In EHRs, as in the Economy, the Bad Drives Out the Good

You may be familiar with Allscripts; it has been in the news recently. It seems that the company has been having difficulty integrating some of its recent acquisitions, has been losing business, and may be searching for a buyer. It may eventually emerge in some reincarnated form, or perhaps the problems are the early indications of a pre-terminal condition.

You may not be familiar with the history of some of the products that Allscripts has acquired over the years. One in particular is notable.

Over 20 years ago, an elegant critical-care system was developed by one of my medical school classmates. The product, called EMTEK, was highly innovative in several respects. The hardware implementation provided a high degree of fault-tolerance in a decentralized manner by teaming each bedside station with a “buddy” elsewhere in the ICU. All of the data and transactions conducted by each station were echoed to the buddy allowing uninterrupted access to the monitoring data in the event a station developed a malfunction. It also provided a novel, spreadsheet-like approach to critical-care data that provided user-definable groups of rows that could be added to the spreadsheet. Each group could be configured to collect data from a monitor, ventilator, infusion pump, or other device at predefined time intervals and automatically display the incoming data on the screen.

After a few years EMTEK was acquired by Motorola and then, after a number of years, Motorola decided to get out of the systems business.

The product was bought by Eclipsys that did some damage to the original design but managed to retain its most useful properties. Eclipsys was then acquired by Allscripts. [“Dogging Allscripts in the past year have been problems integrating products after its 2010 merger with Eclipsys and, apparently, difficulties merging cultures.”]

I do not believe that it is unfair to say that Allscripts, prior to all of their merger and acquisition (M&A) activity, was a run-of-the-mill product. It had, and has, its adherents but it never stood out as a clinically superior product.

In the body, the immune system provides a defense mechanism to detect foreign substances. In response it produces molecules that are specifically tailored to recognize and bind to those substances forming immune complexes. The complexes are then eliminated, carrying off the foreign material before it can cause damage. When M&A activity combines a run-of-the-mill product with an exceptional product, the unspectacular product acts like an antibody. It binds to the exceptional product forming the equivalent of an immune complex. The immune complex eventually gets eliminated, carrying the formerly exceptional to oblivion.

This phenomenon may be a manifestation of Gresham's Law, named after Sir Thomas Gresham (1519–1579), an English financier during the Tudor dynasty. In simple terms, Gresham’s Law says that the bad tends to drive out the good.

For example, “In the market for used cars, lemon automobiles… will drive out the good cars. The problem is one of asymmetry of information. Sellers have a strong financial incentive to pass all used cars off as "good" cars, especially lemons… High-quality cars tend to be pushed out of the market, because there is no good way to establish that they really are worth more.”

Over the years, many excellent, innovative healthcare systems have appeared. Their excellence, as expected, was rarely appreciated by the potential customers. The resulting lack of sales eventually made them into M&A targets of companies that recognized that their existing products were poor. The chaos caused within the acquiring company by the acquisition eventually relegated the good product, and poor product, to oblivion.

If you expected excellent systems, then you must be prepared to take risks and buy them when they become available, recognizing that without your support, the excellent product and its developer, will not be long for this world. Without these excellent products on the market, your only choice will be between lemons.