McKesson Sells IT Division...To Dump Earlier Mistake???

You've all heard by now that healthcare giant McKesson will spin off its IT division. Here's the bullet from Fortune:

Healthcare services provider McKesson said it would combine most of its information technology business with Change Healthcare Holdings to form a new company with combined pro forma annual revenue of $3.4 billion.

Change Healthcare, a provider of software and analytics, network solutions, and technology-enabled services, will contribute all of its businesses to the new company, with the exception of its pharmacy switch and prescription routing business.

Tennessee-based Change Healthcare is majority owned by Blackstone Group.

The new company will be able to offer managed care companies technologies for financial and payment solutions as well as tools for administrative and clinical management, said McKesson, which has a market value of about $39 billion.

AuntMinnie.com elaborates:

In a pair of June 28 announcements, McKesson said it will create a new standalone healthcare IT company in partnership with Change Healthcare Holdings, the revenue cycle management firm formerly known as Emdeon. The new entity will have estimated annual revenues of $3.4 billion, with McKesson owning 70% of the firm and Change shareholders owning the remainder.

The new firm will combine all of Change's operations with most of McKesson's Technology Solutions division, which includes its Imaging and Workflow Solutions unit, which offers enterprise PACS software as well as image management applications for radiology and cardiology. Other operations in the division include Health Solutions, Business Performance Services, and Connected Care and Analytics units.

In announcing the spin-off, McKesson Chairman and CEO John Hammergren said the move would "establish a more efficient suite of end-to-end payment and claims solutions, as well as clinical capabilities," while also "unlocking the value" of the Technology Solutions business. McKesson and Change are also positioning the move as one that will help their healthcare customers navigate the transition to value-based healthcare.

Following the closing of the transaction, McKesson and Change plan to pursue an initial public offering for the new venture. McKesson will then exit its investment in the new company.

McKesson said the spin-off will not include its Enterprise Information Solutions division, which it will retain as it "explores strategic alternatives" for the division. This business includes electronic health record (EHR) software, such as McKesson's Paragon hospital information system. McKesson's RelayHealth Pharmacy division also is not included in the spin-off.

So the new company will have PACS and some other stuff, but NO EHR. Fortune adds, "The new company will be able to offer managed care companies technologies for financial and payment solutions as well as tools for administrative and clinical management, said McKesson, which has a market value of about $39 billion." Doesn't sound like a ripe market for the PACS offering.

Why would McK give birth to a partially-formed offspring like this? Good question. AuntMinnie's Brian Casey continues:

Speculation that McKesson might be seeking a divestiture surfaced in early June, when an article in the Wall Street Journal suggested that the company might be looking at options due to pricing pressures in its core drug distribution business.

The article indicated that the Technology Solutions business had $2.9 billion in sales in its most recent fiscal year (end-March 31) and operating profit of $519 million, which is just a fraction of the $188 billion in sales and $3.6 billion in operating profit produced by McKesson's drug distribution business.

The move is a sign that ongoing changes in the industry are affecting even some of the largest players, according to Michael Cannavo, principal of PACS consulting firm Image Management Consultants.

"It is interesting to see moves by many of the larger companies to either start refocusing their core offerings or consolidating their products with other vendors' offerings," Cannavo said. "End users used to be concerned about the smaller vendors not surviving, or at least the products they bought surviving. Now the larger vendors are starting to have some of these very same issues. The sad reality is no one vendor is considered a safe bet anymore."

The Wall Street Journal elaborates:

Companies often consider separations of units whose profit margins, expected trading multiples or strategies differ dramatically from those of core businesses. It has been happening more as shareholder activists and other investors push companies to narrow their focus.

Spinoff activity peaked among U.S. companies in 2014, with a record 58 transactions worth $164 billion, according to FactSet. They have fallen off a bit since then, though in the past year several big companies have pursued such moves, including Hewlett-Packard Co., Baxter International Inc. and Xerox Corp.

McKesson has announced cost cuts and layoffs as it grapples with price pressures brought on by consolidation among its customers.

And again from Fortune:

Morningstar analysts said McKesson’s healthcare IT business never fit the firm’s overall strategy and was an impaired asset from the beginning as a result of the accounting fraud. (See below.)

“Management has not made any material investments within this business over the past several years, and to our understanding, the technology was two to three generations behind other major HCIT players,” they wrote in a note.

Let's look at a bit of McKesson history, courtesy of the Wiki:

Founded in New York City as Olcott & McKesson by Charles Olcott and John McKesson in 1833, the business began as an importer and wholesaler of botanical drugs. A third partner, Daniel Robbins joined the enterprise as it grew, and it was renamed McKesson & Robbins following Olcott's death in 1853.

The company successfully emerged from one of the most notorious business/accounting scandals of the 20th century—the McKesson & Robbins scandal, a watershed event that led to major changes in American auditing standards and securities regulations after being exposed in 1938. In the 1960s, McKesson & Robbins merged with Foremost Dairies of San Francisco to form Foremost-McKesson Inc.

Yes, they merged with a Dairy.

McK decided to get into informatics at the end of the last century. From Fortune again:

In 1999, McKesson entered the healthcare technology sector by purchasing a large tech company, HBO & Co., for $14.5 billion. Shortly after the deal, auditors discovered that HBO & Co. had been fraudulently boosting sales, eventually leading to a shareholder lawsuit that cost McKesson nearly $1 billion.

Oops. WSJ:

But after it was completed, auditors found evidence that HBO executives had fraudulently booked revenue and inflated the Georgia company’s profits. Several HBO officials were indicted on federal charges, and its chairman was eventually sentenced to 10 years in prison. McKesson shares didn’t recover to their pre-scandal levels for more than a decade.

In the meantime, McK did do something wise...it dumped the PACS that came with HBO and bought a much better product from ALI. Erik Ridley's 2002 AuntMinnie.com article gives an interesting glance into those primitive times:

With PACS seen increasingly as the imaging layer of an electronic patient record, it's no surprise that healthcare information systems vendors would want a piece of the action. The bid by HIS firm McKesson Information Solutions to acquire Canadian PACS provider ALI Technologies for $340 million (U.S.) is the latest acquisition/partnership among PACS and HIS vendors.

For McKesson, the decision to reenter the PACS market reflects its desire to offer a complete electronic patient record, including support for digital image management, said Randy Spratt, senior vice president of technology and standards for McKesson Information Solutions of Alpharetta, GA.

If completed, the deal would mark McKesson's second go-round in the PACS market. McKesson Information Solutions' predecessor, HBOC, had acquired PACS developer Imnet Systems in 1998. McKesson later bought HBOC in early 1999, but abandoned the unit's PACS initiative two years ago.

The architecture of the Imnet PACS technology was not sufficient for many reasons, including its lack of adherence to open standards and lack of a practical image distribution method, Spratt said.

"We probably did not fully appreciate the depth of technical expertise that was required for the viewers and workstations of medical images as opposed to document images," he said. "Without a complete product and without the skill set and expertise, we determined that it would take more time and risk to get it to market than it would to close that product down and look for another."

In acquiring ALI, McKesson receives a true PACS success story, an independent that was able to thrive in a market dominated by larger modality and film vendors. Focusing initially on ultrasound miniPACS, ALI became one of the leaders in the niche before electing to expand into radiology PACS.

ALI implemented that expansion in part by purchasing independent PACS firm Olicon Imaging Systems in 1999. Today, ALI has an installed base of over 500 installations worldwide. While ultrasound PACS orders still make up the majority of the vendor's installed base, roughly 66% to 75% of the firm's new system revenues are being generated from radiology PACS orders, said Greg Peet, ALI's president and CEO.

Ha. I feel vindicated on several levels. I had been told for years that AMICAS was unworthy of my attention because it was a small company ready to be plucked and destroyed. But Merge bought AMICAS and IBM bought Merge, making this one of the most solid systems out there. And Big Iron McKesson is dumping its PACS. Go figure. And the McKesson PACS story itself tells us that a Big Iron (or shall we say, larGE) company can buy another PACS and make it work, rather than destroy it.

We shall see what becomes of one of the more beloved systems out there. I'm thinking it might be wise to put purchase decisions on hold for a while...

Bad Design Kills...

You might remember my post earlier this year concerning failed Kickstarter projects and bad EHRs. I also noted that even a big company such as Damlier Fiat Chrysler could embrace a really bad design, in this case, the gearshift. I quoted from Fox News at that time:

Electronic gear shifters on some newer Fiat Chrysler SUVs and cars are so confusing that drivers have exited the vehicles with the engines running and while they are still in gear, causing crashes and serious injuries, U.S. safety investigators have determined...

Agency tests found that operating the center console shift lever "is not intuitive and provides poor tactile and visual feedback to the driver, increasing the potential for unintended gear selection," investigators wrote in the documents. They upgraded the probe to an engineering analysis, which is a step closer to a recall. NHTSA will continue to gather information and seek a recall if necessary, a spokesman said...

In the vehicles, drivers pull the shift lever forward or backward to select gears and the shifter doesn't move along a track like in most cars. A light shows which gear is selected, but to get from Drive to Park, drivers must push the lever forward three times. The gearshift does not have notches that match up with the gear you want to shift into, and it moves back to a centered position after the driver picks a gear.

This particular adventure in poor choices has led to a very unfortunate consequence:  It seems likely that the mis-begotten gear-shift on his Jeep Cherokee led to the death of Anton Yelchin, which I talked about yesterday.

Again, from Fox News:

Gear selectors from 2014 Jeep Grand Cherokee (Left) and 2017 Jeep Grand Cherokee (Right) (Jeep)

The Jeep Grand Cherokee involved in the accident that killed 'Star Trek" actor Anton Yelchin in Los Angeles on Sunday was one of 1.1 million Fiat Chrysler vehicles worldwide subject to a recall to address a transmission design flaw that was cited in several similar incidents, though none fatal.

According to police, Yelchin died from blunt force asphyxia when he got out of the vehicle and it rolled down his driveway and pinned him against a brick mailbox and a security fence. His 2015 Grand Cherokee featured an uncommon type of electronic gear selector that works like a self-centering toggle to cycle through the transmission's modes (park, reverse, neutral and drive,) rather than a lever with notches or specific positions for each.

Hundreds of owners filed complaints with the National Highway Traffic Safety Administration that it was confusing to use. Several had exited their vehicles without having engaged Park as intended, leading to rollaway events despite warning lights and sounds designed to prevent this from happening.

In April, Fiat Chrysler reported that there had been 41 injuries related to the problem and issued a recall for 2014-2015 Grand Cherokees with the 8-speed transmission to update their software to give enhanced warnings and prevent the vehicles from moving if a door is opened when it is not in Park. The 2012-2014 Dodge Charger and Chrysler 300 sedans that used the same gear selector were also recalled. Fiat Chrysler now uses a more conventional lever in all three models.

It’s not yet known if Yelchin’s Grand Cherokee had been brought in for the recall service prior to the accident, but the LAPD says it is trying to determine whether or not the car was in Park when the accident occurred. TMZ has reported that the vehicle had not received the update and was in neutral at the time of the accident.

"FCA US extends its most sincere condolences to the family and friends of Mr. Yelchin,” the automaker said in a statement regarding the accident. “The Company is in contact with the authorities and is conducting a thorough investigation. It is premature to speculate on the cause of this tragedy.”

Police do not suspect foul play in the accident, and that toxicology reports could take months to analyze.

Here is a video of the gearshift lever in operation:

And here is the NHTSA summary:  "Drivers erroneously concluding that their vehicle’s transmission is in the PARK position may be struck by the vehicle and injured if they attempt to get out of the vehicle while the engine is running and the parking brake is not engaged."

And here is where Mr. Yelchin died. . . his own driveway:

My regular readers know what's coming. Maybe I don't even need to say it. But of course, I will anyway.

Poor design has the potential to kill. This should be obvious, self-evident, clear as day. Here, a rising star was snuffed because some engineer at Fiat-Chrysler had a cutesy idea about changing a fundamental part of a car that didn't need to be changed. The shifter needs to shift, easily and confidently, and it needs to be clear just what gear has been selected. Bottom line, it has to work, each and every time it is used. Or someone could die.

Software companies take note:  So it is with PACS (and EHR's). Don't let the engineers and software writers go wild. Don't throw in features just because someone on the team thought it might look good. Don't take an approach that gets between the user and his/her task, here, viewing patient images and information. Test your product with real users. Then test it again. And again. And again. Make sure it works in the hands of the drivers, I mean users...

And I must state this in the strongest, most litigiously slimy terms possible: Medical software has just as much potential to kill as does a faulty shift lever. Never forget that. Create the software you want used on your child or your spouse or your parent. Or on a young, rising actor, who should still be with us.

Life Is Short, Play Hard...Anton Yelchin, The "New" Chekov, Dies At 27

We've lost yet another Star Trek actor, and it is a sad occasion, indeed. Today, we lost Anton Yelchin, the 27-year-old Russian-born actor who played Chekov in J.J. Abram's reboot of Star Trek.

Image courtesy ILM/AP, LA Times

From the WikiPedia:

Yelchin was born March 11, 1989, in Leningrad, Soviet Union (now Saint Petersburg, Russia). His parents, Irina Korina and Viktor Yelchin, were pair figure skaters who were celebrities as stars of the Leningrad Ice Ballet for 15 years. His family is Jewish; in the USSR, they were subjected to religious and political oppression. Yelchin had said: "My grandparents suffered in ways I can’t even begin to understand under Stalin."

Nationally, Yelchin's parents were the third-ranked pair team; they thus qualified for the 1972 Winter Olympics, but were not permitted to participate by the Soviet authorities (Yelchin has said the reason was unclear: "I don't exactly know what that was – because they were Jewish or because the KGB didn't want them to travel").[7] His family moved to the United States in September 1989, when Anton was six months old, after receiving refugee status from the United States Department of State.[3][4]

Yelchin died in a freak accident, apparently while checking his mailbox, according to the LA Times:

Actor Anton Yelchin, perhaps best known for his role in the new “Star Trek” films, died early Sunday after his vehicle rolled down his Studio City driveway and trapped the actor against a mailbox, authorities confirmed.

Friends went to the 27-year-old actor’s home shortly after 1 a.m. Sunday, when he didn’t show up for a rehearsal as expected, L.A. police Officer Jenny Houser told The Times. Authorities believe Yelchin’s vehicle rolled backward down the steep driveway, Houser said, pinning him against a brick mailbox and security gate.

We've lost many of our screen friends from the Original Series, which as you know is now itself 50 years old. Leonard Nimoy died just a year ago at age 83, DeForest Kelly died years ago at age 79, and James Doohan (Scotty) a few years later at 85. (William Shatner, the real Captain Kirk, remains incredibly active and vibrant at age 85, same for 79-year-olds George Takei and Walter Koenig.) We can accept, though with difficulty, the loss of old friends. But to have such a young life snuffed out in an instant, in a senseless, and yes, freak, accident, well, it will take me a lot longer to accept that.

I am amused by the number of Jewish actors who have "gone where no man has gone before". The list is longer than I would have thought. I was not aware of Yelchin's Jewish heritage until today, but it should come as no surprise. Shatner, Nimoy, and Koenig, as well as Marc Lenard (the only actor to portray a Klingon, Romulan, and a Vulcan--Sarek, Spock's father), and from the spin-offs, Brent Spiner, Armin Shimmerman, Max Grodenchik, Aron Eisenberg, Wallace Shawn. Jews in Space! (With no apology at all to Mel Brooks!)

Indeed, life is short, as Anton Yelchin's tragic demise proves to us. Too short to tolerate malfunctioning PACS installations, but also too short to get one's bowels in a violent uproar over them.

You'll notice I've been silent lately. There hasn't been that much to say, or at least not that much I can or perhaps should say, if you grasp the nuance. I can tell you that several of our major problems with GE's Universal Viewer have been fixed, but several have not, with no obvious resolution in sight. Our other problem child has had a lot of talk, effort, and money thrown at it, with some improvement...but suffice it to say that a lot of what I've been talking about for the past eleven and a half years on this blog hasn't changed one little bit.

Godspeed, Anton...עליו השלום