This document discusses the top 10 healthcare IT vendors by 2016 revenue. It focuses on the high-end vendors with over $1.5 billion in revenue that primarily target large hospitals of 300+ beds. Cerner maintained the #1 spot with around $5 billion in revenue, an 8% increase over 2015. Epic was #2 with $2.5 billion in revenue, up 23%. Allscripts was #3 with $1.5 billion, a 12% increase. McKesson dropped to #4 with around $1.5 billion in revenue from its IT division, a 50% decline from selling off parts of its business. The document outlines recent developments and future prospects for each of these top vendors.

1. Top 10 HIS Vendors by 2016 Revenue
Part 2: High-end Vendors
© 2017 by H.I.S. Professionals, LLC, all rights reserved.
By Vince Ciotti & Elise Ames
HIS Professionals, LLC

2. High-End Vendors
• After the market overview last week, the next 3 episodes delve
into the details of the vendors by size & target market, first:
– High-end = vendors with over $1.5B that primarily target
large hospitals of 300+ beds, AMCs and multi-IDNs.
– Mid-Range = vendors with ≈$.5 to $1B in revenue, generally
targeting small to mid-size hospitals under 300 beds.
– Low-end = vendors with annual revenue under ≈$250M also
targeting small to mid-size hospitals of under 300 beds.
• Interesting how the size of vendors’ revenue
corresponds to bed size of their target market!
• For each vendor, we’ll give details on their:
- Annual revenue and growth/decline
- Product line and target markets
- Recent developments & future prospects.

3. • It is amazing to visualize how much Cerner has grown since its
humble beginnings in 1979 as LIS vendor “PGI,” the initials of its
three founders: Neal Patterson, Paul Gorup, and Cliff Illig:
#1 =
• (PGI acronym – bet Neal’s glad Illig didn’t join before Gorup…)

4. • An 8% increase in revenue kept Cerner at the top for a third year
in a row, ≈$5B passing all other vendors going back ≈4 decades:
3rd
Year in a Row as #1!
• Sad to note how former leaders like McKesson, Siemens and GE
had their revenue decline or disappear – more on them later…

5. Recent Developments
• Several developments in 2016 have helped Cerner grow:
– Return of founder Neal Patterson to full-time employment
this January, after successfully battling cancer last year.
– Strong sales to Siemens clients such as: Universal Health
System (UHS), Missouri Delta, McLeod Health, Baptist…
– In addition, Cerner sold a number of McKesson’s sunsetting
“Horizon” clients like Centra, Covenant and Boca Raton.
• How does Cerner earn so much $s? Like many vendors, they
have diversified their products and services far beyond pure HIS:
– Medical Devices, Patient Engagement, Physician Practices,
Pharmacy, Population Health, Workplace Health, etc.
– “RevWorks” division outsources RCM, and Cerner outsources
IT shops, transferring millions of $s from hospital payrolls.
– They also run most clients from 2 enormous data centers in
KC; remote hosting brings in about 17% of their revenue.

6. Next Year?
• We are bullish on Cerner maintaining the #1 position for years:
– Cerner has access to the C-suites of hundreds of Siemens’
clients on Soarian, Invision, Eagle & Medseries, which their
superb sales teams should do very well converting.
– The DoD contract worth ≈$9B was a major coup in 2015,
although most of that revenue will go to Leidos (SAIC).
• Downsides? Yes, like all vendors, Cerner faces challenges too:
– Epic always does well with large AMCs and IDNS, and has
won several large Siemens clients like Main Line Health.
– And also like Epic, Cerner has experienced a number of
troubled projects like Island Health and California Prisons…
• So Cerner is now the new “normal” – after a 15
year run by HBOC/McKesson, and 15 by SMS/
Siemens. Will Cerner lead for the next 15 years?

7. • Moving into 2nd place is Judy Faulkner’s epic journey that has
won the majority of large AMC & multi-IDNs for many years...
• Their revenue went up 23% from $2 to $2.5 billion last year,
amazing considering almost every hospital by now has an EMR so
the number of system selections has been relatively slim…
• They will probably win as much as Cerner from Siemens’ large
hospital clients on Invision & Soarian, at least those who look.
– They also offer “Community Connect,” which allows large
AMC/IDNs to host neighboring CAH & smaller hospitals.
– Their new “remote hosting” data center is fully operational, so
future revenue prospects are as solid as WI’s frozen lakes.
• As SMS & Cerner have proven, remote hosting
increases revenue enormously over inhouse
processing; like Meditech, Epic never sold
hardware, lowering past revenue substantially.

8. • Epic’s revenue growth is the easiest to graph of all vendors: UP!
Epic Revenue HIS-tory
Epic is likely to continue violating Newton’s law of gravity due to:

9. Epic Re-packaging
• All Terrain
– For large facilities over ≈400 beds
• Full suite of EpicCare applications, modules & features
• 2 FTEs per app for implementation, both for the hospital & Epic
– The full EpicCare run either inhouse or remotely
– Primarily for large complex hospitals, AMCs & multi-IDNs
• Sonnet
– For small hospitals <200 beds
• Minus many more apps & features that small hospitals don’t need
– Only 1 FTE per application/dept., lowering Implementation & travel costs
– Remote hosted from Verona
AT HIMSS this year, Epic announced a new packaging of their
“EpicCare” HIS for three different tiers of hospitals by bed size:
• Utility
– For mid-sized hospitals of ≈200-400 beds
– Minus some apps & modules that mid-size hospitals rarely use, e.g.:
• “Kaleidoscope” for Ophthalmology
– Only 1 FTE per app/dept. for implementation, lowering fees & travel costs
– Remote hosted from Verona

10. • In 3rd
place by revenue is AllscriptsAllscripts with $1.5B, a 12% increase
from 2015; they are major players in physician practices (large =
TouchWorks/Professional, small = Enterprise) where they placed
2nd
in the number of EHR attestations per ONC as of 6/2016:
• Their “Sunrise” suite of integrated MD/HIS apps should sell to
some Siemens & Horizon hospitals who actually go to market...
• Paul Black was one of the driving forces at Cerner during their
past growth, so AllscriptsAllscripts’ future prospects are fairly strong.

11. • Hard to remember how long the HIS-tory of this firm is, going
way back to Lockheed, TDS, Alltel & Eclipsys… Here’s the $tory:
• Alltel had a small
revenue jump with
the Y2k run-up,
• Eclipsys built up
revenue with a
series of product
acquisitions,
• Then a huge jump
in 2011 when
AllscriptsAllscripts added
their enormous
physician practice
revenue:
Allscripts Revenue HIS-tory
(Y2K)
Allscripts
Eclipsys
TDS
Alltel

12. • Slipping to 4th place place is pharma giant McKesson whose
total drug revenue in FY 2016 is in the gazillions, but our
estimate is their IT division “EIS” dropped 50% to ≈$1.5B:
– We had to estimate $s since their fiscal year end is March,
whereas most other vendors are calendar year-end…
– The reasons we estimated the IT decline by 50% are:
• Sale of MD practice systems (≈10% revenue) to eMDs:
– Practice Choice, Medisoft, Lytec, and Practice
Partners.
• Sale of 3 core systems (≈40% revenue) to Change Health:
– Relay Health, PACS and physician practice collections.• The remaining ½ of EIS is still up for sale:
- Paragon, Horizon, Star, HealthQuest, Series
- Rumors are a potential buyer is an Indian
consultancy; as the Brits say, Ta-ta for now…

13. McKesson Revenue History
• Here’s McKesson’s revenue history since the days of HBO
back in the 70s. A bit of a roller coaster ride around Y2K when
McKesson learned HBOC had cooked the books, and then
slowly built things up through many acquisitions (eg: Per Se):
• Will probably be gone next year when EIS sells, an interesting
lesson from HIStory regarding all leading vendors over time…
(Per
Se)
(HBOC)
(Change
& eMDs)

14. • We dropped GE from our Top HIS Vendor list last year due to
their shrunken number of “Centricity” hospital clients - only 11
attestations per the ONC list. GE had acquired it from IDX as
“CareCast,” re-named from “LastWord” and “PHAMIS”...
• GE remains a very strong player in the MD
practice market (ranked #5 on ONC’s list of
attestations), but they have lost so many
hospitals to leaders like Epic & Cerner over the
past 5 years that they’re hardly an HIS player.
• Other vendors have also disappeared from previous Top 10 lists:
- NextGen – HIS products acquired by Harris Healthcare
- Healthland – CAH leader acquired by CPSI (Evident)
The fate of both will be covered in subsequent episodes, along
with several new vendor names that are “up & comers…”
Dropped:

15. Next 2 Weeks
• We’ll delve into the details of the remaining Top 10 HIS vendors
over the next episodes, who are more in the small and mid-size
market segment (both in terms of bed size and annual revenue):
– Mid-Size – vendors whose revenue falls between $.5B and
$1B, and who target mainly small to mid-size hospitals:
Meditech (all 3 products) and two physician practice vendors
new to the HIS market - eClinicalWorkseClinicalWorks and athenahealth
– Small – vendors whose annual revenue is below ≈$250M and
client base consists of small to mid-sized hospitals: CPSI, NTT
Data (Keane), Harris (QuadraMed), and Medhost, (HMS).
• With a subject area so wide and deep, it’s hard to cover it all in a
few slides so feel free to contact us with questions or comments:
vciotti@hispros.com eames@hispros.com
505.466.4958 413.329.6925