1) QuadraMed's Affinity HIS software sold very well throughout the 1990s under Frank Pecaitis and his sales team, as shown by their annual revenue growth. 2) When Arthur Andersen collapsed after the Enron scandal, QuadraMed lost its auditor and was de-listed from the stock exchange. This negatively impacted sales for a few years. 3) Under new leadership, QuadraMed recovered and was re-listed on the stock exchange in 2004. However, its Affinity software was not keeping up with demands for EMR and CPOE capabilities.

1. H.I.S.-tory
by Vince Ciotti
Episode #71:
QuadraMed
Part 3
© 2012 by H.I.S. Professionals, LLC, all rights reserved.

2. An “Affinity” for Sales!
• We left off last week with how well Frank Pecaitis and his team
sold Compucare/QuadraMed’s Affinity HIS throughout the 90s, as
shown by the annual revenue growth chart shown below:
• I hope this
chart
corrects the
gaff of last
week’s that
had the
slope
reversed!
• But what a
perfect
segue to the
nextstory

3. Ken Lay & QuadraMed
• So how in the world did the Enron debacle
have a negative impact on an HIS vendor?
• Ironically, while Ken Lay, Jeffrey Skilling,
Andy Fastow& Co. were cooking the books
throughout the 80s and 90s, they used the
same accounting firm as QuadraMed:
Arthur Andersen, one of the very biggest of
the “Big Eight” accounting firms back then.
• When Arthur imploded after the 2001
scandal went public, their audit clients
were suddenly left without an “audited” set
of financial reports, something NADAQ
insists on for its publically held firms.
• Without an auditor, QuadraMed missed the
deadline for filing and was de-listed...

4. So?????
• What’s that got to do with the price of eggs? Well, if
you were down to your final vendor selection and
your CFO asked about the financial status of your
finalist vendor(s), QuadraMed had nothing to show
you until they could find another audit firm. And
their stock’s value had plummetedto pennies…
• Does that matter when selecting a vendor? Ask:
– Allscripts – just a few months ago when their
stock tanked after missing earnings projections…
– McKesson – whose stock value dropped $9B circa
1999 after their over-priced acquisition of HBOC
– IBM – whose stock crashed in the early 90s…
• So QuadraMed sales took a nasty hit in the early
2000s, despite having a winning product, good
implementations, great service, and happy clients.

5. Just How Good Were They?
• Our consulting firm had QuadraMed in the finals at a number of
system selections in the early 2000s, and here’s how they fared in
terms of demos, telephone reference calls, user documentation,
etc., compared to several of their leading competitors back then:
• These 2002 scores
are the results of
users filling out
detailed checklists
that rate vendor
demos, phone calls
and documentation.
• Of course, no one is
perfect, as these
scores show, but
Affinity did very well
back then!

6. Road to Recovery…
• The man who led QuadraMed out of these woods in the early 2000s
was Larry English, who was recruited from the insurance giant Cigna,
which was formed from the merger of Connecticut General and INA.
• Larry faced a tough row to hoe, as the 27 acquisitions we listed for
QuadraMed last week made its books a nightmare without Enron! It
took Deloitte-Touche and BDO several years to get the $s right…
• One of the firm’s strong
suits became the niche of
Medical Records (HIM
today), thanks to 2
encoders they acquired:
- CodeMaster, and the
- Encoder from Medicus.
• Both were combined in
Oracle-based “Quantim.”

7. HIM Mavens
• The chart below shows QuadraMed’s client base back in the early
2000s; the “PC” figures are primarily for their Quantim encoder,
which roughly splits the HIM market with rival 3M’s “CodeFinder”

8. Re-Listed!
• It took a several years of hard work by Larry,
Frank and the whole QuadraMed team, but they
eventually got the firm back on Wall Street, this
time on the American Stock Exchange. Larry’s
triumphant announcement is captured in this
photo on the right in August of 2004:
• The shot on the left is also
courtesy of Frank Pecaitis,
who gave their execs names:
(Standing from left to right) =
• Dean Souleles, Chief Technology Officer,
• Bill Henderson, VP HIM (Quantim),
• Suzanne Jenkins, VP Product,
• Frank, Sr. VP of Sales, and on far right:
• Mike Wilstead, President and COO.

9. From Rags to Riches To Rags To Riches…
• Compucare/QuadraMed’s roller-coaster ride continued when
Larry English retired at age 65 in 2005. He was replaced by:
• Keith Hagen, a 25-year industry veteran who had worked at:
– Misys, Sunquest and some small start-up named Compucare…
• Keith returned to QuadraMed to find that Affinity was just not
quite achieving the high level of an EMR & CPOE clients wanted.
• He faced the classic dilemma in
IT circles: “build it” or “buy it?”
• Turning to his former colleagues
at Misys, he found the answer
in a system that is its own mini-
HIS-tory, that we’ll take up next
week, as we cover the third leg
of the Compucare story: HDS