McKesson shuffles divisions to create e-health unit

July 12, 2000

McKesson shuffles divisions to create e-health unitiMcKesson integrates clinical with administrative sideAfter careful preparation, including acquiring Abaton.com last November and dropping

McKesson shuffles divisions to create e-health unit

iMcKesson integrates clinical with administrative side

After careful preparation, including acquiring Abaton.com last November and dropping unprofitable product lines at the end of March (HNN 4/5/00), McKesson/HBOC has officially made its move into the e-health space.

Despite a splashy introduction, however, the new business unit, dubbed iMcKesson, is not offering any new products. Its current inventory consists of established products from the numerous business units that were rolled into iMcKesson: Abaton.com, the Access Health Group, Pathways Practice Manager, the Medical Management managed-care division, the Electronic Data Interchange Clearinghouse, and Physician Office Manager.

San Francisco-based iMcKesson is divided into two parts: Medical Management Solutions, which focuses on providing decision support at the point of care, and Provider Solutions, which offers Web-based tools to direct the flow of information among providers, payers, laboratories, and pharmacies.

The division will be coming out with its first product offering later this summer and is already developing Internet-based products to connect patients with physicians, according to Nancy Brown, group president of Abaton. McKesson also plans to acquire MediVation and incorporate MediVation’s electronic provider-patient interface, which enables providers to transfer data to secure patient Web pages, into its clinical and administrative applications.

“What you’ll see first of all as a new product is the linkage of our products within 30 to 60 days,” Brown said. “The real key is the interaction between all pieces of the suite—practice management, clinical, and consumer. Because we have products that have never been launched, the combinations mean one plus one equals four.”

The prominence of Abaton’s Web-based clinical applications in iMcKesson’s repertoire is intended to attract customers into the fold. Although Abaton claims about 6000 clinical users, the iMcKesson announcement marks the clinical suite’s first official launch.

“Abaton wanted to go to market very quietly, so we concentrated on gathering reference sites,” said Brown. “Since we were acquired by McKesson, we’ve been working on iMcKesson, so we weren’t able to focus on selling. As Abaton, we had only two sales reps; now we have 1000. We will have mass market penetration very quickly.”

This broad-based approach means iMcKesson will be competing with established vendors in almost every e-health segment. In fact, some consultants and analysts, including Steve Rushing, president of Superior Consultant, and Charles Trafton of Adams, Harkness, and Hill Investment Bank, have voiced doubts about the division’s chances for success, citing McKesson’s late entry to this highly competitive market. But the firm is unconcerned, maintaining that its clinical workflow expertise will set it apart.

“Because our products are completely incremental, when we just do prescribing, we compete against Allscripts and iScribe,” Brown said. “With our full suite, we compete against companies like MedicaLogic/Medscape. And people have compared the integration of our clinical and administrative pieces to Healtheon. We don’t consider them a competitor, however, because they are not as strong clinically.”

According to Brown, the e-health industry has had little market penetration so far because many people think of e-health primarily as portals and content.

“It’s more about e-technologies,” she said. “We add significant value though transaction- and workflow-based applications.”

Abaton was one of the first dot-coms and a pioneer in e-health clinical and workflow applications. The firm also claims to have been one of the first to recognize the potential of the ASP delivery model for the healthcare industry.

In fact, Abaton’s clinical applications are modular in nature, allowing providers to choose which functions are most vital to their practices. Offered on a thin client over an ASP, the browser-based products are divided by function: ClinRx (prescriptions), ClinLabs (lab orders and results), ClinChart (electronic medical record), ClinReports (clinical reporting), and ClinWorkflow (work lists). Because each system works with patient-specific data, all of the modules have EMR-like functionality.

“The clinical suite takes a building-block approach to the EMR,” said Kathy Brimeyer, product consultant. “Even if you just use the prescription software, you’re building a patient record every time you enter patient information.”

According to Brimeyer, the patient database is accessible across the Abaton system. So if customers decide to add on different modules, they won’t need to reenter or convert information. In addition, the ClinReports module incorporates images and HL7 text-based data into the record. The next generations of these products, which are in beta testing, have automatic evaluation and management coding.

The McKesson units that now make up iMcKesson claimed more than $300 million in revenue for 1999 and the division has about 2000 employees. However, the Abaton.com name probably will not survive, according to Brown.

“Customers want to deal with one vendor, and we want to avoid brand confusion,” she said.