Yesterday, IBM, Pfizer and Microsoft announced the creation of a new software and services company, Amicore, that will target the health care IT industry. While the sector is enormous, with some $22 billion in annual sales, some industry analysts are skeptical about Amicores prospects.
The formation of Amicore comes about six months after the three corporate behemoths announced that they would join forces to provide billing, electronic record management and wireless services to doctors. And while the three companies have tremendous power in their respective markets, the health care IT sector has numerous money-losing incumbents.
To jump start Amicore, which will be privately held for the foreseeable future, the company has hired a new president and CEO, Jim Fitzsimmons, a healthcare technology veteran. It has also acquired PenChart, a Connecticut-based healthcare application developer. PenCharts technology will be used for Amicores initial product offering. Amicore will begin operating immediately and will be based in New York City.
"Pfizer has clearly seen the tremendous administrative burden faced by physicians and their need for solutions to improve their business practices and cut down on paperwork so that they can focus more time on practicing medicine," said Peter Brandt, Pfizers senior vice president of finance, planning and business development.
An ambulance-load of companies have tried to profit by getting doctors to use electronic records, but have instead ended up needing sutures themselves.
The two primary examples of the difficulties of digitizing patient records are Medscape and WebMD. Medscape offers doctors a Net-based subscription service that allows them to store and manage medical records on the Web. It lost $321 million on revenue of $48.2 million last year. During the second quarter it had operating losses of $63.8 million on revenue of $11 million. Its stock trades for about 40 cents per share.
WebMD, brainchild of Silicon Valley billionaire Jim Clark, links insurers, doctors and patients online. It lost $3 billion last year on revenue of $517 million, and it is still digesting a spate of mergers. In the second quarter, it lost $821.8 million on revenue of $178.7 million. Its stock trades for about $4.
Amicore hopes to avoid the fates of those companies by using Microsofts .NET technology platform, which will allow doctors to access electronic records from PDAs and other wireless devices. IBMs Global Services will handle installation, Web-hosting and security for the new technology. Pfizer will use its 8,000 sales representatives to tout the new service to physicians.
The first application will be called Amicore Practice Suite, and will use PenCharts software. The company says it "automates and unifies the administrative, clinical and financial functions in the medical office and connects the practice to payers, laboratories, pharmacies, patients and other providers." The software will run on wireless pen tablet PCs as well as other devices
Mark Anderson, a healthcare IT futurist at Houston-based AC Group, likes PenCharts technology. But he doubts that it will win business for Amicore. "They will get very little business. The market just isnt there. We have been looking at electronic medical records for 10 years and it hasnt happened. Theres just not a market demand for it."
However Anderson said the companys fortunes could change if the federal government mandates a move toward electronic health records. (At present only billing information must be digitized). And Amicore may have a future in Europe, where many countries have mandated electronic record keeping, Anderson said.
Citing statistics from the Medical Records Institute, Anderson said that about seven percent of U.S. doctors have bought electronic medical records systems but only three percent are still using them. Thats because there is no financial or regulatory incentive to use them, he said. "In ten years, this might be a great market," said Anderson. "But in the U.S., the market is very, very weak."