Streamlining Healthcare: AdvancedMD CEO Eric Morgan (Part 2)

SM: Your company was able to build this into a $150 million business segment. How many hospital groups did that constitute? I am not looking for accurate numbers, just something to give us a sense of the market environment at the time.

EM: For Lawson we started with a handful of hospitals in the early days. By the time I left in 2004 there were over 500 clients representing well over 2,000 hospitals. Depending on how you count it, there are between 5,000 and 6,000 hospitals in the United States. Lawson had a very large market share, and we had a very high winning percentage as we looked to capture more market share.

SM: Did that trend continue through 2000?

EM: The vision peaked in the early 2000s. I am not sure where Lawson is now. I know there has been a pullback in spending. There is also market saturation. A lot of hospitals have automated their ERP and therefore there are fewer and fewer new business opportunities.

SM: What does it cost for a hospital to get fully set up in an automated mode?

EM: A small rural hospital that might spend up to $500,000, or you could have a large client who would spend several million dollars for software and services.

SM: It is a regular enterprise software transaction?

EM: Exactly. We competed against PeopleSoft, Oracle, SAP and vendors like them. Those are the vendors we had to beat.

SM: When did you leave Lawson?

EM: I was involved with the Health Care Group through the late 1990s. I then ran our Internet group during the boom days, and then I returned to the healthcare division before I left. I left Lawson in 2004 to go to StatCom.

It was an early-stage company that was not technically venture backed, although at that early stage it did have a single backer. It was for patient flow software for hospitals. It was a new product, and we were endeavoring to create new space within hospitals for this patient flow concept. It was a large ticket item and we started to do deals in the millions of dollars range as we were establishing our early clients.

SM: How was the evolution of that company? Did the hospitals accept that technology?

EM: They continued to work towards taking that technology, which had really started as departmental technology in the operating room. My job was taking them from the departmental solution to a hospital wide enterprise sale. They continue to go after that market and prove their business model, product and market opportunity. They are still in the chasm-crossing stage, but moving forward. Time will tell if they are ultimately successful. They still have to prove out, which is very different from AdvancedMD because we have a proven model.

I think StatCom has great vision, is on the right track, and has tremendous opportunity. I think it will take them longer than I expected when I came on board, which is one of the reasons I left. I am still a fan and hope the best for them and think they have a good shot of making it, although it will not be simple.

SM: AdvancedMD is a very different animal. You are selling to small physician offices.

EM: That was a shift for me. I had to go from hospitals to independent doctors. It is a pure SaaS, web-based product. We fundamentally run everything over the web, from lead generation, actual product demonstrations, and clients will sign up for subscriptions from there. It is a very different model. I went from long sales cycles and political decisions to quick turnarounds on smaller transactions.

This segment is part 2 in the series : Streamlining Healthcare: AdvancedMD CEO Eric Morgan
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