This document provides an overview of McKesson and its history as a healthcare IT vendor. Some key points: - McKesson is currently the largest healthcare IT vendor by revenue, generating $3.2 billion in 2012. - The company traces its roots back to 1833 when it was founded to import and sell drugs wholesale. - In 1963, Walt Huff started his healthcare IT career and later founded HBO, which was acquired by McKesson in 1999 for $14 billion. - McKesson achieved its current size through numerous acquisitions over the decades, including HBO and other pioneers in the industry. - The document outlines the upcoming episodes that will provide

1. H.I.S.-tory
by Vince Ciotti
Episode #112:
McKesson
Part 1
© 2013 by H.I.S. Professionals, LLC, all rights reserved.

2. First Among Today’s HIS Vendors
• We complete the HIS-tory of today’s vendors with
McKesson, whose 2012 “Provider Technology”
annual revenue of $3.2B puts them a solid #1:
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$3.2B = McKesson, née HBOC = Walt Huff, Bruce Barrington, & Dick Owens
$2.6B = Cerner, still run by Neal Patterson, co-founded by Cliff Illig & Paul Gorup
$1.8B (est) = Siemens, née SMS: Jim Macaleer, Harvey Wilson & Clyde Hyde
$1.5B = Epic. Gee, I have to wonder, just who was it who founded them?
$1.4B = Allscripts, née Eclipsys, also founded by Harvey Wilson of SMS.
$850M (est) - GE Healthcare, née IDX/PHAMIS: created by Malcolm Gleser
$597M = Meditech, still run after all these years by Antonino Papallardo
$375M = NextGen: née Quality Systems Inc. founded by Sheldon Razin
$183M = CPSI, founded by M. Kenny Muscat & Denny P. Wilkins
$156M = HMS (Healthcare Management Systems), Tom Givens & John Doss
$150M = Keane, parent giant by John Keane, but HIS div. built by Ray Paris
$106M = QuadraMed, née Compucare, founded by Sheldon Dorenfest
$75M (est) = Healthland, formerly Dairyland, founded by Steve Klick

3. Fitting Finale
• It’s only right that this last episode on today’s vendors will easily
be the longest and most complicated, as McKesson’s roots in
terms of companies & products are incredibly deep and wide:
– 1833 – yes, an amazing 180 years ago John McKesson and
Charles Olcott founded the company in New York City to
import and sell therapeutic drugs and chemicals wholesale.
– 1963 – 50 years ago, Walt Huff started his HIT career when
he became CFO for the Sisters of the Third Order of St
Francis in Peoria, then went to McAuto before forming HBO.
– 1999 – in the biggest acquisition in HIS-tory, McKesson
bought HBOC for a staggering $14B, creating a combined
firm with $23B in annual revenue, before the scandal…
– 2003 – McKesson/HBOC forges ahead of Siemens for #1
place in HIS vendor annual revenue, leading the pack since.

4. Many Thanks
• Amazingly, there are still a number of HIS veterans still working at
McKesson all these years later, and I must give thanks to several
of them who put me in touch with the original founder of HBO:
– Jim Pesce – who enlightened us in earlier HIS-tories
on GE, McAuto and Micro Healthsystems, and now
heads McKesson’s Enterprise Products Division.
– Mark Sweeney – an HBOC veteran still working at
McKesson who put me in touch with his old friend:
– Larry Gerdes – who first arranged financing from his
bank for HBO’s start-up in Peoria IL, then joined
them in 1977 as their CFO. Larry introduced me to:
– Walt Huff, da man in this HIS-tory who took time off
from his busy schedule still working with Larry at
Gerdes-Huff Investments to tell his fascinating tale.
Muchas Gracias!!

5. A Long Story…
• Don’t know if I’ll top Proust’s 4,211 pages for “Remembrance of
Things Past,” but this tale will take a lot of episodes as it covers
so many people, companies and products McKesson/HBOC
acquired over the years - almost a mini-review of HIS-tory!
• A high-level outline of the episodes over the coming weeks:
– Walt Huff’s early days at OSF in Peoria writing their “CRASH”
shared financial system with another HIS-tory hero: Urban
Gerber, which was acquired by McAuto and renamed “HFC”
– Walt’s two partners who dared to leave McAuto in 1973 to
write a data-collection system on a Four Phase mini:
• Bruce Barrington – who headed system development
• Dick Owens – sadly departed, who led installations
– Hooking up later with Urban and Bill Brehm to add their IFAS
financial system on a DEC mini to MEDPRO’s clinicals.

6. HBO’s Merger Mania
• It will come as no surprise to industry veterans to learn that much
of HBO & McKesson’s growth was due to countless acquisitions:
• HBO “minor” (relatively
• HBO major acquisitions (each
speaking) acquisitions:
the result of many mergers):
- 1981 = MDC (Korpman)
- 1994 = IBAX, itself created
from 3 HIS pioneers:
- 1984 = Mediflex (MediPac)
- JS Data
- 1985 = Amherst (Trendstar)
- Dynamic Control
- 1994 = Serving Software
- Stonybrook Systems
- 1995 = ALS (LIS)
- 1995 First Data Corp.
- 1995 = Pegasus (SMR)
(AMEX) and comprised of:
- 1996 = CyCare (MD Billing)
- Systems Assoc. (Saint)
- 1997 = Amisys, Enterprise,
- McAuto (HFC, HDC,
HPR, National Health Enc.
PCS, LabCom, et al)
- 1998 = Imnet (imaging)

7. McKesson’s Merger Mania
• With its multi-billion dollar drug revenue, McKesson continued
HBO’s strategy of growth through acquisitions into the 2000s:
- 1999 = HBOC itself, leading to the
subsequent scandal that preceded
Enron by two full years, showing how
our HIS industry leads the way in
groundbreaking developments…
- 2000 = HCSI (Pharmacy)
- 2002 = ALI (PACS)
- 2007 = Per Se (many systems per se)
- 2007 = Practice Partners (MD Billing)
- 2012 = MED3000 (healthcare
management & technology) and
Medventive (risk management)
- 2013 = HIS-Talk (just kidding…)

8. But First…
• Before we start this complex HIS-tory of HBO & McKesson, several
HIS-Talk viewers offered help identifying more of Bill Child’s
picture quiz from Computers in Healthcare that ran last week:
– Dave Pomerance, co-founder of Dynamic Control Corporation:
• Hi Vince, I must tell you I have certainly been enjoying your
trip down memory lane. I will volunteer that I am L on your
page 13 photos. Hope you are well, and enjoy your Sunday.
– Susan K Newbold, Director, Nursing Informatics Boot Camp:
• “Slide 12 Bill Child’s Challenge: picture H= Steven A
Huseing, former Executive Director, International Medical
Informatics Association, picture O = Shirley Hughes. On
slide 13 of Bill Child’s Challenge: J = Carolyne K Davis, PhD,
RN, former Ernst & Young, former HCFA Administrator”

9. But Wait, There’s More…
- Bruce Brandes, currently EVP at Valence Health:
• “Vince
– on your last slide, picture E is Tom Pirelli, co-founder and CEO of
Enterprise Systems (ESI), a materials management and surgery
software company based in Wheeling IL, which is now the resource
management group of McKesson . Tom and his co-founder Dave
Carlson were former American Hospital Supply guys, and huge Star Trek
fans, thus the "all aboard the Enterprise" announcement every time you
walked into the front door of the office! Tom was replaced as CEO in
1995 by Glen Tulman (his first healthcare CEO gig), followed by an IPO
in 1996 and sale to HBOC in 1997.I joined in 1993 from IBM, had the
best time with some of the smartest, most fun people with which I've
ever had the pleasure to work. Any Director of Purchasing or Surgical
Services will tell you stories of the legendary user group meetings (I am
sure someone has pictures of Joe Carey (former AllScripts COO) which
he would prefer not ever resurface…
- Bruce”

10. Only 4 Left!
Thanks to Craig Schlusberg
from Aspen Advisors:
“Hi Vince,
I’m thoroughly enjoying
H.I.S-tory. Letter C on
slide 13 could be my
former boss and mentor
Everett Hines, maybe
from his days at
Columbia Presbyterian
prior to C&L. Not sure,
but it might be worth
checking with
him. Regards,
- Craig”
Chuck Barlow G. Weinberg
Tom Pirelli
Rich Helpie
E. Hynes
J. Whitehead
Mike Brown
Carolyne Davis Jim Macaleer D. Pomerance
Ralph Korpman Marion Ball

11. Updated
Portraits
Mark Gross
Steve Huseing
Art Randall
Frank Russo
Steve Macaleer
Peter Marsh Ford Phillips Shirley Hughes
• So here’s how things
stand identifying these
faces in Bill Childs
challenge from an article
in his from Computers in
Healthcare magazine from
the late 1980s.
• I would sure appreciate
hearing from anyone out
there who recognizes the
remainder, for which I’ll
gladly spilt the $250 US
Savings Bond from Bill!

12. Updated Vendor C-Suite Timeline
- Susan Rivers, Content Analyst, Encore Health Resources added
more to the ever-growing vendor C-Suite timeline:
• “Vince
– Regarding history for Technicon / TDS Healthcare Systems
– it’s very nice to read and remember back as I was an
employee in the 1980’s and was there during the time that
Ian Hicks, William Seabrook, and John Whitehead were
Presidents. I noticed a couple things that I wanted to
provide you with some updates on. Chuck Tapella’s last
name is misspelled in Bill’s posting. It should be Tapella,
not ‘Tepella.’ Also, on the timeline, you are showing William
Seabrook after John Whitehead. Actually, he came in right
after Ian Hicks; and John Whitehead became president
after William Seabrook. Hope this is helpful to you.
- Susan”

13. Final(?) Vendor C-Suite Timeline
- If you want the detailed file in Excel, or have more input on
founders and number twos, email me at vciotti@hispros.com: