Microsoft follows Google’s Lead and Exits Healthcare

DEC 9

Yesterday, Microsoft announced a new joint venture with GE where both organizations would transfer significant healthcare software technology into a new company led by GE health care executive Michael Simpson. This new company will be based in the Redmond area and have more than 700 employees dedicated to HCIT solutions.

A few months back, Microsoft sold its EMR (Amalga HIS) to Orion and via this announcement,  is transferring two of its three remaining healthcare assets – Amalga and Sentillion – into the JV.. Curiously, Microsoft is hanging onto HealthVault, its personal health record (PHR) suite.

It is hard to grasp why Microsoft would jettison its “crown jewel” HCIT and clinical solutions into the JV and say goodbye to most of its healthcare team (including top exec Peter Neupert (retiring)), while apparently remaining content to simply sell its horizontal platform and servers into health care settings.  (We understand that many Microsoft employees will be transferred into the JV). Moreover, what will become of other HC initiatives underway at Microsoft such as their announced work in the insurance exchange marketplace?

A straight up comparison of Google’s complete retreat from health care to this move by Microsoft is a bit unfair, but yet another juggernaut exiting from an industry desperately in need of new ideas is puzzling.

Is this JV the type of new idea needed by the healthcare sector?  Nat McLemore, GM for Microsoft Health Solutions Group describes the GE / Microsoft JV as follows:

“… Microsoft and GE Healthcare have just announced an exciting new initiative aimed at improving healthcare quality and the patient experience. The two companies are creating a joint venture that will combine Microsoft’s deep expertise in building platforms and ecosystems with GE Healthcare’s experience in clinical and administrative workflow solutions. The new venture, which is pending regulatory approval and has yet to be named, will develop and market an open, interoperable technology platform and next-generation clinical applications that will help enable better population health management.

The joint venture’s foundational offering of an open technological platform will also enable application developers to build customized, differentiated solutions that interact to meet customers’ specific needs. By enabling independent software vendors, system integrators and healthcare IT pros to develop on a common platform, the joint venture aims to support a robust ecosystem of partners that offers customers real choice.”


For veteran watchers of technology centric alliances, it is easy to be skeptical.

The platform approach is exactly what Microsoft Amalga was about – a gigantic integration engine for healthcare. It is no surprise that Amalga will be a major foundational asset in the new company. The challenge with Amalga, and the reason why its adoption was limited in the US, is that giant footprint implementations are far from the ideal solution. Amalga required massive investments and a multi-year implementation to stand-up, and in a world where hospitals and other healthcare organizations don’t have the appetite or budget for monolithic systems and if they do…it likely orbits around an EMR.  The likes of Epic have taken up most of the bandwidth that hospitals can afford for big-iron IT projects and despite Microsoft attempt to buy market share, its ‘platform strategy’ had limited success.

If the JV platform vision is right (and what is needed for the industry) it will take a few years to get legs. Beyond integrating their HCIT suites (and apparently work has already been underway here for a few months) it will take considerable effort for the new company to ready its platform for app developers, a sometimes skeptical lot. Developers may opt to wait and see whether the JV successfully drives adoption for their platform vision given their traditionally limited resources and proclivity for aligning around the true vendor platforms where market share is known, versus jumping on board into the Microsoft/GE health care legacy.

Finally, is this big platform vision the right approach in today’s world of SaaS, Cloud, SOA, and modular app development? Healthcare already has many traditional stacks   – Epic, Cerner, McKesson, Allscrips…the list goes on. The new entrants like Aetna/Medicity, Optum/Axolotl, IBM, Oracle, and others are focused on integrating data and workflows. If the new company claims it is the ‘true path’ for data integration, the market could become confused with other mega HCIT vendor messages, given they acute need for nimble solutions that are quick to implement, solve an immediate pain point, and provide a near term ROI.

Big HCIT vendors must do more to help perpetuate a strong vision and direction for the healthcare industry and perhaps this is where this new venture can emerge as a leader. Microsoft and GE have both tried and neither was successful. Perhaps they have some new innovation and new capabilities that could create a truly differentiated solution. We’re watching closely and would like to know what you think.

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Scott Donahue