August 26, 2006

Sage Gets Into the Doctor's Office

The Sage Group plc (¬?Sage¬?) is to acquire Emdeon Practice Services, Inc. (¬?EPS¬?), based in the US in Tampa, Florida, from its parent company Emdeon Corporation, for an enterprise value of approximately ¬£297 million*, to be paid in cash and financed through Sage¬?s existing credit facilities. The acquisition is expected to complete in September, subject to regulatory approvals.

Laurie McCabe, Vice President, SMB Insights & Solutions, AMI Partners writes With the EPS acquisition, Sage acquires 20,000 installed base EPS customers, and a workforce of roughly 1800 employees, including about 250 sales people, 1000 service and support resources, and 250 development and R&D staff. Designed to support physician offices with 10 doctors or less, the EPS portfolio includes both customer-premise and on demand solutions for - Practice management, Electronic health records management, Radiology practices, Community Health.

Read McCabe's full analysis here, under AMI SMP Perspectives. She writes Sage faces a bevy of aggressive competitors, both from established players, such as Cerner and GE Health Care Technologies and from newer, Web-based on demand entrants, such as Athenahealth and AdvancedMD. As important, Sage should not underestimate the barriers that continue to inhibit physician practices from using software solutions to help manage their practices. Many of these businesses continue to use third-party clearinghouses and billing agencies to manage claims and transactions because they haven't found solutions that are easy enough and affordable enough to deploy themselves. Furthermore, doctors face a barrage of demands everyday-often relegating technology decisions to the low priority category. In many smaller offices, the office manager is often the IT department.

Not only can Sage, with this acquisition, reach into the lucrative physician management industry (billing and etc). But Sage can also upsell these physicians on a number of other software that Sage sells such as ACT!, SalesLogix and Peachtree.

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