Health IT Companies Announce $1.3 Billion Merger

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Health IT providers Allscripts-Misys Healthcare Solutions and Eclipsys plan to merge in an all-stock deal worth US$1.3 billion [b], with the companies focused on creating a universally accepted electronic health record, they announced Wednesday.

Allscripts' main products include electronic health records and an electronic prescribing package for doctors. The company counts about 160,000 doctors as well as 800 hospitals and 10,000 long-term and home-care organizations as customers. Eclipsys' focus is on providing integrated clinical, revenue cycle and performance management software to hospitals, and its users include 700 hospitals and 20,000 doctors.

The merger also will help the combined company's customers better access the approximately $30 billion [b] in federal funding for hospital and doctor adoption of electronic health records, or EHRs. The American Recovery and Reinvestment Act, passed by the U.S. Congress in February 2009, includes incentives for EHR adoption, with the amount of money doctors and hospitals can receive declining over time.

The combined company plans to create a single health record for patents that can be used across the spectrum of health-care facilities, the companies said.

The companies said that will provide hospitals and health-care providers with a comprehensive, single platform of clinical, financial and connectivity products. The combined company will be able to connect doctors, other health-care providers and patients wherever care is provided, including hospitals, doctors' offices, extended care facilities, and patients' homes, the companies said.

In the merger, Eclipsys stockholders will receive 1.2 shares of Allscripts stock for each share of Eclipsys, amounting to a 19 percent increase from Tuesday's closing price.

Glen Tullman, CEO of Allscripts, will be the CEO of the combined company. Phil Pead, president and CEO of Eclipsys, will become chairman and will focus on client relationships, product integration and the company's international business, the companies said.

"We are at the beginning of what we believe will be the single fastest transformation of any industry in U.S. history, and the combination of the Allscripts electronic health record portfolio in the physician office and leadership in the post-acute care market, with Eclipsys' market-leading hospital enterprise solution creates the one company uniquely positioned to execute on this significant opportunity," Tullman said in a statement.

The boards of directors of both companies have approved the merger, but stockholders from both companies still must agree to the deal. U.S. regulatory agencies must also approve the merger.

The companies expect the merger to close in four to six months. The combined company will have more than 5,500 employees.

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