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
