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Allscripts-Misys Healthcare Solutions, Inc. (MDRX)

February 27, 2013 3:00 pm ET

Executives

Richard J. Poulton - Chief Financial Officer

Seth Frank - Vice President of Investor Relations

Analysts

George Hill - Citigroup Inc, Research Division

George Hill - Citigroup Inc, Research Division

[indiscernible] your attendance and listening on the webcast. This is my last presentation of the healthcare conference. I am very happy to have with us the management team from Allscripts. CFO, Rick Poulton; head of IR, Seth Frank. Guys, thank you very much for being here today.

Richard J. Poulton

Thank you, George.

Question-and-Answer Session

George Hill - Citigroup Inc, Research Division

[indiscernible] right on. We're ready to go. Getting a little punchy at the end here. The theme of Citi's 2013 Healthcare Conference is the value imperative. Rick, I will just start off by asking you, can you give the audience a little overview of what Allscripts does and detail how the company fulfills the need to create value for providers in the U.S. healthcare system?

Richard J. Poulton

Sure. So yes, we are a software technology company. Our stated vision is to deliver a connected community of health, and we do that through a very Open Architecture strategy. So our core baseline products are Electronic Health Records. We have a comprehensive suite of offerings, both for the inpatient side of healthcare, as well as the outpatient side as well and post acute. So we're -- we have arguably one of the largest footprints today plus the most clinicians out there, and we look to defend and grow that base.

George Hill - Citigroup Inc, Research Division

Okay. That's a great overview. It's been a time of rapid change at Allscripts if you look back over the last year. Paul couldn't be with us today. I'm sure he's -- hopefully, he's out standing in front of clients or prospects. And you, obviously, have to work closely with Paul. He's been head of the organization a little bit more -- a little more than 60 days. Can you talk about the impact Paul has had, I'd say, inside of merchandise mar [ph] and out?

Richard J. Poulton

Sure. So I'll start by confirming what you asked. Paul would love to be here today, but we've had him literally living out of a suitcase for the last 60 days. He was out on Long Island this morning, -- meeting with and addressing the leadership team of our largest client, which is North Shore-Long Island Jewish Health Systems. So he's been out there all day. He is working the New York area a little bit, but unfortunately, he couldn't get to drop by here.

Paul has had a wonderful impact so far. I mean for those of you who don't know, Paul is an industry veteran, cut his teeth at one of our competitors, Cerner, for an awfully long time, left there as their Chief Operating Officer, but very much a sales background and is quite familiar particularly with the clients in the acute space. He's, by last count, has addressed more than 60 of our customers direct, so he's averaging better than one a day since he's arrived. And he's done that. And that kind of tireless energy combined with his messaging to the clients that we're here for the long haul and we are here to address the needs that we -- all the commitments we've previously made, we're going to address, and we're also going to be here to deliver long-term solutions to them. So he made's -- he's had a very good impact, I think, on the client base but also on the employee base as well. Employees also see this as -- it's been a tumultuous year for the employee group, and this is now representative of a real calming influence.

Richard J. Poulton

That's great. Can you talk a little bit about what has been the perception -- has any of the messaging changed to customers? I've known Paul personally a long time. I know Paul is a high-service guy, and that's going to be what he promises the customers. I know that Allscript's message has always been a level of high service. What have been the subtle changes of Paul's message to customers versus what has been the prior messaging to customers?

Richard J. Poulton

Well, it started with, again, I mean the -- last year for Allscripts has been a little bit rocky, a lot of internal strife at the board level initially, and then we had gone through a strategic alternatives process through the fall last year. It created a lot of question marks, I think, maybe doubts in some cases in some our clients' minds about whether we were in this for the long term or not. And so I think Paul's main theme as he gets out is to reassure people that we are. And we're not just saying that we're backing it up to we'll make by far the largest investment in our product portfolio that's ever been made in the company's history this year, and I think that's the main message that really Paul is trying to get across to everybody there. We are here to support them for the long term.

George Hill - Citigroup Inc, Research Division

Yes. And I'll ask then, the first part of that is, what has been the initial feedback from clients? And people that we've spoken to, it's been very encouraging and the market wants you to be successful. The market wants more options, not less options. So I guess, what is the initial feedback maybe -- I said, maybe for your clients, and then some prospects that you've been in [indiscernible]?

Richard J. Poulton

Yes. So the -- if Paul were here today, he'd tell you by far, the thing that's been most pleasant surprise to him has been the receptiveness he's had in the client base. I mean many of you do your own forms of channel checks, so I won't -- I'll let you make your own judgments as well. But the theme that you just described, George, he's heard loud and clear. People want us to be around. They want us to continue to be an alternative for them, and many who have invested a lot of time in working with Allscripts and investing in what Allscripts has delivered to date, want to continue to reap returns on that investment. So they're very supportive. He's heard on many occasions, we want you to be successful. And he's heard and followed up -- that would be followed up by how can we help. So nobody's given us a free pass on commitments, and we will be investing in restoration of certain client relations over the year, quite a bit. But there's definitely a positive feedback and positive theme we're getting out of the client base.

George Hill - Citigroup Inc, Research Division

Okay. You just mentioned that the company is going to make one of its largest investments in product development in the company's history. Maybe you can dig in a little deeper into that, talk about anticipated level of spend, where we expect the spend to go and kind of what investors and clients should see as a result of that?

Richard J. Poulton

Sure. So we'll have -- as many of you know, there's still regulatory compliant capabilities and functionality that have to come out, so we'll have new releases across all of our platforms out this year. All with fully MU2 compliant, fully ICD-10 compliant, new versions of mobility applications associated with them, new workflow tools that we think are industry-leading tools as well. So all designed to help our clients become more efficient and maximize their reimbursement rates as well. So a lot of the energy will go into that. But there's also -- we're very big believers in what's ultimately going to be community architecture, and then connected community that I spoke to earlier. So we're spending a lot of time on some application development. We have a leading product out in the market today called care manager, the next incarnation of that which will be at really community level, be our care coordinator product, those are areas where you'll see significant investments from us this year.

George Hill - Citigroup Inc, Research Division

Okay. One of the things that has surprised me, I'd say, in the last week is that the company seems to have been pushing [ph] with its Open Architecture, where we did dinner with one of the company's competitors the other night, focused a lot on data liquidity. There's supposed to be a big announcement at [indiscernible] from a couple of the competitors, talking about information exchange, interoperability. I would say, this Open Architecture concept, I guess, like I said, it seems like you guys might have leapfrogged some people with respect to this. I guess, as you guys talk about the Open Architecture concept, can you talk about how it's resonating with clients and how do you use that to differentiate yourself in the sales process?

Richard J. Poulton

Yes. I mean, listen, we're -- we committed that strategy sometime ago, and we believe Open Architecture has proven itself time and time again in many other industries. So we're absolutely convinced that's the right strategy. We just need to execute on that strategy. Open will mean a lot of different things to a lot of people, but you should see it continue -- we think some of the most enlightened clients are the ones that this resonates with the most, and therefore have been willing -- more than willing to tolerate some executional missteps that we've had perhaps over the last year or so. As we right a lot of those missteps, we think the strategy is absolutely sound, and we will see clients being able to do tremendous things. As we collect this data initially at the clinical level and then eventually create interoperability that allows that to be done at the community level, as that intersects value-based care, there's tremendous opportunities we think to leverage, and then we think our solution just will get louder and louder to prospective clients as well. We're excited about the ability to create easy web interfaces to our core EMR platforms and allow the best of the best in terms of application development in the future to be able to interface with our technology. So we're very excited about what Open can mean.

George Hill - Citigroup Inc, Research Division

I'm going to talk for a little bit about 2 of the company's, what I'll call capacities. You've got your development capacity and you've got your service capacity. A lot of money is going to be spent, probably over next 12 to 24 months, on development. Can you talk to us about how much is going to go towards new product development versus what I'll call product modernization of bringing products up the competitive snuff? And then on the services side, can you talk about how much of the services capacity can you dedicate now to new client deployment as opposed to client upgrades and kind of, again, bringing clients up to appropriate service levels?

Richard J. Poulton

Yes. So let's first make it clear, the capacity is not finite, right? We can ratchet that up or down as appropriate. And so we are -- we have setted an investment plan this year that we think is -- again, it's not think, it's the most ambitious investment plan the company has ever had in its history, much of that investment will be devoted to maybe, what you characterize as the upgrade to regulatory compliance features in a lot of our core offerings. But that still leaves us with the largest investment in new innovation and new applications that will deliver new streams of value going forward as well. So we like the mix, but there's definitely investment in both camps. On the services side, I think the distinction I would make is, most of the services -- ultimately, we see our services organization migrating away from doing lots of labor-intensive implementations or upgrades towards -- to be some of that, but also becoming more frankly of a consulting type shop and being able to deliver value to clients by leveraging our collective experience in IQ that we have as well. So we think there's great opportunity there. Today, it's an organization primarily devoted to implementations and upgrades. But we're also spending a fair amount of time, I would say as well, in reinvigorating some of our client relationships. So there are some commitments from the past that we need to deliver on that we still are undelivered in. So there'll be some investment there in continuing to strengthen those relationships.

George Hill - Citigroup Inc, Research Division

Am I conceptually thinking about it right that when you move from that -- when you move from the service environment where you are delivering software and providing services around that to the ongoing consulting relationship, you guys go from being, somebody I'd call who'd provide software to somebody who'd provide solutions.

Richard J. Poulton

Absolutely.

George Hill - Citigroup Inc, Research Division

And I guess, is that the demand that you're seeing form your customers? And I guess, is there any color that you could put around that?

Richard J. Poulton

Absolutely. I mean, listen, at the end of -- I mean we believe firmly at the end of the day, I mean the EMR product, while critical, is -- at the end of the day, is going to be a data repository and really a workflow tool proficiency. The real value-add to a lot of our client base will be through some of the other care coordination tools that I've talked about earlier, as well as creating interoperability of information, the analytics of that information going forward, delivering analytics back to the point of care so that it can help influence what a care provider is providing in that moment. That's where a lot of the value comes from in the future.

George Hill - Citigroup Inc, Research Division

Paul has seen what I would call the HCIT growth playbook executed more than one time, both from his experience at Cerner and some of his experiences subsequent to working at Cerner. He's talked about a couple of initiatives that I've seen him execute already, one of which is increasing Allscripts' share of wallet. You guys have brought some products recently, including Sunrise Financial Manager with the new product version. I guess, can you talk about the company's initiative to increase share of client wallet?

Richard J. Poulton

Yes, absolutely. So revenue cycle management is clearly an opportunity. Sunrise Financial Manager is our revenue cycle management solution for the acute client base that's running our Sunrise platform. It is heavily connected to the Sunrise platform though, so it's not a solution for non-Sunrise users right now. But also on our ambulatory side, we have some very effective revenue cycle management solutions as well. With ICD-10, we think it's a good time to see a lot of potentially new solutions in revenue cycle management, a lot of clients will be looking for replacement of their current tool, and we're developing a sales plan to be responsive in that area. But broader than just the revenue cycle management opportunity, lot of -- we see a lot of opportunity as well in providing basic hosting services to our clients as well. I mean most clients do not want anything to do with being in the business of running server farms or data centers around their facilities. We have probably, a shockingly low penetration of our base today in terms of who we provide these services for. So we've got some work to do in getting our cost structure and delivery model right in that area, but the upside opportunity is significant to us.

George Hill - Citigroup Inc, Research Division

Okay. Another component that we've discussed on one of the calls was the company resells a good bit of technology both hardware and software where it seemed like the company might be able to extract a little bit more of the margin there. I guess, do you have the sense for -- to the degree to which you might be able to extract more margin? And as we think about these -- as we think about some of these buckets that will contribute to growth, maybe rank order them for us, how important is the ability to host, how important is the ability to cross-sell, how important is the ability to extract margin from reseller agreements just so we can prioritize?

Richard J. Poulton

Yes. I think the last category of making sure we have the right partner, third-party partnering arrangements is important, not just from a margin perspective, but just from a continuity delivery of our offering. So just to make sure everybody's clear. I mean, we bundled up with our core offering in many cases, our third-party products as well, and that can run the gamut of analytics tools to voice recognition software to -- we have certain modules within our Sunrise platform that are third-party software. But also, more core things like patient portal is a third party for us. Frankly, our interoperability product that we've been having great success and marketing lately is a third-party product. So what's happening with that is it's driving -- it's a lower margin profile for us than when we sell our own software. But the risk that potentially we take on with that third-party moving in a different direction, underinvesting in their product going forward, lots of things like that is the real risk. And so for that reason, I think we're going to continue to really rationalize and look hard as some of those third-party relationships, first and foremost. Hosting's, I think second on the list because it's just again, more and more clients, it's clear, they don't want anything to do with that. They want to just buy a solution. And so we have to be prepared to offer that better than we had.

George Hill - Citigroup Inc, Research Division

One of the interesting concepts to the Open Architecture process is going to be -- there's going to be products you develop yourself, and then there's going to be product you willingly work with third parties with. As you think of kind of the Allscripts offering map going forward, what don't you offer now that is core, that will be important to offer in the future? And I guess, what components of functionality are you -- will you be okay to grab from third-parties? There's lab core, there's radiology core, mobility has obviously been core.

Richard J. Poulton

Yes. I think the equation of core and non-core is a dynamic one that we'll always be rerouting [ph] out. So I don't think we can say it today, other than to say again what I said a moment ago is, it's very important for us to reckon where we are now and decide whether that's the right spot to be for the long term or not based on what we have today. But to your point, the whole strategy of our Open Architecture is, in fact, recognition that we're not going to develop everything. We want to leverage the collective IQ of the entire -- developer world out there to develop applications that might be relevant to certain clinical providers. So if somebody homegrows a diabetes application that would be very well used in many, many other locations. We provide an easy outlet for that to be offered up to anybody else who's running an Allscripts EMR platform. And so we'll do that through our Allscripts developer platform. And so the best way you can think about that is much like the App Store for the iPhone. But it won't just rest with applications. There's also what -- an industry process called MLMs. Medical logic modules developed by one institution that can easily be leveraged across many other institutions. It's an easy royalty platform for them to offer that up and be rewarded for the IP they've created. There's, we think, many different uses prospectively. And we won't own it. We will be the conduit for that going forward. But the core business of collecting the information and disseminating that information and aggregating that information in an orderly way, is I think right now what we would argue as core for us.

George Hill - Citigroup Inc, Research Division

Okay, that's helpful. As we think about the Developer Program, it's still in its early stages. But how should we think about the economics of that program? You talked a little bit about the App Store, and I think most investors are familiar with how Apple's App Store works economically. How should we think about how Allscripts Developer Program will work to benefit the company economically?

Richard J. Poulton

It should work somewhat similar. Maybe not the same exact percentages that Apple's able to extract, but I think we'll have a couple of different offerings. One that will -- with a more -- to those that desire more active sales force presence, we would get a higher percentage of the take and we will actively use our sales force to make sure this capability is in front of clients, that they're aware of it and that they can use it effectively. And for those that are more passive, it'll be probably a little lesser. But it will all be a rev-sharing arrangement. The key to making this real, and it's becoming real, we've launched the developer challenge, which has spawned a lot of interest, and we actually expect to have more than 100 caps qualified by this year. But the ability to access them through a commercial kind of eCommerce style platform in an easy way ordered appropriately, with search capabilities, that type of stuff is somewhere we still need to get the capability built out a little bit. But the apps themselves are coming, and the MLMs are coming. And it'll take a while to ramp up to be meaningful dollars, but I think it's -- the core foundation is there.

George Hill - Citigroup Inc, Research Division

Are you able to give us any type of preview like which -- either what therapeutic disease stage or which treatment areas have you seen the most interest in developers going after or anything like that?

Richard J. Poulton

Stay tuned.

George Hill - Citigroup Inc, Research Division

All right, will do. Maybe talk about what has been couple of the buzz words in the industry [indiscernible], Big Data, population health management, Allscripts already has a footprint with its care manager product. I guess can you talk about what has been the request and demand from your clients around Big Data population health management ACOs, and how does Allscripts want to position itself to answer the needs of the clients?

Richard J. Poulton

Yes. So I mean we've -- I think it's, as you said, the buzzword everybody's talking about right now and I think a lot of people are still trying to figure out what that can all mean in reality. But I'll tell you, if Paul were here, you can't get through a 5-minute conversation with Paul without him talking about his passion for population health management. And so it's a direction he will clearly steer the company toward. As you said, we have ventured into this a bit already with our care coordination, care manager tool, that will be followed up again this year with our care coordination tool. We're into it -- we're getting into it as well. We had, had an analytic solution that we have been -- had been merchandising for a while to our client base. It's Humedica Solution that was recently a company that was sold, so to my point earlier about third-party relations and where you can find yourself. We now have to assess whether that's really the right tool to continue to be marketing going forward or not. But I think it's an area that we'll continue to evolve towards quite a bit. But it's an area we very much expect to plan. We have a very large footprint and we have -- we touched again, the most clinicians out there, and we believe we can be very relevant to them as they tackle these challenges.

Seth Frank

Probably worth mentioning, if I can interject, is the Sunrise Financial Manager platform is engineered for a risk-taking provider. So round up, that is a key differentiator versus other RCM systems out there today, which has basically been kind of rigged and adopted going forward. This was completely designed to have risk-taking built in, and so we think that will be helpful as that becomes more prominent going forward in the minds of our clients and potential clients.

George Hill - Citigroup Inc, Research Division

I'll say, Seth, you jumped in with the perfect segue into my Sunrise Financial Manager question.

Seth Frank

We rehearsed that earlier.

George Hill - Citigroup Inc, Research Division

We rehearsed already? All right. Well, you knew you would lead me down this path. I guess can you talk about with the launch of the new product, given the transition to ICD-10 is going to happen shortly? Somebody commented earlier that ICD-10 and Stage 2 Meaningful Use are going to happen in the same year. And the government [indiscernible] of wisdom. I guess can you talk about how has the new SFM products been showing to customers given what's going on in the ACO environment? What does demand look like? And I guess can you talk about what is -- current penetration, obviously very low but what is the company's expectation for the product sales ramp, just from a penetration perspective? Not from a dollars perspective.

Richard J. Poulton

Yes. So it's a product that went generally available in December. So it's still very early in its infant stages, but we've got several different clients who are early adopters, and we'll be open to reference sites for the product. Early returns are good. It's not a very rapid implementation process, it takes a while. So nobody has done fully implementing it yet. But we like the early returns. And I think, like anything, once you've got your success stories, then it begins to get significant momentum amount behind it. But as Seth I pointed out earlier, this is in our view, a cutting-edge functionality that does not otherwise exist out there.

George Hill - Citigroup Inc, Research Division

Is that the Phoenix Children that you just signed up for? If I might...

Richard J. Poulton

Yes. Phoenix is the non-early adopter, but they actually just signed in the first quarter as part of their expanded and renewed relationship with us to go beyond SCM. So here you have a client that using a different web cycle management product, which is not atypical within our base, because historically, as lot of folks know, Sunrise clinical system, there's a patient financial offering, patient accounting offering. But there's certainly opportunity to lather, rinse, repeat or however you say that, given the base with folks who want a better, tighter, integrated clinical and financial system.

George Hill - Citigroup Inc, Research Division

The company has brought a handful of new products and upgrades to market recently, I didn't write down the list from your last conference call. How has the company now thinking about client reference stability? Because we've come to see in over the last 5, 6, 7 years how important client referenceability is to the satisfaction of the base, and does that change the pace at which the companies want to bring customers live? And I understand that you kind of want to get everybody live as fast as -- as you possibly can. But you want to balance kind of that 100% referenceability with speed to market and speed to execution, and maybe just talk to me about how you guys think about that?

Richard J. Poulton

Well, yes, I mean I'll start by reiterating -- reference sites are critical. I mean there's no more important thing to close a sale than be able to point at somebody as reference site. So it's very important to us. And I think when we look back and give ourselves a self report card in time, I think we've done a decent job getting early adopters up and running on products but have not done so well scaling launches beyond that. So scalability as we get to more and more is an important thing. The good news, I would say, we recognize it and we'll be much better prepared for it as we get into it going forward.

George Hill - Citigroup Inc, Research Division

Okay. One of the other products that we have under transition is the MyWay product. You guys are going to migrate clients over to professional, I guess, can you talk -- recognize that MyWay is one of the smaller products, can you provide any benchmarks around how many clients have agreed to come over? The free period is scheduled to expire in October. And I guess, just -- what is your expectation for the ramp of clients that migrate over and what is your expectation for the clients that choose to either sit with what they've got or go in different direction?

Richard J. Poulton

Yes, well, it's sounds probably like an old story because it was announced actually in conjunction with our Q3 earnings release. But the reality is the migration has just started. So literally, just in the last few weeks. So we're in -- we're in to double digits now with people that have successfully migrated over. Report card has been very, very strong. We've done it with a fair amount of handholding and white glove treatment. We'd obviously like to see ourselves become more efficient as we continue to scale it out. But moving people off the platform is not -- it's an emotional issue and it's not easy. But we are convinced that's the right solution for everybody. Those that have moved over and now have the ability to use our Wand product, which is our mobility solution with the Pro, which is the user interface that the practitioners are actually staring at, with our Pro product behind it, are just I think astounded by how much their lives have become better relative to what they had before. So the key is not scaling that. And we, I think, announced a little before we were really ready to go. And if I had a mulligan, maybe we would have either delayed the announcement or been a little bit ready for -- better prepared when we did it. But lots of things were going on at that time at the company. But it's the right decision, and we are now getting a lot of traction operationalizing it. So we feel pretty good about it. I mean it's too early to tell you what the ultimate conversion rate is going to be, but we know there's clearly people that are still trying to pick at our heels to pick some of those people away but we feel good about it.

George Hill - Citigroup Inc, Research Division

If I were to look at one of the meaningful use taxation pie charts, just inside the Allscripts customer rate. And you would be kind of this tiny -- MyWay would be kind of this tiny little sliver that, I won't call it insignificant, but it's not a big number of users.

Richard J. Poulton

No. Smallest space of EHRs we were selling up until the -- probably every 2 -- basically 3 products.

George Hill - Citigroup Inc, Research Division

Not to belittle any of those customers, but from an investor's perspective, is it a big deal if a lot of them choose to not -- and I'm not saying that you guys won't choose to service a hell lot of these guys. But if they choose to not want to go through the process...

Richard J. Poulton

No. I mean, look, the MyWay product goes from 1 doc practices to a multi-doc practices. And the 1 doc probably will never make economic sense to us. So those -- no, you shouldn't feel bad about that whatsoever. We're not even targeting that group. But the group that -- is it larger than that. There's a meaningful enough maintenance revenue stream from that group, as well as just by continuing the migration away and not having to support the MyWay platform, the amount of sustaining engineering we have to do to keep that platform going is definitely worth the payback.

George Hill - Citigroup Inc, Research Division

Okay. As we approach -- Rick, Seth and I have been up here for over 0.5 hour. I would like to pause and see if there are any questions from the audience. If not, I am happy to keep going. I am happy to keep going. The company on the most recent earnings call decided not to provide guidance for fiscal '13. I personally think it makes a lot of sense, given everything that the company has going on. But one of the things that were discussed were, as you guys try to push more SaaS arrangements, you're going to see revenue recognition cycles lengthen, companies making their largest investment ever as noted in R&D, expect sales and marketing to continue to grow to support customers. As we -- it sounds like we think about all those things right, investors probably should not be expecting a rapid earnings growth in the near term, I guess not going to ask you to provide guidance. But talk to us about how the company thinks about evaluating those spend decisions and just where do you put the money and just how you think about that?

Richard J. Poulton

Sure. Well, I mean, as we think about our development budget and the development priorities and even though we're making the largest investment ever you can imagine, we're not funding everything that the organization would like to see, either the sales side or the development organization...

George Hill - Citigroup Inc, Research Division

Marketing has always want more money.

Richard J. Poulton

Everybody wants more money. But look, we bring to bear upfront to the best we can our ROI kind of construct to everything in a return on invested capital. And that's easier said than done when you're in a innovative development arena. But we still try to bring that discipline to it. As we do sale fields on a day-to-day basis, then we use a little different criteria with that and look for really cash returns. So we're putting in the kind of Performance Management that I think everybody would like to see us have in it -- have in the business. But -- and again, even notwithstanding we've had some softness in some of our software margins lately, the gross margin performance is still pretty healthy. If we can continue to figure out how to leverage our SG&A cost base and our development cost base. I mean, you can see tremendous leverage down the P&L, if we can do that. So we're growing the development side of that equation right now because we think it's the right thing to do. But we're -- and we're simultaneously attacking the SG&A side of that equation because we also think that's the right thing to do. Eventually, we would expect that development investment to taper off a bit. And if you combine -- controlled SG&A and controlled development with scale to the top line, you get some pretty nice leverage off of that.

George Hill - Citigroup Inc, Research Division

I have historically been a big bull on the hospital systems market and thought vendors should push to the hospitals systems market pretty aggressively. I had 2 compelling cases made for me over the last couple of days about why that might tilt again towards the ambulatory systems market. I would expect you to tell me that they're both equally important. But does the company have a prospective on which segment of the market is kind of more important in the near term and then -- do you....?

Richard J. Poulton

Well, I mean, look, we -- anybody who knows the history of Allscripts knows, I mean we grew out the company through 2 very discrete paths. And those -- each company at that time thought one was more important than the other. Eclipsys has followed the hospital path, obviously, and legacy Allscripts followed the ambulatory path. Sitting here today, we get pretty significant returns off of both sides. So I can't say either one is more important to us than other. We could have long debates and continue to watch the evolution of who's the real decision-making buyer, as you just continue to have consolidation of the big hospitals buying up physician's practices. There's risk certainly that more decision-making is being done on that side, and that's important. Conversely for us, we have a market leadership role, we think, in the ambulatory side. And that's a place where we should be able to swing more competitive firepower than even we can on the hospital side. So I mean, you're going to see us continue to address both, George, to be honest with you. And I'm not -- I don't think we're prepared to declare one more important than the other.

George Hill - Citigroup Inc, Research Division

Okay. And I'll just pause one more time for the audience, and then I'll hop into what is my last question. Nobody has one? Okay. I'd say, Rick, you're inside a rapidly changing organization. I would ask you, what do you see that gives you confidence that might not be obvious to all of us who don't walk and breathe through the halls of 222 everyday?

Richard J. Poulton

Look, tremendous IQ. Resident side of organization, tremendous IQ, tremendous passion for the cause and where we see ourselves in the industry and a renewed sense of -- I think a renewed sense of momentum and inspiration with some of the leadership changes. So it's all about harnessing that energy in a constructive way right now. And that's what Paul's job and my job is, and we're working hard on it.

George Hill - Citigroup Inc, Research Division

Okay. You were very succinct, which left us with a couple of minutes. But I appreciate the time, and thank you very much.

Richard J. Poulton

Thanks, everybody. Appreciate it.

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Source: Allscripts Healthcare Solutions' Management Presents at Citi 2013 Global Healthcare Conference (Transcript)
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