Healwell’s takeover of New Zealand-based Orion looks like a play for the Australian hospital and HIE market by a couple of well backed and innovative Canadian companies.
On 16 December one of New Zealand’s largest and longest running healthcare platform providers announced it would be selling most of the company’s core assets to publicly listed Canada-based AI health platform provider Healwell AI for A$180 million.
Orion has a significant footprint in Australia, particularly in smaller regional hospital networks, with its EMR product (Tasmania included), but in most of these sites it’s an older product facing off against increasing competition from low-cost and agile new cloud-based “lite” hospital EMRs from various vendors – what you start using when you want to upgrade your functionality and connectivity but aren’t in the league to be paying over the odds for a major global EMR vendor such as Oracle and EPIC.
In NSW Orion was being used by Hunter LHD, but that is slated as the first-up instance for NSW health of the EPIC transformation in that state.
So why buy Orion and at that price?
There are a few potentially good reasons.
Technically, Healwell is a smaller company than Orion with a revenue base of just under $60 million but it has a close relationship on AI health tech with a group called Well Technologies, which has a market cap of $1.5 billion on revenues of $226 million, which would indicate that whatever tech they are supplying to the new Orion owner, it’s sought after.
Orion has a pretty good footprint in Australia so if you’ve got good new tech you can bring to that footprint, especially if it’s good AI tech, then you are likely going to be able to start turbo boosting your brand image and start being a lot more competitive in the small-to-medium hospital market, and perhaps even start being attractive to the public hospital network market in certain instances.
Then there’s the fact that the Canadian hospital and GP market is one of the closest in terms of issues, solutions, regulation, patient demographic and technology that you might find across the world that offers a lot of insight into how we might solve a few mid-term management and interoperability problems in Australia.
In fact, Australia is looking very carefully at the regional health management structure and regulatory framework that Canada uses with some view towards trying to mould our fragmented and increasingly dysfunctional state vs federal separation of health management responsibilities into something far more workable and efficient.
Lastly, both Orion and its new owner are very Health Information Exchange and Digital Front Door-savvy, with existing large contracts for its HIE and digital front door technology already implemented in parts of Canada and across the US.
Orion, like a lot of the local major local and overseas vendors, has been particularly interested in the upcoming work being specified by the Australian Digital Health Agency for a national HIE in Australia and, increasingly, for the bevvy of work being looked at by an array of providers – HealthDirect, state governments, PHNs et al – to introduce digital front doors to their provider communities.
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If Healwell AI and Well Technologies can add anything via their tech base to an existing and reasonably well tested HIE and digital front door offerings from Orion, Orion will likely have a much better chance of participating in some of this work.
Orion isn’t public anymore but just prior to delisting in 2018 after selling its data integration and interoperability product Rhapsody, it had revenues of about $150 million.
Without the Rhapsody revenue that makes the deal looks pretty good for outgoing majority owner (84%) Ian Macrae at $180 million, especially given that Macrae had reportedly announced his intention to get out of Orion as far back as 2022 after surviving a brain cancer scare.
But the deal might be worth it if Healwell can leverage the existing brand footprint in Australia by bringing its AI expertise and development to the table, and its experience of operating in a country that Australia would like to emulate in various ways, particularly in the use of HIEs and digital front doors.
If it all stacks up, then the local vendors in Australia developing hospital-lite EMRs, EMR AI analysis vendors, digital front door vendors and all those groups forming up to win national HIE work, likely have a new kid on the block who is wanting to play in their sandpit.