Emdeon Looks to Shed Health Care Practice, Billing Businesses

The health services provider plans to sell off two of its billing software and electronic health records units, but it will retain the WebMD portal.

In the latest of a series of business transformations, health services provider Emdeon has announced that it might sell off its two largest business units, which together provide billing, practice management and clinical software services.

The company will retain its online health portal. Though WebMD Health accounted for just over 12 percent of the companys latest reported revenues, it is the fastest-growing segment by far. For the first nine months of 2005, that segment brought in $119 million, up from $97 million for the same time period in 2004.

Emdeon, formerly known as WebMD, announced that several potential buyers have expressed interest. The announcement comes just days after Emdeon announced the launch of an online offering that allows patients to review and pay bills and make inquiries. In November, Emdeon announced plans to begin repurchasing its stock.

The business units entertaining suitors are Emdeon Business Services, which provides billing software to move money between health care providers and health care payers, and Emdeon Practice Services, which sells electronic health records and practice management software. In the first nine months of 2005, the business practice reported $568 million in revenue, an increase of 12.5 percent over the year before. The practice services reported revenues of $227 million, up 3 percent.

/zimages/6/28571.gifAfter being a bit tepid the last couple of years, hospitals are moving forward with electronic health records. Click here to read more.

In December, the United States Attorney for the District of South Carolina indicted 10 former officers and employees of Emdeons Practice Services unit who had worked for the Medical Manager Health Systems, which later became a subsidiary of Emdeon. The workers are charged with improprieties involving dealer acquisitions and inflating reported revenues from 1997 to 2001.

WebMD started offering a health records system in 2004, though it had provided e-prescribing and document management systems before that.

In November, Tony Holcombe, head of the companys business services, resigned. He is now CEO of Syniverse Technologies, which provides wireless telecommunications services.

If these units are sold off, Emdeon would be left with a majority stake in WebMD Health, an online information service for patients. WebMD Health completed its initial public offering in September. Emdeon sold about 8 million shares at $17.50 a share but retained more than 85 percent of outstanding common stock.

Emdeon also has a plastic manufacturing business, Porex, which makes products for consumer, health care, and industrial applications.

In January, WebMD Health purchased eMedicine.com, an online publisher of medical reference information for health care professionals, for $25.5 million. WebMD runs the portal Medscape, which allows physicians to accrue CME (continuing medical education) credits. WebMD Health also has an agreement with WellPoint to provide health information for its members.

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