Cold bath for MedicalDirector's numbers
We received word at the start of this week that GP software vendor MedicalDirector was about to enter the UK market with its Helix product, having been chosen to be part of the NHS's new GP IT Futures program. MedicalDirector is on a panel with six other PMS vendors, including the four incumbents, and Helix is the only cloud-based product among them.
It's big news for MedicalDirector, which has struggled to sell Helix since its launch in 2017. Helix was expected to be rolled out to all 73 medical centres in former owner Primary Health Care's network but that plan has stalled and Primary, now called Healius, has rolled out MedicalDirector Clinical, the on-premise package that most people still refer to as MedicalDirector 3, in its stead.
Gossip has abounded about the functionality of Helix, including by former staff members on the review website Glassdoor, with some rather strong opinions being voiced about the company's strategy since Affinity took over. As we reported in February, several commenters called Helix a “troubled” product, that it is missing features and is “plagued with technical debt” from offshore development teams, and one commenter said the product “has so many flaws in it that the company that it was originally built for all but refuses to use it in their clinics”.
So it was interesting to read in the Australian Financial Review on Tuesday that investment bank Jefferies Australia is helping Affinity test the market for a potential buyer for MedicalDirector, just three years after Affinity bought it from Healius for the extraordinary sum of $155 million. Healius had tried to offload MD for years beforehand but it was the general industry consensus that it was asking far too much and rumour has it even Telstra Health turned pale at the price tag.
The Fin reported this week that Helix has now been rolled out to 20,000 clinicians – we suggest that figure is actually for all MD products, certainly not Helix alone – and on the back of that figure, the Fin says bankers have been told MedicalDirector's earnings have improved substantially since the launch of Helix.
We think these figures are a bit rubbery so decided to query them and had a close look at the factsheet that MedicalDirector sent out with its press release announcing the UK deal. In it, MedicalDirector says it is the market leader in Australia, claiming it has about 52 per cent market share. Pulse+IT's understanding is that this has not been the case for some years, with Best Practice taking the lead quite a while back. So we asked MedicalDirector for a breakdown of their figures, including the number of practices licensed to use MD, the number of individual clinicians and the percentage using MD3 versus those who have swapped to Helix.
Unfortunately, MedicalDirector has decided to keep these numbers secret, telling us that over 20,000 clinicians use its products but offering no firm figures on either licences or users. “Helix user numbers continue to grow in the double digits”, we were told, but otherwise the numbers are confidential.
We don't see why, so we asked Best Practice for its numbers. BP promptly came back with figures of 4729 Bp Premier sites subscribing, encompassing 24,788 FTE doctors. BP says the actual site number will be higher as some subscribers operate several practices under the one licence.
Considering there are about 7000 general practices in Australia and the latest figures from the Medical Board show there were 41,713 registered GPs, MedicalDirector's numbers of over 20,000 clinicians and 52 per cent market share can't be reconciled with BP's figures, particularly considering there are other, albeit far smaller, players on the GP market including Medtech, Zedmed, Genie Solutions, Intrahealth and newcomers like MediRecords.
MedicalDirector also sells Bluechip, its clinical and practice management product for medical specialists, but whatever its share was in the past, that market is now led by Genie, with perhaps a dozen other suppliers also servicing the various specialist practices and day hospitals.
MedicalDirector also states in its factsheet that its revenue model is 100% Software as a Service, despite the fact that the vast majority of its GP customers run MedicalDirector on premises. It also describes its revenue as 95% recurring which reflects its software licensing model, but absent is a guide as to how overall revenue is tracking.
Nonetheless MedicalDirector is touting its selection by the NHS as “an incredibly significant endorsement of the Helix software platform and the NHS has seen what Helix can do for their market”. We'll see. Helix will need to be localised for the UK GP market and that takes a lot of time and effort, so we don't imagine that there will be many takers when the GP IT Futures program starts on January 1.
Either way, if Affinity does manage to sell MedicalDirector, we expect it will take an absolute bath. MedicalDirector is a quality firm with good prospects but Affinity paid far too much for it in the first place.
In other news, we are continuing to hear grumbles from far north Queensland, where the potential replacement of MMEx for the Regional eHealth Project (ReHP) with Telstra Health's Communicare is raising hackles. Neither the Cairns and Hinterland HHS nor Telstra Health will comment, but our readers are telling us that a lot of questions are being asked about the age of the Communicare product, whether there are newer, more suitable products on the market, and why the project leads are going back to a product that was ruled out during the tender process. We'll have more on that next week.
And WA Health has finally chosen a vendor for its medical imaging platform, which went to tender a couple of times over the years. It has gone with the safe option of Canon Medical for the $47m project. Canon bought Toshiba Medical a couple of years ago and now sells Toshiba's software and imaging equipment product lines under the Canon brand.
That brings us to our poll question for the week: Do you think MedicalDirector can be sold for more than $155m?
Last week we asked: Should all jurisdictions set up publicly accessible dashboards for major IT projects? 80 per cent said yes, 20 per cent said no.