HMS was co-founded in 1984 by Tom Givens and John Doss in Nashville, Tennessee. They got their start by customizing software for the IBM System 32 minicomputers used by American Medical Centers hospitals. This led them to land Community Health Systems as their first client. HMS grew rapidly by partnering with IBM and selling to hospital chains. By next week's episode, HMS had grown to over 600 hospital clients and $100M in annual revenue, evolving from financial systems to clinical applications.

1. “H.I.S.-tory” by
Vince Ciotti
Episode # 60:
HMS
Part 2
© 2011 H.I.S. Professionals, LLC, all
rights reserved

2. 2nd of today’s “Baker’s Dozen!”
• Thanks to co-founder John Doss, last week we
started off the second HIS-tory of today’s HIS
vendors: Healthcare Management Systems
- $3.2B = McKesson, née HBOC = Walt Huff, Bruce Barrington, & David Owens
- $2.2B = Cerner, still run by Neal Patterson, co-founded with Cliff Illig
- $1.7B (est) = Siemens, née SMS: Jim Macaleer, Harvey Wilson & Clyde Hyde
- $1.4B = Allscripts, née Eclipsys, also founded by Harvey Wilson of SMS.
- $1.2B = Epic. Gee, I have to wonder, just who was it who founded them?
- $900M (est) - GE Healthcare, née IDX/PHAMIS: created by Malcolm Gleser
- $545M = Meditech, still run after all these years by Antonino Papallardo
- $353M = NextGen: new Opus & old Sphere financials by Florian Weiland
- $174M = CPSI (Computer Products & Services Inc), founded by David Dye
- $170M = QuadraMed, née Compucare, founded by Sheldon Dorenfest
- $160M = Keane, parent giant by John Keane, but HIS div. built by Ray Paris
- $110M = HMS (Healthcare Management Systems), Tom Givens & John Doss
- $70M (est) = Healthland, formerly Dairyland, founded by Steve Klick

3. Another HIS-tory Hero!
• Our story starts with the co-founder of
HMS way back in Orwell’s year: 1984
– Tom Givens – who just took time
out from his busy golf, er, work
schedule (he runs a golf club in his
spare time!) to relate this tale of
how he co-founded HMS along
with John Doss way back in 1984.
– Tom was a CPA and served as
Controller at a manufacturing firm.
– He was interested in computers,
but there were no classes then!
– He got a call one day from a client
American Medical Centers (AMC),
that had acquired 4-5 hospitals.

4. How Their Hardware Platform Picked Them!
• It seems AMC had bought IBM System 32 minis
for their hospitals, had them installed for about
6 months, but none were being used at all!
• AMC hired Tom to straighten things out, get
software installed, and put the minis to work.
• One of the first pieces of software Tom had to
customize was a corporate reporting system for
the complex inter-company fund transfers in GL
• AMC sold out to another chain and
wanted Tom to move to Indianapolis,
far from his Nashville home. Tom
declined, but took the funds he had
earned to start a DP firm, sharing an
office with his old High School buddy,
John Doss, whom we met in Part 1.

5. Fascinating Chain of Events
• In 1984, Tom & John made their first sale, concentrating on the
many hospital chains headquartered in Nashville, starting with
Community Health Systems (CHS), formed by some ex-AMC folks.
• Seem weird for an HIS vendor to start out with chains? Check the
background of the three leading shared systems back in the 70s:
– Shared Medical Systems (SMS) got it toehold nationally
through a deal with American Medicorps, Inc, (AAM), who put
SHAS into scores of hospitals in Florida, Texas, California, etc., in
the 70s.
- McAuto had an exclusive deal with Hospital
Affiliates International (HAI), with HFC in
their their 100+ sites automating HAI’s
M.O.R.s (Monthly Operating Reports).
- GE’s MediNet automated all of HCA’s 100+
hospitals through a shared set of financial
apps, that HCA still runs to this very day!

6. Both Chains & HMS Grew
• Chains not only comprised a large part of HMS’
early sales in the 80s & 90s, they grew rapidly
through mergers/acquisitions themselves
• Two of HMS’ early chain clients bought other
chains with competing HIS systems installed:
– One with HBO’s Star and one on Meditech
• At first, Tom & John feared they’d lose out to
these larger systems, but their system of
corporate reports on cash & statistics won out!
• Chains also account for HMS’ dominant
role in the small hospital market: as HCA,
AMI, AAM, HAI, Tenet, etc., all learned,
the most efficient hospitals are in the
“sweet spot” of 100 to 300 beds, the
usual bed size for most chains today!

7. Just Who Helped Who??
• Since AMC and CHS steered HMS to IBM minis,
HMS soon became an official business partner of
IBM, starting on the smaller System 32 and 34s
• IBM actually tried to encourage Tom to shift
vertical markets to construction, but HMS’
healthcare sales soon impressed Armonk too!
• HMS grew rapidly, both through sales to hospital chains like CHS, as
well as in partnership with IBM to standalone community hospitals
who were flocking to System 3X minis, just like so many other IBM
“VARs” (Value Added Resellers) who starred in previous HIS-tories:
- Dynamic Control, JS Data, HCS (NJ), First Coast, IHC, LeBlanc, etc.
• Why such a preponderance of HIS systems written in RPG and running
on IBM minis back in the 1980s? Just take a look at the table on the
next page to see just how dominant IBM was over their competitors
during the minicomputer revolution back in those halcyon days:

8. IBM’s Hardware Dominance
Here’s a
table from
Sheldon
Dorenfest’s
“Guide” in
1988,
showing
how IBM
garnered
an amazing
40% of the
hardware
market in
1986 &
1987

9. Of Course We Moderns…
• Now, of course we modern IT sophisticates would never allow
such a near-monopoly in our vastly more sophisticated industry.
• Especially in this era of user-friendly E.H.R.s and P.H.R.s (Personal
Health Records), where consumer-orientation is paramount...
• Now that Apple’s iPads totally dominate PDAs (1.3rd of all MDs
already!), and millions of consumers are finally learning just how
easy it is to open up an app in the Mac OS, navigate the web, etc.
• There’s just no chance that any hospital today would dare force
their MDs and RNs to put up with Microsoft’s far more clunky
Windows OS with it’s “too many clicks” approach to everything.
• Why, take a look at the table on the next page to see just how
many of America’s ≈5,000 hospitals have switched their devices
from Microsoft’s Windows/Office, to Apple’s Mac PCs & iPads.
– At an average bed size of 168 beds (per AHA), and ≈500 PCs per facility
(Average of 2-3 devices per bed), that makes a total of over 2.5M PCs:

10. (this page left blank intentionally)

11. Stay Tuned For More Next Week…
• Next week, we’ll finish the HMS saga, this time bringing the story
right up to 2012, featuring an amazing growth to over 600
hospital clients and an annual revenue figure of over $100M.
• A far cry from the 4 FTEs Tom & John started out with in 1984!
• We’ll also follow the evolution of their product line from primarily
financial systems into the clinical apps for RNs & MDs, including
the recent acquisition of one of the leading ED specialty vendors…
• Of course, there were some
changes in ownership structure, and
another VC (venture capital) firm
(besides Francisco Partners) buying
into our burgeoning HIS/E.H.R.
industry…
• So please, send in any pictures or
stories you might have of HMS