CPSI is a leading vendor for small hospitals, currently serving around 650 client hospitals, most under 100 beds. They have experienced impressive revenue growth over the past 20 years, surpassing estimates for competitors like Keane and QuadraMed in 2011. CPSI achieved success by focusing exclusively on the small hospital market and hiring Scott Schneider, an effective NCR salesman, as their 11th employee. Under Schneider and later John Morrissey as VP of Sales, CPSI was able to build a national sales force. Technically, CPSI adopted an "open" approach using UNIX and later Linux operating systems. They also developed their software suite internally over many years to include more applications than competitors, such as their own PACS and time

1. H.I.S.-tory
by Vince Ciotti
Episode #77:
CPSI
Part 2
© 2012 by H.I.S. Professionals, LLC, all rights reserved.

2. A LARGE small-hospitalvendor
• I’m afraid CIOs from large hospital
and IDNs might not realize just how big
a player CPSI is in the small hospital
market, so here’s some perspective:
- Of the roughly ≈5,000 acute care hospitals in the US (excluding federal
hospitals like the VA), the median bed size is about 160 beds, meaning about
½ are larger than that and ½ smaller. That small market half of ≈2,500
hospitals is the target market for small hospital specialty vendors like CPSI,
Healthland and HMS. Larger vendors like Meditech, NextGen and McKesson
are strong down there too, but these 3 are the small hospital niche leaders:
1. CPSI ≈ 650 client hospitals, about 600 are under 100 beds.
2. Healthland ≈ 500 hospitals (including recent AHN and APS acquisitions)
3. HMS ≈450 (excluding many LTAC hospitals and MedHost ED clients)
(Hard to rank Meditech’s three products: Magic, C/S and Release 6!?)
- Amazingly, CPSI ranks fourth in # of hospitals attesting for Meaningful Use:
- Epic ranks first (349), Cerner 2nd (321), Meditech 3rd(305) then CPSI (148)
Well ahead of much larger firms like Siemens, McKesson, Allscripts, GE…

3. Impressive Revenue Growth Too
• The chart below shows how well CPSI has clearly led these 3 main
competitors in terms of annual revenue over the past 20 years,
even passing our estimates of Keane and QuadraMed in 2011:

4. So How Did They Sell So Well?
• There are several reasons for CPSI’s amazing growth over the
years, starting with the answer to last week’s ending question:
– Who was that NCR salesman they hired back in the early 80s?
• The answer leads us again to Scott Schneider, who so kindly told
much of this tale of their amazing ride along with David Dye.
• Scott not only sold the first hospital client
Thomas Hospital their NCR mini, he also
spread the word about CPSI software to so
many other NCR prospects that CPSI stole
him as their 11th employee back in 1983.
• Scott has to take the credit (blame?) for steering CPSI away from its
wide array of generic industries that it had been selling its mainly
financial systems to in the Mobile area, that includes such diverse
companies as: the local Coca-Cola distributor, several hardware
stores, and even a funeral home, who all needed GL, AP, AR, etc.

5. First VP of Sales
• As good a rep as Scott was (and we did a number of deals with
him over our 20 years of HIS consulting – he was a real class act!),
the challenge of building a national sales staff was very daunting:
– Commission plans, territories, hiring & training new reps, etc.
So Scott was not CPSI’s first VP of Sales , but rather they hired:
• John Morrissey, who was CPSI’s VP of Sales
for 14 years, starting in 1984 (left on left).
John came from a Pensacola firm that sold
Burroughs equipment, even those old
posting card machines that predate DP!
• Under John’s leadership, CPSI’s sales staff penetrated the national
market place, from Vermont to Utah! Indeed, it was a Utah client
that wanted a Lab system so badly they started CPSI down the
clinicals path, later adding RX, Radiology and Orders/Results, to
compete with the growing ranks of their “total HIS” competitors.

6. Technical Approach
• Having started by hiring several programmers from the inhouse
shop at Mobile Infirmary, CPSI’s programming language reflects it
– COBOL – probably the most popular programming language
back in the halcyon inhouse self-development mainframe era.
• Their OS however avoided NCR’s proprietary version, and even
avoided the pitfall of picking a given mini manufacturer’s OS that
led many early hospitals to become solely DEC, IBM or DG shops.
• Instead, CPSI took the same “Open” approach John Indrigo did at
Infostat and Ray Paris did with Threshold (if you missed episodes
#65 & #19, refresh your memory at our web site: hispros.com):
– UNIX – a platform independent operating system that enabled
CPSI to run an a wide range of minis, including such brands as:

7. Technical Evolution
• In the 90s as the “client/server” revolution swept healthcare along
with all other industries, CPSI migrated from UNIX to LINUX, and
also switched from “dumb” terminals to using PCs as devices.
• An interesting sidebar Scott & David relayed was how one of their
founders was very sour on PCs, concerned about their impact on
hospital (and CPSI!) employees’ productivity… His famous quote:
– “The only thing you can do on a dumb terminal is your job!”
• How prescient in this age of eBay, gaming, PDAs and “cell-phonies”
– Just how do you keep them from social networking on the job?

8. Software Evolution
• CPSI’s suite of applications grew over the years too, to where
today it encompasses more apps than any other HIS vendor.
– Don’t believe me? Then tell me who else in this industry offers
their own PACS and Time & Attendance system!?
– Even billion-dollar giants like McKesson either acquired their
PACS (e.g.: McK buying ALI’s) or punt to Kronos for T&A…
– Cerner and Meditech come close, but both have sinned a bit:
• Meditech with LSS &PtCT, and Cerner with Citation, etc.
• And all CPSI apps are home-grown, written by programmers in
Mobile to share data among the same db (albeit proprietary…)
• Indeed, when you think of the acquisition-mania of firms like
McKesson, that has bought so many systems over its and HBOC’s
HIS-tory it may take a 20-part episode to tell about them all,
• CPSI has an enviable record when it comes to acquiring products
and or companies. See the next page for the complete list:

10. Help With Next Week/Vendor…
• Next week we’ll wrap up the saga of
CPSI with the interesting human side
of their corporate culture, and that
comparison to Epic &Meditech that I
promised during last week’s intro.
• After completing the 30-year HIS-tory
of CPSI, we’ll delve into a relative
newcomer in HIS ranks, but one that
is making quite a splash: NextGen
• They’re so new, I don’t know much
about the physician practice parent,
mainly their Opus &Sphere HIS
components, so anyone who can put
me in touch with NextGen’s
founder(s) will get free beer(s) at
HIMSS…