or of they did if they cared enough about the company rather than their pocketbook…

I read the quotes from the movie and just want to cry:

Bud Fox: Why do you need to wreck this company? 

Gordon Gekko: Because it's WRECKABLE, all right? I took another look at it and I changed my mind!

           Perhaps we can be a bit more direct to the AMICAS team as Gecko was :

Gordon Gekko: Well you take it, right in the a$$ you scumbag c*cksucker.

The Dalai and I relate more to Bud Fox’s dad Lou than anyone else in the company because we still have our integrity. But one has to ask not just what Merge was thinking, because they had a plan all along, but did AMICAS management as well? Did they have any choice at alll? It will all come out in the end because unlike AMICAS now Merge is still publicly traded. As the plane was going down did some get parachutes while others resolved themselves to meeting their Maker sooner than later? We’ll see..but if they did God help them…It was best said in the movie…

Carl Fox: I don't go to bed with no whore, and I don't wake up with no whore. That's how I live with myself. I don't know how you do it.

The Dalai has the right idea- get on Thursday’s Merge call. I plan on being there as well. Hell I might even “invest” in one share of Merge stock so I can be a shareholder too and have an unheard voice…..just as the AMICAS shareholders did…

One last thing. An “earnings” call? On a Thursday? Let me tell you how it generally works.  If you had a good quarter your earnings calls are early in the week. If you have a bad quarter or have some creative explanations for a bad quarter then your call is held at the end of the week. I’ll be keenly listening this Thursday.

Gordon Gekko: I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought.

Sadly, he’s so right….