This document discusses the history of healthcare information systems (HIS) consulting firms through four epochs: the 1970s dominated by the "Big Eight" accounting firms; the 1980s rise of boutique firms; the 1990s rise of large consulting giants; and the 2000s of mergers and consolidations. It provides examples of some of the early pioneering consulting firms and individuals from each epoch. The Big Eight firms initially dominated the HIS consulting field due to their close client relationships from auditing work. Over time, this led some to question whether their recommendations were truly objective.

1. “H.I.S.-tory” by Vince Ciotti
© 2011 H.I.S. Professionals, LLC, all rights reserved
Episode # 33:
HIS
Consultants
Part 1

2. I thought we were doing Minis!?
• We were, but with HIS Inc, that 3rd
epoch is now done.
• And before moving on to Micros, time for a little
diversion into a field that has become so big, it just can’t
be ignored in the HIS-tory of HIS: consulting firms.
• And, since I are one, I thought it would be fun to poke a
bit of nastiness the monsters in this field are guilty of,
and recap the careers of some of the early pioneers.
• Unlike many modern “consultants,” some of
whom are too young to vote, the original HIS
consultants were true mavens who knew more
than, well, these folks pictured on the right:
• Don’t recognize the faces? Well, hang on,
you’ll get to meet the Newtons & Galileos of
HIT consulting, up close & personal…

3. Consulting “Epochs”
• Just like the 4 epochs of HIS systems (mainframes,
shared systems, minis & micros), there were 4 different
time periods in consulting dominated by various firms:
1970s = the “Big Eight” accounting firms:
- AA, AY, C&L, E&W, DH&S, PMM, P-W, & TR
1980s = the rise of “Boutique” firms, like:
- SIDA (Dorenfest), Kennedy Group, Johnson…
1990s = the rise of HIS consulting “Giants:”
- Superior, First Consulting Group, ACS…
2000s = mergers, acquisitions & consolidations:
- Xerox acquires ACS who had bought
Superior
- Dell buys Perot who had bought JJ Wild
- CSC acquires First Consulting Group

4. The “Big Eight”
• Hard to remember back in the 60s & 70s when
“consulting firm” was synonymous with “audit firm!”
• The trick then was the intense inside relationship of an
audit firm and their clients: any recommendations they
made in management letters were hard to ignore!
In case you aren’t good at acronyms, they
were:
• AA = Arthur Andersen, est. 1913
• AY = Arthur Young & Company, 1968
• CL = Coopers & Lybrand, 1973
• EW = Ernst & Whinney, 1979
• DH&S = Deloitte, Haskins & Sells, 1978
• PMM= Peat, Marwick & Mitchell, 1925
• PW = Price Waterhouse, est. in 1890

5. Big Eight Dominance• Just how dominant were the Big Eight consultants back then?
Check out the figures below from a study published in the early
1980s by Systemetrics/McGraw Hill (one of the few firms that
competed with Sheldon Dorenfest “Guide,” the early HIS bible!):
• They identified 180 firms offering HIS consulting in a survey of
about 1,500 hospitals (the AHA counted about 7,000 back then),
and about 1/3rd
use consultants (≈500 respondents), the leaders:
– Ernst & Whinney = 46 clients (≈10%)
– Arthur Andersen = 41 clients (≈8%)
– Coopers & Lybrand = 21 clients (≈4%)
– Peat Marwick & Mitchell = 21 (≈4%)
– Price Waterhouse = 16 (≈3%)
– Deloitte Haskins & Sells = 14 (≈3%)
– Touche = 8 (2%), Arthur Young = 3

6. “The Other Guys”
• The also-rans were an odd mix of HIS vendors and “Boutique” firms:
7 = First Consulting Group (≈2%)
6 = Burroughs (Programming?)
6 = Dorenfest & Associates (≈2%)
6 = HMS (Nashville, not NY!)
5 = HBO (implementations?)
5 = SMS (“Strategic Systems Group”)
4 = Software Services (programming?)
4 = Henderman (later bought by Dairyland)
3 = Computer Power (to the people!)
3 = Dairyland Computing & Consulting (today’s “Healthland”)
3 = Dakota Programs (ran in all 50?)
3 = McDonnell-Douglas (McAuto)
2 = William Andrews (another early HIS guru)
2 = Laventhol & Horwath (accounting firm)
2 = Lake Superior Software (LSS - of later fame as Meditech’s PM partner)

7. Big Eight Auditing HIS Vendors
• I got my introduction to consultants at SMS in the early 70s as a
corporate hot shot in King of Prussia where I met a number of
individuals from our auditors, Arthur Andersen, who played
major roles in SMS’ fortunes and the future of the HIS industry:
– Tom Shaffert - our audit partner, regularly brought in AA’s HIS
consultants to hone up on the improvements we were
making to SHAS, which of course started popping up in their
RFPs…
– Lou Amoroso – as nice a guy as he was smart & hard-working,
Lou turned around one of our early install debacles in PA, a
giant gig that showed AA partners there was gold in HIS hills!
– Jay Toole – project manager for AA at Chesapeake Physicians
in Baltimore, where I helped them install SHAS for physician’s
billing, which in those ancient days were white 1554 forms.
– Bob Flippin – one of Lou’s hot shots at Altoona, who later

8. HIS Vendors & Big Eight Firms
• When I went to McAuto in 1980, I encountered their auditors,
Price-Waterhouse, who were just as smart & hard-working as AA.
• We brought them in to learn the nuances of HFC, HDC, PCS, etc.,
just like we had shown AA our SHAS improvements in K of P…
– The result? P-W’s RFPs started to read like McAuto’s
brochures, and our win rate with them shot up dramatically!
• Was this nasty or immoral? It was business!
• Just like hospitals want physicians to refer
patients to them, so they give MDs the best
parking places, a private cafeteria room, etc.
• Where does one draw the line? In consulting,
it’s a very murky line at best...
• If you worked for an HIS consulting firm that
specialized in implementing Meditech - just how
objective would your RFPs be? Caveat emptor!

9. Denouement…
• And that, in a nutshell, explains why the Big
Eight “accounting” firms all shed their
consulting divisions post-Enron and SOX…
• Even giants like Coopers & Lybrand, whose
consulting division revenue was huge, let go
scores of excellent consultants like Frank
Cavanaugh, Everett Hines, & many others.
- Who survive today as “Cardinal” or CCI…
• Ironically, AA’s consulting division grew so large it had split off circa
2000 as Accenture before that debacle, and so escaped AA’s demise.
• Through mergers & acquisitions, today, we’re down to the “Big
Four” all of whom are now re-growing their consulting divisions
rapidly.
- Again, is that kosher? Once again, it’s business, and the four
remaining auditors have thriving HIS consulting divisions...

10. And Then There Were…
• So how did the Big Eight shrink down
to the “Big Four” or “Final Four” as
they’re known today? In a nutshell:
• First, the Big 8 became Big 6 when:
- In 1989, Ernst & Whinney merged with Arthur Young to form
Ernst & Young
- Also in 1989, Deloitte, Haskins & Sells merged with Touche Ross
to form Deloitte & Touche
• The Big 6 became the Big 5 in July 1998 when Price Waterhouse
merged with Coopers & Lybrand to form PricewaterhouseCoopers.
• Subtract Arthur Andersen post-Enron in 2002 and you get our Big 4.
- Where did the name KPMG come from – it was not in the
original Big 8!? In 1987, Peat Marwick merged with the KMG
Group to become KPMG Peat Marwick, later known simply as
KPMG.

11. Next Week
• The 2nd
epoch of Boutique consulting firms is about several HIS-
tory heroes who already appeared in several past episodes.
• How many of their names can you guess?
– One started Compucare, one of the earliest and long-lived HIS
mini-based systems (lives on as QuadraMed today).
• No, not Ron Apprahamian, the other guy!
– 2 others both worked at Lockheed’s early MIS project:
• And both formed thriving consulting firms in the 1970s…
• One consulting to hospitals, the other to HIS vendors.
– Another was an early client of HIS Inc., which if you remember
last week’s episode, was a pretty risky idea back in the 1980s…
• As always, if you have any gems about these early days in HIS
(especially pictures, ads, brochures, business cards, inside dirt…)
• Please send them to vciotti@hispros.com or call (505) 466-4958