“H.I.S.-tory” by Vince Ciotti

© 2011 H.I.S. Professionals, LLC, all rights reserved

Episode # 59:

HMSPart 1

One Down, 12 to Go!• Thanks to Steve Klick, we finished the Dairyland

saga, and this week continue our story of today’s vendors with HMS from Nashville, TN.- $3.2B = McKesson, née HBOC = Walt Huff, Bruce Barrington, & David Owens - $2.2B = Cerner, still run by Neal Patterson, co-founded with Cliff Illig- $1.7B (est) = Siemens, née SMS (I know Jim & Harvey’s story well enough!)- $1.4B = Allscripts, née Eclipsys, also founded by Harvey Wilson of SMS.- $1.2B = Epic. Gee, I have to wonder, just who was it who founded them? - $900M (est) - GE Healthcare, née IDX/PHAMIS: last week’s Malcolm Gleser- $545M = Meditech, still run after all these years by Antonino Papallardo- $353M = NextGen: new Opus & old Sphere financials by Florian Weiland - $174M = CPSI (Computer Products & Services Inc), founded by David Dye - $170M = QuadraMed, née Compucare, founded by Sheldon Dorenfest- $160M = Keane, parent giant by John Keane, but HIS div. built by Ray Paris - $110M = HMS (Healthcare Management Systems), Tom Givens & John Doss- $70M (est) = Healthland, formerly Dairyland, founded by Steve Klick

Another HIS-tory Hero!• Our story starts with the co-founder of HMS way back in 1984:

– John Doss – who time out from his busy golf, er, work schedule (wait ‘til you here what he’s doing today!) to relate this tale of how he co-founded HMS along with Tom Givens back then.

• John started his career back in 1972 when he graduated from the U. of Tennessee with a degree in math.

• Seems they didn’t offer a degree in “Computer Science” back then, and John remember how all kinds of liberal arts majors (including English Lit. like me!) became programmers.

• John started with Burroughs, and then joined GE, two of the BUNCH Group challenging IBM back then.

Fascinating Chain of Events• You may remember Jim Pesce’s story of GE way back in Episode

13A, where Jim told how he joined that leading shared system in the 60s, and how HCA eventually bought rights to their Medinet system back in 1975, and continues to run it for their financials.– (they use a customized Meditech Magic for their clinicals)

• Well, when John got to GE, he immediately began to appreciate how unique the needs of a hospital chain which needed:– Shared general financials (ERP for you moderns) to share

purchasing (AP), materials (GPO), chart of accounts (GL), etc.• In addition, there was a dire need for corporate

reports of key #s such as census, revenue, AR, etc.- John worked on providing such reports for HCA

out of GE’s mainframe-based shared system, - And became expert in how corporations share a

single bank account, allocating funds…

To Ernst & Whinney (Pre-”Young)• John next went into consulting for one of the Big

Big 8: Ernst & Whinney (no “Young” until 1989!), where he helped hospitals select systems, learning all about the leading shared & mini

vendors who tried to sell primarily to large hospitals who could pay the most for systems.

• His expertise with hospital chains continued as E & W had a number of them as clients.

• John’s Nashville location was the home of many hospital chains: HCA, HAI, CHS, PSI, etc.- Anyone figure out why? Maybe back then

when telecomm costs were high, locating in the middle of the US lowered costs!?

- As Orwell predicted however, the mid-80s soon saw a major change impacting all of society:

Regan’s “Fiscal Responsibility Act”• John relates how stunned the world was in the

mid 1980s, when Washington made DRGs the national panacea for growing healthcare costs.– (Ironic to be writing this the day the Supreme

Court upheld “ObamaCare,” which you either hate or love based on your TV channel…)

• John realized that not only chains like his client HCA, but now every hospital needed a modern patient accounting system that handle DRGs

• John felt DRGs were a potential nail in the coffin for old HIS systems, confirmed when he met an old high school friend named Tom Givens who had designed his own Grouper, programmed by a young hot-rod named Tom Stephenson.

So The Stage Was Set…• So John realized a major opportunity at hand for a

new HIS, with this quartet of congruent factors:1. Hospital Chains – right in Nashville needing a

new system with the corporate reporting he had become so expert in working at HCA…

2. DRGs – posing a major challenge for many aging shared systems like GE’s Medinet…

3. Small Hospitals – under 100 beds (the target for most for-profit hospital chains anyway ) needing affordable, modern systems…

4. People – his high school friend Tom Givens and Tom Stephenson had the ability & knowledge to write just such a new system...

• As luck would have it, the Toms’ current employer, a Nashville-based chain named American Medical Center, sold out, Tom received a bit of cash from the sale, and they now had some funds for their firm!

Stay Tuned For More Next Week…• Next week, we’ll continue the saga, this time from Tom Givens,

and how they created their start-up HIS vendor HMS in Nashville, TN, with some fascinating Tom shared (no pun intended!):– How they “partnered” with their hardware vendor, who tried

to lure them away from healthcare to more lucrative markets…– How they sold chain after chain, all based in Nashville, who

either bought or were bought in turn, enlarging HMS’ base…• And I’ll tell the tale of some

fascinating counterparts whereby both of the two leading shared systems of the day (SMS and McAuto) also spread their client bases and state/regional presence through similar “exclusive” deals with national hospital chains.