Intuit has a large presence among SMBs in most vertical industries aside from healthcare. They have muscled their way to significant market share in the retail, manufacturing, distribution, nonprofit, property management, and construction industries primarily through its QuickBooks product line. Companies in these industries adopt QuickBooks when they’re just starting out. As they grow, they ease into industry-specific packages from Intuit that replace, or integrate with, QuickBooks. The transition works nicely for Intuit and QuickBooks users. It creates headaches for their vertically-focused competitors.
This strategy has been effective just about everywhere but healthcare. While doctors may use QuickBooks for accounting, most hire CPAs. Also, these doctors don’t really view accounting as the hub of their business like contractors and manufacturers do. To them, insurance claims and patient records are top of mind. And Intuit isn’t there. They would need to have a strong electronic medical records (EMR) and practice management (PM) offering if they plan to have a presence in medicine. They certainly have the potential to be a major player, and appear to be already on their way.
It’s helpful to understand Intuit’s current healthcare presence to see how an EMR and PM system would blow the doors open. Their back-door approach began in September of 2009, when they launched Intuit Health Bill Pay. This application lets patients view complete breakdowns of statements and pay them online. It is essentially credit card processing through Intuit Payment Solutions for physician practices with a bit more functionality.
This first foot in the door is reminiscent of Intuit’s strategy in retail, where Intuit offers QuickBooks POS for far less than the competition with hopes that retailers will use Intuit Payment Solutions for credit card processing. Intuit makes up the price difference in the long run with processing fees and shakes up the competition in the process. In medicine, Intuit has been able to extend the reach of Bill Pay via Quicken Health Expense Tracker. It allows insurance companies to provide patients with a clear breakdown of what they pay and what the patients owe. Patients naturally then pay through Bill Pay. Cha ching for Intuit.
Just last May, Intuit completed the acquisition of web-based patient portal vendor MedFusion. 30,000 practices were reportedly already using the system, giving Intuit access to a nice chunk of the market. While managing communication like appointment requests, prescription refills, and lab result alerts is nice, it doesn’t get to the sweet spot of the market yet. Acquiring a strong electronic medical records and practice management system would be key.
So who would Intuit acquire? Let’s take a look at the qualities they would go for, and then who best offers those. Most of these qualities are consistent with their offerings in other vertical markets.
Focus on small companies
Intuit doesn’t compete with SAP or Oracle for seven-figure deals. They go after mom and pops, who abound in healthcare. Intuit would want to acquire a vendor who specializes in EMR and PM software for small practices, preferably between 1 and 3 doctors.
Low price point product
Intuit is used to competing aggressively on price and succeeding. They can leverage infrastructure and resources that competitors can’t to realize economies of scale. They can also make up the difference with credit card processing and other “freemium” models. Owning a clearinghouse could also provide them access to claim processing fees, which could further offset a low price point.
Dead-simple UI
Intuit touts its incredibly simple, almost child-friendly user interface across its other products. TurboTax might be the best example of this. Anyone they acquire would need to share their vision.
Large market share / brand name
Intuit doesn’t like to be a small name and can’t even afford to be small at their price point. They have to sell a ton to offer such low prices.
Friendliness for cash-based practices
In order to realize synergies with Bill Pay, Intuit would want its EMR and PM system to be used by practices with a heavy cash component. These cash-intensive specialties include some of the niches that are tougher for most EMR software companies to serve – chiropractic, optometry, therapy, counseling, etc. Primary care and related MD specialists get most of their money from insurance companies, Medicare, and Medicaid. Intuit doesn’t have too much revenue potential there aside from processing co-pays and other small patient payments.
Web-based deployment
MedFusion and Bill Pay are web-based, and a future EMR and PM system would likely need to be as well. Plus, web-based systems tend to have low or no upfront costs, which works nicely with Intuit’s strategy. Intuit does not have an aversion to on-premise systems (ahem, QuickBooks), however.
So who best meets all of these criteria? Let’s take a look at Intuit’s most obvious options.
| MediSoft / Lytec |  | |  | | |  |
| Office Ally | | | | | | |
| HealthFusion / MediTouch | | | | | | |
| Practice Fusion | | | | | | |
| Kareo | | | |  | | |
| AdvancedMD | | | | | | |
MediSoft / Lytec – Despite being on-premise, they make the list because their market share and price points are just too attractive to turn away. However, McKesson has their grasp on them and likely isn’t letting go unless they give up on small practices or Intuit really pays up.
Office Ally – Office Ally is also a huge name and web-based. Several different EMR and PM products, a free offering, and an integrated clearinghouse make them an interesting option for Intuit.
HealthFusion / MediTouch – A very user-friendly, web-based EMR and integrated practice management system with a modern UI, they have a strong presence among small practices and own their own clearinghouse. The system is very affordable, but minus the insanely low or free price point.
Practice Fusion – Practice Fusion enjoys the most market share of the “free” (subsidized by in-program advertising) EMRs. They have grown quickly among small and cash-based practices. Intuit might find its Kareo partnership to be a sufficient billing offering. Bill Pay might meet most users’ needs anyways.
Kareo – Although Kareo doesn’t offer its own EMR, its partnership with Practice Fusion might make it suitable enough for Intuit. Its price point used to be disruptively low but has crept up over time. Intuit might be able to help get that back down.
AdvancedMD – Much more feature-rich than Kareo and Office Ally, AdvancedMD is a big name and offers a great UI. However, the system is more expensive than low-ball competition and might be a little too upmarket for Intuit. It was just acquired by ADP last week and is likely off the market for a while.
Our vote? HealthFusion, with Office Ally as our first runner up. Who do you think Intuit would go with? Let us know below.
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http://drpullen.com health blog
