API Heathcare's Acquisition by Kronos Remains Unpopular

My feelings about the pending sale of API Healthcare to Kronos is no secret. I think this is a horrible idea. As it turns out, I'm not the only one that thinks this. I have it on good authority that in addition to me, but the API employees AND customers are not in favor either!

Two and a half years ago when Francisco Partners bought API, there was a lot of uncertainty. The employees knew things were going to get shaken up. There was a shake up and really, I would say that the operation of the entire company  changed. The balance between making money, providing a quality product, and treating employees fairly shifted dramatically. I hate to say it but employees were on the losing end of that switch. Nonetheless, the core focus of the company remained steadfast and probably even got more precise. Because of that focus, the vast majority of employees remained loyal to the company. There were only a handful of employees that left or were let go.

Fast forward to 2011. Employee retention has become a big problem. I don't have exact number of departures but I'll let you draw your own conclusions but it's pretty obvious that there's a problem when the company has to resort to bribery. If you were a customer right now, how would you feel knowing employees are jumping ship?

Rumor has it that the clients aren't any more excited about this either. Why would they be? There are two major competitors in the market. They chose API over Kronos for a reason and now they're potentially being forced into using a product they don't want or with a company they don't want to work with.

If ever there was a time for the regulators to step in and say, "NO!!!" this is it. Competition is good for the market and for consumers. There is nothing good that could come of this acquisition. All Kronos wants is to eliminate their biggest competitor because that will translate to more money for them AND they won't have to work as hard to try to maintain some sort of edge in the market.

API Healthcare Looks to the Future with Synergy

Yesterday I wondered aloud about API Healthcare's vision for the future and whether they even have one. I'm happy to learn that they do. Historically, HIMSS has been API's marketing focus for the ear. As such, they usually have some big announcement for the convention to stir up some buzz for the company. From what I've heard, they didn't have any new announcements but they did focus on their new platform, Synergy.

API made it's official announcement about Synergy on February 1 so they let the cat out of the bag before the convention. But I'd concede that the announcement was recent enough for it to be still fresh and largely unknown at HIMSS. Synergy is a big deal though and it's an exciting advancement for the company because it takes their vast array of products and unifies them on a single platform. This project has been in the works for years and it lays the foundation for the future but I don't know how it fits in with Kronos.

Previously, all of API's products were independently developed and engineered using a variety of technologies. The single platform brings them together in one seamless integration. It makes the whole system more efficient, easier to troubleshoot, and easier to expand. Think of it this way, if you put a slice of lassagna, a scoop of German potato salad, and some pickled herring on a plate, you'd have a well rounded meal. They might even all be things that you like but they don't really go together even though they get the job done. On the other hand if you put a cheeseburger, fries, and fresh corn on the cob all on the same plate, you have a meal where each component enhances the others. The flavors don't compete with each other. It's a weak analogy but I think you get the picture.

So, API has finally perfected their menu (hopefully just as Ryan Braun's Graffito). They are definitely ready to charge ahead. But then there's this acquisition business. It sounds to me like all this work is not going to reap the rewards that it could or should because obviously Kronos' software doesn't run on API's platform.

I really hope API gets to continue to operate largely independent of Kronos. This company has been working so hard and they have real vision for the future. And since I say that, I need to give credit where credit is due and that's with the CEO, J.P. Fingado. It would be a real shame otherwise.

P.S. I just had this unrelated thought: I wonder if Luis would have bought the company back rather than let it go to the enemy if he had had the chance?

Good News Remains Elusive for API Healthcare

Kronos detailed some more of its plans regarding its acquisition of API Healthcare at the 2011 HIMSS conference. For those of you that don't know, HIMSS is probably the largest healthcare information technology organizations in the world. They have a conference each February and it is enormous. In fact, only a handful of cities can host it because it's so big.

If there's any good news, it's that API's current solutions will continue to be supported. Of course, there's no word about continuing to develop them or actively market them to new customers.

They're pretty clear that they plan to combine the best from each product line. To me this sounds like ransack and pillage.

I think what is most telling though is their overt excitement about obtaining the patient classification system (PCS). What that system does is it calculates staffing levels based on patient needs. So if you have a lot of critically sick patients, it will show you that you need more staff to come in and which staff members will best fill the need, and how you can do it for the lowest cost. This, too, is an area that is being increasingly regulated. To my knowledge, API's PCS is a revolutionary technology in the industry and Kronos had nothing to match it. Because of the regulation in states like California, Kronos couldn't put up much competition.

Since jobs are a hot topic, let's talk about that. Sales and training staff are no longer needed. Engineering staff can be cut down to a skeleton crew for support issues. Configuration analysts can be reduced soon since there won't be new implementations. Tech writers are no longer needed. HR? Goodbye. Management? Goodbye. About the only group things look okay for are the support personnel.

Again, I hope to be proven wrong. PLEASE, prove me wrong! But what good comes from eliminating the biggest competitor in the market with an exclusive cutting edge technology?

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P.S. Historically, API has always had some big announcement to make at HIMSS. I haven't been able to find anything about one this year. This is yet another sign of what's to come. No news is bad news because it says that the company is does not have anything exciting to announce about its future.

Kronos' Acquisition of API Healthcare Is Only Good for Kronos

It was announced on February 7 that Kronos would acquire API Healthcare. This is not good news for anyone but Kronos. It is not good for API employees. It is not good for API customers. I suppose it may be good for Kronos customers in the short term but that remains to be seen.

Who Am I
Who am I to talk you ask? A former API Healthcare employee. I worked there for three years-two years under the original ownership and one year under Francisco Parterns' ownership. I liked working there. I had great coworkers. The management was professional. The company had drive. It was a trifecta for happy employees. The only reason I left was because after meeting my life partner, we decided to start a new life together in Chicago. Unfortunately, Francisco Partners has sold everyone out, in my opinion.

Why This Is Bad
So what's so bad about this? API Healthcare has had a laser focus on the healthcare industry. Everything they make is custom engineered for medical professionals. This means there are no half-ass solutions that try to maximize profits by stretching a single product across multiple industries. Don't get me wrong, the proverbial death of two birds with one stone is a good thing. Healthcare is such a unique industry though. The pay rules for nurses and other support staff  can be so convoluted. Government regulation is extensive and it varies wildly from state to state. This is a 24/7/365. To be a leader in this field, you need a laser focus.

Kronos has been trying to acquire API for as long as I know and certainly longer. API has been Kronos' biggest competitor. Kronos has solutions for a multitude of industries. And of course, their healthcare division simply doesn't have the precision of API. Because of Kronos' size though, they have a respectable market share despite their inferior product.

I would bet money that API employees are going to lose their jobs. Once Kronos gets their hands on the software, they're going to rip it apart, reverse engineer it, and shove it into their own product. They'll only keep API employees around to execute the carnage.

I would also bet money that API customers aren't going to be happy with the results. Kronos still will not have the laser focus. The product is going to get dumbed down and exploited and it's not going to work as well or have the same drive for improvement. Additionally, nothing good ever comes when competition goes away. Sure, there are a handful of other companies in the market but they're peons compared to what's to come. But it's not like Kronos is adding new solution to their portfolio, they're just eliminating the chief competition. Competition has forced both API and Kronos to keep raising the bar. There's no need to do that anymore. Hospitals will be backed into a corner and forced into using a shoddy product because there will be no other choices.

Please Prove Me Wrong
I hope to be proven wrong but I just don't see any silver lining to this. There's one last thought that I want to express. When Francisco Partners bought API from Luis Garcia, they were quite vocal about how they bought companies as long-term investments. They've only had API for two years, which is not very long. I wonder how long Kronos and Francisco have been in negotiations...

What's wrong with cell phone contracts

AT&T announced today their plans to significantly raise their early termination fees (ETF) on smart phones. Of course, this is messed up! Now they claim that they have these fees to recoup the cost they incur by subsidizing the cost of the phone to make them more affordable for consumers. The truth, of course, is that they're just money hungry and they prey on our insatiable need for the latest gadget. I don't begrudge them their right to make money but customers are supposed to come first.

There are two simple options the cell phone companies could employ to make the ETF more reasonable and fair to consumers.

Option 1

This option involves a bit of calculation. The cost of the subsidy plus a reasonable profit margin (10%) = the ETF. Furthermore, the ETF is then divided by the term of the contract and for each month completed, that amount is subtracted.

Here's an example
AT&T's Cost to Apple	$500
Phone's cost to Consmuer	$200
Subsidy paid by AT&T	$300
Reasonable Profit	$50
Total Subsidy/ETF	$350
Amount deducted each month of a 24 month contract	$14.58

So, let's say you complete 9 months of your contract and you've had enough. Your early termination fee would be $218.75

Option 2

This option is really an extension of the firstTake the phone back. AT&T can refurbish and resell that same phone for $150. It costs maybe $50 on average to refurb the phone. So, give the consumer a $50 credit for the phone, which comes off the top of the ETF. Additionally, the phone company gets to make another $50 on the phone.

This isn't rocket science.

Macs are no more secure than PCs

In the news today is yet ANOTHER example that Macs are no more secure than PCs. It is just as easy for a Mac to be hacked as a PC. I admit, there is less risk of falling prey to a cyber attack on a Mac but Macs are not less vulnerable. There is nothing magical (or even scientific) about Macs or Safari that make them impervious to exploitation.

The difference between the two is market share. Apple has roughly an 8% market share in the US. That means 92% of computers ARE NOT Macs. In other words, the world runs on PC's. So, if you are a nefarious person wishing to profit either financially or through some sick pleasure by writing viruses and exploiting computers, who will you go after? PC's of course! You'll go after the biggest group to impact the most number of people possible.

So Mac people, you really ought to get off your high horse because one day, you're probably going to be sorry that you weren't more conscious about security than just playing the odds.