This document summarizes the early history of the Compucare healthcare IT company. It describes how founder Sheldon Dorenfest originally envisioned Compucare as a shared system vendor in 1969, but then pioneered the facilities management model of outsourcing hospital IT departments. Compucare grew quickly using this model before facing challenges developing clinical applications. It acquired applications from Meditech and eventually was sold to Baxter. Baxter later sold Compucare back to founder Ron Aprahamian, who rebuilt it and it was later acquired by QuadraMed, where remnants of the system still run today.
2. But first…
• Some feedback from last week’s HIS-tory installment, which
featured Meditech. Bill O’Toole, founder of O’Toole Law Group of
Duxbury, MA, and a regular contributor to HIStalk, sent this email:
– Vince, loved the newest installment. I'm sure you don’t remember this, but
the pathologist from Cape Cod Hospital is my father. I recall vividly my Dad
being upset with Meditech one night. We went into his lab late that night to
try and fix something or other. Well, long story short, my father was not
pleased with their response. He communicated with Meditech by typing into a
line connected to a printer in a closet at Meditech, loaded with a box of the
old green-bar paper. So the good doctor types in 22 divided by 7 (VC: piece of
cake, er, pi…) and sent it to the Meditech printer. The next day he got a call
from Meditech howling that he owed them a full box of paper!!
• If you have more to add (or subtract!) from these
HIS-tory episodes, please email me at:
vciotti@hispros.com
3. Early “Total HIS” Mini Vendor
• As we saw last week, Meditech started as an LIS niche
player in 1969, grew to add a full suite of clinicals
(Orders, Results, RX, RIS…) in the 70s, added financials in
the 80s.
• Our second mini pioneer started out with a much bigger
vision: to develop a total HIS based on hospital input.
• The man behind this start-up is easily one of the best
known and most respected mavens in the HIS industry:
• Sheldon I. Dorenfest, of “SIDA” fame, which was also one of
the first HIS consulting firms and source of HIMSS Analytics.• This man’s contributions to the industry could take
a full HIS-tory installment in itself, so we’ll just
cover how he formed one of the earliest
minicomputer vendors whose successor firm still
runs in scores of US hospitals 40 years later!
4. Compucare
• Great name: amalgam of “Computer” and “Care!” What
was different about Compucare versus other vendors?
• Back in 1969, Sheldon started Compucare originally as a
shared system, just like SMS, McAuto, and scores of Blue
Cross and state hospital associations were doing…
– To grow Compucare quickly in the highly competitive market of
shared systems, he first explored the possibility of buying
another fledgling shared system called EDS (Executive Data
Systems) based in Cedar Rapids, Iowa.
• Presaging his later and most famous business
success as a consultant, he gave EDS so much
advice on how to improve their struggling shared
system, that they improved it enough to not sell it
Shelly, but continued on for many more years!
5. Plan B
• So now what to do to make Compucare a
success?
• Sheldon next had a vision that reflects his roots as both
an MBA, CPA, and Assistant to the President of the
Hospital Division of Abbott Laboratories :
– Back in the early days of HIS, many hospitals attempted to “roll
their own” through inhouse, self-development, initially based
on IBM and “Bunch Group” mainframes, but spreading to
minicomputers too as they grew in popularity in the late 60s.• Needless to say, many of these early homegrown
systems in the 60s were taking far longer than hospital
CFOs (who were responsible for “Data Processing” back
then) had either the patience or budget for. DP Managers
& their stressed staffs tried their hardest, but hospital
apps just took a lot of time and money to program…
• The solution? As easy as clicking for the next slide:
6. Facilities Management! (FM)
• A concept whose proverbial time has come in the ‘70s:
– Professionals would take over DP, in one of two ways:
• Providing a DP Manger who reported to the outside firm, and was
responsible for managing the staff, time and budget of the project.
• Taking over the entire DP staff, who all became employees of the
outside firm, and had to deliver to keep receiving their paychecks…
– Best of all, by forming a firm specializing in FM in hospitals,
Sheldon was able to share code developed at one site with
that developed at another site, portioning out the work.
• Hospital “A” worked on ADT, Hospital “B” did Billing, “C” did AR, etc.
– Sort of a “shared system” for software…
• For hospital execs, it was the ideal panacea:
- Outside professionals managed the daunting work of
DP, so the hospital CFOs “only” had to worry about
minor details like patient care and financial survival in
this challenging post-Medicare/Medicaid world…
7. (Aside)
• (Pathetic how hospitals back then gave up on running
DP/IT themselves, and paid FM firms to do it for them.
• We moderns know that FM would never work today:
– Such firms merely add their profit margin to current salaries
– They shuffle their people among clients to keep them happy
– Their contracts have few if any penalties for poor service
– Their employees are not as loyal to your hospital & mission
– DP/IT today is a hospital “core competency:”
• EHRs & CPOE are patient care!)
• If only we could go back in a time machine
and have warned those poor pioneers that
no hospital would fall for paying outsiders to
do what they should manage themselves…
• They should have outsourced their planning!
8. Sales Success, Delivery Challenges…
• For the first few years, sales came rolling in, as CFO after
CFO saw this FM approach as the answer to prayers:
– Far better than telling the Board they were giving up, selling
their hardware box, laying off the staff, and going shared.
– And with a convenient target to blame now when things went
wrong: the outside FM firm’s DP Manager and/or staff!
• However, even Compucare’s pros were still
human, and ran into the same problems:
- Writing code for even “simple” systems like
Census, Billing and AR was hard in the
challenging world of healthcare…
• Insurance proration, late ADT input, etc.
- Let alone the new world of clinical apps…
- Orders, Results, LIS, RX, RIS, etc.
• Plus “sharing” code among disparate hospitals…
9. Irony 101
• The biggest challenge Compucare faced was with clinical
applications, like Orders, Results, Lab, RX, etc.
• As we saw with mainframe self-development, most
hospital mini shops started with financial apps like:
– AR & Billing (those Medicare 1453s, 1483s1483s and 1554s1554s)
• How to get the clinical apps needed?
• In 1973, Shelly struck a deal with a
another fledgling firm in Boston who
claimed to have a dynamite suite of
clinical apps they were developing for
client hospital in Cape Cod…
• You guessed it: Meditech!
• So now Compucare had a “Total HIS!”
10. Exeunt stage left…
• After overcoming these challenges, Shelly (ever the
pioneer!) left in 1975 to form another daring venture:
– SIDA, one of the first and most successful HIS consulting firms.
• Leaving Compucare in the hands of Ron Aprahamian
- Under Ron’s tutelage, Compucare concentrated
on Date General minis, with bundled turnkey
software & installation comprising a “Total HIS.”
- Along with a host of competitors also developing
turnkey mini systems, Compucare sold like hot
cakes in the late 70s and early 80s.
- In 1985, Ron sold Compucare to supply-firm giant
Baxter, who had bought up several other mini
vendors: Dynamic Control (Delta) and JS
Data(Alpha), plus a mainframe option (Omega).
- In their g{r}eek world, Compucare was “Sigma.”
11. But wait, there’s more!
• Baxter paid $73M for Compucare, a huge sum in those
days, reflecting just how promising mini systems were.
• So Ron could have taken his money and retired right?
• Wrong! This story gets even more incredible:
- Baxter joined forces with IBM to form IBAX, and
re-named all their acquired products:
• JS Data (Alpha) became Series 3000
• DCC (Delta) became Series 4000
• Mainframes (Omega) became Series 5000
- Since they were out of numbers, IBAX sold
Compucare (Sigma) back to, guess who?
- Ron AprahamianRon Aprahamian, in 1987 for about $30M!
- Let’s see, sell the firm for $73M,
buy it back for $30M, that leaves
a profit of…
12. We’re Baaaack…
• Well, if you can do it once, you can do it twice…
• So Ron, with the help of other gurus like Ransom Parker,
COO, and Christine Chapman, R&D VP, started building a
whole new system to replace Sigma.
• They called it “Affinity,” and it featured:
– ANSI-standard MUMPS (shades of Boston?)
– Open-architecture through a UNIX OS
– RISC hardware (the latest in mini boxes)
– Full suite of financial & clinical apps
• Needless to say, Ron was open to offers…
– And got one in 1998 from QuadraMed for 2.7M shares!
• QuadraMed had also acquired dozens of smaller firms…
13. Where are they today?
• Sheldon
– After selling SIDA’s “3000” data base to HIMSS,
Shelly went on to become CEO of The Dorenfest
China Healthcare Group based in Shanghai,
“actively investing its skill, technology and capital
in in well defined projects to help China to
improve its healthcare system.”
• Ron
– No moss grows on this man! He has since been:
• Chairman of the Board of Superior Consultants
• Independent Director of First Consulting Group
• QuadraMed
- Affinity went on to be implemented in about 200 hospitals at its peak,
and is still running in scores of sites to this very day. It has since been
complemented by QuadraMed’s acquisition of Misys’ “CPR” E.H.R.,
--- but that’s a story for another installment of HIS-tory.
14. Muchas Gracias!
• For input to this week’s episode:
– Ed Gavin – former McAuto sales rep and AA
guru, who worked at Compucare in the
‘80s, before joining our consulting firm.
– Sheldon Dorenfest – who took valuable
time off from his hectic travel schedule
to/from China, whose HIT market he finds
much like the US back in the 50s and 60s!
• For input to next week’s episode:
– David Pomerance – former hospital CFO in
Florida, who built a system on an IBM
System 3 mini for his hospital that was so
good, he sold it to 250 more hospitals!